Case ID: ny-st-rep_6/html/0066-01.html
Source: Caselaw Access Project
Author: {"author": "Pratt, J. Dykmak, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Eliza A. Munoz, Admr’x, Resp’t, v. George Wilson et al., App’lts.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed December 14, 1886.)
    
    1. Mortgage—At what time it becomes effectual.
    One owning the premises in suit in this action on February 6, 1878, conveyed the same with others to his nephew by deed of that date acknowledged on the thirteenth day of the same month and recorded on the following day. This conveyance was without consideration and executed with intent to defraud creditors. The grantee at the same time executed a deed conveying the same premises to his grantor’s wife and bearing even date with the first deed and acknowledged on the same day with it, but not recorded until October 4, 1881. He also, on October 2, 1879, by direction of the grantor, made a mortgage of the premises in question to the mother of this plaintiff, which was acknowledged December 27,1879, and recorded on the thirty-first day of that month. The mortgage was made to secure an indebtedness of the original owner of the premises to the mortgagee. In an action brought to foreclose the mortgage, its validity was attacked on the ground that it had no legal inception. Held, that the fact that the party at whose instigation the mortgage was made retained it after it was recorded, did not affect its validity; that when it was delivered by the mortgagor to the agent of tne mortgagee it became valid and effectual as a mortgage.
    2. Recording act—Bona fide purchaser.
    
      Held, that the mortgagee, considering the facts of the case, must be regarded as a bona fide purchaser under 1 R. S., 756, § 1. (Dvkman, J., dissents).
   Pratt, J.

The only theory that can be predicated upon the evidence in this case is that expressed by the judge who tried the cause at special term, in his findings of fact:

That Michael K. Wilson was the real owner of the mortgaged premises, was indebted to Mrs. Olay, the mother of the plaintiff, and caused George Wilson, who held the nominal title in trust for Michael, to make the mortgage to secure such indebtedness is undoubtedly true, and it is also true that Michael, with a designio cheat his creditors, made a conveyance of the same property to George, and caused the latter to make a deed of the same to Eliza A., the defendant.

That George held the possession of the property and managed it for the benefit of Michael seems clear, and that the latter controlled the former in all acts concerning the property is the only reasonable conclusion to be drawn from the testimony.

The evidence is abundant and conclusive as to the existence of an indebtedness to the amount of the mortgage from Michael to Mrs. Olay. lío other reasonable construction can be placed upon the conduct of Michael than that he owed Mrs. Olay and intended to secure her by this mortgage. The making of the mortgage without consideration would not aid his scheme to defraud his creditors, unless they were both guilty of a conspiracy and that Mrs. Olay was ready to commit perjury to assist Michael in defrauding his creditors. We can indulge in no such presumption.

The facts are equally clear upon the question of the due execution and delivery of the mortgage.

That George signed, sealed and delivered the mortgage to Michael without condition or qualification, is undisputed, and that the latter assumed to act for Mrs. Clay and received and recorded the mortgage for her benefit, is well established by the proofs.

The fact that Michael retained the mortgage after it was recorded does not affect the validity of the instrument. When it was delivered by George and accepted by Michael for Mrs. Olay, it became valid and effectual as a mortgage and what may have transpired after that was immaterial.

The efficiency of a deed depends upon its being executed according to the statutory formalities and being unconditionally delivered by the maker to the grantee or his agent. Wallace v. Berdell, 97 N. Y., 13-23; Fisher v. Hall, 41 id., 416; Church v. Gilman, 15 Wend., 656; Moore v. Giles, 49 Conn., 570.

That George delivered the mortgage and forever ceased to have any control of it afterwards cannot be questioned.

It is equally clear that Michael accepted the mortgage in behalf of Mrs. Clay and intended to make it a valid and effectual security in her hands. Lawrence v. Farley, 24 Hun, 293; Moore v. Giles, supra.

The court below was right in holding that the mortgage in suit was prior and paramount to the deed to Eliza Munoz.

Leaving out of view the principle that a fraudulent conveyance cannot be set up to defeat a junior mortgage, the fact here is that the mortgage was delivered prior in point of time to the deed.

We also think that Mrs. Clay must be regarded, under the facts disclosed, as a purchaser in good faith under the recording act. 1 Rev. Stat., 756, § 1.

Michael managed the whole business; he intended to have the mortgage take effect prior to the deed, and accordingly had it recorded first.

There was evidently no intention to vest any title in Eliza Wilson prior to the recording of the mortgage, and possibly not at all, unless it became necessary in furtherance of the scheme to defraud creditors. This is shown by the fact that Eliza never knew she had any title until the deed was handed to her after it was recorded.

Mrs. Clay has since died, and it is not difficult to find a motive on the part of Michael to defeat this mortgage, but the evidence fails to sustain the defence, and the judgment must be affirmed, with costs.

Dykmak, J.

(dissenting)—This is an action to foreclose a mortgage, and its validity is assailed for want of legal inception. It is the claim of the defendants that the mortgage never became operative and never had legal existence or obligatory force.

The facts to be utilized in the decision of the case are these: Michael K. Wilson was the owner of the premises, and all the legal rights of these parties flowed from him, and he had invested in the property $16,000, received from his mother-in-law, who had directed him to give the property to his wife. On the sixth day of February, 1878, Michael K. Wilson conveyed the premises in question, with others, to his nephew George Wilson, by deed of conveyance, dated and bearing date on that day, acknowledged February thirteenth and recorded February 14, 1873. That conveyance was without consideration and was executed with the design of placing the property beyond the reach of the creditors of the grantor.

George Wilson, the grantee, at the same time executed a deed of conveyance for the same premises to Eliza A. Wilson, the wife of Michael K. Wilson, bearing date the same day and acknowledged at the same time with the other, but it was not recorded until October 4, 1881.

On the second day of October, 1879, George Wilson, by direction of his uncle Michael, made the mortgage in question to Elizabeth Jane Clay, the intestate and mother of the plaintiff, and acknowledged the same December 27, 1879. The mortgage was recorded December 31, 1879. There was no bond executed, and the mortgagee never had possession of the mortgage and had no information of its execution or existence. There is no proof of any indebtedness to the mortgagee, either from George or Michael, except the inference arising from the execution of the instrument itself. The deed of conveyance to Eliza A. Wilson was delivered to her husband and remained in the house thereafter and she was aware of its execution and existence.

The mortgage in question was made under the direction of Michael K. Wilson, and delivered to him, and he loft it for record, and it was returned to him after it was recorded, and thereafter remained in his possession.

The trial judge found the facts requisite to authorize a judgment in favor of the plaintiff, and among other things found that the mortgage, although posterior in date to the deed of conveyance to Eliza A. Wilson, was in fact delivered or became operative.

This case is peculiar. George Wilson, the person who executed this mortgage never was more than the nominal owner of the premises. He received the legal title at the request of his uncle, and conveyed the same away by his direction to Ms wife. George Wilson never rested under any obligation to execute a mortgage to Mrs. Clay, and for himself he never undertook to do so. If a mortgage was to be givento her, Michael K. Wilson was to procure its execution. He was the real mortgagor, and the mortgage was to be furnished or withheld at Ms election. He did procure its execution, but he retained it in Ms own possession, or under Ms absolute control. He had dominion over it at all times. Its execution was the result of his command, and so far from manifesting any intention to surrender it, or deliver it to any one, ho held it within his grasp with vigilance and determination.

The question of delivery always involves a question of intention, and an intent to deliver on one hand, and accept on the other, is essential in all cases to an effective delivery, and if Michael K. Wilson, who was the person to furnish the security if it was supplied, never intended to surrender the same, and never did part with its possession, then there was no delivery thereof, neither did the simple act of recording the mortgage constitute a delivery. Day v. Mooney (6 Thomp. & Cook, 382), and cases cited. In that case the senior counsel for the plaintiff in this action wrote the opinion of the court and made reference to authority amply sufficient to sustain his conclusion.

This mortgage was not the result of any arrangment for security and its execution was the result of the mere volition of Michael K. Wilson. Its acceptance could not have been forced upon the mortgagee, and she could not have compelled its delivery to her. We find, therefore, no testimony to support the finding in favor of a delivery of the mortgage.

The question of consideration is also a very serious one, in the way of the plaintiff. There was no bond and the mort: gage created no personal liability. Under our statute the seal was only presumptive evidence of a consideration and the circumstances surrounding the execution of this mortgage go very far to rebut such a presumption in this case.

Nor is the question of priority free from embarrassment. Michael K. Wilson procured the execution of the deeds and mortgage and his knowledge of the existence of the deed to his wife may well be imputed to the mortgagee if she claims any benefit from his action.

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