Ingraham v. Disborough — 47 N.Y. 421

Majority

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Edward Ingraham et al., Executors, etc., Respondents, v. Gilbert Disborough, impleaded, etc., Appellant.

Headnote

An assignee of a mortgage, although a bona fide holder, takes the same subject to all defences existing between the original parties.

(Argued January 26th, 1872 ;

decided February 6th, 1872.)

Appeal from judgment of the General Term of the Supreme Court in the second judicial department, reversing a judgment entered upon the report of a referee in favor of defendant.

The action was brought to foreclose a mortgage. The bond and mortgage were executed by defendant, Disborough, in blank to secure payment of an apparent indebtedness of $10,000, which was stated in the mortgage to be part oi the purchase-money of the premises described. The name of defendant, Crooker, was subsequently inserted as mortgagee. JSTo consideration was received by the mortgagee. Crooker assigned the mortgage to plaintiffs’ testator for $3,000. The referee found that the bond and mortgage never had any legal inception, and were void.

W. 3. Scott for appellant.

The order of reversal does not state the reversal was upon questions of fact. Only questions of law can be reversed. (Thompson v. Menck, 2 Keyes, 82, 84; East River Bank v. Kennedy, 4 id., 279; Farnham v. Hotchkiss, 2 id., 9; Case v. Phelps, 39 N. Y.,

p. 422

164 ; Crocker v. Crocker, 31 id., 507.) The assignee of a chose in action succeeds only to the rights of the assignor, whether he has notice or not of defect. (Clute v. Robinson, 2 Johns., 595 -611; Mowray v. Lylburn, 2 Johns. Ch., 441 ; Livingston v. Dean, 2 id., 479 ; James v. Morey, 2 Cow., 246 ; Norton v. Rose, 2 Wash., 233 -254; Frank v. Brown, 1 Penn., 257 ; Bush v. Lathrop, 22 N. Y., 535 .) The recital in mortgage is inoperative, either by way of warranty or estoppel. (Jackson v. Douglass, 1 Johns. Cas., 114 ; Jackson v. Phipps, 12 Johns., 418 ; Jackson v. Bodle, 20 id., 184; Jackson v. Richards, 6 Cow., 617 ; Jackson v. Perkins, 2 Wend., 308 ; Gilbert v. Nat. Am. Ins. Co., 23 id., 43.) A conveyance of lands cannot be operated by a deed executed in blank as to name of grantee. (Chauncey v. Arnold, 24 N. Y., 330 , opinion of Denio, J.; Hibblewhite v. McM orine, 6 Mees. & Welsby, 200; Shep. Touch., 54; Buller’s Nisi Prius, 267; Com. Dig. Fait., A 1; Hamlin v. Hamlin, 1 Appleton [Maine], 141.)

D. P. Barna/rd for respondent.

The mortgage was not delivered in escrow, but absolutely. (Lawton v. Sager, 11 Barb., 349 ; Arnold v. Patrick, 6 Paige, 310; Worrall v. Munn, 1 Seld., 229; Brown v. Austin, 35 Barb., 341 ; Braman v. Bingham, 26 N. Y., 483 .) It was not invalid because delivered with the name of mortgagee in blank. (Drury v. Foster, 2 Wall. U. S. S. C., 24; Woolley v. Constant, 4 Johns., 54 ; Penny v. Corwithe, 18 id., 499; Ex parte Kerwin, 8 Cow., 118 .)

The referee has found that the bond and mortgage in this case were given without consideration as between the original parties. That as between them they were without consideration and void. The testator loaned to the mortgagee $3,000, and took an assignment of the mortgage for $10,000 as collateral security for its payment. Upon these as the controlling facts (there were other minor circumstances all tending to the same result), the referee found for

p. 423

the defendant. The Supreme Court reversed the judgment, and ordered a new trial, upon the ground, as appears by their opinion, that the testator was a bona fide holder of the mortgage, and was not subject to any equities or defence existing between the original parties.

This may be the law at some future time. But it is quite clear that it is not as yet. A mortgage like a' note, payable to the payee only, is not negotiable, and is always subject to the defence existing between the original parties. This is well settled by authority and upon principle, and no reasoning is necessary in the case. (Clute v. Robison, 2 J. R., 595; Murray v. Lylburn, 2 J. Ch., 441 ; Livingston v. Dean, 2 J. Ch., 479 ; James v. Morey, 2 Cow., 246 ; Richards v. Warring, 1 Keyes, 576; and in Bush v. Lathrop, 22 N. Y., 535 .) This court held broadly that the assignee of a mortgage took no greater title than his assignor.

Judgment of General Term reversed, and that of the Special Term affirmed with costs.

All concur.

Judgment accordingly.