Gibson v. Thomas

• Decision Date: 21 February 1905
• Citation: 180 N.Y. 483,73 N.E. 484
• Parties: GIBSON v. THOMAS et al.
• Court: New York Court of Appeals Court of Appeals

180 N.Y. 483

73 N.E. 484

GIBSON

v.THOMAS et al.

Court of Appeals of New York.

Feb. 21, 1905.

Appeal from Supreme Court, Appellate Division, First Department.

Action by John W. Gibson against George A. Thomas and others. From a judgment of the Appellate Division (83 N. Y. Supp. 552,85 App. Div. 243) affirming a judgment for plaintiff, certain defendants appeal. Affirmed.

The plaintiff, as the assignee of a mortgage, affecting a certain farm property through which the road of the Ulster & Delaware Railroad Company runs, sought, by this action in foreclosure, to compel the payment of the principal sum due under the mortgage. The defense was made, in the railroad company's answer, that the land occupied by its railroad was not subject to the mortgage lien, but had been released therefrom. Thomas, the owner and the mortgagor, some years after the execution of the mortgage in question, conveyed to the Delaware & Otsego Railroad Company, now a part of the Ulster & Delaware Railroad Company, a strip of land through his farm. It entered into possession, with all usual evidences of railroad occupation, and has since that time operated its railroad upon the land. Mrs. Rogers, the then holder of the mortgage by mesne assignments from the mortgagee, for a nominal consideration executed a release of the land to the mortgagor, which was delivered to the company. The deed and the release were left at the county clerk's office with certain instructions, but by whom it does not appear. These instructions were testified by the clerk to be as follows: ‘I herewith hand you deed from George A. Thomas for right of way; also release from Helen B. Rogers from the F. R. Gilbert mortgage. I presume the assignment from Gilbert to Newell has not been recorded, nor the will of Newell, the father of Mrs. Rogers. I have written Thomas all about the matter, and he is to cause to be recorded all necessary papers to invest Helen B. Rogers, the owner of the mortgage, and then you may record this release.’ Several years later Mrs. Rogers assigned to this plaintiff the mortgage, in consideration of the payment by him of the whole amount unpaid thereon at the time. This assignment was duly recorded, as all the previous ones had been, but the release of the railroad lands had not actually been recorded up to the commencement of the action. The plaintiff resided at a distance from the mortgaged premises, and his testimony is not disputed that, at the time of purchasing the mortgage, he had not seen the farm, and did not know that the railroad ran through it, nor of any release of the land. The plaintiff had judgment in the trial court, which has been affirmed by the Appellate Division in the Third Department.

O'Brien, Haight, and Bartlett, JJ., dissenting.Lewis E. Carr and F. M. Andrus, for appellants.

Marion M. Palmer, for respondent.

GRAY, J. (after stating the facts).

The appeal presents the question of how far the plaintiff was protected, in his transaction with the holder of the mortgage, by the Recording Act, 1 Rev. St. 756, §§ 1, 36, 37, 38, 41. Was he, in purchasing from her the mortgage for the whole amount due upon it, and without knowledge, actual, or constructive, of a portion of the mortgaged premises having been released, nevertheless concluded by the fact of a partial release having been given? If he was, then he was bound by a transaction to which he was in nowise a party, of which he had no knowledge, and which was subsequent to the mortgaging of the premises by their owner. That he would have occupied no better position than did his assignor, prior to the passage of the recording act, may be conceded; but, with that act upon the statute books, was he not entitled to rely upon the title as it appeared of record? Was that not its purpose? I think that he was, and that the failure of the railroad company to cause its release of the land to be recorded was an omission which permitted the subsequent assignee of the mortgage, by recording his instrument of assignment, to gain priority over the company's right. We may dispose at once of the claim that the release was in fact recorded. It clearly was not delivered to the clerk, to be recorded, until some other papers were sent for record. In other words, it was left with the clerk conditionally, and not for immediate record. The facts, therefore, differ materially from what they were in Mut. Life Insurance Co. v. Dake, 87 N. Y. 257. The position of the appellant is, and must be, therefore, that there was, in its visible and notorious possession and occupancy of the land coveyed by the deed to it, such constructive notice of its rights as to defeat the claim of the respondent to have all of the property affected by the mortgage subjected to its payment. That argument is rested somewhat upon the general proposition that an assignee takes subject to the equities enforcealbe against his assignor. But those equities are such which attended the transaction between the original parties. Trustees of Union College v. Wheeler, 61 N. Y. 88, 104.

There were no original equities, however, which, as between mortgagor and mortgagee, would bind the latter and those taking under him. The only fact upon which an equity is sought to be based is that the plaintiff's assignor had released to the mortgagor (not to the purchaser from the mortgagor) a portion of the mortgaged premises. But that is a situation which the recording act was designed to meet. Mortgages and assignments of mortgages are conveyances within the intendment of that act. That is clear from its language, and is settled by authority. Decker v. Boice, 83 N. Y. 215. The purpose of the act was not merely to regulate the relations to each other of successive assignees of the mortgagee of the same mortgage, but it was to confer that priority over all kinds of conveyances which, all things being equal, the date of the record entitled each to. And this would apply where the assignor of the mortgage was disabled from claiming a priority. Decker v. Boice, supra, at page 221 of 83 N. Y. In brief, the earlier recorded assignment of a mortgage should give it relative priority over every other form of conveyance of an interest in the land affected.

The argument based upon possession and occupancy, as constituting notice to persons acquiring subsequent interests in the land, is fallacious. Doubtless, possession and occupancy under an unrecorded conveyance may constitute notice to him who proposes to acquire an interest in the land, whether by conveyance or by mortgage. Cavalli v. Allen, 57 N. Y. 508;Phelan v. Brady, 119 N. Y. 587, 23 N. E. 1109, 8 . R. A. 211. But unless the possessionand occupancy be so inconsistent with the existence of a mortgage lien as to suggest to a prudent person a claim of title adverse to the mortgagee, they would mean nothing more to him than the evident facts. Briggs v. Thompson, 86 Hun, 607, 33 N. Y. Supp. 765, in which case the present Chief Judge of this court concurred in the decision, is precisely in point as an authority, and I do not find any case in which it has been questioned. This appellant took its title from the mortgagor of the land, and was not a stranger, in which case the respondent would have been chargeable with some notice of its claims to possession. The respondent knew, or is presumed to have known, of the recorded deed conveying the land to the appellant; but why should that fact lead him to suppose that it did not take from the mortgagor, subject to the mortgage? The mortgage was of record, and apparently undischarged. There is no reason why railroad corporations should not take lands subject to mortgages. That their properties are, as a rule, subjected to mortgages, is a notorious fact. Here the company took its title from the mortgagor, for the release was not to it, and gave, of itself, no right to possession; it did not record the release from the mortgage lien, and the plaintiff purchased the mortgage without knowledge, actual or constructive, of the release, and with nothing to lead him to believe that the possession of the company was hostile to his mortgage. It seems to me that a fair and just construction of the recording act makes its provisions applicable for the protection of the plaintiff's right to the full security of the mortgage. To so hold is to infer legitimately the full beneficial purpose of an enactment intended for the protection of persons who, in good faith and for value, acquire an interest in lands.

I advise the affirmance of this judgment, with costs.

O'BRIEN, J. (dissenting).

This was an action to foreclose a mortgage, and judgment was ordered in favor of the plaintiff, granting the relief demanded in the complaint. There is but one question involved in the appeal. The question is whether the lien of the plaintiff's mortgage covered certain lands of which the railroad corporation, which is made a defendant, was in possession, and to which it claimed title free and clear from the mortgage. The courts below have decided against the contention of the railroad.

The question involved in the appeal arises upon undisputed facts, and no question of fact is involved in the case. On the 7th day of December, 1868, George A. Thomas and wife executed a mortgage to Francis R. Gilbert upon a farm in Delaware county to secure the payment of $3,500. The farm is described as containing 195 acres. This mortgage was recorded in the clerk's office of the county on the 17th of December, 1868. On the 12th of November, 1870, Gilbert assigned the mortgage to one Newell, and this assignment was recorded on the 9th of March, 1871. On the 12th of February, 1880, Newell having died, his executors assigned the mortgage to Helen B. Rogers, which assignment was recorded February 18, 1884. On the 5th of May, 1894, Helen B. Rogers assigned the mortgage to the plaintiff, and this assignment was recorded May 9th of the same year. This is the history of the plaintiff's title to the mortgage...