Trustees of Union College v. Wheeler

By the Court, Mullin, P. J. Prior to October, 1828, James Mellen .owned the premises in controversy. Mellen, by deed dated the 1st of that month, conveyed them to one Aspinwall. Aspinwall made the purchase for himself, Philo'Stevens and-Benjamin Xott, each of whom advanced one third "of the purchase money. January 26th, 1830, Aspinwall conveyed two thirds of the said premises in fee to Stevens.. Ebtt, as I understand the ease, was equitable owner of one half of the premises conveyed to'Stevens. "While Aspinwall held the title, contracts were executed to sundry persons for the sale of portions of said lands. Some of the purchasers went «into possession of the lands so purchased, and they or their assignees paid up the purchase money' and received deeds. After the deed from Aspinwall to Stevens, other parcels of land were contracted to be sold, the purchasers entered, the contracts were paid up, and deeds given. On the 18th of July, $Tott conveyed, by quit-claim deed, his interest in the premises to Stevens, and took back a bond for $2800, and a. mortgage on the premises conveyed by Mellen, as collateral. STott, on the 1st of July, 1834, assigned the bond and mortgage to the plaintiff. After this assignment was made, Mott, without the plaintiff’s knowledge or consent, released to Steyens portions of said mortgaged premises, and Stevens there [615] upon conveyed the premises so released. The lots released were then, and still are, of greater value than the amount due on the bond and mortgage. The persons purchasing prior to the mortgage to Nott, went into possession of the lands purchased; cleared portions of the same; most of them erected buildings thereon, and occupied them, and others cut and carried off timber from the said lots. Nott knew that sales of portions of the land were being' made by Aspinwall and Stevens; that they received money thereupon ; and his proportion was paid to him. He had no notice of the sale of any specific lots. The referee has ordered judgment dismissing the plaintiff’s complaint, as to the lands sold prior to the mortgage, and as to the lands released after the same was given, and directs foreclosure and sale only of the remainder of said ■ lands. The plaintiff, appeals, and insists that it is not chargeable with notice of the rights of purchasers of portions of the lands, and that the release by Nott did not impair its lien on the premises released by him. , It will be unnecessary to enter upon an examination of the rights of the separate purchasers, or of the separate-lots released. They may be arranged into two classes, and the principle which governs them ascertained and applied. Should there be found a case requiring a- separate consid- . eration, it will be examined by itself. First. As to the lands sold before the mortgage was given to Nott, Nott having paid one third of the purchase money to Mellen, the conveyance to Aspinwall did not destroy that interest, and by the statute then in force a trust resulted to him in said lands, to the extent of one third part thereof. (Jackson v. Sternbergh, 1 John. Cas. 153. Foote v. Colvin, 3 John. 216. North Hempstead v. Hempstead, .2 Wend. 109. Boyd v. McLean, 1 John. Ch. 582. Harder v. Harder, 2 Sandf. Ch. 17.) This trust having been created before 1830, is not affected by the provisions relating to result [616] ing trusts, in the Revised Statutes. As between Aspinwall and Stevens and ÍTott, the former acted as his, ÍTott’s, agent in the sale of the trust land, and he was bound by the sales made of each of them. When the contracts were entered into, the mortgage to ÍTott was not in existence. If it ever became a lien on the lands under contract, it was a lien subordinate to the rights of the purchasers. If the mortgagee would acquire any interest through a subsequent mortgage, it could only be in the purchase money unpaid at the time notice of the mortgage was givén to the purchasers. When the purchasers took deeds, they were under no obligation to search for liens created after the making of the contracts of purchase, and they took the land purchased discharged of all such liens. The right of the purchasers to be protected against the mortgage, does not, in my judgment, depend on whether or not the mortgagee, Hott, had actual or constructive notice of the sales to them, by reason of their occupancy. As between him and the purchasers, he is not to be treated as an incumbrancer, but as the vendor, and as such, in law, charged with knowledge of the acts of his agent who made the sale. « It would be most inequitable to permit ÍTott to pocket his share of the price of the land, and then, having obtained a -mortgage from a joint owner, upon the property sold as well as that unsold, foreclose the mortgage and sell the lands which had been paid for, in satisfaction of the debt due from his co-owner. If he can sell after a part of the purchase money is paid, he may sell after it is all paid. The law is chargeable with no such injustice. If ÍTott was foreclosing, I entertain no doubt but that the purchaser, prior to the mortgage, would have a perfect defense to the action. The plaintiff is found, by the referee, to be a Iona fide purchaser for value, without notice of the contracts of sale theretofore made, or that the purchasers were in possession. By this finding, I suppose, it is meant that the plaintiff had no actual notice. That' it is charged with [617] constructive notice by reason of such occupancy, if it was of a character to constitute notice, is too well settled to admit of a doubt. The plaintiff, being a bona fide purchaser of the mortgage, is not chargeable with the notice which Kbit had of the rights and equities of the purchasers. (Bush v. Lathrop, 22 N. Y. 535, 549. Jackson v. Henry, 10 John. 185. Jackson v. Van Valkenburgh, 8 Cowen, 260. Varick v. Briggs, 6 Paige, 323. Fort v. Burch, 5 Denio, 187.) But it is chargeable with constructive notice of the interest which the purchasers had in the lands purchased by them, and which were actually occupied by them. (Fassett v. Smith, 23 N. Y. 252. Cook v. Travis, 22 Barb. 338.) The occupancy that is sufficient to charge a subsequent purchaser or incumbrancer with notice of the occupant’s rights, must be open and visible, and he must actually improve the premises. Fencing, pasturing or cutting timber, is not such an occupancy as will charge a purchaser or incumbrancer with notice. (McMechan v. Griffing, 3 Pick. 149, and cases cited. Cook v. Travis, supra. Troup v. Hurlbut, 10 Barb. 354. 4 Kent’s Com. 179, and notes.) The referee finds that all the purchasers of Aspinwall and Stevens, before the mortgage was given, entered into possession of the lands purchased by them severally, improved the same, and erected dwellings thereon, except John Claus, Fellows, Matteson, Weed and Bowen. We must presume, in view of this finding, that the occupancy of those who thus improved and occupied, was such as to be notice to the plaintiff of their several interests in the lands. It is found by the referee that those who are named above, soon after the date of their contracts, cut timber on the land purchased, and sold the same, and some of them cleared some part of the same land, but there was no improvement, and there was no actual occupancy by residing on the land, and receiving rents and profits thereof, except from the sale of timber. Such a possession (if it can be called such) is not notice to the .plaintiff, and hence the [618] lands purchased by them are subject to the lien of said mortgage. The release by Eott to Stevens, being executed after the assignment to the plaintiff, but before the same was recorded, was, in the absence of any proof of notice of such assignment to Stevens, operative to release the premises described in it from the lien of the mortgage. But as this release did not impair the lien of-the mortgage upon the lands embraced in it, and not sold by the mortgagor, it is not very important now to inquire to what extent the release affects the rights of the mortgagor. If the lands herein before referred to as sold, but not occupied so as to relieve them from the lien of the mortgage, are to be applied in satisfaction of the mortgage, together with those held subject to it by the referee, the release may be wholly immaterial. But if those parcels are to be treated as subject to the lien of the mortgage, and to be sold with such other land as may be subject to it, in the inverse order of alienation, the release may protect such purchasers to the extent of the value of the land released. But these questions will more properly arise for discussion on another trial of the cause, and I shall therefore omit to consider them further now. [Fourth Department, General Term, at Buffalo, June 5, 1871. It follows that the judgment dismissing .the complaint as to the parties defendant, who own the lands.contracted to be sold to the several persons he'rein before named, viz., John Claus, Fellows, Matteson, Weed and. Bowen, must be reversed, and a new trial ordered, costs to abide the event. Mullin, P. J., and Johnson and Talcott, Justices.]