Westbrook v. . Gleason

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 26 This is an action to foreclose a mortgage upon about two hundred and seventy-five acres of land, situated in Delaware county, which was executed by Dennis D. McKoon to Marius Schoonmaker, and by him assigned to the plaintiff. The facts, so far as they are material to the decision of the question submitted to us, were found at the Special Term of the Supreme Court as follows: Prior to September, 1856, Nicholas Elmendorf claimed to own the mortgaged lands; and he entered into an executory contract with Samuel Inman for the sale to him of fifty-five acres thereof; and Inman entered into possession of such parcel and made some improvements thereon. Subsequently, on the 24th day of September, 1856, the sheriff of Delaware county, by virtue of a sale upon execution issued upon a judgment recovered against Elmendorf, duly conveyed the mortgaged lands to Samuel Gordon and others, by a deed recorded September 26, 1856. On the 18th day of March, 1857, the grantees in that deed conveyed the same lands to the plaintiff in this action, by a deed recorded on the 4th day of April thereafter. On the 3d day of April, 1862, the State comptroller, by virtue of a tax sale, conveyed to the plaintiff the parcel of fifty-five acres and other parcels of land covered by the plaintiff's mortgage, by a deed recorded on the 2d day of June thereafter. Some time after the lands had been conveyed to the plaintiff (the precise time not appearing) Inman surrendered to him his contract for the fifty-five acres and received from him a new contract for the same; and he continued in the possession of that parcel until he sold the same, by a written executory contract, to Samuel Jones, who entered into possession thereof and remained in possession, making some improvements thereon, until October 10, 1870. The date of this contract with Jones does not *Page 27 appear. On the 1st day of June, 1866, — which was probably after the contract with Jones — Inman conveyed to the mortgagor, McKoon, all his interest in the fifty-five acres, by a deed recorded July 31, 1867. On the 13th day of June, 1868, the plaintiff conveyed to McKoon, by quit-claim deed, for a consideration, as expressed therein, of $500, the two hundred and seventy-five acres of land: and that deed was recorded November 28, 1868. On the same day of June, Marius Schoonmaker executed and delivered to McKoon a warranty deed of the same lands, for a consideration, as expressed therein, of $1,500, which deed was recorded February 24, 1873. For the purpose of securing the consideration of these two conveyances, McKoon, on the same day, executed the mortgage for $1,500, which this action was commenced to foreclose; and this mortgage was recorded January 8, 1869. On the 27th day of October, 1868, Schoonmaker assigned this mortgage to the plaintiff, by an instrument in writing duly executed, acknowledged and delivered, but never recorded. On the 1st day of October, 1868, McKoon conveyed the fifty-five acres to Jones, for the consideration of $500 by a deed recorded December 1, 1868; and at the same time, to secure the purchase money and the sum of $200, which Jones owed McKoon, the former executed to the latter a mortgage upon the same land for the sum of $700, which mortgage was recorded on the same day with the deed. Jones took his deed in good faith, believing that he was acquiring an unincumbered title to the land. On the 2d day of December, McKoon for value received sold and assigned that mortgage to the respondent, Gleason, who put his assignment upon record March 7, 1870. Gleason purchased the mortgage in good faith, believing it to be a first lien upon the lands, after having searched the records and finding no incumbrance there. Sometime prior to July 29, 1870, Gleason commenced an action to foreclose his mortgage, and on that day recovered a judgment of foreclosure against Jones and others, the plaintiff, however, not being a party. Gleason became *Page 28 a purchaser of the fifty-five acres under that judgment, and received a deed thereof dated October 10, 1870, which was recorded May 4, 1877. It does not appear how McKoon came to take a quit-claim deed of Westbrook, and a warranty deed of Schoonmaker, of the same lands, at the same time; and it does not conclusively appear which of these grantors had the true title to the land. The title was evidently recognized as being in one or both of these grantors, and the mortgage was given to secure the consideration of both conveyances. Upon these facts the question to be determined is which has priority of lien upon the fifty-five acres, plaintiff's mortgage, or the Jones mortgage assigned to Gleason? I think the courts below were in error in answering this question in favor of the Jones mortgage. To repeat a few facts: The deed to Jones and the mortgage from Jones to McKoon were recorded December 1, 1868. The plaintiff's mortgage was recorded January 8, 1869. The assignment of the Jones mortgage to Gleason was recorded March 7, 1870, more than a year after plaintiff's mortgage was upon record. The deed to Jones of the fifty-five acres did not give him a title free from plaintiff's mortgage, because, although he purchased in good faith and his deed was first recorded, he was not, within the meaning of the recording act, a purchaser for a valuable consideration. He paid nothing, and simply gave his bond and mortgage to secure the entire consideration payable at a future day. A purchaser for a valuable consideration, within the meaning of that act, is one who has paid the consideration of the conveyance or some part thereof, or has parted with something of value upon the faith of the conveyance. (3 Wn. on Real Property [3d ed.], 289; Tourville v. Naish, 3 P. Williams, 306;Story v. Lord Windsor, 2 Atk., 630; Hardingham v.Nicholls, 3 id., 304; Webster v. Van Steenbergh, 46 Barb., 211; Weaver v. Barden, 49 N.Y., 286; Delancey v. Stearns, 66 id., 157; Dickerson v. Tillinghast, 4 Paige, 215.) *Page 29 There is nothing in Jones' prior relation to the land which improves his position. It does not appear that either he or Inman had paid anything upon the contracts which they held; nor does it appear to what extent they had made improvements upon the land. The contracts are not set out, and we have no information as to their terms. There is no finding that the Jones contract was in force at the time he took his deed from McKoon, or that at that time he had any valid claim to the land, or a conveyance thereof. There is no finding, and it cannot be inferred from any of the facts appearing, that the deed to him and the mortgage from him were given in performance of any prior contract. There is no allegation that they were, in Gleason's answer. The plain inference, from the lapse of time and other circumstances, is that the prior contract was either forfeited or abandoned. The mortgage was given for not only the whole purchase price, but for $200 in addition thereto; and according to Gleason's answer, the consideration agreed to be paid for the deed was twice the amount stipulated in the contract. The Jones title, as the case is now presented to us, must therefore rest entirely upon the deed from McKoon; and for the reason above stated, that deed is subordinate to plaintiff's mortgage. It is not disputed that the mortgage from Jones, while McKoon held it, was subordinate to plaintiff's mortgage given by himself, and of which therefore he had full knowledge. The question now to be determined is whether by the assignment of this mortgage to Gleason, the latter obtained any better position for the enforcement thereof than his assignor had. A mortgage under our laws is a mere chose in action; and aside from the force of the recording statute, an assignee thereof — so far as concerns his right as such to enforce the same — must be treated like the assignee of any other chose in action. What the assignor could have done while owner to enforce the same he can do, and no more. He takes the precise position of the assignor. He can obtain by the assignment *Page 30 no greater or better right than the assignor had. While an assignee of a chose in action may now enforce the same in his own name, he must do it subject to all the defenses and equities which would have existed and affected it if the action had been in the name of the assignor, as it was originally required to be. The assignee of a mortgage takes it not only subject to all the equities existing between the parties to the instrument, but it is now too well settled to need further discussion that he takes it also subject to all equities which third persons could enforce against the assignor. (Bush v. Lathrop, 22 N.Y., 535;Schafer v. Reilly, 50 id., 61; Trustees of Union College v.Wheeler, 61 id., 88; Greene v. Warnick, 64 id., 220;Crane v. Turner, 67 id., 437.) Unless, therefore, Gleason can claim some benefit from the recording statute, the priority of plaintiff's lien under his mortgage is established. The recording statute (1 R.S., 756), provides, that "every conveyance of real estate within this State, hereafter made, shall be recorded in the office of the clerk of the county where such real estate shall be situated; and every such conveyance not so recorded shall be void as against any subsequent purchaser, in good faith and for a valuable consideration, of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded." By subsequent sections it is provided that the word "conveyance" in this section shall embrace an assignment of a mortgage, and that the word "purchaser" shall embrace an assignee of a mortgage. In order to protect a subsequent purchaser under this statute, there must be a conveyance to him in writing; and such conveyance must be first recorded. The mortgage from Jones to McKoon was not and could not become in any sense a conveyance to Gleason. That was a conveyance to McKoon, and as such was recorded. The only conveyance Gleason had was the assignment to him; and if that may be regarded as a subsequent conveyance by McKoon of an *Page 31 interest in the same real estate covered by plaintiff's mortgage executed by him, then it could have preference over that mortgage only by being first recorded; and it was not first recorded. It was, in effect, so held in Fort v. Burch, (5 Den., 187). In that case it was decided that where a junior mortgagee, with notice of a prior unrecorded mortgage, assigns his mortgage to one who has no notice, such assignee is entitled to preference only in case he records his assignment before the first mortgage is recorded. In Jackson v. Van Valkenburgh, (8 Cow., 260), it was held that such an assignee is entitled to the preference, although he has not recorded his assignment. But that case was decided upon the law as it existed before the Revised Statutes, when assignments of mortgages were not authorized to be recorded. As the law was then understood, in the absence of a recording statute, if a junior grantee or mortgagee, with notice, conveyed or assigned to an innocent purchaser, without notice, such purchaser would be protected equally as if no notice had ever existed: (Jackson v. Given, 8 J.R., 137; Varick v.Briggs, 6 Paige, 323; Fort v. Burch, 6 Barb., 60.) This seems to have been the rule of the common law, and was said in 5 Denio, (supra), to be "for the prevention of fraud, whereby an innocent purchaser is protected, though he take through a tainted title." In Varick v. Briggs, the chancellor speaking of the common law rule, said: "If a purchaser who has notice of a prior unregistered deed or of a fraud or trust or any other previous claim upon the estate purchased by him, afterwards conveys or mortgages the property to another who has no such notice, either actual or constructive, the latter is entitled to protection as abona fide purchaser or mortgagee." But since the Revised Statutes, a bona fide purchaser of a legal or equitable interest in real estate, from a vendor charged with notice of a prior unrecorded conveyance, can obtain a better position than his vendor only by recording his conveyance first, and thus getting priority upon the record: (2 Wn. on Real Prop., 141;Wood v. Chapin, 13 N.Y., 509.) But there is a further *Page 32 reason for disregarding the authority in this case of Jackson v. Van Valkenburgh. When that case was decided, the law holding that a mortgage for the purpose of assignment was a mere chose in action had not been as broadly laid down as now. Now, as show above, a mortgagee cannot convey by assignment any better title or greater interest, or give any better position to a bona fide assignee than he himself has. We have assumed that by the assignment of the Jones mortgage to Gleason, for the purposes of the recording statute, he took not only a conveyance of the mortgage, but a conveyance of an interest in the land; so that he became under that statute a subsequent purchaser of an interest in the land covered by the mortgage. But there is authority for holding that an assignee of a mortgage under that statute is a mere purchaser of the mortgage; and that the only purpose of recording such assignments is to regulate the relation to each other of successive assignees of the same mortgage: (Greene v. Warnick, 64 N.Y., 220;Crane v. Turner, 67 id., 437.) If this be the correct construction of the statute, then Gleason can have no benefit from the recording statute, because he is not a subsequent assignee of the same mortgage held by the plaintiff. Plaintiff lost no right by not recording his assignment. There was no subsequent conveyance of the same mortgage; and so far as Gleason can claim to be a subsequent purchaser of an interest in the fifty-five acres, by virtue of his assignment, his conveyance was subsequent upon the record to plaintiff's mortgage: (Purdy v. Huntington, 42 N.Y., 334; Campbell v. Vedder, 1 Abb. Ct. of App. Dec., 295; Gillig v. Maass, 28 N.Y., 191.) The conclusion thus reached does not work extraordinary hardship. A grantee or mortgagee of lands may always be subjected to loss by a failure to record his conveyance before the record of a prior conveyance which was unrecorded when he took his. In such cases he loses in the race of diligence which the recording statute requires. One who purchases *Page 33 mortgages always does so at his peril, like one who purchases other non-negotiable choses in action. He must inform himself accurately as to the title and value of the security he buys; and if he is deceived, he must look to the responsibility of the seller. The judgments of the Special and General Terms, so far as appealed from by plaintiff, must be reversed and new trial granted, costs to abide event.