#### Charles B. Bassett, Resp’t, *v.*Jesse L. Wood, impleaded, App’lt.

*(Supreme Court, General Term, Fourth Department,*

*Filed February 15, 1890.)*

Foreclosure—Parties.

A son owned a large house which was arranged and built for two families. There was no garden; the yard was occupied in common. The father advanced certain moneys which the son secured by a mortgage not recorded, by the provisions of which the father during life was to have the right to the possession for life of (generally) the southern part of the house. He went into possession in 1871, and has since continued. He and his family lived separate from any other occupants. Subsequently the son mortgaged the premises to a *bona fide*purchaser, who brings foreclosure. *Held,*that the possession of the father was such as to amount to constructive notice of his interest in and lien upon the premises, as against plaintiff. His possession was actual, open and visible, and was not equivocal, occasional or for a special or temporary purpose.

(Merwht, J., dissents.)

Appeal from judgment in favor of plaintiff, entered upon 'report of referee.

Action of foreclosure.

*Marvins &*Hanford, for app’lt; *Handier &*Sewell, for resp’t.

Martin, J.

We think the possession of the appellant was such as to amount to constructive notice of his interest in and lien upon the premises in question.

The learned referee, at the request of the appellant and upon sufficient evidence, found: “ That in the month of August, 1871, and after said house was ready for occupancy, the defendant, Jesse L. Wood (the appellant), moved with his wife and family into said house and took possession of the south wing thereof, and the south tier of rooms in the body thereof (except the back bed room on the second floor) and the south part of the cellar, and use of the back kitchen for washing, and use of, privy and yards, and took sole and exclusive possession and control thereof, and resided therein, with his family, separate and apart from the occupants of the other portion of said house, and from that time until the commencement of this action, and still resides there.”

■ The appellant held possession of the portion of the premises mentioned under and in pursuance of the provisions of a mortgage given him by the owner in fee. By the provisions of such mortgage the appellant was given the absolute right to such possession during the life of the parties. He was thus in possession when the plaintiff’s mortgage was given. That the appellant’s possession was actual, open and visible, and not equivocal, occasional, or for a special or temporary purpose, is made quite clearly manifest by the evidence in this case. His possession was such as to enable a subsequent grantee or mortgagee to go upon the premises and obtain, by inquiry there, information of his rights in and lien thereon. *Page*v. *Waring,*76 H. Y., 463, 470. It is quite obvious that the plaintiff and the parties interested in the mortgage sought to be foreclosed must have known, or by proper inquiry would have learned, that the premises,in_question were thus occupied by the appellant.

*902In *Moyer*v. *Einman,*13 N. Y., 180, the plaintiff was in possession of a farm under a contract of purchase, and it was held that that fact was notice to all persons who had subsequently become interested in the premises of all the plaintiff’s rights under his-contract. In *Governeur*v. Lynch, 2 Paige Ch., 300, it was held, that where a vendee is in possession of lands under a contract to-purchase, a subsequent purchaser or mortgagee has constructive notice of his equitable rights, and takes the lands subject to his prior equity. In *De Ruyter*v. *Trustees of St. Peter's Church,*2 Barb. Ch., 555, it was held, that where a person who has an equitable interest in a building erected upon premises belonging to another, by having advanced money for the erection thereof, is in possession of the premises under an agreement with the owner at-the time of the execution of a mortgage thereon to a third person, and continues in possession down to the time of the sale of the-premises by a master under a decree obtained in a suit brought to-foreclose such mortgage, the complainant in the foreclosure suit and the purchaser at the master’s sale are bound to take notice of the equitable rights of the tenant, if any such exist, such possession being constructive notice to them of his rights.

In the *Bank of Orleans*v. *Flagg,*3 Barb. Ch., 316, it was held, that where the purchaser of premises is in the actual possession thereof by his tenant at the time of the giving of a mortgage-thereon to others by the vendor, such possession is constructive notice to the mortgagees of the equitable rights of such purchaser, and they are not entitled to protection as *Iona fide*mortgagees without notice of his rights., In *The Trustees of Union College*v. *Wheeler,*61 N. Y., 88, it was held, that actual occupancy by a purchaser under a contract of sale is constructive notice to-a mortgagee of the rights of such purchaser.

In *Grimstone*v. *Carter, 3*Paige Ch., 421, it was held that if a-purchaser of real property knows that a person other than the-vendor is in actual possession thereof at the time of his purchase, or before he has paid the purchase money, and obtained the legal title, he cannot protect himself as a *bona fide*purchaser against the-equitable rights of the person in possession, of whom he made no-inquiry as to the nature of that possession. In *Cunningham*v. *Pattee,*99 Mass., 252, it was said: *“*The authorities fully support-the doctrine in equity, that one who purchases an estate, knowing it to be in the possession of a tenant, is bound to inquire into the nature of the tenant’s interest, and will be affected with notice of the extent thereof. * * * The general rule is that notice sufficient to make inquiry a duty is notice of all that by reasonable inquiry would have been ascertained.” Possession by a tenant is also held to be notice of a collateral agreement held by the tenant for the purchase of the property. *Knight*v. *Bowyer,*23 Beav., 609, 641; *Taylor*v. *Stibbert,*2 Ves., Jr., 437, 440; *Kerr*v. *Day,*14 Penn. St., 112.

“ Possession is notice of the legal or equitable interests in the land of a person in possession. It visits the purchaser with notice of every fact and circumstance which he might have learned by making inquiry of the occupant.” Jones on Mortgages, § 601.

*903The doctrine of the cases cited, and, indeed, the whole current of the authorities, seem to lead to the conclusion that the occupancy of the premises hi question by the appellant constituted constructive notice of his interest therein. It was sufficient to put the respondent upon inquiry that the appellant was in actual possession of a distinct and separate portion of the property, and it was the duty of the respondent to ascertain whether the appellant had any interest in it, and, if so, to what extent, and for this purpose to have some communication with or from him. *Seymour*v. McKinstry, 106 N. Y., 238; 8 N. Y. State Rep., 580; *Spofford*v. Manning, 6 Paige Ch., 383.

The cases of *Brown*v. Volkening, 64 N. Y., 76, and *Pope*v. *Allen,*90 id., 298, are not in conflict with this conclusion. In *Brown*v. *Volkening,*the premises were wholly unoccupied, and hence the case was clearly unlike the case at bar. In *Pope*v. *Allen*there was no distinct occupancy of the farm by the defendant. Pope and the defendant occupied the land together. Both were members of the same family, and the occupancy proved was equivocal. Those cases are clearly distinguishable from the case at bar.

In the case at bar, the occupation of the premises by the appellant was not a joint one, nor was it equivocal. It is true he did not occupy the whole of the premises, but he had actual and exclusive possession of a distinct and separate portion thereof. His possession was both really and apparently independent and exclusive of any possession of that portion by the mortgagor. Such possession was also inconsistent with an absolute and unqualified title and right of possession in the mortgagor. It indicated that the appellant possessed some right therein

We are of the opinion that the appellant’s possession was constructive notice to subsequent mortgagees of his interest in the premises; at least of his interest in that portion of the premises which was in his actual possession. If correct in the foregoing conclusion, it follows that the judgment should be reversed.

Judgment reversed and a new trial granted, with costs to abide the event

Hardin, P. J., concurs.

Merwin, J.

(dissenting)—The main question in the case is whether the occupancy of Jesse L. Wood was of such a character as to be constructive notice of his rights under his mortgage. In *Brown*v. *Volkening,*64 N. Y., 82, the doctrine is laid down that the possession which is sufficient to put a person upon inquiry, and which will be equivalent to actual notice of rights or equities in persons other than those who have a title upon record, “ must be actual, open and visible; it must not be equivocal, occasional, or for a special or temporary purpose ; neither must it be consistent with the title of the apparent owner by the record.”

This rule was approved in *Pope*v. *Allen,*90 N. Y., 298. In that case the plaintiff claimed title under a deed from H. B. Pope, who derived title under a deed from one Bogers which was on record when plaintiff bought. The defendant claimed that he *904was the equitable owner, that N. B. Pope in making the purchase from Rogers was his agent and wrongfully took title in his own name, and. without the defendant’s knowledge or consent, and that, defendant paid the purchase money; that defendant erected a. dwelling house on the premises at his own expense, and occupied it and was in possession at the time of plaintiff’s purchase. It. appeared that prior to the purchase from Rogers, N. B. Pope lived with the defendant as a member of his family and that after the purchase they moved on to the premises and Pope lived with the1 defendant as before. The court said, defendant’s possession was-equivocal and consistent with the record title in Pope, since Pope-was also in possession and there was nothing to indicate that defendant’s possession was not subordinate to his, or suggest hostility to the record title. Upon this subject, it is said in 2 Pomeroy Eq. Juris., § 620, “no mere occupation of the premises in common or in connection with a third person, and no mere acts of ownership equivocal in their nature, over the land, will then suffice.”

In the present case it appears that the house was quite a large-one; that it was arranged and built for occupation by two families, living entirely separate. There was no garden; the yard was occupied in common, as were also certain other privileges in connection with the house. The outside appearance of the house is. not shown. It was built by the son, he first moving in, and after-wards the father. The son was in business, the father apparently not In the house the families lived separate. This continued from 1871 to 1885, the record all the time showing the son to be the owner and no claim there by the father. With considerable force may it be said that such an occupancy by the father was equivocal and not inconsistent with the record title of' the son. There was a common use to a certain extent, and the1 fact that the families lived in the house separate would not materially change the situation. It would be a case where apparently the father was living with the son in the son’s house.

The principle, adopted and applied in the *Pope*case, substantially applies here. Within that, it must, I think be held that, the possession of Jesse L. Wood was not such as to amount to. constructive notice. No actual notice is shown.

The plaintiff is in the position of a purchaser for a valuable-consideration within the recording act. At the time he took the-mortgage he surrendered obligations upon which not only the-mortgagor but others were liable and he also gave time. *Cary*v. White, 52 N. Y., 138. There was a new and substituted contract.

It is argued by the defendant that the provision in the mortgage giving the mortgagees the permission or right to occupy certain rooms with certain privileges was in fact a lease for life and that the provisions of the recording act do not apply to it and that therefore it is good as against plaintiff without recording.

The provisions of the recording act do not “ extend to leases for life or lives, or for years ” in the counties of Delaware and certain others. Section 42, of chap. 3 part 2, of R. S.; 4 R. S., *9058th ed., 2476. This provision is taken from chap. 263 of the Laws of 1823. The mortgage in question is not a lease within the meaning of that act. The father advanced certain monies, upon the agreement by the son to secure them by said mortgage. When the mortgage came to be given, the payment of the interest was provided for in a certain way. The father did not become the tenant of the son. No rent was reserved. The son agreed that the interest should be paid in that way and for any default in that agreement, the father was given a remedy by foreclosure. Such is not a characteristic of a lease.

It follows that the judgment should be affirmed.

Judgment reversed, and new trial granted, with costs to abide event.