45 N.Y.S. 21 | N.Y. App. Div. | 1897
It seems to be settled by the cases that an action in equity will lie to 'cancel as a cloud on title a mortgage which was not in its inception, or which has since ceased to be, a valid lien upon the property covered by it. Such an action was entertained in Levy v. Merrill (14 Hun, 145), where the mortgage had been paid. It appeared there that the plaintiffs had conveyed the property and that the purchaser had reserved enough of the purchase money to answer the mortgagee’s claim; but the decision does not seem to have been based upon these special facts. Miner v. Beekman (50 N. Y. 337) also seems to be a direct authority. The action there was brought by grantees of the mortgagor against grantees of the mortgagee in possession, to determine the amount due upon the mortgage, and to be let into possession upon payment thereof. It was held that the action would lie, Grover, J., saying: “ It is a right inherent in the owner of the fee to have clouds removed, and apparent but not real incumbrances discharged of record at all times.” The fact that the principal point there raised by the defendants and discussed by the court-was whether the Statute of Limitations had run against the right of action in no way weakens the case as an
The principal argument advanced is that the mortgage recites the receivership proceedings, and that a reference to those proceedings shows that the object for which it was given has ceased to exist. It is claimed that this brings the case within a well-defined line of authorities which hold that an equity action will not lie, under the facts presented, to cancel an instrument as a cloud upon title. (Scott v. Onderdonk, 14 N. Y. 9 ; Ward v. Dewey, 16 id. 519 ; Hatch v. City of Buffalo, 38 id. 277; Overing v. Foote, 43 id. 291.). The rule laid down in these cases is^ thus stated in Scott v. Onderdonk, the leading authority : “ If, however, the claim is based upon a written instrument * * * void upon its face, or. * * * where the claim requires the existence of a series of facts or the performance of a succession of legal acts, and there is a defect as to one or more of the links, the party must, in general, wait until the pretended title is asserted.” . There is, however, a clear distinction between such cases and the present. The former dealt for the most part with leases or other instruments in the chain of a tax title. They were either void upon their face or defective for the lack of additional proceedings necessary to give them validity. Here we have nothing of the sort, but a mortgage complete in itself and binding on its face. It was entirely valid when executed and delivered, and ceased to be so only upon the happening of subsequent events which terminated the object for which it was given. It is not a partial and ineffective step toward procuring an interest in the land, but a complete and threatening entity.
Here the contrary appears. The mortgage was executed by the true owner, and creates a pjrima faeie lien, although, in order to enforce that lien, the mortgagee would have to furnish extrinsic proof. In spite of this, however, it creates a prima facie interest-in the land, to destroy which the plaintiff would be obliged to adduce extrinsic proof y and it is this latter fact which renders it a cloud.
No just or logical distinction can, we think, be drawn between this case and those cited where the defense rested upon parol evidence. The facts in this case which show the mortgage to be invalid may be more easily ascertainable and more conclusively convincing than in those cited. However, the record of the receivership suit is just as clearly extrinsic matter as are transactions between the mortgagor and mortgagee. This mortgage refers to the suit, and so does any other mortgage refer to its accompanying bond. But to pursue the one or the other inquiry is to go beyond the instrument and the record. Where the defense lies in parol testimony, then, doubtless, as was said in Ward v. Dewey (supra), the case is peculiarly one for the cognizance of equity ; but no case of which we are aware prescribed any other condition for the maintenance of the action than that the facts in defense shall be extrinsic matter. Possibly there is a contrary intimation in Schroeder v. Gurney (73 N. Y. 430). In that case the sheriff’s certificate of sale, which was sought'to be canceled, was shown to be harmless by the record of a trust deed in the very county clerk’s office where the judgment was entered upon which the certificates issued. Miller, J., said (p. 436): “ This rule (permitting cancellation) is more particularly applicable where parol evidence is required, and does not, we think, embrace a case similar to the one at bar, where the entire evidence is a deed on record in the same county clerk’s-office where the judgment is docketed under
This result seems to us to furnish both the most satisfactory working rule, and the most precise- and logical one. An unmistakable line can be drawn between those cases where the defect exists upon the face of the record, and those where it does not. But, if a dis-. tinction is once recognized between extrinsic proof which is near at hand, or durable or convincing, from that which is further removed or not so satisfactory in its nature, or more apt to perish, confusion and uncertainty are sure to result; and such a distinction serves no good purpose. Purchasers of real estate are always loath to pursue their inquiries into matters outside the record, and to sift and weigh extrinsic evidence,, no matter what its nature. They naturally look to their vendor to furnish them with as perfect a record title as the circumstances permit, and it is with much caution and reluctance that courts compel them to take any but a perfect record title. It
It may finally be said that the mortgage does not cloud the title because it has not, so far as appears, been recorded. But an action will' lie to prevent a threatened cloud, where the danger is not mei:ely..speculative or potential, as well as to remove an existing one. (King v. Townshend, 141 N. Y. 358.) Although it does not appear here affirmatively that the defendant • has threatened to record the mortgage, that is the only just inference to be drawn from his acts. He has been asked to deliver it up, and has refused, although concededly it has quite fulfilled its purpose and is functus officio. It is unreasonable to impute to the defendant an intention to retain it simply as a piece of waste paper, and from some entirely idle motive. He has kept it for some purpose, and, since it has no legitimate use, as an instrument of mischief. He might sue upon it, but would he quite unable to maintain the suit. The only other conceivable thing to do with it is to record it. This would cause the ¡fiaintiff annoyance, and possibly great damage, and it would be the natural óourse-if the defendant wished to extort a concession from the plaintiff. It would also be the natural course if he intended to claim under it in good faith. Whether we impute to him proper or improper motives, the result is the same. All signs point to an intention to record it at some time, and possibly a very inopportune time for the plaintiff. It may be made a cloud at any moment, and the necessary step is one entirely within the defendant’s power. The case is strongly analogous to King v. Townshend {supra). There a tax lease was canceled, although it conferred no interest in the land until notice to redeem had been given to the owner or occupant, and the Comptroller’s certificate of this fact procured, which steps had not been taken, but, on the contrary, had
The result of our examination of the authorities is: (1) That, wherever a cloud exists, equity will remove it; (2) that any instriv ment or instruments sufficient of themselves to create a prima facie estate of interest in land, whether absolute or conditional, which the true owner would be compelled to resort to extrinsic proof in .order to destroy, constitute a cloud, although the claimant might himself, in order to take practical advantage of his interest, be forced to resort to extrinsic proof ■; (3) that the character of the extrinsic proof to which the owner must resort is immaterial.
The mortgage in question answers the definition, at least if recorded,, and hence should be canceled. We have considered the caseat, perhaps, unnecessary length, because the question presented is important, and, though we regard it as settled upon authority, the reasons in support of the rule seem not to have been definitely set forth, and arguments against it are easily framed. It is necessary throughout to disr tinguish carefully between actions brought to cancel instruments affecting land and all others such as bonds and promissory notes.
The order and judgment appealed from should be reversed, with costs of the trial and appeal, and the demurrer overruled, with leave to the defendant to answer over within twenty days, upon payment of costs.
Van Brunt, P. J., Rumsey, O’Brien and Ingraham, JJ., concurred.
Judgment and order reversed, with costs of the trial and appeal, and the demurrer overruled, with leave to the defendant to answer over within twenty days upon payment of costs.