Court Opinion

ID: 6145211
Source: CourtListenerOpinion
Date Created: 2022-02-05 15:05:12.060871+00
Date Added: 2024-06-11T08:54:50.321772
License: Public Domain

Platt, J.
The object of the respondent’s bill was to vacate and cancel the title of David Dunham, on three grounds; 1st» That the debt for which the lots were pledged to Dunham, had been paid; 2dly. That the deed to Dun-ham was in violation of the statute against usury, and, therefore, void ; and, 3dly. That the conveyance to Dun-ham was not registered as a mortgage, pursuant to the statute ; and, therefore, it cannot defeat or prejudice the subsequent conveyance to Dey.
The payment, and the usury charged in the bill, are denied in the answer. Whether the Chancellor has properly decided that the evidence does not support the allegation of usury, is a question which does not necessarily arise ; because the bill is not framed or adapted for relief on the ground of usury. The complainant does not ask to redeem by paying the money actually lent, with interest. If that were his object, there never would have been any disagreement between the parties.
The course of reasoning pursued by the Chancellor did not require him to examine the question of payment; and he, therefore, expressed no opinion on that point.
According to my view of the case, the allegation that the debt to Dunham has been paid, is not well founded. The repeated renewal of the notes, which were the evidence of *568that debt, is to be regarded as an extension of the credit, from time to time; but ought not to be deemed an extinguishment or satisfaction of the original debt, for which the conveyance to Dunham was given as security.
This renders it necessary to examine whether, the statute concerning mortgages, as applicable to this case, re-, quired the registry of the conveyance to Dunham,, as a mortgage, in order to preserve his lien against the subsequent deed to Dey ?
The provision of the Statute is, “ that no mortgage, nor any deed, conveyance, or writing, in the nature of a mortgage, shall defeat or prejudice the title or interest of any bona fide purchaser of any lands, tenements, or hereditaments, unless the same shall have been duly registered,” &c. Before this statute, mortgages gained preference, and took effect as hens, both at law and in equity, according to. their true dates, independent of any notice, either actual or constructive. The unregistered mortgage to Dunham, in this case, is prior in date ; and assuming that it was originally a valid security, it remains to inquire, whether the statute has deprived him of his prior lien ? The statute annuls a prior unregistered mortgage, in one case only ; and that is, in favour of a subsequent “ bona fide purchaser.” The only question, then, is, whether Dey, claiming to defeat the security of Dunham, is to be regarded as a bona fide pur chas cr,” in the true sense of the statute ? I incline to the opinion, that he is not. By a “ bona fide purchaser,” I understand the statute to mean, a person who buys without knowledge of the prior mortgage; and who would, in fact, be defrauded, if such prior incumbrance were to stand in opposition to his title. The manifest object of the statute was to protect purchasers against prior secret conveyances, of which such subsequent purchasers had no notice.
1 cannot suppose that the Legislature intended to favour, much less to give priority to, a purchaser who buys with notice of a prior unregistered mortgage, and with intention to defeat it, by taking advantage of the loches or inadvertence of the prior mortgagee. Notice supersedes registry, because it effects the same object, which is to apprize *569the purchaser of the prior incumbrance. An unregistered mortgage is valid between the mortgagor and mortgagee; and whoever takes a conveyance with intent to invalidate such security, is not a bona fide purchaser, but voluntarily aids in.defrauding the mortgagee.
What degree of particularity, or certainty in the notice, is necessary to affect the purchaser, and supersede registry, it is often difficult to decide. In the case of Hine v. Dodd, (2 A tk. 275.) Lord Hardwicke says, “ the register act is notice to every body; and the meaning of this statute was to prevent paroi proof of notice, or no notice.” He admits, “ there are cases where the court has broke in upon this” rule; but insists, “it was incases of fraud.” His Lordship then observes, “ there may possibly have been cases, upon notice, devested of fraud ; but then the proof must be extremely clear.” The luminous mind of that great man seldom evinced such a want of precision and perspicuity, as in the opinion which I have quoted. It would, perhaps, have been more correct to say, that where the proof of notice is clear and certain, it is, per se, evidence of fraud, in him who attempts to defeat a prior incumbrance, by setting up a subsequent deed. In this case, the notice of the mortgage was not particular as to the date, or sum, or time of payment; but the purchaser was expressly notified in writing by Ward, the grantor, that “ the title of the land was in David Dunham, as collateral security, to pay certain notes.” The notice was not only in writing, but contained in a schedule annexed to, and forming part of the deed, under which the purchaser claims. It must receive the same construction, as if it had been incorporated into the body of the deed. Suppose then the grant had been in this form: I, Matthias Ward, grant, bargain, and sell to Anthony Dey, and his heirs, all my “ estate and property in the lots in Stewart street, the title to which is in the name of David Dunham, given as collateral security to pay certain notes ;” would such a transposition of the same words, from the schedule to the body of the deed, make any difference in the construction of the whole instrument ? I think not; and if so, then the purchaser not only had express notice of the mortgage to Dunham, but the very deed itself pur* *570ported to convey no more than a mere undefined equitable interest in those lots, subject to the prior legal and equitable title to Dunham. The deed contained a reference to Dunham’s title, not merely in regard to the sum for which the lots were pledged, and when payable; but also for the designation and description of the lots themselves; for without examining the title of Dunham, it is impossible to ascertain what lands were 'meant to be conveyed to Dey. The only description of the premises granted by that deed, is contained in the schedule ; the deed did not in its terms profess to convey to Dey the entire estate in those lands, but merely such portion of equitable interest as remained in Ward, after mortgaging them to Dunham; or, in other words, the conveyance to Dey expressed no more than an assignment of the equity of redemption.
Ward, in this case, so far from deceiving Dey, by pretending to convey to him an estate, of which he had before devested himself, expressly informed Dey (hat he had no legal estate in these lots ; for that the title was in David Dunham. Dey then knew that he purchased no more than the equitable interest of Ward, subject to the lien of Dunham, whatever •that might be 5 and the fair construction of the transaction is, that Dey voluntarily took upon himself to investigate the title of Dunham, and to ascertain the extent of his lien, ^o that he might redeem the lots, if he thought proper, for the benefit of the creditors whom be represented.
I do not find it necessary to impugn or to question the decisions in Hine v. Dodd, (2 Atk. 275.) Jolland v. Stain-bridge, (3 Vesey Jun. 478.) or any others cited by the counsel for the respondent. In the case of LeNeve v. Le Neve, (3 Atk. 646.) Lord Hardzoicke said, “it would be a most mischievous thing, if a person taking the advantage of the legal form appointed by an acfof parliament, might, under that, protect himself against a person who had a prior equity, of which he had noticed'’ In the case of Jackson v. Neely, (10 Johns. Rep. 374.) and several others, in our own courts, the same construction of our registering and recording statutes, has been sanctioned.
The decree of his honour the Chancellor, in setting asidé *571the conveyance to Dunham, is, therefore, in my judgment, erroneous, and ought to be reversed.
April 1.
This being the unanimous opinion of the court, it was thereupon ordered, adjudged, and decreed, that the decree of the Court of Chancery be reversed ; that the respondent’s bill be dismissed; and that he pay to the appellant his costs in the Court of Chancery, to be taxed; and that the record be remitted, &c.
Decree of reversal, (a)

 The only point determined in the court below, declared to be erroneous by the above decree, is as to the sufficiency of the notice to the respondent of the prior deed to the appellant, the defeasance to which was not recorded, at the time of the assignment to the respondent in trust.