Case Name: ORANGE R. YOUNG, Appellant, v. THOMAS J. GUY, impleaded, with others, Respondents
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1877-11
Citations: 19 N.Y. Sup. Ct. 325
Docket Number: 
Parties: ORANGE R. YOUNG, Appellant, v. THOMAS J. GUY, impleaded, with others, Respondents.
Judges: Boardman, J., concurred.
Reporter: Supreme Court Reports (Hun)
Volume: 19
Pages: 325–332

Head Matter:
ORANGE R. YOUNG, Appellant, v. THOMAS J. GUY, impleaded, with others, Respondents.
Contract of sale — rights of buyer — mortgagee with notice of, how affected by — failwre to give notice of mortgage — effect of — record—not notice.
One Scribner having contracted to sell certain real estate to defendant Guy, subsequently mortgaged the same to the plaintiff, who had notice of the contract. The mortgage was recorded when given. Guy, having no actual notice of the mortgage, subsequently took a deed from Scribner, and paid up all the purchase-price, except $1,800, for which he gave back a mortgage to Scribner, who subsequently assigned the same to defendant Flack, Flack having no notice of the plaintiff’s mortgage. After the commencement of this action, brought to foreclose plaintiff’s mortgage, and service therein on Guy, Guy paid Flack the amount due on the $1,300 mortgage. Held,
That plaintiff’s mortgage was a lien on the premises to the extent of the unpaid purchase-money.
That Guy was protected as to all payments made before he had notice of plaintiff’s mortgage.
That the recording of plaintiff’s mortgage was not notice to Guy.
That the giving of the $1,300 mortgage to Scribner did not constitute a payment. That the assignee of the $1,300 mortgage to Scribner had no greater rights than Scribner himself would have had.
That the commencement of this action was a notice to Guy of plaintiff’s rights, and that after such notice Guy was not protected in making the subsequent payment of the $1,300 mortgage to Flack.
That plaintiff was not bound to bring an equity action seeking an assignment to himself of the Flack mortgage, or enjoining Guy from paying the same; that this action in foreclosure properly presented his claim. (Learned, P. J., dissenting.)
Appeal from the judgment of the Bensselaer Special Term, dismissing the complaint as to the defendant Thomas J. Guy and Delia, his wife, and rendering judgment in their favor, and against the plaintiff, for costs, and granting the usual decree of foreclosure and sale against the other defendants.
The action was brought to foreclose a mortgage. Upon the trial it appeared that, prior to the 20th day of October, 1874, the defendant Scribner was the owner of Nos. 3 and 5 St. Paul’s place, in the city of Troy. No. 3 was incumbered as follows:
Mortgage to Troy Savings Bank.................... $2 >000 00
Mortgage to Kennedy, held by Flack................ 1 > 057 86
Judgment held by the Warrens.................... 1, 307 44
Judgment held by the Smarts...................... 411 49
$4,776 79
On the 20th day of October, 1874, the said Scribner and the defendant Guy entered into an agreement in writing, by which Scribner agreed to sell to Guy lot No. 3, and to deed and give possession on the 1st day of May, 1875, for the sum of $8,500, of which $2,200 was to be, and was, paid on the execution of the contract, and the remainder was to be paid, or secured, on the delivery of the deed. Out of this $2,200 Scribner paid the Smart judgment of $411.49. On the 2d day of February, 1875, Scribner executed a mortgage of lots 3 and 5 St. Paul’s place, to the plaintiff, for $7,000, to secure two notes then held by the plaintiff, amounting, with interest, to about that sum. When this mortgage was given, the plaintiff had notice of the contract of sale with Guy. On the 1st day of May, 1875, Guy, without notice of the plaintiff’s mortgage, accepted a deed from Scribner of the premises in question, and paid him $3,000 in money, and assumed the $2,000 savings bank mortgage. He also gave a mortgage to Scribner of $1,300, which made up the balance of the purchase-money of $8,500. Plaintiff had notice of this mortgage soon after its execution. A part of the money so paid to Scribner was used to pay off the Kennedy-Flack mortgage and the Warren judgment above mentioned. Some time after-wards— the exact time does not appear — Scribner assigned the $1,300 mortgage from Guy, to Flack brothers. This mortgage was given May 1, 1875, and the plaintiff’s mortgage was then on record, having been recorded February 3, 1875. This action was commenced on the 11th day of February, 1876, and the papers served on the defendants, Guy and wife, March 10, 1876. After the action had been so commenced and the papers so served, the defendant Guy, witli full knowledge of all the facts, paid the §1,300 of the purchase-money, then unpaid, to Elaclc brothers, the holders of the mortgage given by him to Scribner.
The plaintiff claimed at the trial that he had a lien on lot No. 3, St. Paul’s place, at least to the extent of the $1,300 of the purchase-money which remained unpaid until after the defendant was fully notified of the plaintiff’s mortgage, by the service of the foreclosure papers. The judge refused to sustain that view, and dismissed the complaint as to the defendants, Guy and wife, with costs, and the plaintiff appealed.
Esek Coioen, for the appellant.
R. A. Parmenter, for the respondent.

Opinion:
Bocees, J.:
The defendant, Guy, held "No 3, St. Paul's place," under a contract of purchase from Scribner, the owner of the fee, when the latter gave to the plaintiff the mortgage on those premises sought to be foreclosed in this action. The mortgage then became a lien on "No. 3," but only to the extent of the unpaid purchase-money, and it would lose its lien as to all purchase-moneys subsequently paid by Guy to Scribner on the contract, if paid in good faith without notice to the former of the mortgage lien. The rule of law applicable to the case as above stated is clearly laid down in Moyer v. Hinman (13 N. Y., 180); see, also, Trustees of Union College v. Wheeler (61 N. Y., 88). Guy was entitled to protection-for all payments made to Scribner on the contract of purchase until he had notice of the plaintiff's mortgage lien, and the recording of that mortgage was not such notice. (See cases above cited.) He was, therefore, protected in his payments made prior to, and at the time he received his deed from Scribner pursuant to the contract of purchase, May 1, 1875, including the liens on the lot then assumed by him, for he was then without notice of the plaintiff's mortgage. There then remained but $1,300 of the purchase-price unpaid, and for this sum he gave Scribner his bond with a mortgage covering the premises. The giving of the bond and mortgage by Guy to Scribner was not payment of the $1,300. (Hill v. Beebe, 13 N. Y., 556.) The plaintiff's mortgage lien therefore yet continued to this extent, liable however to divesture or defeat, by payment of the Guy mortgage by the latter in good faith without notice of the lien. It seems that this balance of the purchase-money was not paid until the plaintiff commenced the foreclosure of his mortgage. Guy being made a party to the action, then had notice of the lien and claim, and there yet remained this $1,300 of purchase-money unpaid by him. Now if the bond and mortgage given by Guy to Scribner for this sum had still been held and owned by the latter, there could have been no question but that the plaintiff's lien would have prevailed over any claim he, Scribner, could have asserted under Guy's mortgage to him. The plaintiff in that case would have had a superior right in equity to any which Scribner could interpose. But the bond and mortgage given by Guy had been assigned by Scribner to the Flack brothers, and Guy paid and satisfied them to those assignees, with knowledge, however, by him of the plaintiff's position and claim. Now, had Scribner remained the owner of the bond and mortgage, and had Guy made this payment to him, having notice of the plaintiff's claim, he, Guy, would not have been protected in it against the claim and lien of the plaintiff. Is Guy any better protected in the payment because made to the Flacks, the assignees of Scribner ? It should be here noticed that the Flacks were also parties to this action, if that fact be of any importance, and hence, like Guy, had notice of the plaintiff's claim, when they received payment from him. It is now the settled rule of law, that an assignee of a bond and mortgage takes the exact position of his vendor. (Bush v. Lathrop, 22 N. Y., 535 ; Trustees of Union College v. Wheeler, 61 N. Y., 88; Greene v. Warnick, 64 N. Y., 220.) In the last case cited it was held, that an assignee of a mortgage takes it not only subject to all equities existing between the parties to the instrument, but to the equities which third persons could enforce against the assignor. The plaintiff's claim and lien were therefore unimpaired by the assignment of the Guy bond and mortgage to the Flacks. His right and equity remained to him to the extent of the $1,300 unpaid purchase-money, inasmuch as Guy had notice of his lien and claim to it while it yet remained unpaid. It follows that Guy cannot be protected by his payment to the Flacks against the plaintiff's lien. The learned judge who directed judgment in this ease was, therefore, in error in holding No. 3, was, by reason of the payment by Guy to the Flacks, released and discharged from the operation of the plaintiff's mortgage.
The learned judge has found that the plaintiff never asserted, any other lien or claim except the ordinary mortgage lien on the premises, evidenced by his mortgage here sought to be foreclosed. The legal aspect of the case is not at all changed by this finding. All right that he had against the premises was his mortgage lien. This he asserted by his action to foreclose the mortgage. Whether he had a lien, and if he had, the extent of it, were subjects involved in the action. All he could do was to assert his lien under his mortgage. He had no claim upon the Guy mortgage, nor upon the unpaid purchase-money. His claim was on the land by virtue of his mortgage lien, limited in amount to the unpaid purchase-money. The action presents his claim in its true and only aspect. He could make it in no other way than on the facts stated in the complaint. He had no right to demand a surrender or an assignment to himself of the Guy mortgage, nor could he' enjoin Guy from paying it, if the latter was disposed so to do. All he was required to do was to give Guy notice of his lien, after which the latter was bound to respect it. The judgment appealed from must be reversed.
Boardman, J., concurred.