Court Opinion

ID: 5481487
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:56:45.133533+00
Date Added: 2024-06-11T08:33:37.311732
License: Public Domain

Desmond, J.
(dissenting). Plaintiff’s mortgage on this oil and gas lease was a valid one, executed and delivered before the assignment of the same lease to defendant. However, since defendant took its assignment without notice or knowledge of plaintiff’s said mortgage and before that mortgage was recorded, defendant’s rights were prior to those of plaintiff. But that priority was only as to so much of the consideration running from defendant, for the assignment, as was paid by defendant before it had actual notice of plaintiff’s mortgage (Fisk v. Potter, 2 Keyes 64, 74; Macauley v. Smith, 132 N. Y. 524, 532, and cases cited; 1 Jones on Chattel Mortgages and Conditional Sales, § 313). It appears that practically all the royalty payments due from defendant pursuant to the assignment to it became due after defendant got actual notice of plaintiff’s mortgage, and after plaintiff had demanded that defendant pay plaintiff the royalties as security for which plaintiff got his mortgage. Defendant’s refusal to give any effect to that notice and demand and its subsequent removal of the gas from the well, effectually destroyed plaintiff’s entire security and defendant is liable at law in damages for that violation of plaintiff’s rights (Van Pelt v. McGraw, 4 N. Y. 110; Manning v. Monaghan, 23 N. Y. 539, 546 et seq.). The cases cited herein show that it is unnecessary in such a suit to make the mortgagor a party.
Since there may be open questions here as to the amount of plaintiff’s damages and as to the effect, if any, of assignments to other persons of the same lease, there should be a new trial, with costs to abide the event.
Loughran, Ch. J., Lewis, Conway, Fuld and Froessel, JJ., concur in Per Curiam opinion; Desmond, J., dissents in opinion in which Dye, J., concurs.
Judgment affirmed.