Majority
p. 571SIDNEY W. CROFUT v. SAMUEL M. WOOD and POLLY GRAY, Respondents, MATTHIAS B. SMITH, Appellant, and others.
Headnote
Unrecorded mm'tgage—recital of, in, deed — not notice.A recital in a deed, given by a former owner to the grantor of the present owner of real estate, that the premises are subject to two mortgages, existing liens on said premises, if one of such mortgages is not recorded and notice thereof is not given to one taking a mortgage from such present owner, does not give a right of priority to the unrecorded mortgage over the one subsequently given and recorded.
Appeal from a decision of the Special Term,- overruling the report of a referee, appointed to determine the claims' of the respective claimants to the surplus money arising in an action for foreclosure of a mortgage held by the plaintiff.
The referee found, that on or about September 28, 1872, the mortgaged premises were, with other property, conveyed by Samuel M. Wood and others to Clements Trimble, by deed of that date, recorded in the Kings county register’s office. That such deed recited the conveyances to be “ subject, however, to two certain mortgages, now existing liens on said premises, amounting, in the aggregate, to the sum of $2,250, and taxes and assessments to the amount of $150.”
The mortgages, subject to which said conveyance was made, were: one made by Samuel M. Wood and others to Sidney W. Crofut, to secure $1,200, dated January 3, 1871, and recorded January 6,
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1871; another made by the same parties to Matthias B. Smith, dated November 1, 1871; but not recorded till March 12, 1874.
That on October 10,1872, Clements Trimble conveyed the mortgaged premises to Bichard S. Gray, by deed of that date, recorded October 15,1872. Such deed recited that “ the four pieces of property are subject to mortgages, which, together, amount in the aggregate to the sum of $12,300,” which were assumed by the party of the second part.
That on December 1, 1872, Bichard S. Gray and wife made, executed and delivered to Polly Gray, for sufficient consideration, a mortgage to secure $1,700 upon the mortgaged premises (producing the surplus), which mortgage was dated that day, and recorded December 23, 1872.
Polly Gray never had actual notice of said mortgage to Smith, until after a judgment of foreclosure was entered in an action by her to foreclose her mortgage.
He found, as conclusions of law, that, by the recital in the deed of Wood to Trimble, notice was. given to Polly Gray of the amount of the incumbrances existing upon the premises.
That her mortgage was a lien upon the surplus herein subordinate to that of the Smith mortgage.
That the entire surplus belonged to Matthias B. Smith, and should be paid to him after deducting the expenses of this reference and the commissions of the treasurer of Kings county.
Alonzo C. Farnharn, for the appellant, Matthias B. Smith.
A statement in a recorded deed, that it is made subject to a mortgage held by a third person, is constructive notice to all claiming under such deed, of the rights of the holder of the mortgage. (Campbell v. Vedder, 1 Abb. [N. Y. Ct. App. Decisions, Dec. 1866), 295; 4 Peters, 83, 88; 8 Cow., 586 ; 6 Paige, 649; 18 Barb. 14 ; 38 N. Y., 165 ; 38 Barb., 488 ; 2 Barb. Ch., 151 ; 15 N. Y., 354 .) If the information possessed by the party would, if it had been followed up by prompt examination, have led to a discovery of such mortgage or conveyance, the information possessed by the party amounts to implied notice of such instruments. (3 Mye. and K., 699; 2 Sug. on Vend., 552; 8 N. Y., 274 ; 10 Johns., 374 , 461.) If there are circumstances sufficient to put a person on inquiry,
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he acts at his own peril if he makes no inquiry. (1 E. D. Smith, 154.) Ho greater estate or interest shall he construed to pass by any grant or conveyance than the grantor himself possessed at the delivery of the deed. (Rev. Stat., part 2, ch. 1, title 2, § 143.)
James K. Averill and W. T. B. Milliken, for Polly Gray.
The mortgage first recorded is presumptively the prior lien, and entitled to the surplus on a foreclosure and sale. (Freeman v. Schroeder, 29 How., 263 ; Freeman v. Schroeder, 43 Barb., 618 ; 1 R. S. [2d ed.], ch. 3, part 2, § 1, p. 707.) A notice, to supply the place of registry, must be more than barely sufficient to put the party on inquiry. (Tuttle v. Jackson, 6 Mead, 213; Jackson v. Van Valkenburgh, 8 Cow., 260 ; Jackson v. Post, 15 Mead, 588, and cases there cited; Grimstone v. Carter, 3 Paige, 421; Williamson v. Brown, 15 N. Y., 354 ; Beekman v. Frost, 18 Johns., 555 ; Dey v. Dunham, 2 Johns. Ch., 182 .) It is well settled, that if one affected with notice convey to another without notice, the latter is as much protected as if no notice had ever existed. (Jackson v. Given, 8 Johns., 137 .) The ground of the numerous decisions seems to be the actual fraud of the party in taking a second conveyance, and with knowledge of the first, and with intent to defeat it. (Dey v. Dunham, 2 Johns. Ch., 182 ; Jolland v. Stambridge, 3 Vesey, 478; Hine v. Dodd, 2 Atk., 287; approved, 8 Johns., 141 ; Jackson v. Van Valkenburgh, 8 Cow., 264 ; Beekman v. Frost, 18 Johns., 555 ; Jackson v. Davenport, 18 id., 300.) The presumption of- notice which arises from proof of that degree of knowledge which will put a party upon inquiry, is not a presumption of law but of fact, and may therefore be controverted by evidence. (Supra, 15 N. Y., 354 , 360; 1 Hill, on Morts., p. 594, quotes the case of Jones v. Smith, 1 Hare, 55.) “It is neither the purpose nor the office of the recording acts to charge the immediate parties with constructive notice of the precise contents of the instruments they execute, but to notify subsequent incumbrancers and purchasers of the rights such instruments are intended to secure.” (Mead v. Bunn, 32 N. Y., 275 .)
The Gray mortgage was first recorded, and, primarily, Mrs. Gray has the first lien by reason of priority of record. What has
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she done, whereby her 'mortgage is to be made subsequent to the Smith mortgage ? That mortgage was first in date, was given for a good consideration, but was not recorded. Mrs. Gray had no actual notice of the Smith mortgage. In the deed from Wood to Trimble, there is this clause: “ Subject, however, to two certain mortgages, now existing liens on said premises, amounting in the aggregate to the sum of $2,250.” This deed is dated September, 1872. In October of the same year, Trimble conveyed to Richard E. Gray. Gray, in December, 1872, executed the mortgage to Polly Gray. There was but one mortgage on record when Mrs. Gray took her mortgage, and when Trimble sold to Richard Gray, the Crofut mortgage. Is that clause in the Trimble deed, notice of the Smith mortgage to Polly Gray? What notice is it? We assume that she searched and found a deed, dated three months before she took her mortgage, which recited that the property was then subject to two mortgages, amounting to $2,250. She searches and finds but one on the record. Ro name is given in the deed of the person by whom or to whom given. She takes her mortgage and records it. Is this evidence to be held sufficient to make her guilty of a fraud, as against the Smith mortgage, in recording her mortgage first ? Was she hound to examine the Trimble deed at all ? Must' a person, about to take a mortgage, examine the deeds of the several grantees of the title about to be incumbered, to see if those, deeds mention mortgages not recorded ? If there be an obligation to examine the deeds, and they do recite the fact that, at its date, the title is subject to mortgages, is this to be notice of the continuance of such mortgages, as against the record.
We think Mrs. Gray entitled to the surplus.
Order affirmed, with costs.
Present — Barnard, P. J., and Donohue, J.
Order affirmed, with costs,
Cases cited
- Demeyer v. Legg 18 Barb. 14 p. 572