61 N.Y.S. 753 | N.Y. App. Div. | 1899
As incidental to the main contention of the defendants’ counsel, it is urged that the property covered by the mortgage in suit is not the property of the mortgagor, but of the firm of Alfred Dolge & Son, and upon these assumed premises it is argued that such mortgage is a lien upon only the individual interest of the member of the firm who executed the same. Without entering into any extended discussion of this proposition, we think it is sufficiently answered by the fact, conceded upon the trial, that at the date of the mortgage the record title to the property embraced therein was in Alfred Dolge, and that it remained in him down to the time of the general assignment, in April, 1898. It is true that, under some arrangement between the firm and Alfred Dolge, the property was occupied by the firm, but whether that arrangement was in the nature of a lease or what it was does not appear; nor is there any evidence sufficient to charge the plaintiff or his cestuis que trustent with notice that Rudolph Dolge had or claimed any legal or equitable interest in the mortgaged premises. On the contrary, the legal presumption is that the possession of the firm was subordinate to, and not inconsistent with, the record title of Alfred Dolge. Pope v. Allen, 90 N. Y. 298; Mygatt v. Coe, 147 N. Y. 456, 42 N. E. 17. But, even were this not the case, it is undisputed that the firm had full benefit of the mortgage, and never in any manner questioned the right of Alfred Dolge to. execute it. In these circumstances, it would therefore seem but just and equitable that the mortgage should be enforced against the property of the firm.
There is also some question made as to whether the mortgage in suit was a lien upon the personal property embraced therein; the contention being that, in so far as it related to that class of property, it was a chattel mortgage, and should have been filed as such, and that, inasmuch as it was not so filed, it was invalid as to creditors. We see no occasion, however, to consider this feature of the case, inasmuch as the learned trial court expressly held that all the machinery, etc., not attached to the freehold, belongs either to the defendant Mills, as receiver, or to the defendant Kernan, as assignee, and left the question as to their respective interests therein for future
We come, then, to a consideration of the vital question at issue between the parties, which is whether the plaintiff, as trustee for the two banks which he represents, has forfeited the security of his mortgage by omitting to record the same; the contention being that he has, even though such omission was not the result of any agreement or understanding between the parties. To maintain this contention, it is obvious that the defendants must establish a state of facts which will permit them to invoke the doctrine of equitable estoppel, and it is a well-settled principle óf equity jurisprudence that this doctrine should be appliel with great caution, and only in cases where the reason for its application is clearly and satisfactorily established. Banking Co. v. Duncan, 86 N. Y. 221; Moffat v. Herman, 116 N. Y. 131, 22 N. E. 287; Thompson v. Simpson, 128 N. Y. 270, 28 N. E. 627; Chard v. Holt, 136 N. Y. 30, 32 N. E. 740; Lyon v. Morgan, 143 N. Y. 505, 38 N. E. 823. In the case first above cited it was said by Andrews, J., that, “to authorize the finding of an estoppel in pais against the legal owner of land, there must be shown, we think, either an actual fraud, or negligence equivalent to fraud, on his part, in concealing his title; or that he was silent when the circumstances would impel an honest man to speak; or such actual intervention on his part * * * as to render it just that, as between him and the party acting upon his suggestion, he should bear the loss.” And in cases like the present one, where the doctrine is invoked against the owner of an unrecorded mortgage, it should also be shown that the mortgagor was insolvent, and that the creditors who assail the mortgage gave credit to the debtor in reliance upon his unincumbered title to the mortgaged property. The case under review seems quite destitute of all, or nearly all, of these elements. So far as any allegation of actual fraud is concerned, there is not a scintilla of proof to sustain it. On the contrary, the uncontradicted evidence is that neither the plaintiff, nor any of the parties whom he represents, either directly or indirectly, entered into an agreement with the mortgagor to withhold the mortgage from record. IT or does it appear that at the time of the execution of the mortgage the mortgagor was insolvent, or that any credit was extended to him by creditors who relied upon the exemption of his property from incumbrances. Indeed, the evidence all
Obviously, then, the most potent circumstance upon which the defendants rest their contention of fraud in fact is the omission of the-plaintiff to record his mortgage. But the mere failure to record a mortgage, of itself, furnishes no ground for declaring it invalid. It is, at best, only a circumstance which may be considered, in connection with other proof, of a preconceived purpose to deceive and defraud; but as an independent, isolated fact, disconnected from other-suspicious circumstances, it is insufficient to establish a fraudulent intent. Blennerhassett v. Sherman, 105 U. S. 100, 26 L. Ed. 1080; Delaney v. Valentine, 154 N. Y. 692, 49 N. E. 65; Folsom v. Clemence,. 111 Mass. 273; Curry v. McCauley (C. C.) 20 Fed. 583; Bank v. Jaffray, 41 Kan. 694, 21 Pac. 242; Day v. Goodbar, 69 Miss. 687, 12 South. 30.
What other circumstances are disclosed by the record which in any degree tend to reinforce the defendants’ contention? It is said that the execution of this mortgage was not disclosed to the world at large. It is true that neither the plaintiff nor his cestuis que trustent proclaimed from the housetops that they held this mortgage, but immediately upon its execution the plaintiff did take steps to perfect the insurance upon the mortgaged property, by having the same made-payable to him as trustee and mortgagee. This was accomplished through the medium of some 60 policies, issued by as many different companies, and was, of itself, a pretty liberal advertisement of the situation. On the other hand, there is no evidence that any affirmative attempt was made to keep the fact that the plaintiff held this mortgage a secret, and, for aught that appears in the record, its existence was known to all the creditors of the mortgagor.
Again, it is said that the omission of Mr. Clark, the president of the American Exchange National Bank, to mention the fact that the plaintiff held this mortgage, in replying to two letters of inquiry as-to the financial standing of Dolge, received by him shortly before Dolge’s failure, is some evidence of fraudulent concealment. Doubtless this was a circumstance to be considered by the trial court, but its tendency in the direction claimed for it was not such as to entitle it to very great weight, especially in view of the fact that the writer of these letters was under no obligation to proclaim the existence of the mortgage, and gained nothing by reason of any credit being extended to the mortgagor. The truth of the matter is, that the evidence which in any degree tends to impeach the good faith of this plaintiff is wholly insufficient for the purpose for which it was tendered. Fraud may sometimes be inferred from circumstances which
Judgment affirmed, with costs. All concur.