Rutgers v. Kingsland

The Chancellor. If a mortgage is by mistake, as between a mortgagor and mortgagee, so drawn as to exclude lands which they intended it should include, and the mortgage is recorded as drawn, and the lands not included in it are sold to a bona fide purchaser without notice of the mistake; or lands, as well those included as those not included in the mortgage but intended to be, are sold together with other lands not intended to be included in the mortgage, subject to such mortgage on a part of them, to a bona fide purchaser without notice, the court could not, I thinly as against such a purchaser, correct such a mistake. A subsequent purchaser from such bona fide purchaser without notice would hold the lands not included in the mortgage free from the mortgage, although such subsequent purchaser knew of the mistake; because, by purchasing from him who bought in good faith without notice, he would acquire all his rights and equities. A subsequent purchaser bona fide and without notice from a first purchaser who had notice of the mistake would hold the lands not included in the mortgage free from the mortgage ; because his equity Would be at least equal to that of the mortgagee. To apply these principles: if Charles Mix had no notice of the mistake when he bought under the decree of Brown againsMix and others, the complainant cannot succeed in any event. Had he such notice 1 It is contended that as he was one of the — 185 — associates for whom Brown, the mortgagor, acted as trustee and as president of the association, he is, therefore, chargeable with the same knowledge Brown had that certain other land was intended to be covered by tbe mortgage. I have strong doubts whether this position can be maintained. Actual notice is the notice required. I do not see that Ms being one of a number of associates interested in the property is sufficient to charge him with actual notice that certain other land was intended to be included in a mortgage given by the trustee who held the title for the associates. The property was advertised to be sold, at public sale, under a decree of this court. The mortgage was on record. It was a sale at which any person might buy, and at which the property might be sold free from any objection or influence growing out of a mistake as to the quantity included in the mortgage ; for no moans were taken to apprise the public, at that sale or before, of any mistake in the mortgage. Clearly, if, under such circumstances, property be sold to a person having no knowledge of the alleged mistake in the mortgage, he would hold free from the mortgage. If the case is to turn on the ground that the purchaser at that public sale was Charles Mix, one of the associates, and on the ground of his having notice, the proof of such notice should be full and unequivocal. Now the most that can bo said as to notice by him is, that he supposed that the mortgage covered the additional land claimed under it; for, knowledge of what is said to be the mistake in the mortgage was not, it seems, discovered by any body till long after this public sale at which Chas. Mix bought the property. But the mortgage was recorded. Mix, as well as all others who thought of purchasing at the sheriff’s sale, must be supposed to have examined the record, to see what the mortgage covered. The mortgage had been given two and a half years before. No mistake in it had been set up by the mortgagee. And Mix was at liberty to suppose that the mortgagee know what the mortgage covered. Certainly, in reference to all bidders not connected with the transaction and having no actual notice, the property was to be sold subject only to the mortgage as it appeared on record. — 186 — And if Mix, before examining the records, supposed that the mortgage covered the dwelling-house, yet, when the record informed him it did not, his former supposition would not charge him with a notice of a mistake in the mortgage; nor with notice or knowledge that the omission of the dwelling-house in the mortgage was made under such circumstances as would call for a reform of the mortgage as against a purchaser at that sale. If the case made by the proofs and the principles applying to it could carry us beyond this, the next question would be, whether notice to Kingsland was necessary, and if so, at what time notice to him was necessary. He bought the property at sheriff’s sale on executions against Charles Mix. It was contended, that it was not necessary that Kingsland should have notice, he being only a judgment creditor in one of the judgments under which the land was sold to him at that sale; and that, if notice to him was at all necessary, notice at any time before the property was conveyed to him by the sheriff was sufficient. This involves the construction of Sec. 6 of the u Act to Register Mortgages,” Rev. Stat. 658, which provides, that every mortgage shall be void against a subsequent judgment creditor or bona fide purchaser or mortgagee for a valuable consideration not having notice thereof, unless such mortgage shall be acknowledged or proved according to law, and recorded or lodged for that purpose at or before the time of entering such judgment, or lodging for record the deed or mortgage to such subsequent purchaser or mortgagee. If the notice contemplated by this Sec. must be prior to the entry of the judgment, and this, it appears to me must be the true construction of the act, 4 Halsted’s Reports, 193, the complainant could not succeed, if all other difficulties were removed, unless he could show that Kingsland had notice of the alleged mistake in this mortgage prior to the entry of his judgment. A case of the character of the one now before the court was not, probably, in the contemplation of the Legislature. The leading object of the act, no doubt, was to provide that a judgment entered should be prior in lien to a mortgage before given? unless the mortgage was recorded prior to the entry of the judg — 187 — ment, or unless the judgment creditor had- notice of the mortgage. In this case there was a mortgage recorded before the entry of the judgment. The question is not, whether the mortgage, as recorded, is good against the judgment; there is no doubt about that; hut whether the judgment is not good against any subsequent incorporation into that mortgage of additional land, covered by the judgment, which, as between the parties to the mortgage, might be deemed to he bound by it on the ground that such additional land was intended by the parties to the mortgage to he included in it. The question is : after a judgment entered, can a recorded mortgage he declared, as against the judgment creditor, to cover more land than the recorded mortgage covers, on the ground that as between mortgagor and mortgagee it was intended and supposed to cover more. It seem to me that to answer this question in the affirmative would be to allow too great indulgence to the negligence of parties. As to third persons acquiring subsequent liens on property, the record is their proper resort for information, and they must be permitted to rely on it with confidence. Halst. Dig. 687. If a prior mortgage recorded does not, by mistake between the mortgagor and mortgagee, cover all the land it was intended to cover, it is the misfortune, to say the least, of the mortgagee ; and, as between him and third persons acquiring liens, it must be considered his negligence. No good general purpose would be subserved, and much mischief would result, from undertaking to reform such prior mortgages as against subsequent liens. If it could be reformed as against a subsequent judgment creditor, it could bo as against a subsequent mortgagee, for they both stand on the same ground. There is nothing in the proofs, at all events nothing upon which the court can satisfactorily ground a decree for the complainant in a case of this character, to show that Kingsland had-any knowledge of any mistake in the mortgage at the time of the entry of his judgment. No such idea as a mistake in the mortgage had ever been suggested by any body at this time. We — 188 — may conjecture that- Kingsland, from his relation to one or moré of these associates, and from conversations he would be likely to hear, may have supposed that the mortgage covered more land, but the record spoke differently. If, then, the notice contemplated by the Sec. we have referred to must be before the entry of the judgment, the complainant must fail on this ground alone. And I do not see how the express language of the statute can be overcome. Any subsequent notice to him would not answer, for if the judgment is good against all lands not covered by the recorded mortgage, on the ground that the judgment creditors had no notice before the entry of the judgment, a sale under the judgment would'be good, though he had notice after the entry of the judgment. If I could pass this point favorably to the complainant, there are other very serious difficulties in his way. The complainants’ counsel seem to have considered that it would not be safé for them to rely on any proof they could offer of notice to Kings-land before the entry of his judgment; or on the ground that a judgment creditor was not entitled to notice; or on the ground that a judgment creditor, purchasing property under his own judgment without notice is not to be considered a bona fide purchaser without notice. He caused a notice to be served on Kingsland after the property had been struck off to him at the sheriff’s sale under his judgment and that of Wm. Mix. A copy of the notice is in evidence. It was a notice that Margaret Rutgers held a Mortgage given- by Brown to Pomeroy, dated Sept, t, 1836, for $12,000, payable, &c., which was duly acknowledged and recorded, on which all the principal money was due, with interest from Jany. 7,1839, except $150 of the interest paid since that date ; and that the said mortgage embraces a part of the lands levied on under executions in favor of Wm. Mix and the said Jos. Kingsland; and that Margaret Rutgers claims to hold under the said mortgage, and to be entitled to a lien upon six acres or thereabouts of the lands so levied on, including the stone dwelling-house and its appurtenances thereon situated, that is to say upon all that piece or parcel of land, beginning, &c., and giving certain courses and distances, and extending the line, on the course S. 43 deg. — 189 — West, two eliains and 72 links beyond the point where that line stops in the mortgage, (the distance given in the mortgage, on that course being but five chains, an extension of this line two chains and 72 links would be necessary to obtain the object sought by the bill ;) and that the said Margaret, is about to proceed in the Court of Chancery for the enforcing of such lien. This is simply a notice, that by a certain mortgage on record, Margaret llutgers claimed these boundaries. The record showed that the boundaries given in the mortgage were different. Which was K. to consider right; the boundaries claimed by the notice, or those given by the record ? And what was K. to understand by this notice? Was it that the mortgage was not truly recorded; that the boundaris given in the mortgage itself were the boundaries claimed? There is nothing said in this notice of the ground on which she claimed a lien according to the boundaries given in the notice. It is not said that she claims those boundaries because it was intended that the mortgage should give them, and that a mistake in the boundaries was made in drawing the mortgage. The notice is simply that under the mortgage she claims a lien according to the boundaries given in the notice. And it would be quite as natural for K., or any one else, to suppose that the meaning of the notice was, that the mortgage, right in itself, was wrongly recorded, as that the mortgage was wrong and did not include all the land intended to be mortgaged. It was certainly not notice of a mistake in drawing the mortgage. And if any purchaser chose, after such notice, to examine the records, and found that the record of the mortgage was different from the boundaries claimed by the notice, and to put himself on the ground that he would risk being bound further than the record went, though the mortgage itself might go further, his danger from what he supposed, and might under such a notice suppose to be the difficulty, that is to say, an incorrect record, differing from the mortgage, would be at an end when it appeared that the mortgage was the same as the record. It appears to me that the notice, in a case like this, should have stated that the ground on which the boundaries set out in it were claimed was, that they were the boundaries intended — 190 — to have been inserted in the mortgage, and that by mistake, the courses and distances were so run as to exclude a part of the land intended to be mortgaged. There is nothing in the nature of the notice given which would authorize Kingsland to refuse to take the deed from the sheriff. Again, these lands were sold on the judgment in favor of Wm. Mix, for $2800, as. well as on the judgment of Jos. Kingsland; and no notice was served on Wm. Mix. If the sale, had it been made entirely under his judgment, would have been good against the alleged mistake in drawing the mortgage, it cannot be bad because it was sold at the same time under K.’s judgment also. If the sale would have been made on K.’s judgment alone, yet, K., by his purchase at a sheriff’s sale on both these executions, acquired the rights of a purchaser under the judgment of Wm. Mix. I am of opinion, that the complainant can sell, by virtue of her mortgage, only the lands included within the boundaries therein given. Decree accordingly.