Mathews v. Damainville

Ingraham, J.: The nature of the action and the question presented are stated in the opinion of Mr. Justice Patterson. ! I do not concur in the view that the instrument of March 20, 1899, was within the Eecording Act and its record, therefore, constructive notice to subsequent purchasers. Section 240 of the Eeal Property Law (Laws of 1896, chap. 541) defines a conveyance as being every written instrument by which ány .estate or interest in real property is created, transferred, mortgagedior'-'assigned, or by which the title to any real' property may be affected. This instrument, when. executed and recorded, neither created, transferred, mortgaged or assigned an estate or interest in real property. It was an executory agreement whereby upon the happening of a certain contingency, namely, the discontinuance of the foreclosure suit, the plaintiff was to receive a mortgage to secure the amount due him. Until the happening, of that contingency the real estate was not affected at all by the instrument. .This instrument appears to have been recorded on the 4th of April, 1899, and the' foreclosure action 'was not discontinued until April 21, 1899, and it was. on that day that the plaintiff was entitled to demand a mortgage. Thus, when recorded, this-instrument was a mere executory contract to give a mortgage upon the happening of an. event' in the future. It was not then- an equitablé mortgage, as it created no lien upon property and no action [313] could'have been commenced to enforce it.- A different question would have been presented if, at the time the instrument was recorded, the plaintiff’s right to a mortgage was absolute, and he then could have maintained an action to foreclose an equitable lien created thereby. There was nothing in the decision of the question before the Appellate Division in the third department in People ex rel. Mathews v. Woodruff (75 App. Div. 90) that affects this question. The court there held that this agreement, after the discontinuance of the foreclosure suit and when the plaintiff’s right to a mortgage had accrued, was as between Mrs. Eomeyn and the relator Mathews, the plaintiff in this action, to be treated in equity as an equitable mortgage which could be enforced as such. The question now is, whether it was an equitable mortgage when the instrument was recorded, that is, before the foreclosure suit was discontinued. In that case it was held that Mrs. Eomeyn’s obligation to give the mortgage, whenever she was asked to, arose upon the discontinuance of the foreclosure suit, and that by the delay of the plaintiff to demand the mortgage he took the Chance of some hona 'fide purchaser intervening, but so long as no intervening equity arose the plaintiff could enforce the promise against Mrs. Eomeyn, unless the debt was otherwise discharged. The record of the instrument not being notice, the plaintiff must show actual notice of the agreement for a mortgage to subject the property in the hands of the defendant to'the equitable lien. It seems to be conceded that no personal notice was given to Mrs. Decker, but it is claimed that as to her, her attorney had notice of the mortgage and that Mrs. Decker is chargeable with that notice. Mr. Minrath, the attorney for Mrs. Decker, testified that he first knew of the parties to this action at the date of making the first mortgage to Emma Decker in November, 1901; that at that time he did not search the title, knowing that the loan commissioners had made a conveyance to Damainville, and that he thought that was definite enough under the circumstances; that this mortgage was delivered on the 4th of November, 1901, and then recorded; that it was the latter part of December of the same year that Damainville brought to his notice this agreement; that he then first became aware of the existence of this supposed lien; that prior to the time he had knowledge of this agreement the property had been sold at public auction and Mrs. [314] Decker had become the purchaser at this sale, but that deed was delivered, on the 30th of December, 1901, a few days after the witness had notice of the record of this instrument. The sole testimony that connects Mrs. Decker with this instrument is that when her attorney was. acting for Damainville he had. notice of it and on behalf of Damainville endeavored to secure a release from it from: the plaintiff. Notice of the execution of this instrument was not acquired by the attorney in any way while acting for Mrs. Decker or on her behalf. The instrument was not brought to his attention as attorney for Mrs. Decker, nor is there any evidence that he had it in mind as affecting this property when the deed was delivered to Mrs. Decker. As I understand the rule, to bind a principal with • the knowledge of his attorney which the attorney has acquired in some other transaction, not relating to the business of his client, the burden is on the person claiming such notice to show that knowledge of the instrument was present in the mind of the attorney at the time he acted for his client. (Constant v. University of Rochester, 111 N. Y. 611; Denton v. Ontario County Nat. Bank, 150 id. 137.) Thus, in Constant v.' University of Rochester, the court say: “ From all- these various cases it will be seen that the farthest that has been- gone in the way of holding a principal chargeable with knowledge of facts communicated to his agent, where the notice was not'received, or the knowledge obtained, in the very transaction in question, has been to hold the principal chargeable upon clear proof that the knowledge which the agent once had, and which he had obtained in another transaction, at another time and for another principal, was present to his mind at the very time of the .transaction in question. * * * But the. burden is upon the plaintiff to prove, clearly and beyond question, that he did, and.it is not upon the defendant to show that he did not have such recollection. * * * The plaintiffs are bound to show by clear and satisfactory evidence that when this mortgage to the university was taken by Deane, he then had knowledge, and the fact was then present to his mind, not only that he had taken a mortgage to Constant eleven months prior thereto on the same premises, which had not been recorded, but that such mortgage was- an existing and valid lien upon the premises, which had not been in any manner Satisfied. If he recollected that there had been such a. mortgage, but honestly believed that it [315] was or had been satisfied, then, although mistaken upon that point, the university could not be charged with knowledge of the existence of such mortgage.” . I think in this case the plaintiff has failed to sustain this burden of proof, and has failed to show that the knowledge acquired by Mrs. Decker’s attorney in another transaction in which Mrs. Decker was not interested was chargeable to Mrs. Decker, and that she thereby became a bona fide purchaser for value, and this agreement cannot be enforced as against her. The judgment is reversed and a new trial ordered, with costs to appellant to abide event. Van Brunt, P. J., and McLaughlin, J., concurred; Patterson and Laughlin, JJ., dissented.