Briggs v. Langford — 12 N.Y. St. Rep. 461

Majority

p. 461

Area Briggs, App’lt, v. John Langford et al., Resp’ts.^[1]

(Court of Appeals,

Filed December 20, 1887.)

Headnote

1. Mortgage—Action to restrain foreclosure of—Evidence of want of consideration — Admissible

An action was brought to restrain the defendants from proceeding to consummate the foreclosure of a mortgage upon real estate which the plaintiff had purchased upon the assurance that it was free and clear. The plaintiff offered evidence to prove that the mortgage was given for the purpose of defrauding the creditors of the mortgagor and upon no other consideration. Held, that the evidence should have been received.

2. Same—Want of consideration—Can be- set up against assignee OF MORTGAGE.

• The defense of want of consideration - is equally available against the assignee of the mortgage .as against the mortgagee He stands in respect to the security in the place of his assignor and is not exempt from the defense of want of consideration

3. Same—Right of purchaser from mortgagor,'

The plaintiff occupied a position as favorable as that of the mortgagor. Having paid the full value of the land, he was entitled to assail the validity of any pretended lien thereon.

Appeal from a judgment of the supreme court, general term, fifth department, affirming a judgment entered upon a report of a referee in favor of the defendant, dismissing the complaint upon the merits, with costs.

The action was brought to restrain the defendants from proceeding to consummate the foreclosure of a mortgage upon real estate by advertisement upon the ground that the mortgage was given without consideration, and was given

p. 462

with the intent to hinder, delay and defraud the creditors of the mortgagor, etc.

The plaintiff offered to prove by a witness that at different times prior to the assignment of this mortgage to the defendant Langford, the defendant and mortgagee Heath said the mortgage was made to keep creditors off from the property of the mortgagor, and that the mortgage had no validity, etc. The referee sustained the defendants’ oh- ' jections and excluded the evidence.

At the time this evidence was offered it appeared that the defendant Langford was present at the time Day the mortgagor sold the mortgaged property to plaintiff, and the evidence tended to show that he heard all that was said by Day on that occasion, and that he knew at the time he took the assignment of the mortgage that Day had sold the mortgaged land to the plaintiff, and to induce the plaintiff to purchase the same, had represented that he had not encumbered the land, and that, relying upon such representations, the plaintiff paid to Day the full value of the land, and that Langford had assisted in accomplishing such sale. Langford knew that nothing had been paid on the mortgage, although the interest and principal were long past due.

All the facts and circumstances proven tended to show that Langford, when he took the assignment, had every reason to believe that the assurance given to plaintiff by Day, that there was no valid lien upon the land conveyed was true.

Wm.H.Henderson, for app’lt; Worthington Frothingham, for resp’t.

We think that the trial court erred in overruling the offer of the plaintiff to prove that the mortgage was given for the purpose of defrauding the creditors of the mortgagor and upon no other consideration. The plaintiff paid the full value of the land upon the assurance of Day that it was free from incumbrances. Day is dead and his estate is insolvent, and there is no available remedy, on the covenants in the deed. If the mortgage was witliout consideration it could not be enforced against Day, although it was given to cover up his property and defraud his creditors. Wearse v. Peirce, 24 Pick., 141 .

The defense of want of consideration is equally available against Langford, the assignee of the mortgage, as against Heath, the mortgagee, for he stands in respect to the security in place of his assignor, and even if he is a bona fide purchaser, he is not exempt from the defense of want of consideration. Jones on Mortgages, § 843, and case» cited; Bush v. Lathrop, 22 N. Y., 535 .

p. 463

The plaintiff occupies a position quite as favorable at least as that of the mortgagor. He paid the full value of the land, and upon the plainest principles of justice he is entitled to assail the validity of any pretended liens thereon. Upon the facts found it is difficult to resist the suspicion that this is an attempt to enforce a void mortgage, and under 6over of pretended transfers and assignments, to consummate a fraud upon the plaintiff. It is a case where all possible light should be thrown on the transaction.

The judgment should be reversed and anew trial granted.

All concur, except Rapallo, J., absent.