## Facts

- Elmer B. Kinch and his wife agreed in writing to buy a dwelling house for $6,000 from Robert E. Fluke and James H. O’Rorke, paid a substantial down payment, and agreed to pay the balance in monthly installments.
- The Kinches took possession shortly after the contract and remained in open, notorious, and continuous possession while the vendors retained legal title pending full payment.
- While still the record title holder, Fluke later executed and recorded two mortgages on the same property: one to Seaboard Company and one to Finance Company.
- The Kinches had no knowledge of these mortgages when they were executed and recorded.
- In 1926, the Kinches obtained their own mortgage loan, used it to pay the remaining purchase price, and received a deed from Fluke.
- In a title search, the Kinches’ attorney discovered the Seaboard and Finance mortgages but mistakenly believed they did not affect the property and did not warn the Kinches.
- The Kinches filed an action to remove Seaboard’s and Finance’s mortgages as clouds on their title; the trial court dismissed, reasoning that recordation was constructive notice and the attorney’s knowledge supplied actual notice.

## Issues

1. Whether recorded mortgages executed by the record title holder after a vendee enters into possession under an unrecorded agreement of sale constitute constructive notice to the vendee, binding the vendee to those liens.
2. Whether open and continuous possession by a vendee provides notice of the vendee’s equitable interest sufficient to subordinate later mortgagees who relied on the record title without inquiry.
3. Whether an attorney’s discovery of recorded mortgages, coupled with a mistaken belief they were irrelevant and no warning to the client, constitutes actual notice imputable to the client.

## Decision

- The Supreme Court of Pennsylvania reversed.
- The court held that the vendor’s later recorded mortgages did not constitute constructive notice to the Kinches, who were already in open possession under the agreement of sale.
- The Kinches’ equitable interest, evidenced by open possession, was superior to the later mortgages taken and recorded by Seaboard and Finance.
- The attorney’s mistaken view of the mortgages’ effect, without communicating a warning to the Kinches, did not supply actual notice to them.
- The mortgages were ineffective against the Kinches’ interest and were removable as clouds on title.

## Legal Principles

- Open, notorious, and continuous possession by a person other than the record owner is constructive notice of the possessor’s rights and puts later purchasers and mortgagees on inquiry.
- A subsequent purchaser or mortgagee who deals with the record title holder while another is visibly in possession takes subject to the possessor’s rights if the subsequent party fails to inquire into the basis of possession.
- Recording statutes protect later purchasers and encumbrancers against prior unrecorded interests when taken without notice; they do not impose on a vendee in possession a duty to monitor the record for later liens created by the vendor.
- Knowledge is not imputed as “actual notice” to a client where counsel discovers a recorded encumbrance but, due to mistake, does not treat it as affecting the client’s property and does not communicate it as a relevant lien.

## Conclusion

A vendee’s open possession under an executory contract is notice of the vendee’s equitable rights and defeats later recorded mortgages taken from the vendor without inquiry, and neither recordation nor an attorney’s uncommunicated mistake supplies notice that would subordinate the vendee’s interest.


Kinch v. Fluke, 166 A. 905 (Pa. 1933)