Opinion
Argued October 26, 1886
Decided December 7, 1886
E.A. Brewster for appellant. G.S. Van Gorder for respondent.
Under the Revised Statutes (1 R.S. 763, § 41), the recording of an assignment of a mortgage is not, of itself, notice of such assignment to a mortgagor, his heirs or personal representatives, so as to invalidate any payment made by them, or either of them, to the mortgagee.
The section of the statute above cited cannot be said to apply to the facts which are presented for consideration in the case under advisement as is apparent from a careful reading of the same. The defendant who made the payment was not the mortgagor, nor his heir, nor his personal representative. He was the purchaser of the equity of redemption and became seized of the premises subject to the mortgage. He was not, therefore, a party named in the statute, or from its phraseology intended to be embraced within its terms. If the statute was designed to include a purchaser of the mortgaged premises it no doubt would have so stated and thus made it manifest that such was its intention. Nor was the payment made to the mortgagee, the party named, but to a third person, who claimed to act for the owner of the mortgage, without any authority at any time to receive payments upon the principal.
It would seem, therefore, that the statute cited does not embrace any such case as is presented by the evidence here, and if the payments made can be upheld it must be upon some other and entirely different ground.
This is sought to be done, and reliance is placed upon Jones on Mortgages, § 791, and Heermans v. Ellsworth ( 64 N.Y. 159), which, it is claimed, bear upon the construction which is to be given to said section of the Revised Statutes. In Jones on Mortgages the notice, it is said, must be given to the owner of the equity of redemption in order to protect the assignee against payments made in good faith by the mortgagor, or the party liable to pay the mortgage to the assignor; that the recording of the assignment is not of itself such notice of the assignment as will afford such protection. The rule stated would seem to be in direct conflict with the general rule relating to the effect to be given to the assignments of mortgages when placed on record, and to conveyances to subsequent purchasers of the mortgaged premises who take title subject to the mortgage. It is a well-established principle of law that the assignment of a mortgage, and the satisfaction of the same are conveyances within the meaning of the Recording Act. ( Van Keuren v. Corkins, 66 N.Y. 77; Westbrook v. Gleason, 79 id. 23, 25; Decker v. Boice, 83 id. 215; Bacon v. Van Schoonhoven, 87 id. 446.)
Taylor, to whom the payments in controversy were made by defendant Carnes, was the owner of the mortgage and assigned the same to Mrs. Webster, which assignment was recorded on the 14th of July, 1877. This was before the payment from Carnes to Taylor in 1880 was made, and was a notice to all subsequent purchasers or incumbrancers of the mortgaged property, and to all persons who might afterward have any dealing with Taylor in regard to the mortgage. Carnes, in making payments on the mortgage after the recording of the assignment, was a purchaser subsequent to Mrs. Webster, whose title, by virtue of the assignment, was previously recorded.
Under the Recording Act, therefore, Carnes was chargeable with notice that the mortgage, which he intended to pay, had been assigned by Taylor to another party, Mrs. Webster, who subsequently assigned her rights therein to the plaintiff.
The record of an assignment of a mortgage is constructive notice to all persons of the rights of the assignee, save as excepted by the statute. ( Viele v. Judson, 82 N.Y. 32.) In the case cited it is laid down in the opinion by FINCH, J., that the recording of an assignment furnishes protection against any subsequent assignment of the same mortgage or any unauthorized discharge, and is notice that the rights of the mortgagee are gone, and that he can neither assign nor discharge the instrument. This case is directly in point and very distinctly covers the question presented. The record of the assignment here, as in the case cited, was an ample protection to the plaintiff's claim and notice to Carnes that Taylor had disposed of his interest in the mortgage.
In Heermans v. Ellsworth ( supra), the action was upon a demand against the defendant for money loaned by the plaintiff's assignor, and it was held that it is the duty of an assignee of a non-negotiable chose in action, in order to protect himself against a payment by the debtor to the original creditor, to notify the former of the assignment, and that in an action upon the demand where such a payment is established, the burden of proving notice prior to payment is upon the plaintiff. No question arose as to constructive notice or the effect of the Recording Act, and the case cited, therefore, is not in point.
Inasmuch as, upon the recording of the assignment, Carnes had constructive notice thereof it is not material whether he had notice otherwise sufficient to put him upon inquiry that Taylor had ceased to be the owner of the mortgage. It may be remarked, however, that before the assignment of the mortgage by Taylor to Webster the receipts were signed by Taylor individually, and subsequent to the assignment they were signed by him as attorney for the mortgagee, thus disclosing and notifying the defendant that Taylor had ceased to be the owner of the mortgage, and that he only acted as attorney for the owner. Having this information, it would seem to have been the duty of the defendant to have made further inquiry as to the ownership of the mortgage before making payments.
As to the claim of the defendant's counsel that the omission of Taylor to produce the bond and mortgage when Carnes made payments thereon does not, in this case, show that Carnes had no right to make such payments to him, it may be remarked, that if constructive notice was given of the assignment by the recording thereof, then it is not material to discuss the effect of Taylor's not producing the bond and mortgage. If however, any question can arise as to the non-production of the bond and mortgage, it is a complete answer to the position taken that although Taylor had authority to collect interest such authority did not authorize him to receive the principal. This was held in Smith v. Kidd ( 68 N.Y. 130), where it is said in the opinion by RAPALLO, J., that it is incumbent on the debtor who makes a payment to an attorney to show that the securities were in the attorney's possession on each occasion when the payments were made, and that it is not incumbent on the creditor to show notice to the debtor of the withdrawal of the papers from the possession of the attorney.
Under these circumstances, there is no ground for claiming that plaintiff is estopped from denying the right of Taylor to receive the principal due upon the mortgage. There is no foundation for the position that Taylor, as agent, had any authority from the plaintiff beyond that which authorized him to receive the interest, or that the plaintiff was chargeable with negligence in his failure to give notice to the defendant Carnes that he was the assignee of the mortgage.
As the referee erred in his conclusion, and the General Term in affirming the judgment on his report, the judgment should be reversed, and a new trial granted, with costs to abide the event.
All concur, except RUGER, Ch. J., not voting.
Judgment reversed.