Case ID: ny_7/html/0141-01.html
Source: Caselaw Access Project
Author: {"author": "Ruggles, O. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Brown et al. v. Blydenburgh.
    
      Assignment of mortgage.
    
    The discharge of a mortgage, by the mortgagee to the mortgagor, without its production, is inoperative, as against a third person, to whom it had been assigned as security for a loan; the non-production of the instrument is sufficient to put the mortgagor upon inquiry, and to affect him with constructive notice.
    Appeal from the general term of the Supreme Court, in the first district, where a decree of the late assistant vice-chancellor Hoeeman, in a foreclosure-suit, had been affirmed.
    This was a suit in equity, commenced in the late court of chancery, for the foreclosure of a mortgage given by Jeremiah Blydenburgh to Richard F. Blydenburgh, on the 3d August 1839, upon lands in Suffolk county, to secure the sum of $3497.13.
    *On the 5th August 1839, the mortgagee as- ^ ^ signed the bond and mortgage in question to William C. Atwell; and the mortgage and assignment were recorded on the 26th. On the 4th December 1839, William C. Atwell assigned the bond and mortgage to Elijah H. Kimball, as collateral security for a loan of $260, of which $114 remained due at the time of the commencement of this suit; this assignment was recorded on the 10th February 1840. On the 17th March 1840, Atwell assigned and delivered the bond and mortgage to Thomas Calder, as collateral security for a loan of $250; and the latter, on the same day, assigned and delivered them to the plaintiffs, as collateral security for a loan of like amount; neither of these last two assignments were recorded.
    On the 1st October 1840, Jeremiah W. Blydenburgh, the mortgagor, conveyed the. mortgaged premises to William C. Atwell, by deed, dated the 4th May 1840; and on the same day, received from Atwell a discharge of the bond and mortgage; the deed was recorded the 2d October 1840.
    On the 13th October 1840, Atwell executed a mortgage of the premises to. Richard F. Blydenburgh, the mortgagee in the former mortgage, for the sum of $250, which was recorded the 20th November 1840.
    And. on the 12th November 1840, William C. Atwell conveyed the premises to George Atwell, and received from him a mortgage of even date, for the sum of $3500, both of which were recorded on the 25th November 1840.
    In 1841, the plaintiffs commenced this suit for the foreclosure of the first mortgage; William C. Atwell, Elijah H. Kimball and Thomas Calder, being made parties defendant, as claiming an interest in the mortgaged premises; *an answer on oath was waived.143] The bill was taken pro confesso against William C. Atwell; the other defendants put in answers.
    J. W. Blydenburgh, the mortgagor, admitted the execution of the bond and mortgage, and the assignment thereof to William C. Atwell; and averred, that, on the 1st October 1840, without notice or knowledge that Atwell was not the owner, and in the belief that he was, he paid and satisfied to Atwell the bond and mortgage in question; and that prior to the institution of the suit, he had sold and conveyed the premises, with warranty.
    Richard F. Blydenburgh, the mortgagee in the second mortgage, alleged in his answer, that in October 1840, William O. Atwell represented to him that he owned the premises, and that the original bond and mortgage given to the respondent had been paid; that he obtained a certificate of search from the clerk’s office, and learning from it, that the only outstanding incumbrance upon the premises was Kimball’s mortgage, he loaned Atwell $250 upon the security of a mortgage on the premises.
    The defendant, George Atwell, answered, that on the 12th November 1840, he purchased the premises from William O. Atwell, in good faith, and paid the full value thereof.
    The vice-chancellor made a decree for the foreclosure of the mortgage, and a sale of the premises, subject to the prior claim of Kimball thereon, and against the mortgagor for any deficiency. From this decree, an appeal was taken by Jeremiah W. Blydenburgh only; and on a rehearing before the general term of the supreme court, to which the cause had been transferred under the constitution, the decree of the vice-chancellor was affirmed; whereupon, the mortgagor appealed to this court.
    
      Blydmbwrgh, the appellant, in proprid persona.
    
    
      *Meld, for the respondents. [ * 144
   Ruggles, O. J.

The mortgage sought to be foreclosed was executed on the 3d of August 1839, by Jeremiah W. Blydenburgh to Richard F. Blydenburgh, for $3497.13, payable on the 1st of March 1840. The mortgagee assigned it to William C. Atwell on the 5th August 1839; Atwell assigned it to Calder on the 17th of March 1840, to secure the payment of $250; and on the 17th of March 1840, Calder assigned it to the plaintiffs to secure the payment of the like sum.

J. W. Blydenburgh by deed bearing date 4th May * 145 "1 executed *in presence of J. F. Searing, and -* acknowledged before him as commissioner of deeds, on the first day of October of that year, conveyed the mortgaged premises to William C. Atwell in fee; the deed contained the usual full covenants. On the same day (1st October 1840), Atwell made a certificate acknowledging that the mortgage in question was paid; this certificate was acknowledged on the. same day, before the same commissioner. The deed and certificate, therefore, seem to be parts of one and the same transaction, both executed on the first of October. Looking at the affair in this light, it appears, that J. W. Blydenburgh conveyed the land to W. O. Atwell in satisfaction of the mortgage.

It was clearly a fraud on the part of Atwell, to give this certificate of satisfaction; because he had previously assigned the mortgage to Calder, and knew that he had no authority to discharge it.

J. W. Blydenburgh sets up in his answer (not under oath), that he paid the mortgage-money to Atwell in good faith, and without notice of the assignment to Calder ; but there is no proof of the payment of any money by Blydenburgh to Atwell. It appears that he conveyed him the land; and in Atwells hands, the land is clearly chargeable with the payment of the complainant’s debt, and neither W. O. Atwell nor George Atwell, to whom the land was afterwards conveyed, have appealed from the decree. The only ground, therefore, if there be any, on which J. W. Blydenburgh can complain of the decree is, that he is charged with the payment of the deficiency, in case the mortgaged premises should fail to bring, upon a sale, a sum sufficient to satisfy the complainant’s demand. Judging of the value of the land, from the amount of the purchase-money expressed in the deed, the amount of the plaintiff’s demand is so small, as to show that objection to the decree to be rather formal than substantial. But were it otherwise, the decree ought not to be reversed on this point. There are circumstances in the case, which ought to have put Blydenburgh upon inquiry as to Atwell’s right to discharge the mortgage-debt. The bond and mortgage were not in his possession, at the time the certificate *of discharge was given; the complainants in their *- bill offer to produce them, and the inference is, that they were in the complainants’ hands, when the discharge was given. There ,is neither allegation nor proof, that Blydenburgh made'any inquiry of Atwell for the bond and mortgage, nor that any misrepresentation was made by Atwell on that point. In the common and usual course of business, Atwell, if he had been the owner of the bond and mortgage, would have delivered them to Blydenburgh, when the satisfaction was acknowledged; and it is against all probability, that Blydenburgh would have paid the debt, either in money or by a conveyance of the land, without inquiry for his bond. That inquiry would have resulted, either in a 'discovery of the fact that the securities had been previously assigned by Atwell, or in a misrepresentation made by him of the true state of the case. Such a misrepresentation might have excused Blydenburgh; it would have been evidence of his good faith in taking the discharge. His answer, not being on oath, is not evidence in his favor, and the circumstances referred to raise a presumption against him, which he was bound to remove by proof; this he has not done.

Sherwood was a purchaser pendente lite, and after notice of Us pendens filed; he is, therefore, to be regarded as a purchaser with notice of the complainants’ claim.

Judgment affirmed. 
      
       See Foster v. Beals, 21 N. Y. 247 ; Kellogg v. Smith, 26 Ibid. 18. These authorities do not apply to a partial payment in good faith to the mortgagee, without the production of the securities for the debt. Van Keuren v. Corkins, 66 N. Y. 77 ; s. c. 4 Hun 129 ; Wanzer v. Cary, 12 Ibid. 403 ; s. c. 76 N. Y. 526. Nor do they apply to a purchaser of the land. Purdy v. Huntington, 46 Barb. 389 ; s. o. 42 N. Y. 334.