Case Name: Kate Moore, Respondent, v. Joseph Le Maire and Others, Defendants, Impleaded with Catherine Hanley, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1915-07-30
Citations: 169 A.D. 154
Docket Number: 
Parties: Kate Moore, Respondent, v. Joseph Le Maire and Others, Defendants, Impleaded with Catherine Hanley, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 169
Pages: 154–158

Head Matter:
Kate Moore, Respondent, v. Joseph Le Maire and Others, Defendants, Impleaded with Catherine Hanley, Appellant.
Second Department,
July 30, 1915.
Vendor and purchaser =— mortgage — purchase subject to mortgage — failure to record satisfaction of prior mortgage—notice of existence of mortgage — when purchaser estopped from questioning validity of mortgage — purchaser in good faith — costs.
A purchaser of real estate, subject to a mortgage, after recording the conveyance and paying interest on the mortgage regularly for several years, discovered that the mortgagee’s attorney had failed to record a satisfaction piece and assignment of a prior mortgage, and also the new mortgage which she thereupon procured and had recorded. The mortgagee did not deny the discharge of the prior mortgage, and it did not appear that any rights had been or could be asserted by any third party, as the result of the omission to record any of the instruments, or that the purchaser had been injured thereby. In an action by the mortgagee to cancel the prior mortgage upon the ground that it had been discharged by payment prior to the purchase, and to foreclose the subsequent mortgage, the purchaser answered with denials and the defense that at the time of her purchase she had no knowledge or information of the existence of the new mortgage. Held, that the purchaser is estopped from questioning the legality of the new mortgage;
That under the circumstances she should not be regarded as a subsequent purchaser in good faith and for a valuable consideration.
Since the purchaser denied and litigated the validity of the mortgage itself, the discretion of the court in awarding costs and an allowance against her should not be disturbed.
Appeal by the defendant, Catherine Hanley, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Kings on the 23d day of February, 1915, upon the decision of the court after a trial at the Kings County Special Term.
John R. Halsey, for the appellant.
Charles Coleman Miller [ Walter R. Davies with him on the brief], for the respondent.

Opinion:
Jenks, P. J.:
The action is brought to clear a complication and to foreclose a mortgage of $2,500 on real estate. Of the defendants, Hanley alone answered. She is the owner of the mortgaged premises, which she bought from Le Maire, who was the mortgagor. When Hanley bought, she was aware" that there was a mortgage upon the premises for $2,500, and she intended to take the premises subject to such a mortgage. The conveyance to her recited that the premises were "sold subject to a certain mortgage for the sum of Two thousand five hundred dollars, now a lien thereon," and the court found that $2,500, the amount of plaintiff's mortgage, was deducted from the purchase price. And she paid interest regularly for several years on such a mortgage, as a lien upon her premises and in accord with her undertaking. Some years before Hanley's purchase, the said Le Maire had made a mortgage to Killough for $2,500. When it fell due, Killough sought payment, and thereupon Le Maire lifted the mortgage. For this purpose Le Maire made the present mortgage to the plaintiff Moore. Killough was paid, and executed a satisfaction piece and an assignment, which were delivered to Price, then the plaintiff Moore's attorney. Price did not record the satisfaction piece, the assignment or the new mortgage. Price was a wrongdoer, and when ultimately his doings were brought to light these omissions were discovered. The mortgage was taken from him and then recorded, but this was ten years after the purchase by Hanley and the record of her conveyance. Price could not or did not produce the satisfaction piece or the assignment. The complication that arose' from Price's misconduct was that Killough's mortgage was still of record, the satisfaction piece and assignment could not be found, and the present mortgage had been recorded but recently. It did not appear that Killough made any claim, or that he denied the discharge or the execution and delivery of the instruments of discharge. It did not appear that any rights had been or could be asserted by any third party as the result of Price's omission to record any of these instruments. There was no question as to the actuality and the bona fides of the plaintiff's mortgage. There ivas no dispute as to the facts between the plaintiff and Hanley, but their respective counsel could not agree upon the procedure to clear the complication. Hanley took the position that as the complication was due to the misconduct of Price, the duty, labor and expense of clearing it was upon the plaintiff, and that her counsel should be compensated in a stated sum for co-operation. The plaintiff contended that, while she was prepared to carry on the proceeding, Hanley ought to co-operate, and when the parties could not agree even upon the procedure, seems to have threatened foreclosure inasmuch as Hanley, after discovery of the complication, refused to pay any further interest moneys until the complication was cleared away. The plaintiff on her part suggested an extension of the mortgage which was due, upon certain conditions which were not acceptable, and a counter proposition of Hanley's was rejected. Hanley then took the position that if the plaintiff proceeded to foreclose she would defend with assertion of all legal rights that had accrued to her. Finally, this action was brought against Le Maire, Hanley, Killough, the register of Kings and two tenants, whereby the plaintiff sought to cancel Killough's mortgage of record upon the ground that it had been discharged by payment long prior to Hanley's purchase, and to foreclose plaintiff's mortgage. Hanley answered with denials and the defense that at the time of her purchase, the conveyance thereon and the record thereof, she had no knowledge or information of the existence off plaintiff's mortgage described in the complaint, and that by failure of its record until subsequent to the record of her conveyance it was void and not a lien. The Special Term gave judgment for full relief, and Hanley appeals.
If Hanley is sustained, then, as incident to her legal right, she incidentally receives a gratuity of $2,500 out of the pocket of the plaintiff. On the other hand, a judgment for the plaintiff casts no additional burden upon Hanley, for the premises are incumbered in the amount that Hanley contemplated when she made her purchase, and allowance was made of that amount for her benefit in her purchase. Hanley does not contend, and it does not appear, that any harm has been done to her or that there is any threat of harm in consequence of Price's omission to record any of the instruments executed by Killough or the mortgage to the plaintiff. And, on the other hand, the present judgment is for her assurance in this respect.
I think that Hanley is estopped from questioning the legality of the incumbrance or the lien of the plaintiff's mortgage. She understood that the premises were subject to a mortgage for $2,500, and she bought them subject to such a mortgage. And within 10. days after the conveyance to her she was informed, upon inquiry of Le Maire, that the interest on the mortgage must be paid to the plaintiff Moore, through her counsel Price, and thereupon and thereafter for several years Hanley thus paid interest upon the plaintiff's mortgage. (See Thomas Mort. [3d ed.] § 520; Jones Mort. [6th ed.] § 575; Wilt. Mort. Forec. § 460.) I think that the mortgage is not void as to Hanley perforce of its record after the conveyance to Hanley and its record. .Hanley relies upon section 291 of the Eeal Property Law. But Hanley had actual notice of an incumbrance and a lien by mortgage in the amount of plaintiff's mortgage. {Butler v. Viele, 44 Barb. 166; Lamont v. Cheshire, 65 1ST. T. 30, 40 et seq.j Dingley v. Bon, 130 id. 607.) The answer to the contention that Hanley did not know the particulars thereof is that " It is not necessary to show express notice of the particular instrument, but notice of any fact calculated to put a party upon inquiry is, in the absence of explanation, sufficient to charge him with notice of all instruments which an inquiry would have disclosed. The degree of notice required is, in the language of the authorities, such as 'would lead any honest man using ordinary caution to make further inquiries.'" (See Thomas Mort. [3d ed.], § 515, 516, and authorities cited; Jones Mort. [6th ed.] § 574; Wilt. Mort. Forec., supra.) Hanley satisfied herself by inquiry of Le Maire only, and thereupon, as I have said, recognized the mortgage of the plaintiff by payment to her of interest regularly and for a long period. Moreover, I think that under the circumstances of this case Hanley should not be regarded as a subsequent purchaser in good faith and for a valuable consideration, with respect to plaintiff's mortgage. For she purchased with notice that there was a mortgage in such amount upon the premises, took conveyance thereof subject to such mortgage, received an allowance therefor upon her purchase price, and thereupon recognized the mortgage as held by the plaintiff, by payment of interest thereupon. The only features of this case, which take it out of the ordinary purchase subject to a mortgage are that, unknown to all parties, including Hanley, Killough's mortgage remained of record, apparently undischarged, and plaintiff's mortgage had not been recorded. . Hone has been harmed, and none can be, in any event, after this judgment.
But Hanley complains that the judgment is increased by costs and an allowance. While this matter was within the discretion of the Special Term, it is not free from our scrutiny. Hanley was not blamable for insistence that the complication caused by plaintiff's former attorney, Price, should be cleared away by the plaintiff, and any obligation to the plaintiff be determined, defined and declared by the courts. And if her appearance and resistance in this .action had been limited to such contention, then her complaint against the costs and the allowance might be cogent. And even, after the suit was brought, she might have had her remedy by application to the court under the authority of Lewis v. Robinson (78 App. Div. 579), wherein was approved the rule of Bartow v. Cleveland (16 How. Pr. 364). But Hanley denied and litigated the validity of the mortgage itself, and we cannot say that the Special Term erred in its discretion when it awarded costs and an allowance.
The judgment is affirmed, with costs.
Thomas, Mills, Rich and Putnam, JJ., concurred.
Judgment affirmed, with costs.