Kinch v. Fluke

In 1923, Kinch and his wife (plaintiffs) bought a home in Pennsylvania under an unrecorded purchase agreement. The house cost $6,000. Robert E. Fluke (defendant) was to hold title until the remaining balance of $3,738.86 was paid in $35 monthly installments. The Kinches moved into the home. Fluke later mortgaged the Kinch property for the amount of $3,000 to the Seaboard Company (Seaboard) and the amount of $700 to the Finance Company (Finance). Both Seaboard and Finance recorded the mortgages on the same day. The following year, an attorney helped the Kinches obtain a $4,000 mortgage from John C. Peightal. The attorney did not mention the Seaboard and Finance mortgages to the Kinches, because the attorney mistakenly believed that the Seaboard and Finance mortgages did not relate to the Kinch property. The Kinches used the $4,000 loaned by Peightal to pay Fluke the balance owed on the property. Fluke then deeded the property to the Kinches. The Kinches learned of the two mortgages after taking title and then brought an action to quiet title to the property. The trial court dismissed the action. The court held that because Seaboard and Finance had recorded the mortgages after the execution of the purchase agreement, but before title had passed, the Kinches had constructive notice of the Seaboard and Finance mortgages. The court also ruled that the Kinches had actual notice of the mortgages, because the Kinch attorney discovered it through a title search.