Case Name: John W. Gibson, Respondent, v. George A. Thomas et al., Defendants, and The Ulster and Delaware Railroad Company et al., Appellants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1905-02-21
Citations: 180 N.Y. 483
Docket Number: 
Parties: John W. Gibson, Respondent, v. George A. Thomas et al., Defendants, and The Ulster and Delaware Railroad Company et al., Appellants.
Judges: 
Reporter: New York Reports
Volume: 180
Pages: 483–496

Head Matter:
John W. Gibson, Respondent, v. George A. Thomas et al., Defendants, and The Ulster and Delaware Railroad Company et al., Appellants.
Mortgage — Recording Act—When Assignee for Value May Enforce Mortgage Against Purchaser of Part of Mortgaged Property Having Unrecorded Release Thereof. Where the owner of a farm, some years after the execution of a mortgage thereon, conveyed a strip of land through the farm to a railroad company, which had the deed-recorded, entered into possession of the land and ever since has maintained and operated a railroad thereon, and, about the same time, the owner of the mortgage, holding it by mesne assignments from the mortgagee, all of which had been recorded, executed to the mortgagor a release of the land co'nveyed to the railroad company, which was delivered to the company, but not recorded by it, a subsequent purchaser of the mortgage for full value, holding it under a recorded assignment, and who, at the time of the purchase of the mortgage, had no knowledge of the existence of the release, had not seen the farm and did not know that the railroad ran through it, is protected under the Recording Act in his lien upon the entire premises, unaffected by the release.
Gibson v. Thomas, 85 App. Div. 243, affirmed.
(Argued January 12, 1905;
decided February 21, 1905.)
Appeal from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered August 7, 1903, -affirming a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term.
The plaintiff, as the assignee of a mortgage, affecting a cer tain farm property through which the road of the Ulster & Delaware Railroad Company runs, sought, by this action in foreclosure, to compel the payment of - the principal sum due under the mortgage. The defense was made, in the railroad company’s answer, that the land occupied by its railroad ivas not subject to the mortgage lien; but had been released therefrom. Thomas, the o.wner and the mortgagor, some years after the execution of the mortgage in question, conveyed to the Delaware & Otsego R. R. Co, now a part of the Ulster & Delaware R. R. Co, a strip of land through his farm. It entered into possession, with all usual evidences of railroad occupation, and has, since that time, operated its railroad upon the land. Mrs. Rogers, the then holder of the mortgage by mesne assignments from the mortgagee, for a nominal consideration, executed a release of the land to the mortgagor; which was delivered to the company. The deed and the release were left at the county clerk’s office with certain instructions ;.but by whom it does not appear. These instructions were testified by the clerk to be .as follows: “ I herewith hand you deed from George A. Thomas for right of way; also release from Helen B. Rogers from the F. R. Gilbert mortgage. I presume the assignment from Gilbert to He well has not been recorded, nor the will of He well, the father of Mrs. Rogers. I have written Thomas all about the matter and he is to cause to be recorded all necessary papers to invest Helen B. Rogers the owner of the mortgage and then you may record this release.” Several years later, Mrs. Rogers assigned to this plaintiff the mortgage, in consideration of the payment by him of the whole amount unpaid thereon at the time. This assignment was duly recorded, as all the previous ones' had been; but the release of the railroad lands had not actually been recorded up to the commencement of the action. The plaintiff resided at a distance from the mortgaged premises and his testimony is not disputed that, at the time of purchasing the mortgage, he had not seen the farm and did not know that the railroad ran through it; nor of any release of the land. The plaintiff had judgment in the trial court; which has been affirmed by the Appellate Division, in the third department.
Lewis E. Carr and F. M. Andrus for appellants.
The plaintiff, as the assignee of the mortgage Helen B. Rogers owned in 1887, acquired no greater or broader right to the enforcement of the mortgage than his assignor had at the time she assigned the mortgage to him. (Bush v. Lathrop, 22 N. Y. 535; Schaffer v. Reilly, 50 N. Y. 61; Greene v. Warwick, 64 N. Y. 220; Trustees of Union College v. Wheeler, 61 N. Y. 88; Owen v. Evans, 134 N. Y. 514.) The plaintiff’s right to enforce his mortgage against the land conveyed by Thomas to the railroad company, and released from the mortgage by its then owner, cannot be sustained under the Recording Act. (Rayner v. Wilson, 6 Hill, 469 ; Green v. Warnick, 64 N. Y. 220 ; Campbell v. Vedder, 1 Abb. Ct. App. Dec. 295; Gillig v. Moss, 28 N. Y. 191; N. Y. L. Ins. Co. v. Smith, 2 Barb. Ch. 82.) The release was in fact recorded within the meaning of the Recording Act, and so was not - an instrument falling within the condemnation of the statute relating to unrecorded conveyances. (M. L. Ins. Co. v. Dake, 87 N. Y. 257; Bedford v. Tupper, 30 Hun, 174 ; Reid v. Town of Long Lake, 44 Misc. Rep. 370; M. Co. v. Lambier, 108 N. Y. 578.) If, however, the release was not recorded the plaintiff had such constructive notice of the rights of the railroad company as forbids the upholding of his claim against the land released from the mortgage. (Frear v. Sweet, 118 N. Y. 462; Phelan v. Brady, 119 N. Y. 587; Trustees of Union College v. Wheeler, 51 N. Y. 88 ; Cavalli v. Allen, 57 N. Y. 508 ; Baker v. Thomas, 61 Hun, 17; Briggs v. Thompson, 86 Hun, 607; Merritt v. N. R. R. Co., 12 Barb. 605 ; Page v. Waring, 76 N. Y. 463 ; Van Epps v. Clark, 25 N. Y. S. R. 896 ; Anderson v. Blood, 152 N. Y. 285.)
Marion M. Palmer for respondent.
An assignee of a mo: tgage becomes a purchaser under the Recording Act. An assignment of a mortgage, the satisfaction of a mortgage, and a release of a part of the mortgaged premises are conveyances within the provisions of the Recording Act. (1 R. S. 756, § 1; L. 1896, ch. 547, § 241; Briggs v. Thompson, 86 Hun, 607; St. John v. Spalding, 1 T. & C. 483; Belden v. Meeker, 47 N. Y. 307; Baker v. Thomas, 61 Hun, 17; Bacon v. Van Schoonhoven, 87 N. Y. 446 ; Becker v. Boice, 83 N. Y. 215; Brewster v. Carnes, 103 N. Y. 562; Van Keuren v. Corkins, 66 N. Y. 77; Westbrook v. Gleason, 79 N. Y. 23; Frear v. Sweet, 118 N. Y. 463; Larned v. Donovan, 84 Hun, 533; M. L. Ins. Co. v. Wilcox, 55 How. Pr. 43 ; Smyth v. K. L. Ins. Co., 84 N. Y. 589.) An assignee in good faith and for value of a mortgage, by recording his assignment, may gain priority over a prior unrecorded mortgage and also gain rights, although such priority and rights could not be claimed by his assignor. (Briggs v. Thompson, 86 Hun, 607; Baker v. Thomas, 61 Hun, 17; St. John v. Spalding, 1 T. & C. 483; Decker v. Boice, 83 N. Y. 215; Brown v. Volkening, 64 N. Y. 76.) The release in question is void as to the plaintiff in this action. (Briggs v. Thompson, 86 Hun, 607; Baker v. Thomas, 61 Hun, 17; Decker v. Boice, 83 N. Y. 215; Brown v. Volkening, 64 N. Y. 76.) One who seeks to establish a right in hostility to a recorded title to, or security upon land, under and by virtue of a prior unrecorded conveyance or prior equities, must show actual notice to the subsequent purchaser of his rights, or prove circumstances such as would put a prudent man upon his guard, and from which actual notice may be inferred and found. (Holland v. Brown, 140 N. Y. 344; Cook v. Travis, 20 N. Y. 400; Brown v. Volkening, 64 N. Y. 76; Pope v. Allen, 90 N. Y. 298; Staples v. Fenton, 5 Hun, 172; Seymour v. McKinstry, 106 N. Y. 230; Baldwin v. Golde, 88 Hun, 115 ; Marden v. Dorthy, 12 App. Div. 188; Brown v. Thomas, 61 Hun, 17; Fassett v. Smith, 23 N. Y. 252; M. I. Ins. Co. v. Wilcox, 55 How. Pr. 43.) The occupation of the Delaware and Otsego railroad and the Ulster and Delaware railroad was not inconsistent with the title of Helen B. Rogers as assignee of the mortgage, but was consistent therewith. (Briggs v. Thompson, 86 Hun, 607; Cook v. Travis, 20 N. Y. 400; Fassett v. Smith, 23 N. Y. 252; M. L. Ins. Co. v. Wilcox, 55 How. Pr. 43 ; St. John v. Spalding, 1 T. & C. 483; 1 Am. & Eng. Ency. of Law, 245.) The strip of land occupiied by the Ulster and Delaware railroad is subject to the lien of the mortgage in question. (Early v. Roosa, 35 N. Y. S. R. 900; Syres v. Rathbone, 9 Abb. [N. S.] 277; Jackson v. Collins, 3 Cow. 89; Jackson v. Bush, 10 Johns. 223 ; Webb v. Bindon, 21 Wend. 99.)

Opinion:
Gray, J.
The appeal presents the question of how far the plaintiff was protected, in his transaction with the holder of the mortgage, by the Recording Act. (1 R. S. 756, § 1, 36, 37, 38, 41.) Was he, in purchasing from her the mortgage, for the whole amount due upon it and without knowledge, actual, or constructive, of a portion of the mortgaged premises having been released, nevertheless, concluded by the fact of a partial release having been given ? If he was, then he was bound by a transaction, to which he was in nowise a party, of which he had no knowledge, and which was subsequent to the mortgaging of the premises by their owner. That he would have occupied no better a position than did his assignor, prior to the passage of the Recording Act, may be conceded ; but, with that act upon the statute books, was he not entitled to rely upon the title as it appeared of record? Was that not its purpose ? I think that he was and that the failure of the railroad company to cause its release of the land to be recorded was an omission, which permitted the subsequent assignee of the mortgage, by recording his instrument of assignment, to gain priority over the company's right. We may dispose, at once, of the claim that the release was, in fact, recorded. It, clearly, was not delivered to the clerk to be recorded, until some other papers were sent for record. In other words, it was left with the clerk conditionally and not for immediate record. The facts, therefore, differ materially from what they were in Mut. Life Insurance Co. v. Dake, (87 N. Y. 257). The position of the appellant is, and must be, therefore, that there was, in its visible and notorious possession and occupancy of the land conveyed by the deed to it, such constructive notice of its rights as to defeat the claim of the respondent to have all of the property affected by the mortgage subjected to its payment. That- argument is rested, somewhat, upon the general proposition that an' assignee takes subject to the equities enforceable against his assignor. But those equities are such which attended the transaction between the original parties. (Trustees of Union College v. Wheeler, 61 N. Y. 88, 104.) There were no orignial equities, however, which, as between mortgagor and mortgagee, would bind the .latter and those taking under him. The only fact, upon which an equity is sought .to be based, is that the plaintiff's assignor had released to the mortgagor, (not to the purchaser from the mortgagor), a portion of the mortgaged premises. But that is a situation, which the ¡Recording Act was designed to meet. ¡Mortgages and assignments of mortgages are conveyances within the intendment of that act. That is clear from its language and is settled by authority. (Decker v. Boice, 83 N. Y. 215.) The purpose of the act was, not merely to regulate the relations to each other of successive assignees of the mortgagee of the same mortgage; but it was to confer that priority over all lripds of conveyances, which, all things being equal, the date of the record entitled each to. And this would apply, where the assignor of the mortgage was disabled from claiming a .priority. (Decker v. Boiee, supra, at p. 221.) In brief, the earlier recorded assignment of a mortgage should give it relative priority over every other form of conveyance of an interest in the land affected.
The argument based upon possession and occupancy, as constituting notice to persons acquiring subsequent interests in the land, is fallacious. Doubtless, possession and occupancy under an unrecorded conveyance may constitute notice to him, who proposes to acquire an interest in the land, whether by conveyance, or by mortgage. (Cavalli v. Allen, 57 N. Y. 508 ; Phelan v. Brady, 119 ib. 587.) But, unless the posses sion and occupancy be so inconsistent with the existence of a mortgage lien, as to suggest to a prudent person a claim of title adverse to the mortgagee, they would mean nothing more to him than the evident facts. Briggs v. Thompson, (86 Hun, 607), in which case the present chief judge of this court concurred in the decision, is precisely in point as an authority, and I do not find any case in which it has been questioned. This appellant took its title from the mortgagor of the land and was not a stranger; in which case the respondent would have been chargeable with some notice of its claims to possession. The respondent knew, or is presumed to have known, of the recorded deed conveying the land to the appellant; but why should that fact lead him to suppose that it did not take from the mortgagor subject to the mortgage ? The mortgage was of record and, apparently, undischarged. There is no reason why railroad corporations should not take lands subject to mortgages. That their properties are, as a rule, subjected to mortgages is a notorious fact. Here the company took its title from the mortgagor; for the release was not to it and gave, of itself, no right to possession; it did not record the release from the mortgage lien and the plaintiff purchased the mortgage without knowledge, actual or constructive, of the release and with nothing to lead him to believe that the possession of the company was hostile to his mortgage. It seems to me that a fair and just construction of the Heeording Act makes its provisions applicable for the protection of the plaintiff's right to the full security of the mortgage. To so hold is to infer, legitimately, the full beneficial purpose of an enactment intended for the protection of persons, who, in good faith and for value, acquire an interest in lands.
I advise the affirmance of this judgment, with costs.