Brinckerhoff v. Lansing

| New York Court of Chancery | Jul 19, 1819

The Chancellor.

The claims of the three plaintiffs are entirely separate from each other, and rest on distinct grounds.

1. The plaintiff Wilcox, claims as a purchaser under the defendant Bates, and seeks to be relieved from the operation of a judgment of 1806, against Bates, in favour of the de■fendant Lansing. The counsel for the defendant Lansing, admitted, at the hearing, that the judgment complained of was satisfied; consequently, the plaintiff Wilcox, is entitled to the relief sought by the bill, and to have the defendant Lansing, perpetually enjoined from any proceeding upon that judgment. The plaintiff Brinckerhoff also seeks the same relief, and is entitled to the same remedy, in respect to that judgment.

2. The plaintiff Morey, claims title to a lot in Lansing-burgh, under a purchase upon execution against John Morey, who held under a lease of the defendant Bates, given in 1804, and he seeks to be relieved against the operation of a mortgage covering the same lot, and given by Bates to the defendant Lansing in 1802.

The plaintiff Morey makes an objection to the mortgage which is peculiar to his case. When the defendant Bates leased the lot to John Morey in 1804, the defendant Lansing was a subscribing witness to the execution of the lease, and with knowledge of its contents. The lease was for only a part of the lands - covered by the mortgage then held by -Lansing against Bates, and it was for the term of sixteen years, at the annual rent of 12 dollars and 50 cents.

It is contended, that this fact brings the case within reach °f the principle, that if' a prior incumbrancer be a witness to a subsequent conveyance or incumbrance, and knowing ^is contents, does not disclose the fact of his own incumFrance, but intentionally suffers the party dealing with his debtor to remain in ignorance, he shall have his incumbrance postponed or barred, because he is thereby auxiliary 7 * yy to an act of fraud. (Hobbs v. Norton, 1 Vern. 136. Hunsden v. Cheyney. 2 Vern. 150. Mocatta v. Murga troyd, 1 P. Wms. 393. Becket v, Cordley, 1 Bro. 357.)

.... . , , The only question here is, whether the doctrine applies x 1 to the case.

The mortgage from Bates to Lansing was, at the time, duly registered ; and it is the settled rule of construction un^er our registl'y act, that the registry is notice of the mortgage to all subsequent purchasers and mortgagees, and they are chargeable with all the consequences of such notice. v 1 (Johnson v. Stagg, 2 Johns. Rep. 510. Frost v. Beekman, 1 Johns. Ch. Rep. 298. Parkist v. Alexander, 1 Johns. Ch. Rep. 389.) The law will, therefore, intend, that John , , Morey had notice of the prior registered mortgage when he took the lease from Bates, and that the plaintiff Morey had the like notice when he purchased, upon execution, the title of John Morey ; and it would require direct and satisfactory proof of intentional deception and fraud, on the part of Lansing, before he can be postponed to a subsequent purchaser.

The fact, that the lease which he attested, was for a part only of the mortgaged premises, and for a term of years, does not afford a very strong inference of actual fraud, either on the part of Bates or Lansing. The remaining interest of Bates in the lot demised, and the residue of the mortgaged premises, may have been deemed by the parties a sufficient security for the mortgage debt. Intentional fraud upon John Morey does not seem to be a necessary conclusion. If no inquiry was made, (and none is charged,) Lansing might have presumed, what the law presumed, that his mortgage was well known to Morey, the lessee, by means of the registry. He had already made his mortgage known to the world, and if the purchaser did not choose to inquire of him, or to search the records, he had no just ground to complain.

It appears to me to be a fatal objection to this charge of fraud, that the bill itself does not contain any charge, that either John Morey, the lessee, or the plaintiff’ Morey, the purchaser under him, were ignorant of the mortgage, at the time of the purchase by them respectively; nor does the bill even charge that Lansing, at the time of his attestation, withheld the knowledge of the subsisting mortgage. There is no fraud or intentional deception at the time charged; and if the party sets up a title to relief in equity, on the ground of being a bona fide purchaser, he ought to deny notice in the most decided manner. If he will not aver, that he was a purchaser without actual notice, we are not •bound to presume it, especially, since the law had given him notice by the registry of the mortgage. Whether he comes for relief in his character of an innocent and injured purchaser, as a plaintiff, or sets up that defence by plea, the rule requiring him to aver his claim fully and explicitly, and which rule has been often declared, (1 Johns. Ch. Rep. 302. 3 Johns. Ch. Rep. 345. and the cases there cited,) will equally apply. Under the circumstances of this case, a very explicit denial of notice was requisite on the part of the plaintiffs, and a most pointed charge of intentional concealment on the part of the defendant Lansing, if they meant to clothe themselves in their proper character as purchasers, and to succeed on the ground of actual fraud. We have a precedent of what such a bill ought to contain, in the case of Arnott v. Biscoe, (1 Ves. 95. Belt’s Supp. 67.) The bill there charged, that the party did not disclose the incumbrance, but averred that there was no incumbrance. The suit was to get rid of a purchase on the ground of a concealed incumbrance, and there was a charge of absolute fraud in the defendant.

The mere silence of a mortgagee, when he is present at the execution of a subsequent purchase or incumbrance, is not sufficient to affect his right, unless that silence was intentional, and for the purpose of deception. That inference is not to be drawn from silence alone, under the operation of our registry act. There must be active fraud charged and proved, such as false representations, or denial upon inquiry, or artful assurances of good title, or deceptive silence, when information is asked. The burden of the charge, and of the proof, lies upon the purchaser. He must make out the fraud, and the mortgagee is to be presumed innocent, until proved to be guilty. This is the true doctrine to be extracted from the cases, and it applies with accumulated force in cases like this, where the party has put his mortgage upon record, and given notice to the world.

The same objections, as to the charge of fraud, apply to> another fact in the bill, viz : That a few days after the date of the lease from Bates to Morey, a son of the defendant Lansing leased the same lot to Morey, forever, and this lease was also witnessed by the defendant Lansing, with knowledge of its contents.

Why this last lease was taken, is wholly unexplained. But whatever might have been the reasons operating upon the parties to that lease, the simple attestation of it by Lansing affords no better inference of a fraudulent design in this, than in the other case.

3. This case, then, turns wholly upon the question, whether the mortgage of 1802, from Bates to Lansing, was, at the time of filing the bill, to be deemed a valid subsisting mortgage for any part of the debt originally secured by it. In this question the plaintiffs Brinclcerhoff and Morey are equally interested, for they both hold, by purchase under Bates, parts of the land covered by Lansing’s mortgage.

It does not appear to me, that the claim under this mortgage ought to be affected by other transactions totally distinct from it; any fraudulent pretensions of Lansing, under either of his judgments, are not to destroy his rights under the mortgage; it must stand and be investigated Upon its own merits.

e There is no doubt of its having been a fair, valid mort- . . . ° ’ gage m the beginning, and given to indemnify Lansing, as endorser of a note drawn by Bates, for 1,500 dollars. The only proper inquiry now is, has Lansing been injured, and is he entitled to any indemnity for the injury he received by means of that note?

The proviso in the mortgage was, that Bates was to pay to Lansing 1,500 dollars, with interest, “ according to the condition of a certain bond, or writing obligatory, bearing even date therewith, executed by Bates to Lansing, as a collateral security.” The bond here referred to was, according to the condition of it, “ to pay 1,500 dollars, with lawful interest, on or before the 7th of March, 1803, or keep the defendant L. harmless, and pay up the note endorsed by the defendant L., for the defendant B-, in the Farmers’ Bank, when the same should be called for.”

The note referred to, in the condition of the bond, ’ of the same date with the bond and mortgage, and was for ° ° 1,500 dollars, payable in fifty-six days, and discounted at the Farmers’ Bank, in favour of Bates. It appears, by the testimony of L. I. Tillman, that the note was renewed at the end of the fifty six days, by a new note, made and endorsed in like manner, and so it continued to be renewed, toties quoties, for a number of years. The calls were all paid, from time to time, by Bates, and the sum was reduced gradually, at times, to 900, dollars, to 700 dollars, to 600 dollars, and, at one time, to 400 dollars, and then it was raised again, on the renewal, to 1,000 dollars, and at one time, to 1,300. The debt of 1802 was kept alive in the bank, by these constant renewals, and alternate variations in the sum, until the Sth of October, 1811, when the sum was reduced to 720 dollars, and the note then alive,' and for that sum, was protested for non-payment. This catastrophe put a stop, according to the usual mercantile phrase, to the running of the note in the bank, and the defendant Lansing, as endorser, was obliged to take up and pay the note, which he did, by a note of his own, as drawer, endorsed by the defendant Adams.

I see no good reason why the bond and mortgage should not stand as an indemnity and security for the 720 dollars, which Lansing was thus obliged to pay.

The bond was intended as an indemnity against the bank debt, originally created by the loan upon the note for 1,500 dollars, so long as that bank debt should continue, under the customary renewals and fluctuations in the amount. The 1,500 dollars were, by the bond, made payable in six months; this fact shows that the parties contemplated a continuation of the debt beyond the fifty-six days, for which the original note was made payable. It was evidence of an expectation that the note was to be repeatedly renewed. The other part of the condition of the bond, that the defendant Bates was to pay the note in the bank “ when the same should be called for,” shows, also, the like expectation. Instead of fixing at the precise period when the first note was made payable, as would have been done in an}'' other case, the partifes adopt the loose commercial phrase applicable to a note running in the bank, and evidently allude to the calls for partial, and for final payment, to be made on the part of the bank. There is no doubt that this construction of the instrument is according to its true meaning; and the mortgage continued a subsisting and valid security so long as the debt created in September, 1802, was kept alive in the bank, either in whole or in part, by these customary renewals. The mortgage, with its accompanying bond, fairly disclosed the nature of this continuing security, and no imposition was, or could have been, practised upon any subsequent purchaser or mortgagee, who would be at the pains to examine into the state of the deijt disclosed by the bond and mortgage. The mortgage itself disclosed the nature of the debt secured by the bond, when it stated that the bond was taken as a collateral security.

Such a security for such a debt might subsist indefinitely; but what concern has the purchaser, or subsequent incumbrancer, with the nature of the security, provided there be no false lights held oat, and he be, by the registry, timely and duly informed of the character of the lien ?

The only objection of any force to the validity of the mortgage, as a security for these renewed notes, is, that the notes were occasionally increased, which might seem to be so far the creation of a new debt. But I apprehend such an occasional increase of the debt, on the periodical renewal, provided the debt was kept within its original limits, did not change the character of the debt, or affect the security. It is not so understood in the commercial world, and was not so intended by the parties to the mortgage; and an increase of the sum, on a renewal, was no more than a return of some of the calls made on the former renewals. The identity of the debt remained, so as to preserve the relation between that and the pledge. It would be dangerous and unjust, as between the parties, not to allow the whole note so renewed, to come under the protection of the mortgage. There was nothing here like the novation of the civil law. There was uo new debt created, differing in quality or character, or relation or security. It was according to mercantile and bank usage, (in reference to which the bond and mortgage were giV'tn,) a renewal or continuation of the same debt, under the same circumstances, and subject only to those fluctuations in amount, which are customary in such bank operations.

4. But if any part of the debt secured by the mortgage, be still due to Lansing, it is then contended, that the plaintiffs are entitled to redeem, and that there ought to be a reference, to ascertain the rateable proportions of such debt to be paid by the plaintiffs B. and M., and the defendant A., who may be bound to contribute, according to their respective interests in the mortgaged premises.

The plaintiffs, who are owners of the equity of redemption, are, no doubt, entitled to redeem, but they are not entitled to any delay. A motion to enlarge time for payment upon a bill to redeem, is new, and such a motion was refused by Lord Eldon, in Novosielski v. Wakefield, (17 Ves. 417.) where he observed, that in a bill to redeem, the plaintiff professes that his money is ready. He comes into Court, saying, “ here is the money : give me my estate.” If, then, the bill in the present case be viewed as a bill to redeem, the plaintiffs must redeem forthwith. I do not perceive that they are entitled to have the right of the defendant L. to proceed upon his pledge suspended, until this question of contribution can be settled between the two plaintiffs B. and M., and the defendant A. It is a question with which he has no concern. It is strictly res inter alios. There might be much time «consumed, before the ratio and amount of contribution could be settled. It is suggested by the counsel for the defendants, that the defendant A. is dead, and the suit, in that case, would have to be revived against his representatives, before the contribution could be ascertained. His proportion of the contribution would, at any rate, be small, for it appears by one of his answers, that he gave Only 100 dollars for his interest in the mortgaged premises; and it was only for part of an unexpired term, which is to v l * ' expire in 1820, or a year hence, and it is averred to be worth no more than the annual rent of 37 dollars, which is charged thereon.

As between the two plaintiffs, B. and A., who are not litigants before me, or against each other, it might be difficult to enforce the rate of contribution when ascertained. I am not aware that I could make any decree directly against either of them, in favour of the other, on that point, as the pleadings now stand before me.

There is no case that will warrant such an absolute delay of the rights of the mortgagee, under his mortgage, as is now sought, in order to have this question of contribution previously settled, in which he has no interest. In Gill v. Lyon, (1 Johns. Ch. Rep. 447.) to which I have been referred by the plaintiff’s counsel, there was no delay of the mortgagee. He was merely ordered to sell one part of the mortgaged premises first, and if not sufficient, then to sell the residue, after thirty days notice to the purchasers of such residue, to redeem. So, in Stevens v. Cooper, (1 Johns. Ch. Rep. 425.) a mortgagee who had released part of the mortgaged premises, and deprived the owners of the remaining part, of their recourse to the owners of the other part, for contribution, was confined, but not delayed in his remedy, to the rateable proportion of the debt chargeable upon the remaining part. I do not find a case, or a principle in the books, to justify a stay of a mortgagee’s remedy, until those who are entitled to redeem have settled among themselves, or by the aid of this Court, their just proportions of the debt. But the plaintiffs may still be entitled to retain the suit, and go on against the defendant Adams, or his representatives, to compel a contribution from him, to them, of his proportion (however small) of the mortgage debt. It may be so small, indeed, as not, in any event, to carry costs, or be worth pursuing; but still I am content, that the suit continue for that purpose, as against Adams.

e I shall, therefore, decree : (1.) A perpetual injunction in favour of the plaintiffs, B. and TV., against any execution or other proceeding, on the judgment confessed by Bates to Lansing, and docketed on the 3d of April, 1806, and that entry of satisfaction of record of that judgment, be made by the defendant Lansing. ,

(2.) That unless the plaintiffs B. and M., or one of them, bring into Court and deposit with the register, for the use of the defendant L., within thirty days, the sum of 720 dollars, together with lawful interest thereon, frotn the 8th day of October, 1811, unto the day of bringing in the same, the injunction heretofore issued, in respect to any proceeding under the bond and mortgage in the pleadings mentioned, be thereafter dissolved, so far as to allow.the defendant L. to demand and collect under it, or by virtue of it, the Sum" of 720 dollars, with interest from the 8th day of October, 1811, until the money shall be paid, and the costs and charges of all necessary proceedings thereon.

(3.) That the bill, as to the defendant B., be dismissed, and that unless the plaintiffs B. and M. shall, within thirty days, elect to proceed against the defendant A., to enforce his proportion (if any) of contribution to the said debt and interest, so declared due to the defendant L., and give notice of such election to the solicitor for the defendant Adams, that then the bill, as to him, shall stand dismissed.

.(4.) The question of costs has become somewhat complicated, owing to the distinct claims put forward by the plaintiffs, and the various and unequal merits of the several pretensions.

The plaintiff TV. is entitled to his costs, as against the defendant L.

The plaintiff B. and the defendant L. are not entitled to costs against each other. ■ The defendant L. set up a judgment which was satisfied, and claimed more under the ( mortgage than was due. He, therefore, has no right to any costs, though he succeeds in establishing a mortgage debt. The plaintiff B. is not entitled to costs against the defendant L.; for though he has successfully overthrown the unjust pretentions of the defendant L., under his judgment, he has failed in his charge that the mortgage was satisfied and kept on foot by fraud, a charge which he persevered in making, even down to the hearing of the cause.

The plaintiff M. has also failed in his claim, which was, to defeat the mortgage absolutel}', as being satisfied, and as being fraudulently set up, but he has so far succeeded as to reduce the mortgage to one half, and less of. the amount claimed under it, and, perhaps,'neither he nor the defendant L., ought to have costs, as against each other. The case is the same as between the plaintiff B. and the defendant L., and the same conclusion ought to follow.

As the defendant B., the original mortgagor, had no interest remaining in the mortgaged premises, but it had all been sold on execution, and purchased in by the plaintiffs I?. and M., and the defendant A., he had no interest in the controversy, and W’as not a necessary party. And if he had conducted himself properly, he would have been entitled to his costs of the suit. But he united in his answer with Lansing, in setting up the subsisting validity of the judgment, and of the entire mortgage debt. The answer in this respect was not true, and the defendant B., in a further answer, admitted that the judgment debt had been paid. I think he may be considered as having forfeited his title to costs; but, certainly, the plaintiffs cannot claim costs against him, when they show, by their bill, that he had parte'd with all his interest, and against him no decree could be prayed.

Lastly; If the plaintiffs should not elect to proceed by contribution, and the bill as to the defendant A., should be dismissed, it must be dismissed with costs.

Decree accordingly.

Perpetual junction agianst any proceeding judgment which had been satisfied.

if a prior wkn™5‘Tsubveyance oHntom'in*6’its doeseinot dís- ■ close his own incumbrance, W intentionally suffers the party to remain m ígnorance, he shall be postponed, or barred.

is Ba1 registry of a mortgage, it IS noliGB (o ail subsequent purchasersand mortgagees; and there must be proof of intenlional iraud to postpone or bar the mortgagee.

And if the subsequent purchaser, or mortgagee, seeks relief on the ground of actual fraud, or intentional deception, on the part of the first incumbrancer, Ire must clearly and pointedly charge such fraud or intentional conceal"nTL^expiikíowiediíf of Sth/pifoHucumbrimce-

The mere silence of a mortgagee who witnesses a subsequent purchase, or incumbrance, is not sufficient to affect his right, unless that silence was intentional, and for the purpose of deception; for where the pri- — tie — cumbrance is registered, there must be actual fraud shown, as false representations, or denial upon inquiry, or artful assurances of fi^ood title, or deceptive si* lence, when information is asked, in order to postpone or bar the prior incumbrancer. And the burden of proving such fraud lies on the subsequent purcha-

———— g¡ben™ose8ufe bccordingSUIto of6 ascertain same date, and "a^conditiom ghge^rratost fojsutb® Mortgagorthe and endorsed by the rnortgaS'ee> aad d[s" counted at the Bank, joi^the tion of the wUl^continue andsuiidseem súTh note shall kept^aiire to wLie^or to newáisb"there°í time, ‘bbb mstom8bry°the trabsbetto™011 Ibchthe mortfbSbénce‘íh to ¡dg b°ü$c¡ent to apprise a subsequent or mortgagee of tke «atoe of the debt secu* red»

On a bill to redeem, further time of payment is not given.

$tor will the proceedings of the mortgagee, under a power of sale in the mortgage, be suspended or delayed, until the plaintiffs, who are owners of the equity of redemption in different proportions, Lave settled the rateable proportion which each is to contribute towards the redemption.

Various claims tied.