Case ID: ad_118/html/0579-01.html
Source: Caselaw Access Project
Author: {"author": "Robson, J.: Kruse, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James M. Hamilton, Appellant, v. Frank V. Fleckenstein, Defendant, Impleaded with William S. Morse and Others, Respondents.
    Fourth Department,
    March' 6, 1907.
    Appeal — judgment based on inconsistent findings that mortgage was taken in good faith and without notice, and that the mortgagees had knowledge of the fact that plaintiff claimed a lien upon the premises.
    When, findings, whether made by the court as its own conclusions or at the request of an unsuccessful party, are inconsistent, and the determination of the facts involved in the findings is material and necessary to uphold the judgment, the defeated party on appeal is entitled to the benefit of the findings most favorable to his contention, and if the judgment stands without sufficient facts as a basis, it should be reversed.
    When on the issue as to whether a mortgage on real estate was accepted by the mortgagee in good faith and without notice of a prior contract whereby the plaintiff was entitled to a conveyance of the lands on the completion of a building thereon, then in course of construction, the court finds, first, that the mortgage was accepted by the mortgagees “in good faith and without notice of the contract. set forth in the complaint herein or of anj other claim or lien of plaintiff's affecting said premises,” and, second, that the plaintiff iiad conversations with a member of the firm which was furnishing lumber for the house, which firm subsequently became the mortgagees, in which lie stated that the house was being built for him, and that on the plaintiff’s request a member of the firm instructed the foreman to make changes in the lumber delivered, etc., the two findings are inconsistent, for upon the latter finding the mortgagees are shown to have had knowledge of facts sufficient to put them upon inquiry as to the plaintiff’s claim to the premises.
    Kruse, J., dissented, with opinion.
    Reargiiment of an appeal by the plaintiff, James M. Hamilton, from a judgment of the Supreme Court in favor of the defendants William S. Morse and others, entered in the office of the clerk of the county of Monroe on the 10th day of April, 1906, upon the decision of the .court, rendered after a trial at the Monroe Special Term, dismissing the complaint as to said defendants.
    The judgment appealed from was affirmed by this court July 12, 1906, and thereafter on appellant’s application a reargument was granted. • (See 114 App. Div. 915; 115 id. 883).
    
      Hugh O'Brien, for the appellant.
    
      John P, Morse, for the respondents.
   Robson, J.:

Appellant’s motion for reargument was founded upon the claim that certain findings of fact, made by the court at his request, were inconsistent with and directly contradicted the material finding of .fact, made by the court, upon which respondents’ right to the . judgment, directed in the court’s conclusions of law, was based.

The only question presented to the court at this time is whether the findings to which our attention is now directed are so diametrically opposed as to be necessarily irreconcilable. ■ If these findings, whether made by the court as its own conclusions of fact, or at the suggestion of the unsuccessful party by requests to find, are inconsistent. to that extent, and the determination of the- facts - involved in the findings is material and necessary to uphold and establish the right of the propérly successful .party to judgment in the action, then it follows that, the appellant being, of course, entitled to the benefit of. the findings most favorable to his contention, the judgment stands without sufficient facts as a basis for its rendition, and should be reversed. (Redfield v. Redfield, 110 N. Y. 671; Nickell v. Tracy, 184 id. 386.)

The facts involved in this controversy aré neither complicated nor obscure. In 1902 defendant Fleckenstein, besides one lot on Chili avenue at the end of Darien street, owned four other lots situate oh the latter street in the city of Rochester. Upon each of these lots'in the late , summer, Or fall, of that year he . began the erection of -a- dwelling house. Some considerable part of -the lumber used in the construction of these houses he purchased of the firm of William B. Morse & Sons,- which firm the respondents now represent.

The erection of the dwelling house on the Darien street lot, known as lot 14, which is the lot and premises in question in this action, was in pursuance of a contract, made on the fourteenth day of August of that year by Fleckenstein with the appellant Hamilton. By this contract Fleckenstein agreed, for the consideration to be paid him as stated in the contract, to sell and convey to Hamilton these premises, together with the house, which he was, as provided in the contract, to build thereon and complete by November 15, 1902.

The appellant Hamilton, carrying out in full his part of the contract, before the mortgage, hereinafter referred to, was given, had paid to Fleckenstein, as required by said contract, a considerable amount of the purchase price of the premises.

The respondent William S. Morse during all this time had the general management of the business of the Morse partnership ; and on or about November 16, 1902, he required Fleckenstein to give security for the firm’s claim against him for lumber furnished, which then amounted- to $2,700. After some negotiation it was agreed > that one-half of that sum should be secured to the firm by Fleeken- . stein’s note, payable one month after date, with a mortgage on lot 14 as collateral security therefor; and the remaining one-half by his two months’ note with a mortgage on lot 16 as collateral. Lot 16 was at that time also under contract by Fleckenstein to another person, whose rights are, however, not in -any way involved in this action. Fleckenstein’s note with th e mortgage on lot 14 was there upon executed and delivered to Morse for the firm, and the mortgage was by him recorded in the clerk’s office November 18, 1902.

Hamilton’s contract was not recorded till long after the recording of the Morse mortgage; and it was never completed by Fleckenstein, who has since been adjudged a bankrupt. ■

Hamilton brings this action to have his contract with Fleckenstein declared to be a lien upon the premises, described therein, superior to the liens of any of the defendants in the action, including the Morse mortgage, and to foreclose his lien on the premises in the usual course.

Priority of record of respondents’ mortgage, and that it was given for a valuable consideration, were not controverted on the trial. The litigated issue was whether the mortgage was taken in good faith and without notice of appellant’s interest in tine premises. Upon this issue the court has found:

Third. That said mortgage was executed and delivered to the mortgagees therein named for a good and valuable consideration and was accepted by them in good faith and without notice of the contract set forth in the complaint herein or of any other claim or lien of plaintiff’s affecting said premises.”

But he lias also found at appellant’s request:

Tenth. That during the month of October, 1902, said James M. Hamilton called at the lumber office of said William B. Morse. &■ Sons; that he thereupon met William S. Morse, with whom he was acquainted; that he had a conversation with said William S. Morse regarding the quality of the lumber which, was being delivered by said William B. Morse & Sons for the construction of the house on the above-described premises; that in the course of the conversation lie told said William S. Morse that the house which was being built . on'said lot fourteen Darien street was.being built for him, said Hamilton'.
“ Eleventh. That thereupon the said William S. Morse instructed said Hamilton to go to the foreman in the lumber yard of said William B. Morse & Sons and explain to the said foreman what he wished; that thereupon said Hamilton did go to said foreman, told him that said house on said lot fourteen Darien street was being .built for him, said Hamilton; that the specifications of the contract were for second grade pine siding, and that white wood siding was being delivered, and he, the said Hamilton, wished said siding to be changed to second grade pine; that the foreman agreed to make said change, and that thereafter second grade pine siding was delivered to. the said house, number fourteen Darien street by said William B. Morse & Sons, and the white wood siding theretofore delivered was taken-away.”

There is sufficient evidence to support these two findings, and, if effect is to be given them, no other conclusion can be reached than that in the month preceding that in which respondents’ mortgage was. taken their general manager was notified by Hamilton that the house on the premises in question- was being built by Fleckensteiu for him, and that the former had such an interest in the premises that he at least had the right to and did insist that the material' used in the erection of the house should conform to specifications in the contract under which Fleckenstein was then building the house for him. Though it is not specifically found as a fact by the trial court, it is yet worthy of notice that Fleckenstein testifies he told Morse in the interview, in which Morse demanded security, which was the day before the mortgage in question was given, that both lot 14 and lot 16 were under contract. Morse does not expressly deny that he was so informed by Fleckenstein at that time, though he does say that nothing of the kind was said on the next day when the mortgage was given.

It is true that Morse was not told either by Hamilton or Fleckenstein, prior to the time the mortgage was given, the extent or nature of Hamilton’s interest in the premises; but that lie then had information that Hamilton did claim some interest therein is equally clear. What this interest was an inquiry either of Hamilton or of Fleckenstein would have disclosed. Morse made no inquiry whatever, notwithstanding his knowledge that Hamilton asserted some interest in the premises. This information would, it seems, have made a prudent man alert to ascertain what that interest was, or was at least sufficient to demand of him reasonable effort and inquiry to obtain the further information as to the interest claimed, which was apparently ready at his hand.

If the facts which were brought to Morse's attention were sufficient to put a prudent man upon inquiry,” then, whether he made the inquiry or not, respondents must necessarily be held chargeable with notice of all facts which reasonable inquiry would have surely disclosed. (Brumfield v. Boutall, 24 ITun, 451; Williamson v. Brown,-15 H. Y. 354.)

It follows that the necessary effect of the findings, embodied in the tenth and eleventh requests to find, is that respondents did have implied actual notice of appellant’s interest in the premises, and for the purposes of this appeal these findings in favor of the unsuccessful party must control, rather than the contradictory finding that the mortgage was accepted by respondents in good faith and without notice of any interest, claim or lien of plaintiff affecting the premises.

On the argument it was suggested by respondents’ counsel that the trial court’s acquiescence in the tenth and eleventh requests to find was due to inadvertence, which was in a measure explained by the fact that the minutes of the evidence were not. before the court at the time the requests to find were passed on. Whether or not these findings would have been made by the court, if attention had been called with greater precision to their statements and the evidence in their support, we are, of course, unable to determine. The present discussion will doubtless on another trial result in a harmonious decision of all material facts. We express no opinion as to the merits. -

The judgment appealed from should be reversed and a new trial granted, with costs to the plaintiff to abide the event.

All concurred, except Kruse, J., who dissented in memorandum.

Kruse, J. (dissenting):

It is not proposed to reverse this judgment because it is against the weight of evidence or on account of any infirmity in any of the proceedings harmful to the appellant, save only that one of the findings of the trial judge contained in his decision is inconsistent with another finding of fact made at the request of. appellant.

I think the two findings are not inconsistent. The tenth finding made upon the request of the appellant and relied upon by him for reversing the judgment is to the effect that during the month of October, 1902, the plaintiff in a conversation with William S. Horse, one of the defendant mortgagees, regarding the lumber which Morse’s firm was furnishing, stated to Morse that the house upon the premises in- question was being built for him. The mortgage was not taken until the Itth day of November, 1902, so that at the time when the conversation referred' to took place Morse was not interested in any way in the title to the premises, nor was-lie called upon to make inquiry. Hor does it appear that at that time he even contemplated taking any mortgage upon, the premises. It is true that if at the time Morse took the' mortgage his attention had been called to this conversation or if it appeared that he still had in mind the information given him when the lumber was being sold he would be chargeable therewith. .(Foulks v. Reed, 89 Ind. 310, 314.) It seems to me, however, that the third finding contained in the decision negatives that fact, for there it is specifically found that the mortgage was executed and delivered to the mortgagees for a good and valuable consideration without notice of the contract or of any other claim or lien of the plaintiff’s affecting said premises.

Judgment reversed and a new trial ordered, with costs to the appellant to abide the event.