Gibson v. Thomas — 85 A.D. 243

Majority

p. 243

John W. Gibson, Respondent, v. George A. Thomas and Others, Defendants, Impleaded with The Ulster and Delaware Railroad Company and Others, Appellants.

Headnote

An unrecorded release of part of mortgaged, premises is ineffective as against an assignee of the mortgage in good faith and for value — occupation by a purchaser of the part released is not notice.

One Thomas, after executing a bond and mortgage to F. R. Gilbert upon certain premises, conveyed a portion of the' mortgaged premises to a railroad corporation and also obtained from the owner of the mortgage a release of the premises thus conveyed. The deed and release were both delivered to the railroad company, which at once went into and continued in possession of the premises. It recorded the deed, but neglected to record the release.

Thereafter the mortgage was assigned to a party who paid full value therefor, without any knowledge, actual or constructive, that any part of the mortgaged premises had been released from the lien of the mortgage, except such as was imputable to him by the fact that the railroad company occupied the premises in question. His assignment was duly recorded.

Held, that the rights of the assignee of the mortgage were superior to those of the railroad company;

That the railroad company’s occupation of the premises, not being inconsistent with the existence of the mortgage lien, was not such as would suggest to a prudent man that it claimed by a title adverse to the mortgage.

Smith, J., dissented.

Appeal by the defendants, The. Ulster, and Delaware Railroad Company and others, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Delaware on the 29th day of December, 1902, upon the decision of the court, rendered after a trial at the Delaware Special Term, directing a foreclosure and sale of mortgaged premises.

George A. Thomas in 1868 executed a bond and mortgage to F. R. Gilbert upon certain lands in Delaware county. Thomas sold and conveyed to the Delaware and Otsego Railroad Company a strip of land from such mortgaged premises. Such deed was recorded in the clerk’s office of such county on August 22, 1887. On the 28th of July, 1887, Helen B. Rogers, who had then become the lawful owner of such mortgage by several mesne assignments from said Gilbert, executed and delivered to said Thomas a release of such strip so conveyed to said railroad company from the lien of

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the said mortgage. Such release was by Thomas delivered to such company with his conveyance to it, but it was' never put on record in the county clerk’s office. The railroad company át once went into possession of their strip of land and used and occupied it.

Subsequently, on May 5, 1894, said Helen B. Rogers sold and assigned to John W. Gibson, the plaintiff in this action, the said bond and mortgage, and such'assignmént was duly recorded in the clerk’s office of Delaware county on May 9, 1894. Gibson paid full value for the bond and mortgage, and at the timé of the purchase had no knowledge that Helen B. Rogers had released any part of the mortgaged premises, nor did he then know that the railroad company occupied any part of the same. He was a purchaser for full value and in good faith, with no notice that any part had been released, except such as the possession of the railroad company gave him.

He brought this action to foreclose the mortgage. The railroad company answers, claiming-that the mortgage was no. longer a lien upon its property. The trial court held otherwise, and ordered a foreclosure and sale against its land as well as against the rest of the-mortgaged premises, and from the judgment entered thereon this appeal is taken.

F. M. Andrus, for the appellants.

Marion M. Palmer, for the respondent.

It is clear that, but for the Recording Act, the plaintiff would have taken no greater rights in the mortgage than his assignor had, and that any defense which Thomas, the mortgagor, and his grantee would have against a foreclosure by her could be set up as against him. But the question is whether, under the Recording Act (1 R. S. 756, § 1, revised by Real Prop. Law [Laws of 1896, chap. 547], § 241), the rights- acquired through the release have not been lost by the prior recording of the subsequent assignment. In the case of Baker v. Thomas ( 61 Hun, 17 ) this precise -question was' decided adversely to the appellants here. It was there held that a release of a portion of mortgaged premises was void as against a subsequent assignment of the mortgage which was first recorded. I do not find

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that that case has ever been questioned, nor do I find any decisions that conflict with the reasoning therein adopted. On the authority of that case the decision in this case must be affirmed, unless the fact that the railroad company was in full possession of its land and was using the same is to be deemed a sufficient notice to the plaintiff of the existence of the release. Upon that question the case of Baker v. Thomas may not be a conclusive authority, but the case of Briggs v. Thompson ( 86 Hun, 607 ), which was followed by the trial court, fully sustains the judgment here. In that case the possession by the purchaser was sufficiently full-and notorious to sustain an adverse user; yet it was held that, being derived primarily from the mortgagor, his occupation was not inconsistent with the existence of the mortgage lien, and was not such as would suggest to a prudent man that he claimed a title adverse to the mortgagee. I concur with that conclusion and with the reasoning upon which it is based.

It is further claimed by the appellant that the release having been left at the county clerk’s office for record, it must be considered as on record, and hence the plaintiff’s assignment could acquire no priority, and Mutual Life Ins. Co. of New York v. Dake ( 87 N. Y. 257 ) is cited as authority for such claim. In that case the first mortgage was actually recorded, but the clerk neglected to index it, and hence it is not a precise authority on the situation here. But. further than that the release here was not in fact left for record. The clerk was instructed to record it when certain papers, supposed to be necessary, were subsequently sent him. It does not appear that such papers were ever sent, and so the clerk seems to have entirely omitted recording the release. It does not seem to me that,, under such instructions, the omission to record it was the fault of the clerk.. It was the fault or neglect of the party who left the release there, and hence it must be treated as never having been left for record.

I conclude that the judgment should be affirmed, with costs.

All concurred, except Smith, J., dissenting.

Judgment affirmed, with costs.

Cases cited

Mutual Life Insurance v. Dake 87 N. Y. 257 N.Y. 1881-12-15 p. 245