Court Opinion

ID: 5460713
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:35:29.647976+00
Date Added: 2024-06-11T08:32:52.290275
License: Public Domain

By the Court, E. Darwin Smith, J.
Upon the facts found by the referee I do not see why the conclusions of law based thereupon were not entirely legitimate and sound. The plaintiff made out a clear case upon his evidence, and the referee finds as matter of fact that the matters set up in the defendant’s answer were not established. It follows that as no defense was made out the plaintiff was entitled to judgment for the foreclosure of the mortgage set out in his complaint. It therefore becomes necessary to inquire whether the exceptions to the exclusion of evidence offered by the defendants were any of them well taken. The first exception relates to the evidence offered to prove that the defendant Donald McLean was an illiterate person and had been afraid of being cheated by people, and that at the time of the execution of the deed from him to Hector McLean there was a *287verbal agreement that the latter should take a deed of the premises and manage them for Donald’s use and benefit, and he, Donald, should remain in possession in the mean time; that the deed to Hector was executed in pursuance of such agreement; and that Donald had remained in possession ever since the execution of such deed. This evidence was objected to and excluded by the referee. The whole offer, taken together, tended to establish that the defendant Donald McLean was the equitable owner of the premises in question, and that Hector took and held them in trust for his benefit. This offer was doubtless excluded upon the ground that it did not go far enough to displace the plaintiff’s equity as a bona fide purchaser of the premises. Hector was invested with the legal title by the deed to him of the defendant Donald, given in evidence, of the date of June 21, 1844. And being thus apparently upon the face of the record invested with such legal title, he conveyed the same to the plaintiff's testator, for a valuable consideration. To overreach the mortgage to Chappell, which vested him with a legal estate in the premises, the defendant was bound to go further than simply to show his prior equity. He was bound to show that Chappell had notice of such prior equity, before he advanced the consideration for the mortgage; that is to say, before he indorsed the notes of Hector which the said mortgage was given to secure. The rule in equity is that as between two parties having equal equities the prior equity must prevail; but if the party having the subsequent equity clothes himself with the legal title before he has notice of the prior equity, such legal title must prevail. So far as the defendant’s offer went it did not propose to show that Chappell had any notice of the prior equity of th.e defendant Donald McLean when he took his mortgage and incurred the liability it was given to secure. The exception must be considered as though the evidence had been received, and such evidence must in this sense be considered in connection with the other evidence in the cause. And if in connection with such evidence it would have *288made out a defense under the pleadings, it ought to have been received. It appears from the case, that evidence was given and received tending to establish the fact that Chappell had notice of this prior equity, and such evidence was controverted, and the issue thus made on the evidence is found by the referee against the defendant. In this view the evidence tending to show the prior equity, thus excluded, would have been of no benefit to the defendant and would not have established a defense.. To charge Chappell with notice of the prior equity it was necessary for the defendant to show that he had notice of such prior equity. The argument that he had constructive notice of such equity in the fact that Donald McLean was in possession of the premises fails, for the reason that it is not proved that Chappell knew such fact. In Grimstone v. Carter, (3 Paige, 437,) it is held that if the party claiming the prior equity is in possession of the estate, and the subsequent purchaser has notice of that fact, it is sufficient to put him upon inquiry as to the actual rights of such possession, and is good constructive notice of such rights. This is sound law and the settled rule in equity, in such cases. The offer of the defendant did not propose such proof, and the referee having admitted evidence tending to establish such fact, has found that it was not proved. It seems therefore that the defendant was not injured by the exclusion of this evidence; for the proof given assumed the very fact offered to be proved, that Donald McLean had the prior equitable title to the premises in question, and the referee has found for the plaintiff on that issue. This exception, I think, therefore, is not well taken.
The next exception is to the exclusion of the proof tending to show that the defendant Donald McLean was in possession claiming to hold adversely, and it is claimed that the plaintiffs’ mortgage was therefore void under the statute avoiding deeds where the grantor is not in possession, and has not been, for one year preceding the making of such deed. (1 R. S. 739, § 148.) This exception is- not well taken. *289Donald could not, claim to hold adversely under his own trustee. His occupation was like that of a tenant at will. It was not under claim of title adverse to that of his trustee whose title was derived from him. He could not claim adversely to his own title, or the title of Hector derived from him, and under which he had remained and held possession. The possession which avoids a deed for champerty must be under claim of a title adverse to +hat of the grantor in the deed sought to be avoided. (Crary v. Goodman, 22 N. Y. Rep. 170. Holdridge v. Stiles, decided by Court of Appeals, Dec. term, 1862, and not yet reported.) Donald McLean could not make any such claim, and the evidence was therefore properly excluded. The evidence of the title papers, claimed to have been destroyed by fire, was properly excluded. It was immaterial in fact, and it was a matter in the discretion of the referee whether he would or would not open the case to receive it. I cannot see that the evidence, if received, would in any degree have varied the case. It was simply additional evidence to establish a prior equity in Donald McLean, which was virtually assumed in the disposition made of the case by the referee as I have stated.
The motion for a new trial, on the ground of newly discovered evidence, should be denied. The evidence offered' would be cumulative merely, on the single issue of the prior equity of the defendant Donald McLean. The case presents no basis, that I can see, for a claim that the prior equity of Donald McLean should prevail over the equity of the plaintiffs. Donald McLean conveyed his property to his son for his own use and benefit, and thus enabled him to commit what would be a great fraud upon the plaintiff’s testator, if the claim arising upon his equitable title were to prevail over the legal estate acquired by Chappell under the mortgage. A party who enables another to commit a fraud ought rather to suffer the consequences of such fraud than to subject an innocent person, acting in good faith and relying upon the *290evidences of title given by such original owner of the estate, to suffer injury from such fraud.
[Monroe General Term,
September 7, 1863.
I think the judgment should be affirmed, with costs.
E. Darwin Smith, Johnson and Welles, Justices.]