Eyck v. Witbeck

The single question presented by this .appeal relates to the rights of the parties under the recording act. The property in controversy is a farm in the town of Coeymans, concededly worth $20,000. Peter W.

The deed was executed July 7, 1877. The grantor was her father, and it recited a consideration of §10 and the annual payment to the father during his lifetime of the entire net proceeds of the farm, and of one-third of such proceeds to his wife during her lifetime, if she survived him, and of one-third thereof to another daughter for the same period, and of one-half of such proceeds to her after the death of both parents. The grantee was given power to sell the property after the mother’s "death, and, if sold, the use of one-half of the proceeds of sale should be paid to the sister during her life; but the principal should be managed and controlled by the defendant.

It was proved that $10 in money was actually paid by her to her father at the time of the execution of the deed. Peter Ten Eyck’s family then consisted of his wife and two daughters, who lived with him upon the farm, except the defendant, Mrs. Witbeck, who lived with her husband upon another farm in the same town. Immediate possession was not taken by her under her deed, but her father, with the rest of the family, continued to reside upon the farm, and, by himself and tenants, to manage and control it until his death, in 1883, after which it was in the same manner occupied by the mother and unmarried daughter until the death of the mother in 1885. In September, 1871, Ten Eyck, through an intermediate grantee, conveyed this property to his wife, who, in January, 1883, conveyed it to the plaintiffs. The defendant’s deed was

The defendant challenged the validity, of the plaintiff’s title upon the ground of the mental incompetency of Mr. Ten Eyck, and the undue influence of his wife over him when the deed to her was executed, and of its alleged nondelivery, as well as the non-delivery of the deed from Mrs. Ten Eyck to the plaintiffs ; and upon the further ground that Mrs. Ten Eyck’s deed was void as to the defendant under the recording act.

The trial court held that the defendant was not a purchaser for a valuable consideration, and was not, therefore, within the protection of the statute ; but submitted to the jury the question whether the deeds under which plaintiffs claimed had ever been delivered, and whether Peter W. Ten Eyck was of sound mind, and free from undue influence, when he executed the conveyance to his wife.

The verdict was for the defendant, and the General Term intimate very plainly that, in their opinion, it was not supported by the evidence, and that they would have set it aside were it not for the decision of the General Term in the fifth department in the case of Hendy v. Smith ( 49 Hun, 510 ; 2 N. Y. Supp. 535 ), which holds that a grantee for a consideration of one dollar paid is a purchaser for a valuable consideration, as the terms are used in the recording act. They felt constrained to regard this authority as controlling, and to hold, as matter of law, that the defendant had a superior title because of the prior record of her deed, and that the verdict and judgment were therefore right. The order of affirmance states that, but for the recording acts, the judgment appealed from would have been reversed.

From the relationship of the parties, the recitals in the defendant’s deed, and the circumstances attending its exe

In the case before us every feature of the transaction is indicative of a gift. The grantor was eighty-two years of age, and the grantee was his eldest daughter. He was-evidently conscious that the end of his life was near, and desired to make some final disposition of his real property for the benefit of his family through the medium of this-daughter, in whom, for the time being, he seems to have had especial confidence. If in the full possession of his-mental faculties, he must have known that he had previously conveyed the property to his wife. Apparently there was a struggle between the different members of his household for the possession and control of the farm, which destroyed that quietude and repose so grateful to-old age. He may have thought that in this way he-could appease both factions, trusting that each might remain in ignorance of the status of the other until he-died, when the result of the complications which he had created would be a matter of indifference to him. But we need not speculate as to his motives. We must deal with the fact of the execution of the later deed as we find it on the record, and the extent and quality of its-consideration as shown by the proofs. It is plain that the real consideration which the grantor had in mind when he made the conveyance was not the receipt of an insignificant sum of money, but the provision which he was thereby making for the benefit of the different persons who composed his family, and all of whom had just claims upon his bounty. By its terms no one in fact would enjoy the use of the property until after his death,, for he reserved to himself the entire net rents and profits-■during his lifetime. The instrument was therefore most.

So far as the cases of Webster v. Van Steenbergh ( 46 Barb. 211 ) and Hendy v. Smith (supra) hold a contrary doctrine, they do not have our approval. On the other hand, the cases of Fullenwider v. Roberts ( 4 Dev. & B. 278 ); Worthy v. Caddell ( 76 N. C. 82 ;) Upton v. Basset (Cro. Eliz. 445); Doe v. Routledge (Cowper, 705); and Metcalfe v. Pulvertoft (1 Ves. & B. 180),—so far as they hold that a purely nominal consideration is insufficient to protect the subsequent purchaser, are in harmony with the views we have expressed.

We deem it unnecessary to undertake to determine here what degree of adequacy of price is required to uphold a subsequent deed, first recorded. Upon this branch of the case we have no occasion to go further- than to hold that a small sum, inserted and paid, perhaps because of a popular belief that some slight money consideration is necessary to render the deed valid, will not, of itself, satisfy the terms of the statute, where it appears upon the face of the conveyance or by other competent evidence that it was not the actual consideration. Where the subsequent conveyance is a mortgage, and only part of the consideration paid, there can be but little difficulty in properly adjusting the equities of the parties, for the mortgagee can then be considered as a bona fide purchaser pro tanto, and the mortgage enforced to the extent to which he has parted with value upon the faith of it (Merritt v. Northern Railroad Co., 12 Barb. 605 ; Pickett v. Barron, 29 Id. 505; Williams v. Smith, 2 Hill, 301 ; Stalker v. McDonald, 6 Hill, 96 ; Peabody v. Fenton, 3 Barb. Ch. 451 ). But in case of a deed having a mixed consideration—that is, partly valuable and partly good-such a rule would be difficult of application, if not impracticable; and no case has been cited where the question has arisen in that form. There is an obiter remark

It is strenuously urged by counsel that the considerations expressed in defendant’s deed, other than money, are sufficient to invest her with the title of a purchaser for value. It is not important to determine how these provisions should be construed; whether as reservations out of the property granted, or as creating a trust for the benefit of the grantor and others, or as implied covenants on the part of the grantee to annually account for the net income of the property iq the manner specified. Unquestionably, as between the parties, the defendant, by the acceptance of the deed, became bound to observe its conditions, and to render to the beneficiaries named their respective shares of the net rents and profits of the farm. But this was simply an obligation to account for the use

There is a wide distinction between a good and a valuable consideration when the latter term is used in the statutes defining the rights of a subsequent purchaser. Blood, love and affection, future support, a precedent indebtedness, and the like, are, either of them, sufficient as a consideration between the parties ; but neither is potential enough to override the prior equities of others in the property conveyed. The phrase “ a purchaser in good faith and fora valuable consideration,” is not peculiar to the recording act, but is one of frequent occurrence in the statutes. It can be found inthe chapters on trusts (4. Rev. St. 8th ed. p. 2437, §§ 5 r, 54, on powers ; Id. p. 2451, § 132) ; on conveyances (Id. p. 2452, § 144) ; and on frauds (Id. p. 2593, § 5). It is an expression which has been borrowed from the language of courts of equity, and should be interpreted in the sense in which it is there understood. As pointed out by Chancellor Walworth in Dickerson v. Tillinghast (4 Paige, 215), it has a curious and instructive history in connection with its introduction into the recording act. The English registry law made the prior unrecorded deed wholly void as against the subsequent grantee, without reference to the question of notice or the payment of value. Immediately the court of chancery, with characteristic diligence, sought to relieve the earlier grantee from the hardship which the enforcement of the letter of the law might inflict, and, while respecting the command of the statute, which made his deed void at

Whether there was sufficient evidence to go to the jury upon the issue of fraud and undue influence in the execution of the deeds under which the plaintiffs claim, or of their non-delivery, we cannot now consider. The General Term has not yet passed upon that question.

The order appealed from must be reversed, and the case remitted to the General Term for a review upon the facts, with costs to abide the. event of the action.

All the judges concurred.

Note on how far a want of adequate consideration or BADGES OF FRAUD APPEARING ON THE RECORD AFFECT A SUBSEQUENT PURCHASER WITH NOTICE.

Statute of frauds.] By 2 R. S. p. 137 (4 Id. 8th ed. p. 2593) pt. II. chap. VII, tit. 1, § 1, it is provided that “ every conveyance of any estate or interest in lands, or the rents and profits of lands, and every charge upon lands ór upon the rents and profits thereof, made or created, with the intent to defraud prior or subsequent purchasers for valuable consideration of the same lands, rents or profits as against such purchasers, shall be void.” [Prior purchasers are included because of the preference given to registered over unregistered deeds, see Reviser’s Notes, 2 R. S. 2 ed. p. 654.]

§ 2. No such conveyance or charge shall be deemed fraudulent in favor of a subsequent purchaser who shall have actual or legal notice thereof, at the time of his purchase, unless it shall appear that the grantee in such conveyance or person to be benefited by such charge was privy to the fraud intended.

[This section was intended to settle the question whether a sub

2 R. S. p. 137 (4 Id. 8th ed. p. 2593), § 4. “ The question of fraudulent intent in all cases arising under the provisions of this chapter shall be deemed a question of fact and not of law ; nor shall any conveyance or charge be adjudged fraudulent as against creditors or purchasers solely on the ground that it was not founded on a valuable consideration.

§ 5. “The provisions of this chapter shall not be construed in any manner to affect or impair the title of a purchaser for a valuable consideration unless it shall appear that such purchaser had previous notice of the fraudulent intent of his immediate grantor or of the fraud rendering void the title of such grantor.”

Recording Act.] Section 1 of the Recording Act (1 R. S. p. 756 7. 4 Id. 8th ed. p. 2469) provides that: “ Every conveyance of real estate within this State hereafter made shall be recorded in the office of the clerk of the county where such real estate shall be situated 7 and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the same real estate or any portion thereof, whose conveyance shall be first duly recorded.”

The Recording Act (1 R. S. p, 761 ; 4 Id. 8th ed. p. 2475), § 37 declares that “ the term ' purchaser ’ as used in this chapter, shall be construed to embrace every person to whom any estate or interest in real estate shall be conveyed for a valuable consideration and also-every assignee of a mortgage or lease or other conditional estate.”

Assignment on the eve oj insolvency, no excuse for refusal to take title against oral evidence ofgoodfaithi\ Bayliss v. Stimson, 53 Super. Ct. 225, affirmed on opinion of the court below in 110 N. Y. 621 . Action at law by the vendee to recover back earnest money paid and for damages by reason of the breach of a contract for the assignment of a lease. Plaintiff sought to rescind on the ground that the defendant had recently derived his title from a third person by an assignment expressed to be in the consideration of “one dollar and other good and valuable consideration” and that such third person had in the meanwhile failed and assigned for the benefit of creditors. Defendant gave parol evidence showing that the assignment to him was bona fide and for a valuable consideration.—Held, that plaintiff could not recover.

The court say: “ There is a plain distinction between an action in equity and for a specific performance, and an action at law for

Royer Wheel Co. v. Fielding, 31 Hun, 274 . Where a conveyance was given for a nominal consideration and it also appeared that the grantor was insolvent at the time of the conveyance.—Held, that the conveyance was fraudulent as to creditors.

Assignment by trustees to one of themselves.] Priessenger v. Sharp, 39 State Rep. 260; S. C., 14 N. Y. Supp. 372 . In an action to recover back a payment made in the purchase price "of real property, together with the expense incurred in examining the title, brought on the ground of the failure of defendants to give good title, it was shown that a prior owner, under whom the defendant claimed, had been one of two trustees to whom a mortgage on the property was given ; that it had been assigned by the trustees to him individually and that he brought an action to foreclose it and became the purchaser at the sale.—Held, that the title obtained in this way is presumptively voidable at the instance of the beneficiaries of the trust, and any person taking the title from him takes it with notice of the fact that the mortgage was held by him in trust and defendant failing to show that in fact this trust created no defect, the title was not marketable.

The court say': “ It was competent, however, for the defendants to show that in fact this trust created no defect. But the burden was upon them to show it. They gave no evidence to that effect. Moreover, the plaintiff gave evidence that at the time fixed for closing of the title the defendant’s attorney stated that somebody might be interested in the mortgage besides the trustees.”

Trustee or executor conveying to himself through third person.] People v. Open Board Stock Brokers B’ld’g Co., 92 N. Y. 98 . Proceedings to compel a purchaser at a receiver’s sale to complete his purchase. The purchaser’s examination of the title disclosed two deeds which constituted links in the chain of title, one from an executor to a third person, and the other by a third person to the executor, both being recorded upon the same day. A search in the

Bona fide purchaser from dummy.] Very v. Russell, 65 N. H. 646 . A mortgagee sold the mortgaged premises under a power of sale contained in the mortgage to his own agent and gave him a quit-claim deed. ■ The agent sold to a bona fide purchaser for value.—Held, that as against the mortgagor the purchaser was protected in his title according to the legal interpretation of the instrument of conveyance by which he held.

Purchaser from fraudulent grantee.] Ledyard v. Butler, 9 Paige, 131. A bona fide purchaser or mortgagee from a fraudulent grantee, is entitled, if neither has actual nor constructive notice of the fraud, to preference over' a subsequent purchaser under a judgment against the fraudulent grantor, if such prior deed or mortgage is first recorded.

Mortgage by fraudulent grantee to bona fide creditor of grantor,J Brooks v. Wilson, 53 Hun, 173 . In an action by a judgment creditor to set aside a fraudulent conveyance,—Held, that where an insolvent debtor, with intent to defraud his creditors, has conveyed his property,‘and the fraudulent grantee, at his request, for the purpose of securing a valid indebtedness of the insolvent debtor to a third person, executes a mortgage upon such property to such third person, such mortgage constitutes a just appropriation of the property of the insolvent debtor to the payment of his debt, and the mortgagee becomes a bona fide purchaser; and the right of the creditors to set aside the conveyance to the prejudice of the mortgagee was, therefore, cut off.

Deed as security for pre-existing debt.] Bingham v. Hyland, 6 N.Y. Supp. 75 . One .who takes a deed to land as security for a pre-existing indebtedness, and for no other consideration, is not a purchaser for a valuable consideration within the meaning of the recording act.—So held, in an action in equity to establish title under an unrecorded deed, and to have a subsequent recorded deed declared void, where it appeared, by evidence extrinsic to the recorded deed, that the consideration for which it had been given was a prior indebtedness.

—in parti] Merritt v. Northern R. R. Co., 12 Barb. 605 . One

Pickett v. Barron, 29 Barb. 505 . Foreclosure. The assignment ■of the bond and mortgage to plaintiff purported upon its face to have been made “ as collateral security for $177.68.” It appeared by the evidence that only $100 in cash was advanced at the time •of the assignment and that $77.68 was for a pre-existing debt. Held, that plaintiff under the recording act had-priority over a previous assignee of the same mortgage whose assignment had not been recorded, only to the extent of the $100 actually advanced.

The court say: “ When a party has obtained the legal title, if he has paid but a part of the consideration or value of the property he is entitled to be considered a bona fide purchaser pro tanto •(citing Peabody v. Fenton, 3 Barb. Ch. 451 ; Stalker v. McDonald, 6 Hill, 93 ). The case last cited, it is true, was a case of a promissory note. But the anology between the case of a person claiming the rights of a bona fide holder of negotiable paper, and a person claiming to be a subsequent purchaser for a valuable consideration, under the recording acts, is quite perfect, and there is no reason why the rule of law should not apply to them alike.”

Deed in payment.] Dickerson v. Tillinghast, 4 Paige, 215. One who without notice of a prior unrecorded mortgage takes a conveyance of land in payment of an existing debt, or as a security therefor, without giving up any security, divesting himself of any right, or doing any act to his own prejudice, on the faith of the title before he has notice of the mortgage, is not a bona fide pur•chaser for valuable consideration within the meaning of the recording act.

See, also, S. P., Evertson v. Evertson, 5 Paige, 644; Westernvelt v. Haff, 2 Sandf. Ch. 98 ; Coddington v. Bay, 20 Johns. 636 ; Woodburn v. Chamberlin, 17 Barb. 446 .

Sipley v. Wass (N. J. 1892,) 24 Atlantic Rep. 233. A conveyance in absolute payment and discharge in whole or in part •of a debt, and not merely as security therefor, is sufficient to make the creditor”a bona fide purchaser for a valuable consideration under the twenty-second section of the New Jersey statute concerning mortgages (Revision, p. 706, § 22),—providing that unrecorded ■mortgages shall be void against a subsequent judgment creditor or bona fide purchaser or mortgagee for a valuable consideration not having notice thereof.

Tardy deed by official assignee, for trivial consideration!) Palmer v. Morrison, 104 N. Y. 132 . It seems, that the facts that the title proffered by a vendor comes through a deed executed by an assignee, in bankruptcy, in a case where no debts were proved against the estate of the bankrupt, before his dischage, and but one small debt afterwards; that the land was sold by the assignee for but two. dollars, without any proof that even that was paid, or that any binding contract for the sale was made; that no deed was given by the assignee .until after the lapse of 22 years, when no conveyance could have been compelled, and that the deed was then given without order of court, and that no possession ever accompanied the: title under the assignee’s sale,—leave the title involved in so much infirmity and uncertainty, that a court would decline to compel a vendee entitled to a good marketable title to take a conveyance thereof.

Deed not expressing consideration.) Boyton v. Rees, 8 Pick. (Mass.) 329 , 332. Trespass in tearing down a dam. At the trial the plaintiff offered in evidence an unrecorded deed which conferred, upon him the privilege of maintaining the dam, but did not mention any consideration. Held, that the deed was not void because it failed, to express any consideration, as the deed itself imported a consideration ; and to avoid it as a voluntary conveyance against subsequent, purchasers, the party objecting must prove that no consideration, was given.

Quit claim.) Smith v. Rudd (Kan. 1892), 29 Pacific Rep. 310 . A party receiving a quit-claim deed for real estate is presumed to take it with notice of all outstanding interests and claims of which he

McDonald v. Belding, 145 U. S. 492 . In Arkansas, although the rule obtains that a person holding under a quit-claim deed may be ordinarily persumed to have had knowledge of imperfections in the vendor’s title, yet that rule is not universal, and one may become entitled to protection as a bona fide purchaser for value, although holding under a deed of that kind. So held, where the deed accepted by the purchaser was not drawn, a quit-claim deed pursuant to any specific direction given by him, and it appeared that he had paid full value.

“ In trust,” notice .] Budd v. Munroe, 18 Hun, 316 . The words- “ in trust,” contained in a certificate of stock, are sufficient notice of a trust to impose the obligation of ascertaining authority of the trustee to sell or hypothecate the same.

Diversion imposes burden of proof.] Consalus v. McConihe, 22 Weekly Dig. 180. Where a bond and mortgage were assigned for a particular purpose from which the assignee diverted them,—Held. that those claiming under him must show themselves purchasers in good faith and for value.

Amount paid.] Macauley v. Smith, 132 N. Y. 524 . A grantee-can not claim to be a bona fide purchaser for value under the recording act, unless he has paid all- the purchase money. If only a portion of the purchase money has been paid, he is only protected to the extent of amount innocently paid.

Neglect to foreclose not enough.] Weaver v. Edwards, 39 Hun, 233 . The owner of land gave a first and second mortgage, and subsequently by fraud secured the satisfaction of the first mortgage. The holder of the second mortgage, seeing that the first mortgage was satisfied of record, neglected to enforce his mortgage. In an action by the first mortgagee, brought some eight years after such satisfaction had been given, to set it aside, and to have his mortgage restored ás lien prior to that of the second mortgage, Held, that he was entitled to the relief sought.

The court say: “ The difficulty with the executors [the holders, of the second mortgage] in this case is that mere neglect to sue does not make them bona fide purchasers for value. To put them