Case Name: Kellogg v. Smith
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1862-12
Citations: 26 N.Y. 18
Docket Number: 
Parties: Kellogg v. Smith.
Judges: 
Reporter: New York Reports
Volume: 26
Pages: 10–18

Head Matter:
Kellogg v. Smith.
The purchaser of a bond, and mortgage who fails to require the production of the bond, is chargeable with notice of any defect in the assignor’s title thereto.
A mortgage contained a covenant that the same should not be assigned without the written consent of the mortgagor, or a week’s previous notice to 'him. The mortgagee assigned the mortgage without such consent or notice, and delivered the bond and mortgage to the assignee, who did not record the assignment. He again assigned them to a person, who learned by inquiry that the mortgagor had no notice of any previous transfer, and the second assignment was recorded. Sdd, that the title to the securities was in the first assignee.
Appeal from the Supreme Court. Action for the foreclosure of a mortgage. The contest was between the plaintiff and the defendants Smith and Buckley, personal representatives of Clafflin & Buckley. Each claimed title to the mortgage and the bond for which it stood as security, by assignment from one Bedell, the mortgagee. The mortgage contained a covenant that the mortgagee would not assign the same without the written consent of the mortgagor, or one week’s notice to him of the intention to assign. On the trial before a referee these facts appeared: On the 24th September, 1845, the mortgagee, Bedell, transferred the bond and mortgage to the plaintiff by writing under seal and duly acknowledged, and by delivering the bond and mortgage to the plaintiff, who ever after retained them in his actual possession. The assignment was not recorded.
Subsequently, in December, 1845, Buckley & Clafflin agreed with Bedell to advance certain moneys upon this mortgage if found to be. a first lien and if a complete transfer-were made. Their counsel examined the title, was satisfied of the priority of the lien, and was ready to take the assignment on- the 30th December, 1845, but required the production of the bond and mortgage. Bedell told him that the bond and mortgage were in the hands of his agent, but the counsel declined to advance the money until they should be delivered to him. The next day was fixed upon to close the business. The next day ■ Bedell gave as an excuse that the papers were locked up in an iron safe, that his agent had the key and had gone out of town to spend New Year’s day, and that the bond and mortgage could not be produced until his return. The counsel ascertained from the mortgagor that he had never consented "to or received notice of an assignment, and Bedell averred that he had made none. Buckley & Clafflin believed the representations, and thereupon instructed their counsel to take the assignment and pay over the money, if, upon search at the clerk’s office, he should find no record of a previous assignment. The counsel made such search, found no assignment recorded, and immediately put on record the assignment to Buckley & Clafflin and paid over the money. The referee (in obedience to a decision at general term in the first district, "setting aside his previous report for the plaintiff, and granting a new trial) ordered judgment dismissing the complaint, which having been affirmed at general term, the plaintiff appealed to this Court.
William M. Evarts, for the appellant,
argued, among other things, that the purpose and effect of the recording acts in respect to the assignments of mortgages is merely to protect persons who, in good faith and for value, deal with or give credit to the land—by buying it, or an interest in it, or by taking liens upon it, against unrecorded interfering conveyances of the land or interfering liens upon the land. It is not within the design or effect of these acts to guard purchaser of debts or things in action against defects in their vendor’s title to such debts or things in action. Unrecorded conveyances are declared ineffectual only against purchasers of the same estate, or some portion thereof, whose conveyance shall be first duly recorded. (1 R. S., p. 756, § 1.)
He also argued that the non-production of the bond and mortgage was sufficient to charge Buckley & Olafflin with the duty of finding the actual possessor, and with notice of the facts which an inquiry, properly pursued, would have disclosed
William Allen Butler, for the respondents.

Opinion:
Gould, J.
There can be no doubt that, by the law of this State, the debt is the principal, and the mortgage" a mere security, appurtenant and secondary; and it is on this principle that this court (Kortright v. Cady, 21 N. Y., 343), held that a tender of the debt to the mortgagee or his assignee discharged the land of the lien of the mortgage.
It is also perfectly well settled here, that any legal transfer of the debt (by writing, or delivery, whichever is legally sufficient), draws after it the mortgage; and that, under such circumstances, a mere delivery of the mortgage is a good assignment of it.
In this case, there can be no pretence that (by any law, recording act or otherwise), Buckley & Clafflin procured any title to, or interest in, the bond. And without that, the actual holding of the mortgage (which they had not), would be merely idle; it would be a pledge for nothing, valueless.
The truth is, they saw fit to trust to Bedell's word, that he owned and possessed the bond (with its collateral security); and upon that trust, they paid him for the bond, and took a written assignment of it and of the pledge that secured it. In looking for the title to the security, they failed to look after the title to the principal; and they must abide the consequences of not taking the proper precaution of requiring the production and delivery of the bond. The recording act cannot be tortured into exercising any power over the sale of the bond.
The judgment should be reversed and a new trial ordered.
Denio, Ch. J., Davies, Wright, Selden and Sutherland, Js., concurred that the non-production of the bond and mortgage was such notice as to put the respondents on inquiry, and deprive them of the protection given by the recording acts to purchasers without notice: some of them thought the recording acts had no application to the case, but the court did not pass on that point.