## Facts

- The Bank of Mendocino sued in ejectment to recover multiple tracts of land, including a disputed parcel identified as the land described in paragraph 6 of defendants’ answer.
- Defendants occupied the disputed parcel as agents of the Garcia and Point Arena Railroad Company, which was not joined as a party.
- Around 1870, Campbell conveyed the disputed parcel in fee to the railroad by deed; the deed was never recorded and was later lost.
- For many years, the railroad and its agents held open and notorious possession of the disputed parcel.
- After the railroad’s unrecorded conveyance, Campbell mortgaged the same land to Abbott; following default and foreclosure, the bank acquired a sheriff’s deed.
- Public records showed Campbell as owner; the railroad had of record only a right-of-way deed from persons not shown in Campbell’s chain of title.
- Before trial, defendants offered to allow judgment for the bank as to all land except the disputed parcel; the bank refused.
- The trial court awarded the bank the other tracts but entered judgment for defendants (with costs) as to the disputed parcel; the bank appealed and sought a new trial.

## Issues

1. Whether the bank could claim bona fide purchaser status without notice despite the railroad’s long, open, and notorious possession under an unrecorded deed.
2. Whether a purchaser may rely solely on record title in the mortgagor when a non-record claimant is in open possession, including when the claimant’s recorded instrument appears outside the apparent chain of title.
3. Whether the bank could recover the disputed parcel in ejectment when the superior title and right to possession were found to be in a nonparty railroad and defendants possessed only as its agents.

## Decision

- The judgment for defendants as to the disputed parcel and the order denying a new trial were affirmed.
- The railroad, though not a party, was found to hold the title and right of possession to the disputed parcel; defendants’ possession as its agents defeated the bank’s claim.
- The bank was not a bona fide purchaser without notice because the railroad’s open and notorious possession imposed a duty to inquire into its claim of title.
- Having failed to make reasonable inquiry, the bank was charged with notice of the railroad’s rights and could not recover the disputed parcel in ejectment.

## Legal Principles

- Open, notorious, and long-continued possession by a person other than the record owner is notice sufficient to require a purchaser to investigate the possessor’s claim.
- A purchaser with knowledge of facts that would prompt a reasonable inquiry is charged with notice of what such inquiry would disclose; failure to inquire precludes bona fide purchaser protection.
- A recorded instrument from persons not shown in the record chain of title does not eliminate the need to investigate when possession indicates a competing claim.
- In ejectment, a plaintiff cannot prevail against occupants holding for a superior titleholder when the plaintiff’s title is inferior to that nonparty’s established title.

## Conclusion

The court held that the railroad’s long, open possession required the bank to investigate the railroad’s claim before acquiring through foreclosure; the bank’s failure to inquire defeated bona fide purchaser status and barred ejectment of the railroad’s agents from the disputed parcel.


Bank of Mendocino v. Baker, 82 Cal. 114, 22 P. 1037 (Cal. 1889)