Parkist v. Alexander

1 Johns. Ch. 394 | New York Court of Chancery | 1815

The Chancellor.

The plaintiff is entitled to relief. The intestate was intrusted by him with the agency of procuring a lease in fee of the premises, in the name of Alexander M'Knight, and he promised to perform the trust. Instead of doing this, he, afterwards, purchases the equitable title of M'Knight, and, with the consent of M'Knight, but without the knowledge or consent of the plaintiff, took the lease in his own name, in consequence of this, a mortgage from M-Knight to the plaintiff, and which was duly registered prior to the taking of the lease, and prior to the deed of M'Khight, is now attempted to be superseded, by setting up this subsequent legal title in the intestate. This, I think, cannot, and ought not to be permitted. An agent, or trustee, undertaking a special business for another, cannot, on the subject of that trust, act for his own benefit to the injury of his principal. This is a sound and fundamental rule of equitable policy. (Hardwicke v. Vernon, 4 Ves. 411., and see the case of Green and others v. Winter,^* . . May, 1814, and the authorities there cited.) The consent of M'Knight alone was not sufficient to authorize this departure from the instructions, for they were given by the plaintiffhimself, and accepted as coming from him ; and if the agent undertakes to judge that he may innocently depart from them, for the sake of -his own interest, and that the variation cannot be material, he does it at his peril. If it turns out that the departure will essentially affect the rights of the principal, the agent cannot, surely, establish any conflicting interest of his own upon such departure from his iustructions.

I shall consider this case, then, as if the lease had been ¡n name 0f M'Knight, and then the question is, whether the subsequent purchase by the intestate, without notice of the registry of the plaintiff’s mortgage, can defeat that mortgage ? This point was settled in the case of Johnson v. Stagg, (2 Johns. Rep. 510.) The registry of a mortgage is, of itself, notice, inlaw, to all subsequent purchasers, as well as mortgagees; and they are bound, at their peril, to consult.the registry. A contrary doctrine would shake the foundation of all mortgage security, and lead to every species of fraud. It is, clearly, not the doctrine of the statute, which declares, that “ no mortgage, nor any deed, conveyance, or writing in the nature of a mortgage, shall defeat or prejudice the title or interest of any bona fide purchaser, &c., unless the same shall have been duly registered.” If this paragraph does not mean that a mortgage, duly registered, shall be preferred to a subsequent bona fide deed without notice, it is senseless and idle, and worse than idle—it is delusive, and a snare to the unwary. No decisions of the English courts, upon the English registry acts, in which there is any variation in the language of the provision, could induce me to change my opinion on the construction of our statute. 1 had occasion, lately, in the cause of Frost v. Beekman,^* to express this same opinion; and with me the point is absolutely at rest.

In this case, and for the purpose of this decision, I consider what. ought to be done as done, and, consequently, that M'Knight had a legal estate to support his mortgage to the plaintiff. But if the intestate had acted as he did, without any instructions from the plaintiff, and so as to reduce the interest of MKnight to a mere equitable estate at the time that he gave the mortgage to the plaintiff, and at the time that he gave the deed to the intestate, I think the better opinion is, that the registry of such equitable mortgage, or encumbrance, is notice to the subsequent purchaser of the legal estate. The statute I have cited, speaks of any “ writing m the nature of a mortgage,” and these words may reach to any agreement creating an equitable encumbrance. The design of the statute was, that ¿very purchaser should look to the registry of mortgages, and see whether there was any mortgage, or any writing in the nature of a mortgage, previously executed by the grantor. Lord Hardwicke said, in Hine v. Dodd, (2 Atk. 275.) that the register act of 7 Anne, c. 20., was notice to all the world, but that the * * . courts had broken in upon the statute in cases of fraud. And some of the latest and best writers on the subject (Cruise's Digest, vol. 4. 348. Sug. L. of Vend. 3d Lond. edit. 524—8.) admit, that the true construction of the register acts is to render the registry, even of an equitable encumbrance, notice to all persons, and that the purchaser ought to search, or be bound by the notice. But the decisions, on the subject of tacking one lien to another, as in the cases of Bedford v. Bacchus, and of Wrightson v. Hudson, (3 Eq. Cas. Abr. 615. pl. 12. 609. pl. 7.,) are considered, in England, as having given a different construction to the registry acts. This doctrine of tacking has, however, been adjudged, and finally settled, with us, (Grant v. U. S. Bank, 1 Caines’ Cas. in Error, 112.,) not to apply between registered mortgages ; and the force of these decisions is no longer to be regarded. The case of Morecock v. Dickens, (Amb. 678.,) decided by Lord Camden, in 1768, is considered as the leading and decisive authority against the doctrine of constructive notice arising from the registry of a “ writing in the nature of a mortgage ;” and he seems to ground his opinion wholly upon the case of Bedford v. Bacchus, but he manifests, at the same time, a strong reluctance to be bound by such a doctrine. In that case it had been agreed, by deed between Morecock and Wilson, that a lease of lands to Wilson should stand as a security for 800Z., and this deed, containing the agreement, was duly registered under the stat. of 7 Anne. Wilson, afterwards, mortgaged the lands to Duk.ns for 800/., and delivered him the lease ; but Dickens, at that time, had no notice of MorecocDs deed. j^¿¡S0)¡ became bankrupt, and Morecock hied his bill to be paid the money in preference of the mortgage to Dickens. The question was, whether Dickens, who had got the legal interest, was to be affected with constructive notice arising from the registry of Morecock1 s deed ? and Lord Camden said, that he considered himself bound by the decision of Bedford v. Bacchus ; that a thousand neglects to search had been occasioned by that decision, and, therefore, he could not take upon him to alter it; that if this was a new question he should have had his doubts, and that it was a serious question whether a court of equity should not say that, in all cases of registry, a subsequent purchaser ought to search, or be bound by the registry.

Mr. Sugden says, that this decision seems hardly reconcileable with the genera! principles of equity, and that it was founded on a mistaken application of the case of Bedford v. Bacchus. But when we consider that the principle of that prior decision is done away with us, and that except this of Lord Camden, and those relating to tack» ing encumbrances, we have no decisions on the point, and nothing but some extra-judicial dicta, (1 Schoale & Lefroy, 90. 157—160, 161.,) I think we are at liberty to give our registry act such a construction as will best accord with the obvious dictates of its policy. If the plaintiff’s claim was, then, to be considered as resting upon a mere equitable mortgage, 1 should still be of opinion that the registry of that mortgage gave it a preference to the subsequent legal title of the intestate.

I shall, accordingly, give to the defendant, Catharine M„ Alexander, as administratrix and guardian, &c. the election, either, within 30 days, to. assign over to the plaintiff the lease taken in the name of the intestate, or to discharge the mortgage debt, with the costs of the foreclosure ; and, in defaultof making such election, that the lease be assigned by her, as administratrix and guardian aforesaid; and that, in either case, she pay the costs of this suit. 7 1 •>

The following decree was entered:

“ That Catharine M. Alexander, one of the above defendants, as administratrix of the goods, chattels, and credits of William Alexander, deceased, and guardian to the other defendants, excepting Alexander MiKnight, within thirty days after being served with a copy of this decree, make her election, either to assign over to the plaintiff, and to his heirs, by an instrument valid in law, all the right, title and interest of the said William Alexander, at the time of his death, of, in, or to the lease mentioned in the pleadings in the above cause, hearing date on or about the first day of January, in the year of our Lord one thousand eight hundred and ten, and taken by the said William Alexander, deceased, in his own name, and given for town lot No. 4., in First-street, in the village of Little-Falls, and accompany the said assignment with actual delivery of the lease, or to pay to the plaintiff the principal and interest due on the bond and mortgage mentioned in the said pleadings, and executed by Alexander MlKnight, one of the defendants, to the plaintiff, and bearing date the sixth day of May, in the year of our Lord one thousand eight hundred and eight, together with necessary costs and expenses of the plaintiff, accrued iff advertising and selling the lot under a power contained in the said mortgage; and, in case the said Catharine M. Alexander shall, within that time, elect to discharge the mortgage debt and costs as aforesaid, and shall signify her election in writing, subscribed by her, or her solicitor, or counsel, and served on the plaintiff, his solicitor or counsel, or filed in the register’s office, it is further ordered, that it then be referred to one of the masters of this court, residing in Albany, Oneida, or Herkimer counties, to ascertain and report, with all convenient speed, the amount of such principal and interest and expenses as aforesaid; and that upon confirmahon of such report, the same be paid: and if no such election be made within the time aforesaid, it is further ordered, and decreed, that the said Catharine M. Alexander, immediately after the expiration of the said thirty days, assign and deliver the lease as aforesaid. And it is further ordered, adjudged, and decreed, that, in either case, the said Catharine M. Alexander pay to the plaintiff his costs of this suit, to be taxed.”

* Ante, p. 26—44.

* Ante, p. 288.