Court Opinion

ID: 7965150
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:49:56.052471+00
Date Added: 2024-06-11T16:34:37.249119
License: Public Domain

Mitchell, J.
The mortgage from Crowe to Hollerith, being for purchase-money, and executed simultaneously with the deed of purchase, would, under a familiar rule, take precedence of the mortgage from Crowe to plaintiff, although the latter was executed and recorded first in point of time. * The same rule applies in a case where the mortgage is to another than the vendor, who actually advances the purchase money. Jones, Mortg. § 466; Curtis v. Root, 20 Ill. 518; Jackson v. Austin, 15 John. 477; Bolles v. Carli, 12 Minn. 62, (113;) Jones v. Taintor, 15 Minn. 423, (512.) Hence the suggestion of the appellant that the deed was executed by Hollerith as executrix, while the mortgage was taken back to her personally, is without force. Neither is the application of the rule affected by the fact that the Hollerith mortgage extended the time of payment of the purchase-money for a longer time and at a higher rate of interest than fixed in the original contract of purchase under which Crowe held the land at the time of the execution of the plaintiff’s mortgage. Whether, if plaintiff had sought to redeem, and pay off Mrs. Hollerith, he would have been bound by the terms of the mortgage, or whether he’ could still have redeemed according to the terms of the original contract between Crowe and Hollerith, it is unnecessary to consider. It is enough to say that no such relief is, or ever has been, sought. On the contrary, plaintiff’s contention is that the lien of his mortgage is prior to that of the Hollerith mortgage.
When the deed' of purchase' was delivered to Crowe and the Hollerith mortgage taken back, the whole of the purchase-money was overdue, and Crowe in default in the terms of his original contract, and hence his interest in the land, and the mortgage lien of plaintiff on this interest, liable to be wholly lost. Crowe could not have demanded a deed at all, except upon payment in full of the purchase-*97money, and it was only in consideration of his giving back the mortgage that he obtained the deed at all.
Neither is there anything in the point made by appellant that the priority of a purchase-money mortgage can only be enforced in equity, and that the purchaser at a foreclosure sale, under a power in the Hollerith mortgage, took subject to plaintiff’s mortgage. Hollerith’s rights were not founded upon any mere equitable vendor’s lien, but upon her mortgage. The purchaser at the foreclosure sale took whatever estate was covered by the mortgage; and the mortgage, being for purchase-money, and executed simultaneously with the deed of purchase, covered all that was conveyed by that deed.
It follows that, by the foreclosure of the mortgage and the expiration of the period for redemption, all estate or interest of Crowe in the premises, and with it the lien of plaintiff’s mortgage, has been extinguished, unless preserved and continued by the following state of facts found by the trial court, to wit: That a few days after the expiration of the period of redemption Hollerith conveyed the premises to one Cudworth, (the mortgagor to the defendant bank, and the grantor of defendant Kelley,) for $832, being the amount due on the foreclosure, if the period of redemption had not expired; “that such purchase was made pursuant to a secret understanding and agreement between said Cudworth and defendant Crowe” that Crowe should allow the period of redemption under the foreclosure to expire, and that Cudworth should thereafter purchase the premises from Hollerith, securing the money therefor by mortgage on the premises, (which were worth $2,500,) and should hold any surplus secured under such mortgage, and the title so obtained, in trust for said Crowe, and for his use and benefit.
It will be borne in mind that plaintiff is here, not as a creditor, but as purchaser, seeking to establish and enforce a lien under his mortgage. Hence he is not in position to assert any interest in the premises which Crowe himself could not assert. While the findings are not explicit on the point, yet we infer and assume from them, as a whole, that the “secret understanding and agreement” between Cud-worth and Crowe were purely verbal. The question, then, would seem to be whether the facts, as found, are sufficient to create a construct— *98ive trust in the land, in favor of Crowe, within the doctrine of a line of cases of which Ryan v. Dox, 34 N. Y. 307, may be said to be the leading one. Without considering at length a question which is not discussed by counsel, and does not seem to have been called to the attention of the court below, we content ourselves with saying that, in our opinion, the facts found are not enough to create any such trust in favor of Crowe in the premises, even in the hands of Cud-worth. The consideration paid to Hollerith for the purchase did not move from Crowe. It is not found that but for this understanding or agreement Crowe would have redeemed, or that he refrained from redeeming in reliance thereon. Neither is it found that Hollerith was a party to this understanding or agreement, or that she conveyed to Cudworth in pursuance of it, or that Cudworth was enabled to obtain the conveyance at all, or for a less price than she otherwise would. This reason, if sound, is conclusive in favor of both the defendant bank and the defendant Kelley.
But there is another reason why plaintiff can claim nothing, in any view of the case, as against the defendant bank. The bank is an innocent purchaser for value. The court finds that at the time of the execution of the mortgage to it the bank had no notice of plaintiff’s equities, if any, in- the premises, or of the purpose for which the same were conveyed to Cudworth, of of the understanding in reference thereto between her and Crowe, “except so far as the law would imply such notice from the state of the records, and the facts attending such loan.” The records certainly did not convey to the bank any notice of any secret trust in favor of Crowe. True, they charged it with notice of plaintiff’s mortgage, but at the same time disclosed the fact that the lien of that mortgage had been extinguished and cut out by the foreclosure of a paramount mortgage, and the expiration of the period of redemption.
The suggestion that Crowe’s possession of the premises was notice can have no force, under the circumstances of this case. The bank had a right, under the circumstances, to suppose that Crowe’s possession was subordinate to the right of Cudworth, who appeared by the record to have acquired Crowe’s title under the foreclosure. Crowe, while thus in possession, not only made no claim adverse to Cud-*99worth’s title, but, on the contrary, as Cudworth’s agent, negotiated and procured from the bank the loan on this mortgage. Scott v. Gallagher, 14 Serg. & R. 333, (16 Am. Dec. 508;) Cook v. Travis, 20 N. Y. 400; Van Keuren v. Central R. Co. of N. J., 38 N. J. Law, 165; Newhall v. Pierce, 5 Pick. 450; Bloomer v. Henderson, 8 Mich. 395, (77 Am. Dec. 453;) Dawson v. Danbury Bank, 15 Mich. 489.
Judgment affirmed.