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LEXSEE 119 N.Y.

587

James J. Phelan, Appellant, v. Margaret Brady, Impleaded, etc., Respondent

[NO NUMBER IN ORIGINAL]

Court of Appeals of New York

119 N.Y. 587; 23 N.E. 1109; 1890 N.Y. LEXIS 1127

March 3, 1890, Argued
March 21, 1890, Decided

PRIOR HISTORY: [***1] under a perfectly valid but unrecorded
deed. Her title, therefore, prevailed
Appeal of the General Term of the as against the mortgagee. It mattered
Supreme Court in the first judicial not, so far as the occupant was
department, entered upon an order made concerned, that the mortgagee in good
June 19, 1888, which affirmed a faith advanced his money upon an
judgment in favor of defendant, apparently perfect record title of the
dismissing plaintiff's complaint on mortgagor. Nor was it of any
the merits, upon a decision of the consequence whether the mortgagee was
court on trial at Special Term. in fact ignorant of any right or claim
of the occupant to the premises. It
DISPOSITION: was enough that she was in possession
under her deed and the contract of
Judgment affirmed. purchase, as that fact operated in law
as notice to the mortgagee of all her
CASE SUMMARY: rights.

OUTCOME: The court affirmed the
PROCEDURAL POSTURE: Plaintiff judgment of the trial court, which
mortgagee appealed the judgment of the dismissed the mortgagee's action to
General Term of the Supreme Court in foreclose on the mortgage.
the First Judicial Department (New
York), which affirmed the trial CORE TERMS: mortgage, occupied,
court's judgment in favor of tenants, deed, apartment, delivery,
defendants, mortgagor and occupant, rents, contract of purchase, purchase-
dismissing the mortgagee's action to money, purchase-price, housekeeper,
foreclose on the mortgage. fee-simple, default, rented, notice
OVERVIEW: The mortgagee sought to LexisNexis(R) Headnotes
foreclose on a mortgage of a tenement
building. He subsequently learned that
prior to the execution and delivery of
his mortgage, the building had been Criminal Law & Procedure > Sentencing
sold to one of its occupants. The > Corrections, Modifications &
trial court held that the occupant's
Reductions > Eligibility,
title and possession was sufficient to
Circumstances & Factors
defeat any claim under the mortgagee's
mortgage, and dismissed the complaint. Real Property Law > Deeds > General
At the time of the execution and Overview
delivery of the mortgage to the Real Property Law > Financing >
mortgagee, the occupant was in the Mortgages & Other Security Instruments
actual possession of the premises > General Overview
[HN1] Actual possession of real estate 29; Grinstone v. Carter, 3 Paige, 421;
is sufficient notice to a person Webster v. Van Steenbergh, 46 Barb.
proposing to take a mortgage on the 212.)
property, and to all the world of the
existence of any right which the William E. Wyatt for respondent.
The defendant Margaret Brady's
person in possession is able to
establish. possession and occupation under a
deed, though unrecorded, was notice as
to her ownership of the property.
SYLLABUS: Actual possession of real
(Gerard on Real Estate, 593, 594;
estate is sufficient notice to all the
Goveneur v. Lynch, 2 Paige, 300; Bank
world of the existence of any right
of Orleans v. Flagg, 3 Barb. 318;
which the person in possession is able
Tuttle v. [***3] Jackson, 6 Wend.
to establish.
213; Moyer v. Hinman, 13 N. Y. 184;
Trustees, etc., v. Wheeler, 61 id. 88-
In an action brought to foreclose a
98; Cavalli v. Allen, 57 id. 517;
mortgage upon certain premises given
Chesterman v. Gardner, 5 Johns. Ch.
by M., who held an apparently perfect
39; Territt v. Cowenhoven, 11 Hun,
record title to the same, it appeared
320; Troup v. Hurlbut, 10 Barb. 354;
that before the execution of the
Smith v. Jackson, 76 Ill. 254; Greer
mortgage, M. had conveyed the premises
v. Higgins, 20 Kan. 420; Brown v.
to B. who was in possession, and, with
Volkening, 64 N. Y. 76-83; Page v.
her husband, occupied two rooms in the
Waring, 76 id. 463-470; Seymour v.
buildings on the premises; he also
McKinstry, 106 id. 230-238; Robinson
kept a liquor store in a part thereof;
v. Wheeler, 25 N. Y. 260; People v.
the other rooms she leased to various
Snyder, 41 id. 402; Seymour v. Van
tenants, claiming to be the owner, and
Slyck, 8 Wend. 403, 404; Sharder v.
she collected the rents. Her deed was
Bunker, 65 Barb. 608; Brown v. Austin,
not recorded until after the giving of
30 id. 358; Ernest v. Reed, 49 id.
the mortgage. Held, that B.'s actual
367; Tracy v. Snowden, 23 Wkly. Dig.
possession under her deed, although
41; Moyer v. Hinman, 13 N. Y. 184;
unrecorded, and its existence unknown
Merithew v. Andrews, 44 Barb. 200; 2
to the plaintiff, was sufficient
Pomeroy's Eq. Juris. 665.) The fact
notice to him of her rights to defeat
that the property in question is a
any claim under [***2] the mortgage.
tenement-house, has no proper bearing
on the question, and cannot change the
Also, held, that the fact B. and her
rule. ( Page v. Waring, 76 N. Y. 470;
husband occupied the store and a
Crosland v. M. S. F. Assn., 121 Penn.
living apartment in the building prior
St. 82, 83; Brown v. Volkening, 64 N.
to the time she went into possession
Y. 84; De Ruyter v. Trustees, etc., 2
under her contract of purchase could
Barb. [***4] Ch. 556; 2 Pomeroy's
not aid the plaintiff.
Eq. Juris. 665.) The defendant was
The nature of the action and the guilty of no negligence. ( Seymour v.
facts, so far as material, are set McKinstry, 106 N. Y. 230.) The
forth in the opinion. defendant being in actual possession
under a deed covering the premises,
COUNSEL: and claiming under a specific title
adversely to John E. Murphy,
N. B. Hoxie for appellant. The plaintiff's mortgagor, the mortgage
plaintiff had not constructive notice under the Revised Statutes is void. (
of defendant's claim. ( Williamson v. Fish v. Fish, 39 Barb. 13; Cary v.
Brown, 15 N. Y. 362, 364; Pope v. Goodman, 22 N. Y. 174; Bradstreet v.
Allen, 90 id. 298, 303; Cooke v. Clarke, 12 Wend. 675; Christie v.
Travis, 20 id. 400; Staples v. Fenton, Gage, 71 N. Y. 189.)
5 Hun, 172; 3 Wash. on Real Prop. 317;
Claiborne v. Holmes, 51 Miss. 146; JUDGES:
Billington v. Welch, 5 Binney, 129;
Page v. Waring, 76 N. Y. 463, 471; O'Brien, J. All concur.
Chesterman v. Gardener, 5 Johns. Ch.
OPINION BY: continued [***6] in actual, open and
notorious occupation and possession of
O'BRIEN the premises as such owner, and has
ever since and still owns the same in
OPINION: fee-simple.
[*589] [**1110] On the 23d day The trial court found that in
of July, 1886, the plaintiff loaned to March, 1886, Margaret Brady employed
the defendant John E. Murphy the sum one Michael J. Murphy, an attorney, to
of $ 2,000, and took from him his examine the title to the premises in
bond, whereby he promised to pay the question and purchase the same for
same with interest semi-annually in her, and before May 7, 1886, she gave
two years thereafter. On the same said Murphy, as her attorney, the sum
day, and as collateral security for of $ 6,700 to be used as part of the
the payment of the bond, Murphy and purchase-money; that Murphy procured a
his wife executed, acknowledged and contract for the sale of the premises
delivered to the plaintiff a mortgage to be made between Mary S. Trimble,
upon certain real estate in the city who then owned the same, and his son
of New York. The premises thus John E. Murphy the defendant, in which
mortgaged consisted of a tenement contract the said John E. Murphy
building, or block, containing forty- appeared to be the purchaser of the
three rooms or apartments, then premises; that upon the execution of
occupied by twenty different occupants this contract, about March 19, 1886,
or families, as tenants from month Michael J. Murphy paid to Mrs. Trimble
[***5] to month, except that three of part of the sum of $ 6,700, which he
these apartments were occupied by the had received for that purpose from
defendant Margaret Brady and her Mrs. Brady, and the rest of that sum
husband, who kept a liquor store in was paid to her on the 7th of May,
part of the building, and they 1886; that the balance of the
occupied two living rooms in the rear purchase-price, namely $ 16,000, was
of the store, the wife claiming to be secured to be paid to Mrs. Trimble by
the owner of the premises and a purchase-money mortgage; that on the
collecting rents from the other same day the purchase-price was thus
tenants. paid, Mrs. Brady's lawyer took from
The plaintiff, at the time he made Mrs. Trimble a deed of the premises
the loan, had no actual notice or [***7] to his son John E. Murphy, and
knowledge of any title to the premises the deed was duly recorded on that
in Mrs. Brady, or any claim on her day; that on the 1st of May, 1886,
part to be the owner. When the first Mrs. Brady took possession of the
installment of interest became due premises under the contract claiming
upon the mortgage, default was made, to own the same, and has ever since
and the plaintiff brought this action remained in possession and occupied
to foreclose under a provision in the the same herself and by her tenants;
mortgage making the whole sum due upon that she rented certain rooms in the
default in the payment of the interest building to tenants immediately
when due. Margaret Brady being in thereafter; that she discharged the
possession was made a party to the housekeeper who had before that date
action, [*590] and she answered, rented the premises and collected the
setting up the defense that prior to rents for Mrs. Trimble, and moved
the execution and delivery of the herself into the rooms formerly
plaintiff's mortgage, and on or about occupied by the housekeeper, and that
the 5th of May, 1886, she became the she has received the rents ever since
absolute owner in fee-simple of the the 1st [*591] of May, 1886; that on
premises described in the complaint the fifth of May of that year a deed
and in the mortgage and of the whole conveying the premises to Mrs. Brady
thereof, and that upon becoming such was executed and duly acknowledged by
owner, she took possession of the the defendant John E. Murphy and his
same, and that she has ever since wife, and by him delivered to his son
Michael J. Murphy as agent and property situated as this was,
attorney for Mrs. Brady; that Murphy occupied by numerous tenants, it would
never had any interest in the be inconvenient and difficult for him
premises, never paid any part of the to ascertain the rights or interests
consideration money and never had that are claimed by all or any of
possession of the same or any part them. But this circumstance cannot
thereof; that the said Michael J. change the rule. [HN1] Actual
Murphy retained the deed to Mrs. Brady possession of real estate is
in his possession until not later than sufficient notice to a person
the 25th of August, 1886, when he proposing to take a mortgage [*592]
delivered the same [***8] to her and on the property, and to all the world
the same was recorded by her on the of the existence of any right which
26th of August, 1886, subsequent to the person in possession is able to
the execution, delivery and record of establish. ( Governeur v. Lynch, 2
the plaintiff's mortgage. Paige, 300; Bank of Orleans v. Flagg,
3 Barb. 318; Moyer v. Hinman, 14 N. Y.
The trial court held that Mrs. 184; Tuttle v. [**1111] Jackson, 6
Brady's title and possession was Wend. 213; Trustees of Union College
sufficient to defeat any claim under v. Wheeler, 61 N. Y. 88, 98; Cavalli
the plaintiff's mortgage, and v. Allen, 57 id. 517.)
dismissed the complaint, and this
judgment has been affirmed by the The circumstance that Mrs. Brady
General Term. and her husband occupied the store and
a living apartment in the building
At the time of the execution and prior to the time that she went into
delivery of the mortgage to the possession under her contract of
plaintiff, the defendant Mrs. Brady purchase as tenants under Mrs.
was in the actual possession of the Trimble, the then owner, cannot aid
premises under a perfectly valid but the plaintiff. It does not appear
unrecorded deed. Her title must, that he ever heard of that fact till
therefore, prevail as against the after the commencement of this suit,
plaintiff. It matters not, so far as and we cannot perceive how it would
Mrs. Brady is concerned, that the affect the result if he had. The
plaintiff in good faith advanced his trial [***10] court found that prior
money upon an apparently perfect to making the loan the plaintiff was
record title of the defendant John E. upon the premises for other purposes,
Murphy. Nor is it of any consequence, and that then, by making inquiry, he
so far as this question is concerned, could have ascertained the rights of
whether the plaintiff was in fact Mrs. Brady in the property, and while
ignorant of any right or claim of Mrs. the absence of such a finding would
Brady to the premises. It is enough not change the result, it shows that
that she was in possession under her the plaintiff's loss is to be
deed and the contract of purchase, as attributed to his confidence in
that fact operated in law as notice to Murphy, who probably deceived him, and
the plaintiff of all her rights. to his failure to take notice of Mrs.
It may be true, as has been argued Brady's possession.
by the plaintiff's counsel, that when The judgment should be affirmed,
a party [***9] takes a conveyance of with costs.