Court Opinion

ID: 5548046
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:22:45.604255+00
Date Added: 2024-06-11T08:34:58.608357
License: Public Domain

The Chancellor.
From the answers in this case, it must be taken as true, that when Mrs. Tillinghast conveyed to her eon, she concealed from him the fact that she had given a previous mortgage on the premises, which was then an existing lien thereon. If she knew the mortgage was not recorded, the fraud was probably intended to be committed upon Mrs. Hughes. But if she supposed it was recorded, it was a fraud upon her son to convey to him property which she had already mortgaged to another, without disclosing to him that fact. The legal title to the land was in Catharine Tilling-hast at the time of the execution of the mortgage; and there is no pretence that Mrs. Hughes had any information as to the manner in which she had paid for the land, at the time the loan was made and the mortgage given to secure the same. If this had been otherwise, I am inclined to think there might have been a prior equity in favor of the defendant, Charles Tillinghast, to the extent of his share of the assets of the estate of his father which were applied to the payment of the first instalment of the purchase money of this particular portion of the Seneca lands. This, however, would be but a very small portion of the value of the premises; as the mother was the owner of one third of the assets in her own right, and the brothers and sisters of Charles were entitled to share with him in the residue. The complainants’ mortgage is. a valid lien upon that part of the premises conveyed to Charles Tilling- • hast, unless, upon the facts disclosed, he is to be considered a bona fide purchaser without notice, within the meaning of the recording act. '
The object of the registry and recording acts was to protect those who should part with their money, property, securities, *221*r other valuable rights, upon the faith of a conveyance or mortgage of real estate, supposing that they were getting a good title thereto, or a legal and specific lien thereon; and without notice, or having any reason to believe, that there was any previous mortgage or conveyance which could defeat such title or lien. The English registry acts made the unregistered •deed or encumbrance at law wholly inoperative and void, as •against a subsequent grantee or encumbrancer. But the court of chancery, in accordance with the manifest spirit and intention of the statute, at an early day adopted the principle of considering the prior deed or encumbrance as an equitable title or lien. It therefore applied to such cases the equitable principies which had previously been adopted, by that court, in relation to other contests between the holder of an equitable •title, or lien, and a subsequent grantee or mortgagee of the ■legal tide. In accordance with those principles, if the subsequent purchaser, or mortgagee, was a bona fide purchaser; that is, if he had actually parted with his property on the credit of the estate, so as to give him an equitable claim or specific lien thereon, without notice of the prior equity, and had also clothed that equitable lien with the legal title, by talcing a deed or mortgage, the court would not divest him of that legal title, or lien, in favor of the prior equity. But if he had notice of the prior equity, at any time before he had parted with his property on the credit of the estate, and before he had united the subsequent equity with the legal title, he was not considered as entitled to protection, against the prior equity, as a bona fide purchaser. The words bona fide purchaser, therefore, when introduced into our recording and registry acts, were intended to be used in conformity with this established meaning thereof; and they must, in the present case, receive the same construction which they had previously received, in the court of chancery, in reference to that principle of equity¡ If a person has an equitable title to, or an equitable lien upon real estate, a subsequent purchaser who obtains a conveyance of the legal estate, with notice of that equity, cannot in conscience retain such legal title ; as he has no equity united with it. So if he merely takes the legal ] estate in payment of, or as security for a previous debt, without *222/giving up any security, or divesting himself of any right, of placing himself in a worse situation than he would have been if 1 ° he had received notice of the prior equitable title, or hen, prevjoug to purchase, this court will not permit him to retain the legal title he has thus obtained, to the injury of another. -These principles are so familiar to every chancery lawyer, that it is not necessary to refer to the numerous decisions and elementary treatises in which they are to be found. The case of Coddington v. Bay, in the court of errors in this state, (20 John. Rep. 637,) is a leading case upon the question as to what is necessary to constitute a bona fide purchaser of a negotiable security for a valuable consideration, without notice of a prior equity ; and is analogous to the case now under consideration. It was there held that the receiving of a negotiable note in payment of, or security for a pre-existing debt, without any new consideration, or other change of rights on the part of the persons receiving it, did not constitute them bona fide purchasers for a valuable consideration ; although they supposed that the person from whom they received the note had a perfect right to dispose of it in that manner.
In this case Charles Tillinghast took the conveyance of the property under a belief that his mother had a right to dispose of it in that manner, and without any suspicion that she was either committing a fraud upon him or upon any other person. But he only received it towards a pre-existing claim that he had against his mother, for a share of his father’s estate which she had appropriated to her own use; and it is not alleged that he parted with any security, relinquished any right, or made any valuable improvement on the property, upon the faith of the title thus conveyed, and before he had notice of Mrs. Hughes’ mortgage. I must therefore declare that this mortgage is a valid and subsisting lien upon the lands conveyed to him. It must be referred to a master to compute the principal and interest due. And upon the coming in of the report, the master must proceed and sell the mortgaged premises, or so much thereof as is necessary to pay the amount reported due, with interest and costs. The decree, however, must direct that part of the mortgaged premises, if any there *223is, which belongs to Catharine Tillinghast, to be sold first, and then such parts of the premises as have been conveyed by her subject to the mortgage, in the inverse order of alienation ; so that the lands conveyed to her son Charles shall not be sold, if there is sufficient raised to pay the complainants without resorting to his part of the mortgaged premises.
The master who sells the property is also to ascertain whether any part of the premises are encumbered by a mortgage to the state; and if so, to ascertain the amount due; and either to sell that part subject to such mortgage, or to pay the amount, thus ascertained to be due, out of the proceeds of the sale of that part of the premises, as he shall deem most advantageous to the parties in this suit. The master who makes the sale is also to be authorized to cause such surveys to be made as he may deem necessary, and to compel the production of such deeds and papers as he may think proper for the purpose of ascertaining the separate interest of the defendants, and their several rights, by priority or otherwise. Upon the coming in of the master’s report of sale, the defendant Charles Tillinghast is to be at liberty to apply to the court for such decree as he may be entitled to against his mother, or any other of the defendants in this cause, either upon the covenant in her deed, or for the costs of his defence in this suit, or for contribution, or otherwise,