Rice v. Dewey

54 Barb. 455, 1862 N.Y. App. Div. LEXIS 249

• Court: New York Supreme Court
• Decided: February 10, 1862
• Status: Published

Opinion

By the Court,

Grover, J.

The determination of- this case will be facilitated by considering the rights of the purchasers from Hedges collectively, in the first instance. These purchases were made while the defendant’s mortgage was owned and held by Lowry. It is necessary first to ascertain whether the purchasers have shown a right to have their lands respectively discharged from the lien of the mortgage at the time of its transfer from Lowry to the defendant. If they had such right against Lowry, at the time, it is equally available against the defendant as assignee of Lowry. He took the mortgage subject to all defenses that existed against it in his hands. ' It must be borne in mind that it is against the defendant that it must be shown that the purchasers had a defense to the mortgage while owned by Lowry, and át the time he transferred the same to the defendant. This renders the admissions of the defendant competent evidence of any facts tending to establish such defense. The referee finds that the sales were made by Hedges tó the respective purchasers, and the considerations therefor received by Hedges with the knowledge and consent of Lowry while the owner of the mortgage. Whether the referee based his judgment upon this fact, or upon the other facts found by him, does not distinctly appear; nor is it material, if this or any other facts found by the referee will warrant the judgment rendered. The referee also finds that Lowry did not consider the mortgage a lien upon the respective parcels so sold by Hedges. There is no dispute that those parcels are covered by the mortgage, and that they were originally subject thereto, and of course they so continued, unless by some act of Lowry they were discharged. Whether Lowry considered them subject to the lien is wholly immaterial, except so far as it may be evidence of some agreement, act, or omission on the part of Lowry, discharging the lien. Hedges, as mortgagor, had the right to sell the lands in such parcels as he chose; and knowledge by Lowry that he was making such sales, and receiving' the consideration therefor, would not discharge the lands sold from the mortgage. When Lowry had carried his mortgage to be recorded he had done all that was required of him to preserve his lien; and all persons purchasing from Hedges • subsequent thereto, were bound at their peril to investigate the title and take notice of the mortgage. If they neglected this, it was their own fault, and neither law nor equity can relieve them from the consequences of the omission. This rule must be strictly adhered to, or incumbrances upon real estate will no longer constitute safe investments. I confine these remarks alone to-the fact that the sales were made with the knowledge of Lowry. It is also found that they were made, and the consideration received therefor, by Hedges with his consent. By this finding I apprehend that something more was intended by the referee than the mere non-action of Lowry to prevent the sales. He could do nothing to prevent the sales, other than to proceed to foreclose the mortgage if there was any thing due thereon. This he was not bound to do. He had a right to presume that the purchasers had examined the records and knew of his mortgage, and that they were satisfied with the covenants of Hedges, as to title, and with their equitable right to have the lands embraced in the mortgage remaining unsold first applied to the satisfaction of the mortgage, or had pbtained other security against the lien, . The referee probably intended, by the finding, that Lowry had entered into some agreement respecting his lien, whereby the ■lands purchased were discharged from, the lien. He does not find what this agreement, if any, was. This renders it necessary to look into the evidence to ascertain whether Lowry had made any, and if so, what agreement respecting it. This evidence consists mainly of the declarations of the defendant. It is shown that the defendant said he did not suppose his mortgage was a lien upon lots sold by Hedges, when he purchased the mortgage. This declaration is of no consequence except as evidence tending to ■show an agreement or act of Lowry discharging the mortgage. That he told Merchant that he would release the parcel contracted by Hedges to Crawford, whose interest Merchant had acquired; That Hedges’ deed for said parcel would be good, and that he was going to release several lots, and would have it all done at once; The declaration that he was going to release several lots is only evidence from which it may be inferred that Lowry or the defendant had agreed to release the lots in question, provided such inference is warranted by the other evidence in the case. Standing alone it amounts to little or nothing,- so far as the plaintiffs, other than Copp, who has succeeded to Merchant’s title, are concerned, being equally consistent with the idea that the defendant considered the unsold land sufficient security, and therefore was willing voluntarily to discharge these parcels from the lien. It was further proved that the defendant told Cole that the description of the mortgage embraced lots in the possession of others. That Hedges had sold these lots by an arrangement and with the consent of Lowry, when Lowry owned the mortgage. This evidence is not more certain than 'the referee’s finding. It does not show with whom an agreement by Lowry was made to discharge any land from the lien, nor upon what consideration or conditions such release was to be given. The purchasers were witnesses in the case, and they none of them claim to have made any agreement, themselves, with Lowry. On the contrary, they testify that they knew nothing of the mortgage. Hedges is a witness for the plaintiffs, (and from his deposition there is no reason to believe an unwilling one,) and he is silent as to any agreement made between himself and Lowry, or any release. He testifies that he was present at the purchase of the mortgage by the defendant of, Lowry, and yet not one word do we hear of having been said about any release of lots sold by Hedges. That he did not wish him to consider the lands sold any part of the security if he purchased the bond and mortgage. That the defendant told him he considered the unsold land amply sufficient to secure the amount due on the bond and mortgage. This is utterly inconsistent with the idea that Lowry had discharged the lots in question by an agreement with Hedges. I think the evidence fails to show the release of any of the lots by Lowry while the owner of the mortgage, or any act affecting the lien upon any parcel except the .one conveyed to Crawford. It follows, then, that at the time of the transfer of the mortgage by Lowry to the defendant, it was a lien upon all the lands sold by Hedges, except the parcel sold to Crawford. We must then examine and see whether the defendant has released any of the lands, or has estopped himself from asserting a lien thereon by his acts and declarations.

Ho release by him to any of the plaintiffs is claimed. Hedges testifies that the defendant was informed of the lots sold by him, at the time he purchased the mortgage. This is clearly immaterial. By the purchase he acquired Lowry’s rights, and we have séeñ that knowledge by Lowry of the sales made by Hedges would not estop him, and of course it would not estop the defendant. Hedges also testifies that he made an arrangement with the defendant by which he was to execute a new bond and mortgage to him, leaving out the parcels sold. The defendant does not in his testimony deny this. It does not appear that there was any consideration for this. Indeed it appeal's that there was not. This, then, so far as Hedges and the defendant are concerned, is a mere verbal contract in regard to an interest in real estate, based upon no consideration, and in no part performed. It requires no argument to show that such a contract is wholly nugatory, so far as the parties thereto are concerned. This arrangement does not appear to have been even communicated to the plaintiffs, and I do not see how, if it had been, it could avail them, unless it was shown that they proceeded to invest their means upon the expectation of its performance, to the knowledge of the defendant. In that event, silence on his part, while the plaintiffs or either of them were expending their money, would have been fraudulent. This arrangement between Hedges and the defendant cannot aid the plaintiffs. The defendant’s knowledge that some of the plaintiffs were making improvements upon the lots conveyed to .them by Hedges does not estop the defendant. As remarked above in regard to Lowry, the defendant had a right to presume that the plaintiffs had examined the records and knew of the mortgage, and had .obtained security satisfactory to themselves against the lien. Any other rule would wholly fritter away the recording acts. Ho case can be found holding that a mortgagee whose mortgage was duly recorded, lost any right by neglecting to give personal notice of his mortgage, to a purchaser from the mortgagor. This is not at all analogous to the class of cases where one having the title to land himself knows that another, ignorant thereof but believing himself to be the owner, is proceeding to erect improvements thereon, and the real owner conceals his title from him, or remains silent in relation thereto. An estoppel en pais arises when a party has made representations, or done acts, to influence the conduct of another by inducing a belief of a given state of facts when such party, having acted upon such belief, would be injured by showing a different state of facts. (The Welland Canal Company v. Hathaway, 8 Wend. 480. Ryerss v. Farwell, 9 Barb. 618.) Testing the acts of" the defendant by this rule, the evidence comes short of showing any estoppel against him, except as to the land conveyed to Merchant, which will be noticed hereafter. The defendant concedes that the land sold by Hedges to Crawford is only liable for the balance of the purchase price, after deducting the amount of the mortgage thereon, transferred to Lowry and by him to the defendant, and by the latter indorsed upon the mortgage in question. Under the facts of this case I think this parcel liable for such balance, with interest thereon. There is no evidence of any agreement by the holders of the mortgage, in relation to this parcel, except what is to be inferred from the receipt of the mortgage by Lowry. Upon a sale by the mortgagor, equity exonerates the land sold from the lien of the mortgage to the extent only that the purchase money has been applied upon the mortgage. It is unnecessary to discuss at any length the equity of Copp in the parcel conveyed to Merchant growing out of the facts testified to by Merchant, as the referee has not passed upon these facts. The case shows that evidence was given tending to impeach Merchant and to sustain him, and how the referee would have determined does not appear. I will add that if upon another trial facts should appear estopping the defendant as to this or any other particular parcel, the defendant, so far as lands conveyed by Hedges, prior to the creation of such estoppel, are concerned, must be charged with the value of .the lands at the time he so estopped himself from asserting the lien. The plaintiffs claim that in case lands sold and conveyed by Hedges are charged with the mortgage, they are only to be charged with their value exclusive of improvements made by the purchaser.

. Ho such rule has ever been applied between mortgagees and purchasers from the mortgagors, in this State. The reverse is the law. I regret that in this case the operation of the rule may be somewhat harsh upon some of the plaintiffs; but the court has no more power to change or modify the established rules in equity than in cases of legal cognizance. Improvements that constitute a' part of the realty, irrespective of the' question by whom made, are equally subject to the lien of a mortgage as the land upon which they are made.

The only remaining question is as to the amount due upon the mortgage. The dispute upon this point arises upon the notes of Hedges received by the defendant on account of interest due upon the bond. The referee has found that the notes were agreed to be taken as paymént, by the- defendant. It is well settled that a new promise to pay is no defense to an action brought upon the original obligation, although expressly agreed to be taken as payment, (Waydell v. Luer, 5 Hill, 448, and cases cited,) the reason being that there is no consideration for the promise to receive the new promise in payment. When this reason does not apply, the rule no' longer prevails. If any new or additional security or other benefit is obtained by the plaintiff or any detriment sustained by the defendant, by the new agreement, the defense is perfect. Apply the rule to this case. The notes were given for interest due. This interest, by the well settled, rules of law, did not draw interest. The notes were given upon interest. Thus a demand not' drawing interest was converted into a debt on interest. This was a benefit* to the defendant, and the very benefit, as' the case shows, the defendant was seeking. I think this is a good consideration for the agreement of the* defendant to accept the notes in payment. This would not apply to a debt already upon interest. It follows that the referee did not err in holding that the notes, although not in fact paid, operated as a defense to that portion of the defendant’s claim. It is not an answer that the defendant was presently entitled to receive the money, and that its present receipt would have been equally beneficial to the defendant as notes upon interest. This might or might not have been so.

[Erie General Term, February 10, 1862.

In the above remarks I must not be understood as expressing- any opinion upon the controverted question of fact, whether the defendant expressly agreed to receive the notes in payment. This must be determined from the proof. The defendant’s counsel insists that instead of ordering a new trial, the court shall modify the judgment. This we cannot do. The case contains only the exceptions on the part of the defendant. To modify the judgment prejudicial to the plaintiffs without giving them a new trial would be error. This has repeatedly been so held by the Court of Appeals.

The rule as to the order of sale is so well settled that I shall not discuss it.

There must be a new trial; costs to be determined by the final judgment.

Marvin, Davis and Grover, Justices.]