Stoughton v. Pasco, 5 Conn. 442

Stoughton v. Pasco

5 Conn. 442 | Conn. | 1825

Hosmer, Ch. J.

The general question in this case, is whether the mortgage made by Jonathan Pasco to the plaintiff, is void in respect of Ashna Pasco, a subsequent mortgagee, except as regards a small debt by promissory note.

The objection made, on the defendant’s part, to the granting of the prayer of the plaintiff’s bill, is founded on the law requiring the recording of deeds. It is insisted, that the policy of the recording system, will be violated, by giving validity to a mortgage, containing, as the one in question is supposed to do, no reasonable certainty in the description of the debt intended to be secured. The determination of this Court, in Pettibone v. Griswold, 4 Conn. Rep. 158. is principally relied on ; and is claimed to sustain the defendant’s objection.

There are two questions embraced in the present case. The first is, whether the demand of Stoughton is of such a nature as to authorize the mortgage security; and the second is, whether it is described with such reasonable certainty, that in respect of it, a subsequent mortgagee is legally affected with notice.

1. In Pettibone v. Griswold, before cited, it was said, that a mortgage may be taken “ for existing debts, existing liabilities, and perhaps for debts to be contracted in future.” The court has found, that Jonathan Pasco was justly indebted to the plaintiff, as trustee on Heath’s estate, in the sum of 3,137 dollars, 85 cents ; and that this sum was intended to be secured by the mortgage deed to Stoughton. The precise sum of money due to the plaintiff had not been ascertained, at the date of the mortgage ; and hence the phraseology of the condition, that if Jonathan Pasco should pay to Stoughton all the monies, and deliver to him all the securities for money, in his hands, belonging to Heath’s estate, and render a true account, the deed should be void. That Jonathan Pasco was under a legal obli*446gation to do what he stipulated, and that, as to him, Stoughton had a just demand, to the extent of the stipulation, must be implied by every one who reads the above condition. It would not enter into the imagination of any one, that the mortgage was for a sum of money not due ; and that, contrary to common sense and universal usage, Pasco had made a pledge of his estate to secure to the plaintiff a mere gratuity. But this point need be pursued no further, as the court, in the decree passed, considered the mortgage valid as between the parties.

2. The question remains whether the demand of the plaintiff is described in the mortgage, with such reasonable certainty, as from the record to affect a subsequent mortgage with notice.

Now, what would such person understand from reading the aforesaid condition? On the principle of constructive notice of the record, the subsequent mortgagee must be supposed to have read the deed with its condition ; and hence the propriety of the proposed question. On such perusal, he must be presumed to know, that the mortgage was for a debt, in some manner resulting from the trust estate in the mortgagor’s hands, due to the co-trustee, the plaintiff ; that the precise amount, at the date of the mortgage, was not ascertained; that it embraced all the monies and securities of Heath, in the hands of Pasco ; and that this person had bound himself to render a true account of his indebtedness. In addition to this, let it be remembered, that Ashna Pasco, previous to the delivery of either deed to him, had information from his mortgagor, that the account between Jonathan Pasco and Stoughton had been adjusted, and that the sum now claimed as a debt, was acknowledged to be due.

That the condition of a mortgage deed must give reasonable notice of the incumbrance on the land mortgaged, is an established principle. This is the undoubted criterion, by which, in respect of third persons, the validity of the mortgage is to be tested. What, then, is reasonable notice ? Is it requisite that the condition should be so completely certain, in every particular, as to preclude the necessity of all extraneous enquiry? Certainly not, It was adjudged in Pettibone v. Griswold before cited, that a mortgage to indemnify a surety for the official good conduct of another, is valid universally ; and yet the event on which an indebtedness may arise, as well as the amount, are utterly unforeseen and contingent. Without a specification of either of these facts, there exists that reasonable notice, which, in favour of those who are not parties to the mortgage,

*447the law demands. The object of the recording law is to prevent fraud on purchasers and creditors; and such facts must be reasonably notified as are sufficient for this purpose; but, as has been shewn, notice perfect and complete, without any enquiry dehors the record, is not required.

One head of presumptive notice is this: that the law imputes to the purchaser the knowledge of a fact, of which the exercise of common prudence and ordinary diligence must have apprized him. Hence, it has become a principle in a court of equity, that the notice, which presents a certain object, concerning which successful enquiries, without unreasonable inconvenience, may be made, is sufficient. In Peters v. Goodrich, 3 Conn. Rep. 150 the above principle was recognized and applied. Curtis executed a mortgage deed to Goodrich, which was duly recorded, with condition to indemnify him against a promissory note, of which the latter was an indorser. To foreclose the equity of redemption, a bill was brought by Goodrich, from which it appeared, that the mortgage was variant from the note, both in respect of its date, and of the person to whom it was payable. The defendant, who was a subsequent mortgagee, objected against the correction of these mistakes, upon the specific ground, that the description in the mortgage deed must be precisely adhered to, pursuant to the supposed policy of the recording system. In the delivery of their opinion, the court observed, that " as between the parties, it is unquestionably clear, that the misconception of the date of the note, and of the promissee, admitted of correction, on the common principles applied in chancery in similar cases ; and the second mortgagee had such constructive notice of the fact from the recorded deed, as placed him in no better condition than the mortgagor Whatever is sufficient to put a person on enquiry, is considered in equity to convey notice ; for the law imputes to a person the knowledge of a fact, of which the exercise of common prudence and ordinary diligence, must have apprized him. Had the second mortgagee applied to Goodrich for information, as it was his intention to represent the facts correctly, relative to the mistakes, he would have had a communication of all the knowledge he now possesses. ”

The same principle was recognized by the court, in Pettibone v. Griswold, before cited. After having declared it to be the policy of our law, that the title to real estate should be registered for the benefit of creditors and all ethers interested, it *448was observed by the court: " That it is the object of this law" (the act requiring deeds to be recorded) “ to prevent fraud, and give security and stability to title. It results, unquestionably, that the condition of a mortgage deed must give reasonable notice of the incumbrances on the land mortgaged A creditor is not obliged by law to make enquiry in pais concerning the liens on the property of his debtor ; but on application to the record, he may acquire all the information, which his interest demands : at least, he must have the power of knowing from this source, the subject matter of the mortgage, that his investigation may be guided by something, which will terminate in a certain result. And what is not of less importance, the incumbrance on the property must be so defined as to prevent the substitution of every thing, which a fraudulent grantor may devise, to shield himself from the demands of his creditors." In the argument of this case, it has been supposed, that the court, iu Pettibone v. Griswold, had required perfect and complete certainty in the condition of a mortgage, so far as relates to strangers to the transaction ; and to such a degree as to preclude the necessity of any further enquiry. But the error is most obvious, and resulted entirely from the construction of a single sentence in the opinion expressed, disjoined from all other parts of it ; as if it had been declared in the form of an axiom, and were insulated and alone. I readily admit, that the paragraph immediately succeeding the rule relative to notice, was not expressed with a precision that defies all criticism. Instead of the expression “ concerning the liens,” more correctly it should have been “ concerning the existence of the liens.” It was expected, however, to receive its construction as being the part of an entire subject, each sentence contributing something to the precise developement of the court’s opinion ; in pursuance of the maxim, Ex antecedentibus et consequentibus fit optima interpretatio. More especially may it be demanded, that it be read with this qualification: “ at least, he must have the power of knowing from this source,” i. e. from the condition of the deed, “ the subject matter of the mortgage, that his investigation may be guided by something, which will terminate in a certain result.” It is extremely obvious, that the case of Pettibone v Griswold was not affected by the preceding principles ; and this may account for their being perhaps more loosely expressed than they would have been, had a close application of them been required. The mortgage in that case embraced all future notes and receipts, without the designation of any, and *449supplied neither information, nor the probable means of successful enquiry ; and, as there was no imaginable check on the substitution of notes and receipts at pleasure, and without limitation of time, the policy of the recording system, if such mortgage were valid, would effectually be defeated. A condition to a deed made to secure all future supplies, debts and liabilities, would not be more dangerously lax and indefinite.

The principle contended for by the defendants, is refuted by the case of Peters v. Goodrich ; by the expressions already recited from Pettibone v. Griswold ; and by other parts of the same case. The latter case requires, that the record should contain sufficient information relative to the subject matter of a mortgage, to direct the enquirer to the necessary intelligence, and to prevent a debtor, by extreme indefiniteness and generality, from the substitution of every possible demand at his pleasure. “ I am well aware,” (said the Judge, when delivering the opinion of the court) “that absolute certainty is not to be expected from an examination of the records of land titles ; but there always may and ought to be a certain object, after which suitable enquiries may be made. A mortgage may be given to indemnify a person from damages arising, by reason of his having become the surety of another, in the office of sheriff or collector ; or as administrator on an estate. In all these cases, an enquiring creditor cannot know from the record the precise incumbrance ; but he has notice of certain definite facts, which point to and guide him in, the necessary investigation on the subject. Cases of this description must not be confounded with conditions to deeds, which neither communicate any certain information, nor designate any track, in pursuance of which information may be obtained.”

In the transaction of business, the exigencies of it not unfrequently require, that the conditions of mortgage deeds should be as uncertain as the one under discussion ; and such mortgages are unquestionably legal. Both private justice and the convenience of the public demand, that they should be considered valid. The case of mortgages for the indemnity of sureties, has already been mentioned. A mortgage to secure an unliquidated book debt, or the fidelity of a factor or bailiff, whose business it is to receive money and pay it over, undoubtedly would be good ; and yet there is nothing certain here but the subject matter of the stipulation.

What, then, is the fatal uncertainty existing in the description of the debt and obligation of Jonathan Pasco ? The sum *450of the indebtedness was not, and could not be, specified; nor was it necessary that it should be; but the subject matter of the mortgage was explicitly stated. The subsequent mortgagee had notice from the record, that Jonathan Pasco was indebted ; and that he was accountable to the plaintiff for all the monies, and securities for money, of Heath. What the original amount was, the inventory of Heath’s estate would inform him; and he would have experienced no difficulty in ascertaining the precise sum and manner of Jonathan Pasco’s indebtedness. He was informed, by the mouth of his mortgagor, that a settlement had been made between him and the plaintiff ; and that the balance due surmounted twenty-eight hundred dollars. Instead of effectuating the policy of the recording system, by an invalidation of the plantiff’s mortgage, the court would, in that event, be instrumental in the perpetration of a hardship most inequitable. The free use and disposal of a person’s property where neither law nor policy forbids, would be inhibited; the exigencies of business, in promotion of the general convenience, disregarded ; and the impracticable principle, in all cases, that mortgage conditions must contain within themselves, not reasonable certainty only, but certainty to a certain intent in every particular, adopted. This would be conformable neither to correct principles, nor to our own adjudications.

Peters, J.

was of opinion that this case was not distinguish able in principle from Pettibone v. Griswold ; and would, therefore, affirm the decree of the superior court.

Brainard, J. concurred with the Chief Justice. Bristol, J.

said, that aside from the case of Pettibone v. Griswold, he should have no doubt that the mortgage in question was good ; but that case had produced some hesitation in his mind; and he was inclined to think, that the present case must be governed by it.

Decree reversed.