| New York Court of Chancery | Feb 15, 1880
This is' an application to open a final decree in order that a defendant may be let in to defend. The applicant is
The result of this application depends entirely on the question of notice. "Was the complainant chargeable with notice of the defendant’s rights at the time he executed the release ? It is admitted that he did not have actual notice, but it is insisted that he had constructive notice. It is not disputed that the defendant, immediately after her purchase, took- possession of that part of the mortgaged premises to which she had acquired title, and soon thereafter erected a house on- it, which she has since occupied as a residence. This is her whole case. The notice she attempts to charge upon the complainant is such only as has arisen from her possession. She does not pretend that he actually knew she was in possession, nor does she attempt to show that .any facts or circumstances came to his knowledge before he executed the release, which made it his duty to make inquiry as to the ownership of the mortgaged premises, and' which, if pursued in good faith, would have led to notice of her rights.
Does the mere fact of possession, standing alone, without the mortgagee’s knowing who has possession, and without notice to him of any facts which would provoke a just man •to inquiry, constitute sufficient notice in such case ? Actual
Judge Hare, in his notes to the last edition of Leading-Cases in Equity ( Vol. 2, Part 1, p. 310), says: “ The better opinion is, that the notice should be so far actual as to justify the inference that the mortgagee, in releasing, acted with a willful disregard of the purchaser’s equity.” If, in releasing, the mortgagee acts without knowledge of the purchaser’s rights, and in good faith and with just intentions, he-has done all-that equity requires. Cheeseborough v. Millard,. 1 Johns. Ch. 413.
In Hoy v. Bramhall, 4, C. E. Gr. 563, the mortgagee admitted that, before he executed the release, he knew that the mortgagor had disposed of most of the mortgaged premises, Such knowledge came so near actual notice as to leave, practically, no distinction between them. It was abundantly sufficient to charge the mortgagee with the duty of inquiry, and, of course, to make it the duty of the court-to deal with him as though he knew all he would have learned by a proper pursuit of the inquiry. As a general rule, a mortgagee is not chargeable with notice by construction, of rights acquired in the mortgaged premises subsequent to his mortgage. The registration of a subsequent mortgage or conveyance does not operate as notice to him. Blair v. Ward, 2 Stock. 119" court="None" date_filed="1916-07-18" href="https://app.midpage.ai/document/dubois-v-waterman-7318539?utm_source=webapp" opinion_id="7318539">2 Stock. 119; Van Orden v. Johnson, 1 McCart. 376; Hoy v. Bramhall, 4 C. E. Gr. 563.
It is difficult to perceive upon what ground it can be said that subsequent possession should have any greater effect in affording notice, as a matter of pure legal presumption, than subsequent registry. To make possession notice, it should
These citations make it perfectly clear, that before a mortgagee can be charged with notice of rights or equities* arising subsequent to the execution of his mortgage, something more than a change- in possession of the mortgaged premises must be shown. To deprive him of the right to surrender such part of his security as he may deem prudent and just under the circumstances, it must be shown that he knew his act would result in injury to some person who had subsequently become interested in the mortgaged premises, or that he would have had such knowledge, had he made the inquiry which the facts before him made it his duty to make, if he desired to avoid unnecessary wrong to another.
The application must be denied, with costs.