Summary
In McPherson v. Rollins there was no express direction that the mortgage security should remain unchanged during the term of the trust.
Summary of this case from Kirsch v. TozierOpinion
Argued October 12, 1887
Decided November 29, 1887
E.A. Nash for appellants.
A.J. Abbott for respondent.
That a valid trust was created by the terms of the mortgage, and to the effect as found by the referee, and that it continued to exist there can be no doubt. The transfer of property was executed and the relation of trustee and cestui que trust formed and at no time renounced. This question must be deemed closed in this court by its decision in Martin v. Funk ( 75 N.Y. 134). The important inquiry before the referee was, whether the defendants had any notice, actual or constructive, of the plaintiff's rights, or of the character in which Deming held the mortgage. His finding that they had no actual notice reduces our inquiry to the effect of the recording act. As intending purchasers they must be presumed to investigate the title and to examine every deed or instrument forming a part of it, especially if recorded; they must, therefore, be deemed to have known every fact so disclosed ( Acer v. Westcott, 46 N.Y. 384), and every other fact which an inquiry suggested by those records would have led up to. Thus they are plainly chargeable with notice of the mortgage and of all the facts of which the mortgage could inform them. They knew, therefore, that the legal interest was in Deming, and that, to some extent, he was the owner of a beneficial interest. As to that they might rely upon his acts. How was it as to the plaintiff? The mortgage declared that it was intended as security for the payment of $250 annually to Deming, individually, and $50 annually to "Deming, or to the general guardian of Florence McPherson (the plaintiff), on or before the fifteenth day of May in each year hereafter, for the benefit of said Florence, until the said Florence shall arrive at the age of fifteen years, and thereafter the further sum annually to said Deming or guardian, of one hundred dollars, payable on or before the fifteenth day of May in each year until the said Florence shall arrive at the age of twenty-one years, for the benefit of said Florence;" and recited, also, that she was fourteen years of age on the 1st of April, 1873, being the same year in which the mortgage was executed. There was notice, therefore, that the plaintiff had a beneficial interest under the mortgage, which, by its terms, would continue until 1880, the time of her majority, and in like manner, although to a different period, as to the rights of Ida. It is true that at the same time the purchasers found of record a certificate signed by Deming, dated February 6, 1874, referring in terms to this mortgage and declaring that it "is redeemed, paid off, satisfied and discharged." But this was an act not in the execution of his trust nor warranted by it, and the referee properly held that, as against the plaintiff, it was of no effect. As to this, also, the purchasers must be presumed to have known the law. The case of Field v. Schieffelin (7 Johns. Ch. 150), and other similar cases cited by the appellants apply only where a trustee or guardian has a power of disposition of the estate and may exercise it in his discretion. This power Deming did not possess. The discharge was in contravention of the trust and, therefore, in fraud of the beneficiaries for whom the trust was created. By its very terms the mortgage was to be a security not only for the payment of the money, but to remain such security for the payment of money at specific times during the plaintiff's minority. The defendants knew this and knew also that the time when the trustee was authorized to receive payment had not arrived. His power was limited by the terms of the mortgage, and his apparent authority was his real authority. He had no power to vary its terms nor receive payment in anticipation of the times fixed by the mortgage. His declaration or certificate that he had been paid was, therefore, of no avail against the express provisions of the instrument by which his power was defined. In case of default on the part of the mortgagor in paying, the mortgagee might, as the appellants say, foreclose, for power to do so is expressly given by the mortgage, but whether the security for future payments would then be found in the decree or otherwise would depend on circumstances not pertinent to the present inquiry. A point is made that the plaintiff is not the owner of the mortgage and cannot maintain the action. Such question was not raised by the pleadings, nor does it appear to have been presented upon the trial, but the averments of the complaint show that the plaintiff is a real beneficiary. The form of the action is not objected to and the judgment goes no further than to give the relief to which, as a beneficiary, she is entitled.
It should, therefore, be affirmed.
All concur.
Judgment affirmed.