Summary
In Crane v. Turner, 67 N.Y. 437, the equity existed at the creation of the mortgage, and Miller J., speaking for the unanimous court, said, page 439, "The principle is settled beyond peradventure that an assignee of a mortgage must take it subject to the equities attending the original transaction. If the mortgagee himself cannot enforce it, then the assignee has no greater rights.
Summary of this case from Gearon v. KearneyOpinion
Argued November 24, 1876
Decided December 5, 1876
M.M. Waters for the appellant. William G. Choate for the respondents.
This case involves a question as to the priority of mortgages, as liens upon the premises mortgaged.
The mortgage foreclosed in this action was executed by the mortgagors, Ethan M. Pierce and wife to Aurora M. Pierce, and by the mortgagee was assigned to the plaintiff's testator. The mortgage and the assignment were both duly recorded. At the time when the mortgage foreclosed was executed, the mortgagor, Ethan M. Pierce, had possession of the land under a contract of sale, and held only an equitable title. A deed was executed to him after the mortgage was given, and subsequently the owner and mortgagor conveyed the premises to J. Denison Pierce, and took back a mortgage from him, which was duly recorded. The grantee had notice of the existence of the prior mortgage, and the grantor assigned the last-mentioned mortgage to the defendant, Robert Turner, which assignment was also placed on record. Turner searched the records back to the date of the deed to Ethan M. Pierce, inquired of the latter and was informed that the mortgage assigned was the first lien. The defendant claims that the mortgage assigned to him was entitled to priority over the mortgage held by the plaintiffs. We think that this position is without foundation, and cannot be upheld, as is manifest by a reference to recent cases decided in this court. The principle is settled beyond peradventure, that an assignee of a mortgage must take it subject to the equities attending the original transaction. If the mortgagee himself cannot enforce it, then the assignee has no greater rights. The true test is, to inquire what can the mortgagee do by way of enforcement of it against the property mortgaged, and what he can do the assignee can do and no more. As a purchaser of a chose in action he must always abide the case of the person from whom he buys, and he stands entirely in the place of the latter. ( The Trustees of Union College v. Wheeler, 61 N.Y., 88; Green v. Deal, 64 id., 220.) In the case at bar the original mortgagee of the mortgage held by the defendant Turner, was the owner of the premises; had executed the first mortgage to the plaintiff's assignor, and had full knowledge in regard to the same. He was in no position then to enforce the second mortgage which was given to him by his grantee, as a lien prior to the first one held by the plaintiffs, and the doctrine of estoppel would apply to any such claim. He was fully acquainted with its existence, knew that it was a lien upon the farm prior to the one he had taken, and was thereby absolutely precluded from any right to assert a priority as to the second mortgage. Under the rule referred to, his assignee stands precisely in his position, and has no better or greater right to claim priority. The fact that the assignor had only an equitable title when the first mortgage was given, even if that title was not the subject of a mortgage, does not in any way change the aspect of the case or the rights of the parties. The assignor was estopped from denying the validity of the mortgage or the priority of the lien, and, of course, the assignee takes no better, and no superior right to a preference. Nor is there any ground for the position of the defendant's counsel that under the recording act the plaintiff's mortgage was not notice to the defendant, although recorded, because the record shows a perfect chain of title sustaining the plaintiff's mortgage. This point is also decided adversely to the defendant's claim, in Green v. Deal ( supra), and it is there held that the only effect of recording an assignment of a mortgage is to protect the assignee against a subsequent sale of the same mortgage. If it be not put on record then the assignee might assign to another person, a bona fide purchaser for value, who might record his assignment first, and hold the mortgage against the first assignee. The case last cited involves the precise point last considered, and is decisive upon that question.
As the recording act does not aid the defendant, and no ground is shown upon which he is entitled to a priority, it necessarily follows that there was no error upon the trial, and the judgment of the General Term must be affirmed.
All concur.
Judgment affirmed.