Opinion
Submitted May 26th, 1933.
Decided September 27th, 1933.
1. Defendant executed a mortgage to complainant on property it had conveyed out of itself more than two years before. Complainant recorded his mortgage. Several months later, defendant reacquired title to the mortgaged premises, but simultaneously conveyed the premises away. Held, that the complainant may not foreclose against a subsequent grantee who never had notice of his mortgage.
2. The purpose of the Registry act is to give notice of conveyances. Under the circumstances of this case, the present owner of the land could never have had notice of complainant's mortgage by following the usual search routine and relying upon the records of deeds and mortgages. Having had neither actual nor constructive notice of complainant's mortgage, the owner cannot have his land subjected to its lien now.
On appeal from a decree advised by Vice-Chancellor Davis, who filed the following conclusions:
"The facts in this case are practically undisputed. The complainant seeks to foreclose a mortgage made by Collingswood Extension Realty Company to Walter R. Binns, dated April 18th, 1927, and recorded April 20th, 1927, which mortgage by its description covers a lot known as lot 76, block C on plan of Franch Estates, which, admittedly, was not owned by the mortgagor at the time of the execution of this mortgage, the title at that time having been vested in someone else, it appearing by the admissions that the Collingswood Extension Realty Company had conveyed this lot on February 16th, 1925, to one George M. Rothery, by deed recorded on February 25th, 1925. This lot, 76 C, was conveyed to Collingswood Extension Realty Company on August 7th, 1927, by deed recorded August 9th, 1927. It was on the same day conveyed by Collingswood Extension Realty Company to Lea H. MacClelland, this deed being recorded August 9th, 1927. In other words, the two deeds, West Jersey Development Company to Collingswood Extension Realty Company and Collingswood Extension Realty Company to Lea H. MacClelland, bore the same date and were recorded the same date, and by a mortgage bearing the same date and recorded the same date as the two deeds, these premises were mortgaged to the Market Street Title and Trust Company. The Collingswood Extension Realty Company, the mortgagor in the mortgage which the complainant now seeks to foreclose, had no title to lot 76 at the time of the execution of the complainant's mortgage, and did not acquire title until several months afterward, on August 7th, 1927. The Collingswood Extension Realty Company immediately parted with the title to a third party who created a mortgage thereon. Now, the defendants, Metropolitan Life Insurance Company, East Penn Realty Company, Market Street Title and Trust Company, William A. Clarke, Eleanor Stabler Clarke and Hugh Ferguson have all filed answers, and those answers deny the right of the complainant to include lot 76 under his mortgage, that is, under the mortgage made by Collingswood Extension Realty Company to Walter R. Binns now under foreclosure and now owned by complainant by assignment, the legal title to which lot is now vested in defendant, East Penn Realty Company, by various conveyances made between the time of the execution of the mortgage on August 7th, 1927, down to the deed of December 29th, 1930, conveying the title to the East Penn Realty Company.
"The complainant contends that its mortgage should cover this lot 76 and that the various defendants who filed answers should be foreclosed. Admittedly the Collingswood Extension Realty Company had no title to this lot at the time of the giving of the mortgage now under foreclosure. The complainant contends that inasmuch as the description in this mortgage covered this lot No. 76 and that the mortgage became possessed of the title some months later, notwithstanding the fact it had been divested of the title during the period from 1925, two years before the giving of the mortgage, until August 9th, 1927, some months after the giving of the mortgage, and notwithstanding the fact that the present owner had no notice which could be considered as a constructive or actual notice of the mortgage, that the complainant has an initial lien on these premises and that the defendants, and particularly the East Penn Realty Company, the present holder of the title, is bound by the mere fact that this mortgage was given by the Collingswood Extension Realty Company and covering this particular lot by description.
"Now, the purpose of the Registry act is to give notice of conveyances. I think it would be entirely clear if the Collingswood Extension Realty Company had reacquired the title of this property and if the foreclosure were against that company without any intervening parties; then that mortgage covering the lot which was acquired afterward would be held to be a good mortgage against it. However, that situation does not exist here; the Collingswood Extension Realty Company had no title to the lot at the time the mortgage was given and there was nothing which would give the present holder of the title notice that this mortgage did cover it.
"I think the case of Bingham v. Kirkland, reported in 34 N.J. Eq. 229, is a fair statement of the law and the rights of the parties and has application to this case. The usual method of examining a title is to search against the party who holds the record title up until the time he parts with the title and then search against the person who holds the title so long as he has the title. Now, when the Collingswood Extension Realty Company conveyed the property in 1925, to one George Rothery, then the Collingswood Extension Realty Company parted with the title and there was no reason why anybody making an examination of the title would continue to search against that company after it parted with the title, the search would then be against the record owner of the title, and there would be no reason to search against the Collingswood Extension Realty Company until it reacquired title on August 7th, 1927, because the company had no title to the property during that period, and it seems to me if I am to conclude that this mortgage covers this lot 76, I would have to conclude that the Registry act would be of no avail to a person who depends on the record in order to ascertain whether or not a party is seized of title to a property.
"I have no doubt in my mind as to the rights of the respective parties. The complainant is entitled to a decree for the amount proved to be due, $3,000 with interest from September 29th, 1929, to be made out of the premises described in the mortgage, excluding lot 76. These answering defendants are entitled to have the bill dismissed as against them.
"I will advise a decree in accordance with these conclusions."
Mr. Patrick H. Harding, for the appellant.
Mr. Richardson A. Roberts, for the respondents.
The decree under review will be affirmed, for the reasons given in the conclusions of Vice-Chancellor Davis, ubi supra. For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, CASE, BODINE, DONGES, HEHER, PERSKIE, VAN BUSKIRK, KAYS, HETFIELD, DEAR, WELLS, DILL, JJ. 14.
For reversal — None.