Court Opinion

ID: 5501721
Source: CourtListenerOpinion
Date Created: 2022-01-10 03:00:43.929636+00
Date Added: 2024-06-11T08:33:57.201770
License: Public Domain

Landon, J.,
(dissenting.) The two mortgages were concurrent in date, delivery; ■ were were by to create concurrent and equal liens upon the mortgaged premises. The mortgagees were the grantors by deed of the same date to the mortgagor of their equal undivided interest in the premises, and the mortgages were both given to secure parts of the purchase money. They were therefore of equal and concurrent lien, unless some existing equity required that one should have priority over the other,—Boies v. Benham, (N. Y. App.) 28 N. E. Rep. 657;—or a valid agreement to that effect existed between the mortgagees at 'the time of their execution and delivery,—Jones v. Phelps, 2 Barb. Ch. 440. The mere fact that one was recorded before the other did not, of itself, create any priority. Greene v. Warnick, 64 N. Y. 226; Decker v. Boice, 83 N. Y. 215. The respondents do not claim any equitable priority, but rely upon priority created by the agreement between Harvey and Bichard Miller prior to the execution and delivery of the two mortgages. If that agreement (if it may be called such) were free from fraud, it might uphold the claim of priority given by the judgment to the mortgage to Harvey Miller. But I think that agreement must be condemned as fraudulent. Before the execution of ■the two mortgages, and in expectation of their execution, Bichard Miller made .an agreement with Arnold Wise for the purchase by Bichard of Wise’s farm, the $4,000 mortgage to be received by Bichard to be applied in part payment of the purchase money theredf. This agreement was known to Harvey Miller. Some point is made that Harvey did not know that Wise was to take the mortgage from Bichard. Harvey himself testified, when asked if he knew that Wise was to take that mortgage that day; “Bo, not positively; but I supposed it would be turned in. Whether "Wise or somebody else would take it, I didn’t know, but I supposed it would be turned in for that property. I knew no other source in which Bichard would turn that mortgage.” Of course, the person to be cheated, whether Wise or another, is now as immaterial to the question under consideration as it was then to Harvey. The intention was, by a secret agreement between themselves, to import into Bichard’s mortgage a latent defect which would benefit Harvey’s mortgage, and then assign the impaired mortgage without disclosing the impairment, and thus thrust upon the assignee—whether Wise or another was immaterial— ■the risk .to result from their artifice. The suggestions that they did not do *638this to cheat Wise, but merely to help Harvey; that they believed the mortgage assigned him would be good, though not so" good as it purported to be; that Bichard did not expressly tell him it was equal in lien with Harvey’s mortgage,—are more like appeals to charity to condone their fraud than evidence in disproof of it. Whatever advantage the secret agreement-would confer upon Harvey, they meant he should stealthily acquire; and whatever increased risk it might thrust upon Wise, they meant he should not know until it should be too late for him to refuse it. The facts indicate that, while Bichard was taking his mortgage to the law-office, where it should be transferred to Wise, Harvey was taking his mortgage to the clerk’s office to be recorded. Was it necessary that Wise should station a messenger at the clerk’s office in order to detect the record of Harvey’s mortgage, before he could finish his transactions with Bichard? Clearly not, in view of the law with respect to such mortgages, that mere priority of record confers no priority of lien. The maxim of caveat emptor does not apply to a latent defect or vice caused or created by the vendor himself. Hoe v. Sanborn, 21 N. Y. 552; Littauer v. Goldman, 72 N. Y. 506. Much less will the maxim apply where the latent defect is created for a fraudulent purpose by the vendor, for it is idle for the buyer to take heed when the artifice of the seller is so contrived as to baffle the buyer’s caution. It is true that Wise was not expressly told after the two mortgages were executed that they were equal liens in point of time; that is to say, no oral misrepresentation was superadded to the representation implied by the mortgages themselves, and the open facts respecting them. Harvey and Bichard intended to deceive Wise by concealing what it was Bichard’s duty to disclose, and what it was Harvey’s duty to see to it that Bichard did disclose. Mutual concealment was necessary to make quite sure of the success of the imposition upon Wise. It was not needful for the appellants to provean affirmative oral misrepresentation to Wise after the execution of the mortgages, and the failure to do it was not material. As the assignee of each mortgage abides by the case of his assignor, the rights of the present owners as to priority are the same as they stood between Harvey and Bichard before Bichard’s assignment to Wise. As no priority was acquired by Harvey by the mere act of his priority of recording, the question now depends upon the validity of their oral understanding to give Harvey’s mortgage priority of lien. It will be noticed that that understanding was not based upon any consideration. It was destitute of any equities u) uphold it. If was a mere nudum pactum, and therefore not a binding agreement. Bichard, therefore, was not bound by it. But, if we call it an agreement, it was entered into for a fraudulent purpose, and therefore not binding upon Bichard. Ex maleficio ñon oritur contractus. Harvey could not enforce it against Bichard. Ex dola malo non oritur actio. They were equal wrongdoers. In pari delicto potior est conditio defendantis. The mortgages, therefore, remained as they were when executed,—concurrent. It is suggested that the agreement for prior record is executed, but, as we have seen, nothing follows to fix priority from the mere recording, and therefore the situation is unchanged by that fact. Priority can only exist by virtue of a valid agreement; and, as the facts disprove its validity, even if the prior record were presumptive evidence of it, equality remains. The judgment should be modified by declaring such equality of lien and equal right to the proceeds of sale, and disallowing costs to the defendant Anderson, and awarding to appellants costs against him of this appeal and in the court below, and in other respects affirmed, with costs to the plaintiff out of the proceeds.