New York Life Insurance & Trust Co. v. Cutler ( 1845 )

The Assistant Yice-Chancellor.

The legal title to the farm in Lodi, ivas regularly vested in Cutler, when he executed the mortgage to the complainants. The defendant Young, is wholly mistaken when he says that he never was divested of his title, and that Cutler never was seised of the farm.

His real ground of defence is, that Cutler, ever since 1828, has owned the farm in trust for him ; having a naked legal title, but without any interest.

I deem it unnecessary to examine this point, because admitting all that Young claims for it, he does not establish a defence to the mortgage.

He does not claim that the mortgage is affected by the trust, unless the complainants had notice of its existence. Young’s answer alleges that they had due notice ; but it does not state in what manner it was given to them.

At the hearing it was argued that there was both direct and constructive notice of the trust to the complainants when they took the mortgage.

I. As to direct notice, the testimony wholly fails to establish it.

2. Then as to the constructive notice. The answer alleges that Young has been in the undisturbed possession of the farm ever since the year 1798. Mrs. Cutler proves that he has been in possession for forty years. This is relied upon to show notice to the complainants of his equitable rights. The answer does not allege, nor is there proof. (Cutler’s testimony being laid aside,) that the complainants knew or were informed of this possession. It therefore rests on the sole fact that Young occupied the land.

I think the answer does not go far enough, to enable the court to infer notice, under the circumstances of this case. Young’s title was divested in 1818 or 1819. There is no pretence that he had any title, legal or equitable, from thence till 1828, though he remained in possession. Then from 1828, to October, 1843, when his answer was put in, he remained in the occupation of the farm in like manner. He knew in 1828, that Cutler had taken a deed of the farm in his own name. Yet we have neither allegation or testimony, that during the next fifteen years, Young ever claimed the land, or did a single act inconsistent with Cutler’s full ownership, or indicating any intention ever to interfere with his title.

Under such circumstances, it was incumbent on Young, if he relied on his possession as being notice to the complainants, to state in his answer that he was in possession of the land at the date of the mortgage, claiming it as his own ; and to have proved the character of his possession accordingly. As the case stands, all that he has stated or proved, is entirely consistent with his having been occupying by the mere sufferance of Cutler, or as a tenant under him ; and for aught that appears, if the complainants had been put upon inquiry by learning of his possession, they would on inquiry have found that he was such occupant or tenant. He does not allege or prove that Cutler was not in possession in 1833, by Young’s actual possession under him.

The legal presumption is, that after 1819, Young was occupying under Platt, the owner of the land. So far as the complainants had any information, they had a right to rely upon the legal presumption that the possession followed the title under Cutler, as well as under Platt. And Young has not alleged or proved sufficient in regard to the character of his possession, (when it is considered in connection with the other circumstances,) to deprive the complainants of the benefit of that presumption, or to subject them to the doctrine of constructive notice of Young’s alleged rights, as it is maintained in some of the cases, upon pos- ' session alone.

1 will not therefore enter at all into the controverted questions growing out of that doctrine.

There is another difficulty in the way of Young’s defence, which arises from the sale of the Hector farm, to Shannon. Young sets forth this sale, and he does not deny but that Shannon bought in good, faith. Nor does he pretend that Shannon had any notice whatever of his equitable claim to the Lodi farm, or of any fac which would preclude Shannon from bargaining with Cutler, on the assumption which Cutler’s legal title warranted, that the complainant’s mortgage was a valid and perfect lien on both of the farms.

Therefore on Shannon’s taking a conveyancé of the Hector farm, subject to $2500 only of this mortgage, on the faith of Cutler’s legal and recorded title to both farms, Young’s latent equity in the Lodi farm, cannot be permitted to intervene to cast a greater burthen than the $2500, on the Hector land.

Shannon on purchasing a legal title in 1837, was not bound to inquire the state of the possession of the Lodi farm in 1833, and cannot be affected by any doctrine of constructive notice in this suit.

The equitable set off which Young brings forward, in Cutler’s claim on Shannon, growing out of the Hamilton mortgage ; if not altogether too remote, is too vaguely presented to authorize any decree in regard to it.

This is not the proper stage of the cause, for settling the controversy between Young and the Seneca County Bank.

There must be a decree for a sale of the premises. The Lodi farm is to be sold for the $1500, and arrears of interest, and the Hector lands for the $2500, and interest. The answer of the infants sets forth various equities in respect of the order of sale of the latter, and the decree will direct the master to settle' those equities and sell the premises accordingly.

The costs occasioned by Young’s defence, must be borne by him. The residue of the complainant’s costs and those of the guardian ad litem, are to be apportioned on the two farms, in the same ratio as the mortgage debt.

The other questions between the parties, are not to be affected by the decree.