Opinion
Argued May 5, 1885
Decided June 9, 1885
Thomas J. Clute for appellant.
Bartholomew Skaats for respondent.
Very numerous answers to the careful and elaborate opinion of DANIELS, J., at the Special Term, and which the General Term approved and adopted, have been presented for our consideration, and fortified by a copious citation of authorities. Selecting out those which seem most plausible and are confidently urged, we may confine what needs to be said to their discussion without useless repetition of the argument which has thus far prevailed.
1. The judgment rendered is criticised as in direct violation of the Recording Acts. That Mrs. Clute bought the property at a sale on execution, when the prior Chamberlain mortgage was discharged of record; that she became such purchaser in good faith and for value, as the trial court expressly found; and that a practical revival of the satisfied mortgage sweeps away the protection of the record, and works gross injustice to one who has trusted to it; is the substantial argument made. But we do not see that the Recording Acts affect the question. Whatever of good faith attended Mrs. Clute's purchase at the execution sale, she could gain by it no better or stronger right than the creditor would have got if he had been the purchaser. ( Frost v. Yonkers Savings Bank, 70 N.Y. 553.) She took only what the judgment could give, and bought at the peril of disappointment as to the existence or scope of its lien. The maxim of caveat emptor applied to her purchase, and she has no ground of complaint if she is given an interest in the land precisely commensurate with the actual lien of the judgment under which she bought. The record told her that such lien was only upon Hall's equity of redemption and was subject when obtained to the prior Chamberlain mortgage. The judgment creditor had no equitable right to any thing more. If more came by an enlargement of the lien, that was simply the creditor's good fortune; if it did not so come, the good fortune vanished, but no right of the creditor was invaded. Mrs. Clute's purchase, therefore, gave her, outside of her legal right, no equity to have the property freed from the incumbrance to which the judgment itself was subject. Her struggle is to retain the benefit of an accidental and unintended extension of the judgment lien, to which she was in no way equitably entitled, at the expense of others acting in ignorance and through mistake.
2. It is further contended that the judgment appealed from carries the doctrine of subrogation beyond any recognized limit; that the savings bank holding the final mortgage was a mere volunteer, advancing its money without compulsion or necessity, and that it was error to make the mortgage as the final form of a continuous debt a lien upon the premises, having priority over the sheriff's deed. Two cases are specially relied on as the basis of this contention. ( Marvin v. Vedder, 5 Cow. 671; Banta v. Garmo, 1 Sandf. Ch. 383.) They hold that a mere volunteer cannot be subrogated, and we have quite recently admitted the doctrine to be sound. ( Acer v. Hotchkiss, 97 N.Y. 403.) But it is not the savings bank which is invoking equitable interference. It is not even a party to this action, although benefit may result to it from justice done to others. The defendant, sued in ejectment and certain to lose his land, resists the claim of mesne profits and the complete recovery sought, by himself invoking the doctrine of subrogation. It is Emmerich and his grantors who have paid the interest upon the outstanding incumbrance, in ignorance that the title had been sapped, and wasting their money without return, and it is the defendant who brings his trouble into equity and seeks its aid. He is no mere volunteer. He was in possession of the land as owner, supposing his title to be perfect. He had covenanted to pay the bank mortgage, and parted with his money in good faith and to protect his title. In no sense were his payments voluntary, and in every particular he stood within the rule of subrogation. But it is said that he could defend against his covenant as it respects any future liability by reason of his eviction ( Dunning v. Leavitt, 85 N.Y. 35), and so the amount unpaid cannot be made a lien for his benefit. Possibly he might so defend; but is he bound to set up such defense and repudiate his covenant for the pure profit and benefit of a plaintiff having no equitable right to such profit? If Emmerich can escape his liability by two modes of procedure, one of which throws the loss where it belongs, and the other of which lands it upon innocent parties, may he not choose the former? If he decides to abide by his covenant and not resist it, at least the plaintiff may not complain. But Emmerich, by his deed, obtained all the rights of Marks Cottrell, and he at all events remains liable upon his bond to the bank, and himself paid off the Pearsall mortgage with the new loan, and his equity has become defendant's.
3. It is said that Marks Cottrell had actual notice of plaintiff's title before he paid off the Pearsall mortgage, and that defendant had such notice in 1874. The findings are to that effect, but they show also that each party had no such actual knowledge until after their conveyances were taken, and they had become bound by their covenants to pay off the mortgage incumbrance. The contention amounts to this, that they were bound to repudiate their covenants and throw the loss upon innocent third parties for the benefit of one whose sole right was subject in equity to the payment of the debt.
4. But it is added that Marks Cottrell, after the sheriff's deed to Mrs. Clute, had nothing to convey, and could not transfer any right or title to Denis Cottrell which might pass to the defendant; and that Marks Cottrell could not indirectly, by a mortgage upon land which he did not own, cut off Mrs. Clute's title. All this assumes that her title was something more than it really was, and puts its accidental and mistaken extension in the place and stead of its real lien. Marks Cottrell was in possession when he conveyed to Denis, and his deed was at least effective to transfer that possession and whatever equitable rights he had as against the legal title obtained by plaintiff. That legal title is not here assailed or destroyed. Equity has simply taken its measure, and allowed it to prevail to its lawful extent, and, in justice to complaining parties, compelled it to operate solely within its own proper and just boundaries.
5. It is also insisted, both as to Mrs. Hyde and Marks Cottrell as well as to defendant, that they had covenanted and agreed to pay off the mortgage debt, and that one cannot be surrogated to a debt for which he is primarily liable, and which it is his duty to pay. That is only another mode of saying that one cannot be surrogated who has no equity, and is quite true without affecting the case here presented. It was not their duty to pay as against the judgment creditor, and it was his duty and his debt if he became owner under the judgment. As between these grantees and the creditor, the mortgage debt was the prior lien and to be taken out of the land, leaving the judgment to take the residue; and in no just sense can it be said, as against one claiming under the judgment, that the owners of the fee were bound to pay off the incumbrance. While they had agreed to do so as to other parties, and as to them were primarily liable, they stood in no such relation to the plaintiff, and owed her no such duty.
The foregoing are the principal objections taken to the conclusions of the court below. There were many others, but largely dependent upon those discussed. The general principles involved in the decision have been sufficiently vindicated by the opinion of the Special Term, to which we have already referred.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.