St. Andrew's Church v. Tompkins

The Chancellor. The Bank is not chargeable with notice of the leases, or of the agreement of the mortgagor to apply the rents to the plaintiffs as a substitue for interest. Notice that the estate, or part of it, was in possession of a tenant, has been considered as notice of the lease and its contents. In Taylor v. Stibbert, (2 Vesey, Jun. 437.) Lord Rosslyn held it to be a rule in equity, that whosoever purchases an estate from the owner, with information that it was in possession of tenants, is bound to inquire into the estates of those tenants, and is bound by the leases they hold. The rule was cited and approved of by Lord Erskine, in 13 Vesey, 120. But the Bank had no notice of the existence of the leases; and the question here is, whether the Bank are bound to allow the prior mortgagee to enlarge his demand beyond what it appears upon record, when they had no other information at the time they took their mortgage, than what the plaintiffs had disclosed upon record. There is no sound reason why the plaintiffs should take their intermediate interest out of the mortgaged premises, to the prejudice, and probably at the expense of the defendants, any more than that they should enlarge the principal of the debt, in conformity to some private agreement between them and the mortgagor. It is the policy of the registry act, that a subsequent incumbrancer should be able to ascertain with certainty the extent of the prior incumbrance ; and if moneys not mentioned in the bond or 17 mortgage can be covered by them, when the rights of a subsequent mortgagee are interposed, and to whom no fraud or negligence is to be imputed, and who is not chargeable with any notice, actual or constructive, it would go to weaken, very essentially, the value of mortgage security. The master, therefore, can only compute interest on the bond without interest, which is now due, from the 1st of May last, when it became due; and on. the other two bonds, which are without interest, and not yet due, the amount of principal must be computed, subject to the usual discount or rebate of interest, in like manner as trustees under the insolvent debtor or absconding debtor acts (1 N. R. L. 162. 468.) are directed to allow, of debts not due, and not upon interest. Order accordingly.