Judges: Avert, Banks, Brown, Hinman, Maltbie
Filed Date: 4/7/1936
Status: Precedential
Modified Date: 11/3/2024
The plaintiff brought this action to foreclose a mortgage made by the defendant James A. Dyer to the Thomas F. Clark Company and assigned by that company to it. The Prudential Life Insurance Company was made a defendant as claiming an interest in the mortgaged premises by reason of an assignment of the same mortgage to it by the Clark Company, which was alleged to be subsequent to the assignment to the plaintiff. The Insurance Company, to which we shall hereafter refer as the defendant, filed an answer and cross-complaint. The cross-complaint gave a rather detailed history of the transaction and to it were annexed copies of the various instruments involved in the controversy. Its allegations, so far as material to the issue decisive of the case, state the following situation: The Clark Company, which was engaged in the business of loaning money on mortgages, had a contract with the defendant giving to it the exclusive right to submit to the defendant applications for loans on improved real estate in certain towns, one being that in which the real estate included in the mortgage here in question was located. It was the practice of the defendant not to take mortgages to secure loans for construction purposes until the improvements had been completed. To provide funds for the construction of the improvements the Clark Company would obtain a loan from some bank, assigning to it as security a mortgage made to it to secure the advances to the mortgagor. Upon the completion of the improvement the defendant would purchase the mortgage upon the Clark Company furnishing it with the mortgage note and deed and a certificate of title.
The defendant approved an application submitted by the Clark Company for the loan to Dyer. Dyer then executed the note and mortgage in question to *Page 266 the Clark Company. The company made a written assignment of the mortgage to the plaintiff as collateral security for a loan. This assignment was never recorded. Subsequently the Clark Company executed and delivered to the First National Bank and Trust Company of New Haven an assignment of the same mortgage as collateral security for a loan, furnished the bank a certificate of title showing that the company held the mortgage as of record, and also indorsed and delivered to it an instrument which purported to be but was not in fact the note secured by the mortgage. Later the mortgage and the false note were reassigned to the Clark Company, by a written instrument duly recorded. Meanwhile the Clark Company had furnished to the defendant a certificate of title showing that the land records disclosed the Dyer mortgage to be owned by it and its assignment to the First National Bank. Thereafter the Clark Company delivered to the attorneys who were representing the defendant the false mortgage note, the original assignment to the First National Bank, its reassignment to the Clark Company, and an assignment of the mortgage by the company to the defendant; and the attorneys caused the last two instruments to be recorded. The defendant had no knowledge of the assignment of the mortgage to the plaintiff and accepted as genuine the note delivered to its attorney, in reliance upon the title to the mortgage as disclosed by the record referred to in the certificate of title. The defendant sought in its cross-complaint a judgment that it was the owner and holder of the mortgage and debt secured thereby and that the plaintiff indorse without recourse and deliver to it the note actually secured by the mortgage. The plaintiff filed a demurrer to the cross-complaint which the trial court sustained, and, the defendant refusing to plead over, *Page 267 judgment was entered upon the cross-complaint for the plaintiff.
The defendant claims that, because of the failure of the plaintiff to record the assignment of the mortgage to it the latter cannot assert any right to the mortgage or the indebtedness secured by it as against the defendant. Section 5010 of the General Statutes provides: "No conveyance shall be effectual to hold any land against any other person but the grantor and his heirs, unless recorded on the records of the town in which the land lies." We have never expressly decided whether an assignment of a mortgage falls within the purview of this statute. Mortgages have always been regarded as conveyances of land within the meaning of the recording statute. An assignment of a mortgage passes to the assignee all the title the mortgagee had in the land. General Statutes, 5029; Cohn v. Bridgeport Plumbing Supply Co., Inc.,
That an assignment of a mortgage falls within the purview of the recording statute follows from the nature of such an instrument and is plainly indicated in the cases we have cited. Indeed, to hold otherwise would make a serious inroad upon the policy of this State that purchasers of interests in real estate are entitled to rely upon the land records as disclosing the true title; it would make it possible for a mortgagee to mislead purchasers of land by vesting in the mortgagor, through a release of the mortgage, an apparently clear title, when in fact the mortgage might still be subsisting by reason of an outstanding unrecorded instrument; and the recording statute would give no protection to an assignee of the mortgage as against a prior unrecorded assignment. The very case before us illustrates the injustice that may result in such a situation, for all the plaintiff needed to do fully to protect its interests was to record the assignment made to it, whereas, that not having been done, the defendant paid full value for the assignment made to it after taking such precautions through a search of the record as it might reasonably rely upon to assure the transfer to it of a good title. Our conclusion that an assignment of a mortgage falls within the purview of the recording statute is confirmed by the statute *Page 269 concerning the garnishment of debts secured by mortgages or liens (5780), for it is there provided that if the provisions of the statute are followed, the creditor may file for record a judgment lien upon the mortgage or lien and his rights thereunder will not be affected by any instrument not appearing of record prior to the filing in the town clerk's office of his certificate of attachment; and the effectiveness of this procedure would be seriously affected if the judgment lien were to be subordinated to unrecorded assignments of a mortgage.
The difficult question in this case is as to the effect of a failure to record an assignment upon the rights of a subsequent assignee. Ordinarily, as between the indebtedness and the mortgage securing it, the indebtedness is the principal thing and the security incidental; an assignment of the debt carries with it the right and benefit of the security, though that be not assigned; and an assignment of the security apart from the debt transfers the bare title, the beneficial interest in which remains with the owner of the debt. Bulkley v. Chapman,
Apart from the effect of the recording statute, the plaintiff would of course be prior in right; the assignment to it transferred to it, as between it and the Clark Company, the entire debt and mortgage and left nothing which the Clark Company might assign to the defendant. The statute in terms provides simply that "no conveyance shall be effectual to hold any land against any other person but the grantor and his heirs," unless it is duly recorded. Upon that simple provision has been builded a policy with reference to recording conveyances of land which has been described by us in Goldberg v. Parker,
Only by an analogous application of the policy of the recording statute can it be made to afford protection as regards assignments of mortgages. If the failure to record an assignment of a mortgage and the debt it secures had no further effect than to estop the assignee from asserting a right to the benefit of the mortgage, a subsequent assignee of the debt and mortgage *Page 272 would be left in the position of holding a mortgage without any indebtedness secured by it; he would have a bare title to the mortgage; and under the authorities we have cited, he would hold that title for the prior assignee in whom, by his ownership of the debt, the beneficial interest in the security would still be vested. The protection of the recording statute in such a case would be for him but an empty form. In such a situation, the first assignee, as between himself and the assignor, has become the owner of the indebtedness and the assignor has nothing which he has any right to transfer to the second assignee. But under the principle of estoppel which governs the application of the recording system in such a case, by his failure to record his assignment the first assignee is barred from claiming a right to collect the indebtedness through the enforcement of the mortgage as against the subsequent assignee. The situation is no different from that which arises where the owner of land conveys it, but the deed is not recorded; that deed passes the title to the grantee and leaves nothing in the ownership of the grantor which he has any right thereafter to convey; yet if he does make a subsequent deed of the property, the grantee in that deed is recognized as owner, because the grantee in the earlier deed may not assert his title against him. When the defendant took the assignment from the Clark Company which purported to transfer to it the mortgage and the debt secured by it, it thereby acquired a right to collect that debt through the enforcement of the mortgage and as regards that right the plaintiff cannot claim priority.
Of the cases from other jurisdictions cited by the plaintiff, only two present situations sufficiently analogous to the one before us to merit consideration. In one, Lee v. Kellogg,
The allegations of the cross-complaint state a situation which, if proved, would give to the defendant a prior right as regards the collection of the indebtedness by a foreclosure of the mortgage securing it. Whether the specific relief sought is the proper method of working out the rights of the parties we have no need to inquire, as the demurrer was addressed solely to the substance of the pleading and not to the prayers for relief.
There is error, the judgment is set aside and the case remanded to be proceeded with according to law.
In this opinion the other judges concurred.
Price v. Northern Bond & Mortgage Co. ( 1931 )
Mechanics Bank v. Johnson ( 1926 )
Waterbury Trust Co. v. Weisman ( 1919 )
Cohn v. Bridgeport Plumbing Supply Co., Inc. ( 1921 )
City National Bank v. Stoeckel ( 1926 )
Waterman v. Buckingham ( 1906 )
Curtis, Receiver v. Lewis ( 1902 )
Rodgers v. Crafts, No. 29 36 94 (Aug. 25, 1992) ( 1992 )
Grand Avenue Assoc. v. Gallant Gallant, No. Cvnh-5223 (Oct. ... ( 1993 )
Kahn v. Statewide Grievance Committee, No. Cv95-0551010 (... ( 1996 )
Gordon v. Tobias, No. 438895 (Jun. 28, 2001) ( 2001 )
Century Mortgage Company v. George, No. 95538 (Jan. 12, ... ( 1993 )
New England Sav. Bank v. Village Brook Plaza, No. 51 53 44 (... ( 1991 )
Columbia Fed. Sav. Bk. v. Int'l Site Consu., No. 300606 (... ( 1992 )
Connecticut Bank Tr. v. Trolley Barn Corp., No. 50 92 21 (... ( 1991 )
Construction Servs. v. Sanseer Mill Assoc., No. 64273 (Mar. ... ( 1992 )
Connecticut National Bank v. Marland, No. 67947 (Mar. 15, ... ( 1993 )
Novastar Mortgage v. Mendoza, No. Cv99 0169865 (Oct. 27, ... ( 1999 )
Mortgage Buyers of America v. Wolfman, No. 519778 (Jan. 28, ... ( 1994 )
Connecticut National Bank v. Marland, No. 067948 (Mar. 12, ... ( 1993 )
Genovese Drug Stores, Inc. v. Connecticut Packing Company, ... ( 1984 )
Second National Bank of New Haven v. Dyer ( 1939 )
Bank United v. Lemoult, No. Cv-00-0179862 S (Jan. 9, 2001) ( 2001 )
Hamilton v. United States ( 1992 )