Purdy v. . Huntington

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 336 It was claimed by the defendant, Calvin Huntington, in his answer and on the trial, that the mortgage in *Page 338 question was merged in the conveyance from Joseph S. Mitchell, the mortgagor, to Minott Mitchell, the mortgagee, after its maturity, and was thereby discharged and ceased to be a lien, and if not so merged then, that he was to be protected as a bonafide purchaser of the mortgaged premises without notice of the assignment of the mortgage to the plaintiff's intestate, and that it was discharged by the delivery of the deed thereof from Minott Mitchell to him. Neither of those positions is sound. It is clear that there was no such merger. When the premises were conveyed by Joseph to Minott Mitchell, the mortgage had been assigned to the plaintiff's intestate and was then held by him, and the fact of such assignment was known by both of the parties to that conveyance, and it was the intention of both that the lien of the mortgage should continue. The necessary elements to constitute a merger were therefore wanting. The interests of the mortgagee and owner were not united in Minott Mitchell. Without such union, there could be no merger. The question is then presented, whether Calvin Huntington can be protected in his title as against the mortgage by reason of the omission to have the assignment thereof recorded. It is conceded that he is to be charged with constructive notice of the existence of the mortgage, and of the continuance of its lien, by its record in the proper office. By that he was informed not only of the date of the mortgage, the amount secured thereby, and of all its particulars, but that it was open and uncanceled of record, and therefore apparently an outstanding lien and incumbrance on the premises of which he was taking title. Having that information, he knew or was at least chargeable in law with the further notice, that it was such lien and incumbrance in the hands of any person to whom it had been legally transferred, and that the record of such transfer was not necessary to its validity, nor as a protection against a purchaser of the property mortgaged or any other person than a subsequent purchaser in good faith of the mortgage itself or the bond or *Page 339 debt secured thereby; but on the contrary, that a vendee of the premises took it subject to the lien of the mortgage irrespective of the ownership thereof. That knowledge and notice made it his duty in the exercise of proper diligence, to inquire whether Minott Mitchell, his vendor, was still the owner and holder of the mortgage, and his omission to make that inquiry deprives him of the protection of a bona fide purchaser. These principles are fully established by the decision of this court in Brown v.Blydenburgh (7 New York Rep., 141); Kellogg v. Smith (26 id., 18); Gilligg v. Maas (28 id., 191, c.); and Campbell v. Vedder (3 Keyes, 174). See also Raynor v. Wilson (6 Hill Rep., 469); Read v. Marble (10 Paige Ch. Rep., 409); and NewYork Life Ins. Trust Co. (2 Barb. Ch. Rep., 82). Having no actual knowledge of the existence of the mortgage, and having, by his neglect to examine the records, failed to obtain the notice which they would have given him, he incapacitated himself from making specific inquiries in relation to it, and, as was well said by the learned referee, in his well considered and able opinion, "he cannot now insist that the plaintiff's security should be set aside in his favor. If, by the neglect of the plaintiff to record his assignment, the parties are equally in fault, the plaintiff having the prior equity must prevail." The General Term of the Supreme Court, if I correctly understand the opinion of the learned justice who delivered it, on the reversal of the judgment founded on the referee's decision, appear to have based that reversal on the ground that the records justified the conclusion and warranted Huntington, when he took his deed, in the assumption that Minott Mitchell had not parted with the mortgage and had taken the title in extinguishment of it. He says: "The referee correctly held that the rights of the defendant, Calvin Huntington, as a purchaser of the premises embraced in the mortgage previously assigned by his vendor to the plaintiff, are to be determined by the records in the clerk's office, and the facts fairly to be inferred from what was there stated." *Page 340 He then assumes a very material fact, and on which his conclusion was principally if not entirely based, as appearing by those records when Huntington took his deed, which in reality did not appear. After referring to the circumstance disclosed by the evidence, as well as by those records, that Joseph S. Mitchell acquired his title to the premises from Minott Mitchell under a deed bearing even date (4th June, 1855) with the said mortgage, which he assumes, and as I concede to be fairly inferable, to have been given for a part of the purchase money, although the fact is not found by the referee, he says (and I deem it material to set forth the statement in full), that Huntington, by examination, "would have learned from said records that three years afterward, and five days after said bond and mortgage became due and payable (July 10th, 1858), that the said Joseph S. Mitchell reconveyed the said premises to the said Minott Mitchell for the same consideration expressed in the deed without covenants." He then adds: "The legitimate inference from those facts, which embrace all the information to be derived from the registry of deeds and mortgages in the county clerk's office of Monroe, where the land was situated, was, that the sale from Minott Mitchell to Joseph S. Mitchell was rescinded, and Minott took back his deed for the balance remaining unpaid of the original purchase money, and secured by said bond and mortgage, and repaid to Joseph S. the $1,000 of purchase money paid down on the purchase by the said Joseph S. to the said Minott Mitchell. This is the conclusion that would be naturally drawn by the simple inspection of the records. The reconveyance of the land would be presumed to be in discharge and satisfaction of the mortgage, inasmuch as it did not appear that said mortgage had ever been assigned, no assignment of it appearing upon the records. The legal and equitable title therein appears to be united in Minott Mitchell. The mortgage, I think, from these facts would be presumed to be merged in the legal title and thus extinguished. Such, I think, would be the natural inference and language *Page 341 of the records, and the interpretation which would ordinarily be put upon the facts therein and thereby disclosed." It will be seen, from the statement of the learned judge, that he has assumed as a fact shown by the records, that the conveyance from Joseph to Minott Mitchell was recorded when Huntington made his purchase and took his title. In that, he was mistaken. It appears by the findings of the referee, and the fact is conceded by the learned justice, "that on the 10th day of July, 1858, the said Joseph S. Mitchell conveyed by deed to said Minott Mitchell the premises discribed in the mortgage above mentioned." It is then further found by him that this deed was recorded on the 6th day of October, 1859, and that finding is supported by the production of the deed in evidence by the defendant; and it also appears by such findings that on the 3d day of October, 1859, Minott Mitchell sold and conveyed the said mortgaged premises to the defendant, Calvin Huntington, by deed with covenant of warranty; and it is shown by the deed, also read in evidence by the defendant, that the deed was dated and acknowledged on the said 3d day of October, 1859, and was recorded in the book of deeds on the 9th day of January, 1862. It thus appears, that the records, instead of showing the deed from Joseph to Minott Mitchell to have been recorded on thethird day of October, 1859 (the day on which Huntington took his deed), as assumed by the learned justice in his opinion, did in fact show, that it was not recorded until the 6th day of October, 1859. The whole of the reasoning and argument, as well as the conclusion based on that assumption, must fall, when the foundation on which they rest is swept away. It may, however, be urged that if Huntington had actual knowledge, or notice of the existence of the deed from Joseph to Minott Mitchell, it is better than the constructive notice with which he would have been chargeable from its record. Conceding that proposition to be true, it does not aid him. There is nothing to show that he had actual knowledge *Page 342 or notice. The fact is not found by the referee. The fair inference deducible from his finding in connection with the evidence is to the contrary. All that is found by him, as to the actual knowledge or notice he had of the title, is that derived from Minott Mitchell, "by whom he was informed that there were no incumbrances, and that the title was good, on which declarations of his vendor the said Calvin relied and believed the same to be true;" and he, on his own direct examination, testified, on being asked what representations were made by Minott Mitchell at the time he bought the property said: "I asked him if he knew the property to be free from incumbrances, and the title good; he said it was; when he handed me the deed, he said the title was as good as if it came from Uncle Sam. He said he had loaned money on the property about the year 1835; he foreclosed the mortgage, and got a chancery deed some several years after. I think in 1844. He gave me the master's deed; he said he had owned it since then; I never had any intimation, in any way, that there was any incumbrance on the property. I was in negotiation with him two or three weeks; I talked about buying it; I asked if the property was free from incumbrances, and the title good, and he said it was;" and on being cross-examined, he, after the statement of some collateral matters, but without having said anything further in reference to the purchase, than is above set forth, said: "I have said all that I recollect in relation to the purchase," and nothing else was afterward stated by him on that subject. The information conveyed by that statement was, that the title he had was under that master's deed, given in 1844, and that he had continued to own it since that time, and nothing was communicated from which it could be understood or in any manner inferred that he had parted with the title to Joseph, and that he had subsequently received a reconveyance thereof from him. There is, therefore, nothing to warrant the conclusion from any of the facts actually known to Huntington, or of which *Page 343 he had constructive notice from the records, that the mortgage was merged in the legal title and satisfied. It may be proper to consider the case in another aspect. Assuming that Minott Mitchell might, in the absence of actual notice of the assignment, be considered and treated as the owner and holder of the mortgage, and that the deed from him, as was suggested on the argument, would operate as an assignment thereof to Huntington (but which I by no means admit, and is contrary to what is said in Wilson v. Troup (2 Cowen, 230, c., by WOODWORTH, J.), the title of the plaintiff would nevertheless be superior to his. The deed was recorded in the book of deeds. That record was inoperative and ineffectual as the record of an assignment of the mortgage and conferred no rights as such on Huntington as assignee. See 1 Rev. St., 756, §§ 2, 3, c.;Gilligg v. Maas, supra (213 and 214); Dey v. Dunham (2 John. Ch. Rep., 188); Dunham v. Dey, S.C. in error (15 John. Rep., 155); James v. Johnson Morey (6 John. Ch. Rep., 417, 432); James v. Morey, S.C. in error (2 Cowen Rep., particularly opinions of SAVAGE, Ch. J., 316); White v. Moore (1 Paige Ch. Rep., 551, c.); N.Y. Life Ins. and Trust Co. v.White (17 N.Y., 469); Brown v. Dean (3 Wendell, 208). Each of the parties, on that state of facts, would have held an unrecorded assignment, and that first given would prevail and have preference. If the views above expressed are correct, the order of the General Term is erroneous, and should be reversed with costs, and that of the Special Term must be affirmed with costs.