Hopkins v. Baker

Dowling, J.:

This action is brought to foreclose a mortgage made by defendant Sarah Y. Baber to John Haven, now deceased, to secure payment of the sum of $2,000, with interest, being a purchase-money mortgage covering premises situate in the city of Hew York, and distinguished as lot Ho. 240 upon a map entitled “ Map of 40 acres of land situated in the 12th Ward of the City of Hew York, part of the estate of Isaac Dyckman, dec., known as the ‘part 2nd of the Dyckman Homestead Property.’ ”

While the'mortgage purports to cover “all the right, title, interest and estate which Isaac Dyckman had in his lifetime” in and to the property in question, it is not questioned that this right, title, interest and xestate was claimed to be the fee to this irregularly-shaped parcel of land, as to the title to which there had been for many years a controversy between Dyckinan and Chesebrough, and this plot was the debatable ground between their undisputed boundary lines. The defense in this action was champerty.

The mortgage sued upon was executed November 19, 1904. Prior thereto, and on April 26,1899, Charles A. Chesebrough, individually and as sole surviving trustee under the last will and testament of Margaret Chesehrough, deceased, and Elizabeth Chesebrough, his wife, had executed a deed of the premises in question to the Ernst-Marx-Nathan Company, which deed was recorded June 9, 1899. The grantee took possession of the premises (then unimproved), and caused a fence to be erected inclosing the same. On October 2, 1899, the Ernst-Marx-Nathan Company conveyed the same premises to Solomon Moses, on whose behalf possession was taken within two or three days thereafter. The fence was then in position inclosing the property and remained there. The last-mentioned deed was recorded April 19, 1901. In the year 1907 the property was filled in to a depth of six to ten feet, bringing it up to the street level, and signs were displayed thereon on behalf of the owner offering it for sale. No effort ever seems to have been made to assert ownership by any acts of Dyckinan, Haven or Baker. Upon proof of all these facts, it was held that the statute applied, and that plaintiffs were entitled to no judgment herein.

The Be vised Statutes of this State (Pt. 2, chap. 1, tit. 2, art. 4; 1 R. S. 739; 1 R. S. [2d ed.] 732) provided as follows:

“ § 1471 Every grant of lands shall be absolutely void if at the time of the delivery thereof such lands shall be in the actual possession of a person claiming under a title adverse to that of the grantor.” (The source of this section was Laws of 1801, chap. 87, § 8 — “ An Act to prevent and punish champerty and maintenance.” It was declaratory of the common law.)

“ § 148. But every person having a just title to lands, of which there shall be an adverse possession, may execute a mortgage on such lands; and such mortgage, if duly recorded, shall bind the lands from the time the possession thereof shall be recovered by the mortgagor or his representatives. And every such mortgage shall have preference over any judgment or other instrument, subsequent to the recording thereof; and, if there be two or more such mortgagee, they shall severally have preference according to the time of recording the same, respectively.” . (This was an entirely new provision.)

In explanation of their reasons for these provisions, the revisers stated: “It is proposed to abolish the law of maintenance,.and to qualify that of champerty, as declared in the statute (1 R. L. 172), so far as to permit mortgages of lands held adversely. The great objection to these laws has been that a destitute claimant is often prevented by their operation from enforcing his rights; whereas if he were permitted to avail himself of the property, for the purpose of procuring professional assistance and defraying the unavoidable and often heavy expenses of a litigation, he would be placed more nearly on an equal footing with his antagonist who happens to be in possession. Desirous to obviate this objection, so far as it is entitled to weight, but at the same time unwilling to propose the entire abolition of the present law, the revisers have adopted a middle course by allowing a claimant to mortgage lands held adversely. The prohibitions of the Champerty Act, so far as they are consistent with this modification, will be inserted in Part IV.” (3 New York Revisers’ Reports, 72, § 185, note; 3 R. S. [2d ed.] 596, §185.),

• The Real Property Law (Laws of 1896, chap. 547) ¡provided as follows: “ § 225. Effect of grant or mortgage of real property adversely possessed.— A grant of real property is absolutely void, if, at the time of the delivery thereof, such property is in the actual possession of a person claiming under a title adverse to that of the grantor; but such possession does not prevent the mortgaging of such property, and such mortgage, if duly recorded, binds the property from the time the possession thereof is recovered by the mortgagor or his representatives, and has preference over any judgment or other instrument, subsequent to the recording thereof; and if there are two or more such mortgages, they severally have preference according to the time of recording thereof, respectively.”

It is under this section that defendants claim that they were entitled to judgment of dismissal. And the language of the statute would seem to leave no doubt that where a mortgage on real property is executed by one out of possession no action upon the mortgage can be maintained. The mortgagee must either sue upon the bond, or, if he desires to enforce his rights on the real estate, wait until the mortgagor or his representative has actually recovered possession thereof. As was said by Judge Bosworth in Lowber v. Kelly (17 Abb. Pr. 460): “ The object of the revisers in recommending permission to mortgage, in such cases, is stated in 3 Rev. Stat. 2d ed. 596, § 185. It was no part of that object to allow the mortgagee to bring a suit of any kind as such mortgagee until after his mortgagor or the representatives of the latter had recovered possession of the premises, for until that event has occurred the mortgage is not to bind the lands.” In De Garmo v. Phelps (176 N. Y. 458), in the opinion of the court, Justice Cullen says : “ I concede that, though Inglehart’s title was perfect, the statute rendered any voluntary conveyance by him, while the lands were ill adverse possession by another party, void; and while the statute authorized him to mortgage his lands, I assume that the effect of the provision that the mortgage shall bind the lands from the time the possession thereof is recovered by the mortgagor is to exclude such operation until possession is so recovered, which in this case never occurred.” And the dissenting opinion of Judge G-ray adopts the same view (p. 461). There is no provision that such defense shall be available only to the person in possession of lands so mortgaged to another. The statute contains an absolute declaration of the absence of any binding force upon the real estate of a mortgage executed in the manner described, and when an action is brought which in effect seeks to bind the real estate in a manner forbidden by law, and before it may lawfully be bound, that defense is available to any defendant in the action. In the present case the mortgage was executed by one out of possession of the real estate, who had never thereafter either by herself or by her representatives recovered possession thereof, and the mortgage, therefore, conferred upon the mortgagee no enforcible right. Ho action in foreclosure could be brought until the mortgagor or her representatives had recovered possession. Until that event arrived, an action could be begun only on the bond accompanying it.

The judgment appealed from should, therefore, be affirmed, with costs to respondents.

McLaughlin and Laughlin, JJ., concurred; Ingraham, P. J., and Miller, J., dissented.