Howard Insurance Co. v. . Halsey

Johnson, J. Upon the conveyance of the ninety-two acres to Wildes by Halsey, an equity arose in Wildes’ favor to have the residue of the mortgaged premises applied in the first instance to the payment of the mortgage debt. Subsequently to that conveyance, the mortgagees released from the lien of the mortgage the whole of the residue of the premises which had been conveyed by Halsey to Hunt, and by him to Paulding. This residue at the time of the release was of greater value than the amount of the mortgage. Upon these facts, if the case stopped here, it is not denied by the counsel for either party, that the appellants would not be deprived of the lien of their mortgage; for the right to have encumbered lands which have been sold in successive parcels applied to the satisfaction of the incumbrance in the inverse order of their alienation, being only an equity, and not a legal right, the prior incumbrancer is not bound at his peril to ascertain whether any of the mortgaged lands have been aliened or subsequently encumbered, when applied to to release part of the lands bound by his incumbrance. In order to impose upon him the obligation to regard this equity, his conscience must be affected by knowledge of the facts upon which the equity depends, or by notice sufficient to put him upon inquiry. (Stuyvesant v. Hall, 2 Bar. Ch. R. 151; Guion v. Knapp, 6 Paige, 35. It is quite obvious that the existence of this equity does not depend upon the purchase being for a valuable consideration. Looking at the simplest case, that of mortgagor and his grantee of part of the mortgaged premises, *274 plainly as between them, the ungranted lands are first liable. The introduction of new parties does not alter this equity. They who come in after the first purchase, and under the mortgagor succeed to his position and obligations. (Clowes v. Dickinson, 5 J. C. R. 235; 3 Rep. 12 b. Harbert’s Case.) It is not contended that the appellants had any actual notice or knowledge of the conveyance to' Wildes; nor was the recording of the conveyance to Wildes constructive notice to them of its existence. (Stuyvesant v. Hall, 2 Barb. Chr. Rep. 151.) The information obtained by Mr. Strong, the solicitor who was retained to foreclose the mortgage in 1842, can not be regarded as effectual, because it was not acquired in reference to the same transaction. Had the solicitor who advised or drew the release received the same information while that was in preparation, it would have bound the appellants. (2 Sugden on Vend. 456, pl. 16.) We, however, agree with the superior court in the opinion that constructive notice, or at least notice to put the appellants upon inquiry, existed in this case. The release executed by the appellants to Hunt, dated April 30, 1846, after describing the three parcels released, declares the same to be part of the same premises conveyed to William Paulding by said Hunt and wife, by deed dated February ■ 25, then last past, and to be therein described as parcels 1, 3 and 4. This reference of course makes the deed referred to, and the description of the premises therein contained, as completely notice of its contents to the appellants, as if it were recited at length in the deed. Now in that deed the description of parcel number 1 was as follows: “ Beginning at the north-easterly corner thereof, on the south side of the New York and Albany post road adjoining land now or late of George Wildes, and running thence southerly in three different courses along said Wildes’ land to land of Isaac Lafurgy,” &c. Now when the mortgage to the appellants was executed, *275 the land therein contained was described as a farm consisting of about 294 acres, and being part of a farm theretofore conveyed by Vanbrugh Livingston to the mortgagor. The appellants, by means of the deed to Paulding, had then this state of facts presented to them, that in a deed by the grantee of their mortgagor of part of the mortgaged premises, another part is described not as their mortgagor’s property, but as now or late the property of George Wildes; and in another part of the same deed it is called the said Wildes’ land. We think that this was sufficient to arrest the attention of the appellants, and put them upon inquiry. The property having come from Livingston to Halsey, described only as Livingston’s, having been mortgaged by Halsey to them by a general description and as having been Livingston’s, the fact that a particular parcel of it is afterwards spoken of as belonging then or lately to another person, would naturally excite surprise, and lead to inquiry. Two objections were urged upon the argument to this conclusion, the one, upon the ground that the description in the mortgage gives no information of the ownership of the land on the east, a blank being left for the name of the owner; the other because the description of parcel number 1 in the Paulding deed gives no intimation that Wildes’ land was a part of the mortgaged premises. These objections are each founded upon a single erroneous idea, that the appellants could not locate the land described in the release so as to distinguish what part of the premises mortgaged to them was not included in the description of the lands to be released This they obviously could do, or were bound to be able to do. They therefore knew, or were bound to know, that a strip of land lying west of their eastern boundary was not released, and yet that that strip was described not as the property of their mortgagor, but of a third person. No matter what was the name of the owner to the east of their eastern boundary, they knew that the, land west of that line had been mortgaged to them as Halsey’s, and that *276 a description of it as the property of another person could probably be true only on the supposition of a conveyance by Halsey prior to the release they were about to execute The decree of the superior court must therefore be affirmed with costs. Decree affirmed.