Gibson v. . Thomas

73 N.E. 484, 180 N.Y. 483, 1905 N.Y. LEXIS 1104

• Court: New York Court of Appeals
• Decided: February 21, 1905
• Status: Published

Opinions

Gray, J.

The appeal presents the question of how far the plaintiff was protected, in his transaction with the holder of the mortgage, by the Recording Act. (1 R. S. 756, §§ 1, 36, 37, 38, 41.) Was he, in purchasing from her the mortgage, for the whole amount due upon it and without knowledge, actual, or constructive, of a portion of the mortgaged premises having been released, nevertheless, concluded by the fact of a partial release having been given ? If he was, then he was bound by a transaction, to which he was in nowise a party, of which he had no knowledge, and which was subsequent to the mortgaging of the premises by their owner. That he would have occupied no better a position than did his assignor, prior to the passage of the Recording Act, may be conceded ; but, with that act upon the statute books, was he not entitled to rely upon the title as it appeared of record? Was that not its purpose ? I think that he was and that the failure of the railroad company to cause its release of the land to be recorded was an omission, which permitted the subsequent assignee of the mortgage, by recording his instrument of assignment, to gain priority over the company’s right. We may dispose, at once, of the claim that the release was, in fact, recorded. It, clearly, was not delivered to the clerk to be recorded, until some other papers were sent for record. In other words, it was left with the clerk conditionally and not for immediate record. The facts, therefore, differ materially from what they were in Mut. Life Insurance Co. v. Dake, (87 N. Y. 257). The position of the appellant is, and must be, therefore, that there was, in its visible and notorious possession and occupancy of the land conveyed by the deed to it, such constructive notice of its rights as to defeat the claim of the respondent to have all of the property affected by the mortgage subjected to its payment. That- argument is rested, somewhat, upon the general proposition that an' assignee takes subject to the equities enforceable against his assignor. But those equities are such which attended the transaction between the original parties. (Trustees of Union College v. Wheeler, 61 N. Y. 88, 104.) There were no orignial equities, however, which, as between mortgagor and mortgagee, would bind the .latter and those taking under him. The only fact, upon which an equity is sought .to be based, is that the plaintiff’s assignor had released to the mortgagor, (not to the purchaser from the mortgagor), a portion of the mortgaged premises. But that is a situation, which the ¡Recording Act was designed to meet. ¡Mortgages and assignments of mortgages are conveyances within the intendment of that act. That is clear from its language and is settled by authority. (Decker v. Boice, 83 N. Y. 215.) The purpose of the act was, not merely to regulate the relations to each other of successive assignees of the mortgagee of the same mortgage; but it was to confer that priority over all lripds of conveyances, which, all things being equal, the date of the record entitled each to. And this would apply, where the assignor of the mortgage was disabled from claiming a .priority. (Decker v. Boiee, supra, at p. 221.) In brief, the earlier recorded assignment of a mortgage should give it relative priority over every other form of conveyance of an interest in the land affected.

The argument based upon possession and occupancy, as constituting notice to persons acquiring subsequent interests in the land, is fallacious. Doubtless, possession and occupancy under an unrecorded conveyance may constitute notice to him, who proposes to acquire an interest in the land, whether by conveyance, or by mortgage. (Cavalli v. Allen, 57 N. Y. 508 ; Phelan v. Brady, 119 ib. 587.) But, unless the posses sion and occupancy be so inconsistent with the existence of a mortgage lien, as to suggest to a prudent person a claim of title adverse to the mortgagee, they would mean nothing more to him than the evident facts. Briggs v. Thompson, (86 Hun, 607), in which case the present chief judge of this court concurred in the decision, is precisely in point as an authority, and I do not find any case in which it has been questioned. This appellant took its title from the mortgagor of the land and was not a stranger; in which case the respondent would have been chargeable with some notice of its claims to possession. The respondent knew, or is presumed to have known, of the recorded deed conveying the land to the appellant; but why should that fact lead him to suppose that it did not take from the mortgagor subject to the mortgage ? The mortgage was of record and, apparently, undischarged. There is no reason why railroad corporations should not take lands subject to mortgages. That their properties are, as a rule, subjected to mortgages is a notorious fact. Here the company took its title from the mortgagor; for the release was not to it and gave, of itself, no right to possession; it did not record the release from the mortgage lien and the plaintiff purchased the mortgage without knowledge, actual or constructive, of the release and with nothing to lead him to believe that the possession of the company was hostile to his mortgage. It seems to me that a fair and just construction of the Heeording Act makes its provisions applicable for the protection of the plaintiff’s right to the full security of the mortgage. To so hold is to infer, legitimately, the full beneficial purpose of an enactment intended for the protection of persons, who, in good faith and for value, acquire an interest in lands.

I advise the affirmance of this judgment, with costs.