Clark v. Ulrich — 14 N.Y. St. Rep. 4

Majority

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Samuel T. Clark, Administrator et al., Resp’ts, v. Wolfgang Ulrich et al., App’lts.

(Superior Court of Buffalo, General Term,

Filed January 24, 1888.)

Headnote

1. Assignments of mortgages are conveyances—Record of—Necessary TO AFFECT SUBSEQUENT PURCHASERS.

Assignments of mortgages are conveyances, and if not recorded áre void against subsequent purchasers of the mortgaged premises, whose interest may be affected by such assignments, and whose conveyances are first recorded, and such a purchaser having obtained good title to the p emises can transmit it unimpaired, although his grantee had notice of the unrecorded conveyance.

2. Same—Record of—Who affected by.

One, however, who purchases the mortgaged premises subsequent to the recording of the mortgage assignment is affected by notice thereof.

This action was brought to foreclose a mortgage. Upon the trial it was proved that on the 23d day of July, 1874, the defendant Wolfgang Ulrich and wife executed their bond and mortgage bearing date on the 1st day of July, 1874, upon the premises described in the complaint to the Excelsior Savings and Aid Association, to secure certain sums of money and delivered the same to Joseph Bork, as the attorney of said association. On the 23d day of July, 1874, the said defendant and wife executed and delivered to Joseph Bork their bond and mortgage upon the same premises as collateral security for the payment of $579.51 and interest. This is the mortgage sought in this action to be foreclosed.. Each of said mortgages was recorded at the same time, on the 3d day of October, 1884. Previous

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to the recording, and on the 19th day of September, 1874, said Bork assigned said bond and mortgage last mentioned to the plaintiffs, who became, and have ever since been, the owners thereof. Said assignment became lost and was never recorded. To supply its place Joseph Bork executed and acknowledged another assignment to the plaintiff Elizabeth J. Clark, bearing date the 18th day of January, 1878, which recited that it was made to take the place of the previous one. The last assignment was recorded on the 24th day of January, 1878.

On the 24th day of December, 1874, the Excelsior Savings and Aid Association commenced an action to foreclose their mortgage and filed a lis pendens on that day. Joseph Bork, with Ulrich and wife, were made parties defendant, • but none of the plaintiffs were made a party thereto and had no knowledge of the same. A foreclosure and sale of the premises were had. Bork became the purchaser and received the sheriff’s deed, executed on the 22d day of May, 1875, and recorded June 16, 1875. At the time of the taking of both mortgages, Joseph Bork was the agent of the aid association and of the plaintiff Walter Clark. The foreclosure of the association mortgage was had by and under the direction of Bork as agent of the association.. Thereafter, on the 19th of February, 1876, Joseph Bork and wife executed to Peter J. Ferris, as trustee of the city of Buffalo, a deed conveying title to all the real estate, or interest in the same, owned by him in the city of Buffalo, in trust, to sell the same and apply the proceeds to the payment of a pre-existing indebtedness due said city from Bork. Thereafter, and on the 24th day of July, 1876, Ferris and Bork sold and executed to George A. Voght a deed of the northerly twenty-five feet of said premises, and took back to Ferris, as trustee, a mortgage to secure a part of the purchase price. This mortgage was foreclosed and the premises bid in by Jacob Six, who received a deed from the sheriff, which was recorded February 19, 1880.. The plaintiffs were not made parties to this foreclosure.

The purchase by Six was made for Frank Six and Frances Six, his wife, who paid the purchase money, and took a conveyance from Jacob Six. Prior to Six and wife taking title, they had an abstract of title made, which disclosed plaintiffs’ assignment. Subsequently, Frank Six died, and his wife thereafter married defendant George Springholz. Thereafter said premises were conveyed through Henry H. Voght to George Springholz and Frances, Ms wife, who now own the same as joint tenants.

The southerly half of said premises were conveyed by said Ferris, as trustee, by deed bearing date February 1,. 1882, and recorded February 18, 1882, to George Bork. He'

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subsequently conveyed to the defendant Joseph Roemhild, taking back a mortgage, which was subsequently assigned by Bork to the defendant Elizabeth Ward.

The foregoing was the condition of the title at the time of the commencement of this action.

H. B. Van Peyma, for app’lts; O. O. Cottle, for resp’ts.

—The learned trial court held and decided, that Frank Six and his wife, prior to to their acceptance of the purchase, under the foreclosure of the Yoght mortgage, discovered the assignment of the Joseph Bork mortgage to the plaintiffs, which had been previously recorded, and that before the payment of the purchase-price they had such notice, and held as a conclusion of law following therefrom that the land, so purchased, became chargeable with the payment of said mortgage, and so remained in their hands and the hands of their grantees.

Counsel for such defendants duly excepted to such findings and conclusions. This presents the question. In this regard, I think the learned court in error. It is undoubtedly true, that as between the plaintiffs and Joseph Bork, the land was chargeable with the payment of plaintiff’s mortgage, in Bork’s hands, as a purchaser under the foreclosure of the Aid Association mortgage. So far as the record showed, at this time, however, Bork appeared to be the owner of plaintiffs’ mortgage, and the decree of foreclosure entered in the case, cut off said mortgage as a lien. At least such is the notice which would be given to a purchaser upon an examination of the record. Here the decree operates a discharge of the mortgage, shows it to be cut off, and in this respect it differs from the case of Purdy v. Huntington ( 42 N. Y., 334 ), where there was nothing to show, but that the mortgage wás still a subsisting lien. It was in this state of the record, that George A. Yoght made his purchase. As to him the record showed perfect title in Ferris as trustee; the plaintiffs had not then recorded their assignment, and did not do so until nearly two years thereafter. Yoght then was a bona fide purchaser, for value, and with a prior recorded deed obtained good title against the whole world. Bacon v Van Schoonhoven, 87 N. Y., 446 -450.

Where the court held that the assignment of a mortgage is a conveyance, and say: ‘'Such assignments, if not recorded, are void, not merely as against subsequent purchasers of the same mortgage, but, also, as against subsequent purchasers of the mortgaged premises, whose interests may be affected by such assignments, and whose conveyances are first recorded.” Clark v. Mackin, 95 N. Y., 346 .

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Having obtained good title could he transmit it unimpaired % The question furnishes its own answer, and has •often been decided

In Hooker v. Pierce ( 2 Hill, 650 -2), Judge Cowen said: “ They (the registry acts) were intended to affect with notice, such persons only as have reason to apprehend some transfer or incumbrance prior to their own, because none arising afterwards can, in its own nature affect them. And after they have once, on a search instituted upon this principle, secured themselves against the imputation of notice, it follows that every one coming into their place, by title derived from them, may insist on the same principle in respect to himself.” Wood v. Chapin, 13 N. Y., 509 .

Where the court held that a purchaser from one who is protected by the recording act against a prior unrecorded conveyance is entitled to such protection, notwithstanding that he purchased with notice of the prior conveyance. Westbrook v. Gleason, 79 N. Y., 23 -36.

In Webster v. Van Steenbergh, 46 Barb., 211 -214, the court say, “A purchaser from one who is protected-by the recording act as against a prior unrecorded conveyance of the same land is himself entitled to such protection, notwithstanding he purchased with notice of the prior conveyance. Wade on Law of Notice, §§ 241, 242, pages 137-138, §§ 61, 62, pages 42, 43; Bigelow on Frauds, page 307. Gerards Titles to Real Estate, page 593.

The reason which furnishes the basis of the rule, rests in the fact, that a bona fide holder of property would be deprived of the benefits of a free market, and the value of his property be diminished in his hands. It seems to follow from this rule, and the authorities, that when Six purchased, he succeeded to the rights of Voght, as a bona fide holder, and the defendants Springholz, now occupy such velation with their land freed from the lien of plaintiff’s mortgage. The other defendants are not in a position to invoke the aid of the rule here laid down. They became purchasers after the assignment of the mortgage from Joseph Bork had been recorded, and consequently were chargeable with notice of the hen of the mortgage. They are in no sense, bona fide holders. It follows that the judgment must be reversed, as to the defendants George Springholtz and Frances Springholtz, and a new trial ordered, costs to abide event. As to the other defendants, and in all other respects the judgment is affirmed with costs.

Titus, J., concurs. Beckwith, O. J., dissents.