Mills v. Comstock

The Chancellor. The plaintiff appears in the character of a bona fide purchaser, for a valuable consideration, without notice that the mortgage set up by the defendant was outstanding and subsisting. On the contrary, he had notice, by means of the Onondaga records, that the equity of redemption of Miller, the mortgagor, had been released to Herrick, from whom he purchased.' The short state of the case is, that Miller, the owner of the land, gaye a mortgage of it to Conklin and Herrick, on the 28th of November, 1807, to secure the payment of a bond, and that mortgage was forthwith duly registered: The bond was payable on the 1st of December, 1809. On the 7th of March, 1808, Miller conveyed the same land to Herrick, by an absolute deed, in fee, with full covenants of title; and the deed was duly recorded in April following. On the 7th of June, 1808, Herrick gave Miller a bond, with a condition, that if Miller paid him 400 dollars, on the 1 st of December, 1809, he was to reconvey the land to Miller, subject to the mortgage, but this bond or defeasance was never registered, and the conveyance from Miller to Herrick [220] of the equity of redemption stood upon record as an absolute deed. Conklin's interest in the bond and mortgage was assigned to Herrick, on the 17th September, 1808. On the 1st of May, 1809, Herrick assigned over the bond and mortgage to the defendant, who now claims to hold the mortgage, as a valid and "subsisting incumbrance, in opposition to the subsequent purchase by the plaintiff, fróm Herrick. In the first ¡place, it was the duty of one of the parties to the conveyance of the .equity of redemption from Miller and Herrick, to "have had the defeasance Created by the bond of the 7th of June, 1808, registered, so "as to give notice of the real character of the 'deed of the 7th of March, 1808, (Laws, vol. 1 373. sec. 3.) It had been put upon record, as an absolute deed, and there was nothing to gainsay it, and every person dealing with Herrick, had a right to presume, and was chargeable with notice, that Herrick was the absolute owner, and that Miller had parted with his equitable title by this last deed, as he had already parted with his legal title by the mortgage. The legal and equitable titles had united in Herrick, and the latter had, of course, merged in the former. This was the language of the official notice of the record, and when the defendant afterwards, on the 1st of May, 1809, took from Herrick, an assignment of Miller's bond and mortgage, he took no better title than Herrick himself had in the character of an original mortgagee, and he was chargeable with notice of the release by Miller, of the equity of redemption. Herrick was no longer mortgagee, but a purchaser of the whole-interest of Miller; and whatever conveyance H, afterwards made of his interest in the premises, that conveyance ought to have been recorded, in order to protect the party against subsequent bona fide purchasers from H. But the defendant did not record the deed of assignment, and the subsequent purchaser from if ..had no means of knowing that the [221] mortgage was still regarded as subsisting; and Miller, by omitting to record his deed of defeasance, and the defendant, by omitting to record his deed of assignment, lost their titles , , • . . ° , x . under those instruments, as against subsequent purchasers. If this were not the case, then they would have enabled Herrick, by their negligence, to commit a fraud upon bom fide purchasers, and the verity of the records and the language of the recording act, would proVe a snare to the unwary. But the words of the statute are too strong to admit of any such abuse or evasion : “ All deeds and conveyances of or concerning, or whereby any of the military bounty lands may be any way affected in law or equity, shall be recorded, Sic. and every such deed and conveyance shall be adjudged fraudulent and void against any subsequent purchasers or mortgagee for valuable consideration, unless recorded, &ic. before the recording the deed or conveyance under which such subsequent purchaser or mortgagee should claim.” (Laws N. F. sess. 17. ch. 1. sec. 1.) There were provisions in the deed of assignment of the mortgage to the defendant which, connected with the subsequent acts of H. and the defendant, are sufficient to create an inference that the assignment was intended to be concealed. I have no doubt that intention existed on the part of Herrick, and the defendant seems to have lent his sanction to it, by the very form of the assignment, which he accepted. The mortgage was to secure a bond payable on the 1st of December, 1809; yet it was agreed between H. and the defendant, that the latter was not to enforce payment, until the expiration of five years, and H. covenanted, that he would see that the interest was annually paid ; for he agreed, that the interest should be paid by the mortgagor, or by him, and that if at the expiration of the five years, he, Herrick, should pay the principal, the right so assigned should cease. If this assignment was intended as a fair and absolute transfer of the bond and mortgage, the ordinary course would have been to have left Miller, the mortgagor, to pay the debt and [222] Interest, as they became due, according to the tenor of the bond. Instead of this, H. officiously assumes the payment upon himself, and the defendant accepts of his covenant upon an agreement, without consulting Miller, to give nearly five years of extended time, beyond the terms of the bond. The parties contracted with each other as if TL and not Miller, was the debtor, and was to be exclusively charged with the payment of the bond ; and in pursuance of this agreement, it appears, that the annual interest, down to May, 1815, was actually paid by H. There does not seem to have been any communication between the defendant and Miller, and it has very much the appearance of a combination between the defendant and H. to keep the claim under the mortgage from the knowledge of the mortgagor himself. Its tendency was to enable H. to appear to the world as the absolute owner, and to deal with the public as the real owner, which he effectually did by the deed to Pugsley, in 1810, and by the coercion of a release of dower from Miller’s wife, in the same year, and by the sale to the plaintiff, in 1816. When Miller attested the deed to Pugsley, in 1810, he must have considered Tí. as the absolute owner, or he was knowingly auxiliary to a fraud. Under the circumstances of the case, I consider the plaintiff entitled to hold the land discharged of the pretended incumbrance set up by the defendant; and that if the assignment of the mortgage to the defendant was not void on the ground of fraud, (which I much incline to believe,) yet that as the defeasance to the deed from Miller, and as the assignment of the mortgage to the defendant, were neither of them recorded, the plaintiff is entitled to protection, under the statute, as a bona fide purchaser for a valuable consideration. There is no notice, either actual or constructive, with which he is to be charged. I shall, accordingly ,decree, that the defendant be perpetually enjoined from prosecuting or from selling under the [223] mortgage. I have had some difficulty on the question of costs; hut as the defendant declares, in his answer, that when he took the assignment of the bond and mortgage, he had no knowledge of any interest or title in H., other than as mortgagee, and as there is no direct proof sufficient to countervail this averment in the answer, I have not thought the case quite strong enough to charge him with the costs of this suit. Decree accordingly.