Opinion
April Term, 1902.
Mark Ash, for the appellants.
Mark G. Holstein, for the respondent.
The respondent claims that appellants are not "subsequent purchasers in good faith and for a valuable consideration" within the meaning of section 241 of the Real Property Law (Laws of 1896, chap. 547), and that her mortgage having been first delivered, although subsequently recorded, is the prior lien. The referee and Special Term have so held, and this is the important question presented by the appeal.
It is urged on the part of the respondent that there was no delivery of appellants' mortgage as against the intervening rights of third parties until it was received from the register's office and mailed to them. It is well settled that the delivery of a deed or mortgage to a recording officer with intent that it shall become operative, although without the knowledge of the party to be benefited, constitutes a good delivery as between the parties, and an acceptance will be presumed unless the grantees or mortgagee repudiates the transaction when it comes to his knowledge. ( Lady Superior, etc., v. McNamara, 3 Barb. Ch. 375; Ford v. McCarthy, 77 Hun, 612; 29 N.Y. Supp. 786; Munoz v. Wilson, 111 N.Y. 295; National Bank v. Bonnell, 46 App. Div. 302; Edlich v. Gminder, 65 id. 496.)
The rule is otherwise, however, where the grantor or mortgagor who causes the instrument to be recorded does not intend that it shall become operative. ( Parmelee v. Simpson, 5 Wall. 81; Foster v. Beardsley Scythe Co., 47 Barb. 505.)
The referee has specifically found, and the evidence supports the finding, that the respondent's mortgage was made, delivered and accepted for a valuable consideration and upon the agreement and understanding that it was to be a lien on the premises subject only to the three prior mortgages, and without notice or knowledge on the part of the mortgagee of the existence of the mortgage subsequently delivered to the appellants.
While it appears that Mrs. Drought hesitated for a time in deciding whether to give priority to appellants or respondent in securing their respective claims, it is evident that she finally determined to give the respondent priority. This is manifest from her withholding delivery of the appellant's mortgage until after she had delivered the mortgage to the respondent. She probably deceived the appellants in this regard, but it is likely that her intention would have been consummated in such a manner as to avoid any controversy, were it not for the fact that her attorney, instead of delivering the mortgage to appellants, as he was authorized and directed, sent it to the recording office instead. When the appellants subsequently accepted the mortgage, the mortgage to respondent was upon record, and, it being the intention of the mortgagor that the latter should have priority, I think the appellants are chargeable with having accepted their mortgage subject to the rights of the respondent.
The mortgage to respondent having been first made and delivered for a good consideration between the parties, it takes priority over the mortgage to appellants, unless the latter is given priority by the Recording Acts. ( Cary v. White, 52 N.Y. 138.) If the appellants are subsequent purchasers in good faith and for a valuable consideration, the question arises when they became such. Until the appellants accepted the mortgage they were at liberty to reject it. At the time it was delivered to the recording officer the appellants could have receded from their parol negotiations and have filed a mechanic's lien or otherwise enforced their claim. There could, therefore, be no actual binding delivery to them until they had knowledge of the facts so that they might ratify the act of the mortgagor in executing and having the mortgage recorded or disaffirm the transaction. In the case at bar that time was subsequent to the recording of the respondent's mortgage.
I think the rule that where the grantor or mortgagor executes and records a deed or mortgage without the knowledge of the grantee or mortgagee a subsequent acceptance by the grantee or mortgagee will give effect to the instrument from the time of its delivery to the recording officer should not apply in a case where the rights of third parties have, as here, intervened. (1 Jones Mort. [5th ed.] § 85; Thomas Mort. [2d ed.] § 474; Munoz v. Wilson, supra; Foster v. Beardsley Scythe Co., supra; Parmelee v. Simpson, supra.) Furthermore, it is not shown that the appellants were purchasers for a valuable consideration within the meaning of the Recording Act. The mortgage was given as security for an antecedent debt. The appellants retained the notes which represented the indebtedness, and, so far as appears, no new notes were given and they did not part with any property or right or waive any remedy.
These views lead to the conclusion that the mortgage to respondent takes preference over the mortgage to appellants and that the order appealed from should be affirmed, with costs.
O'BRIEN, J., concurred; VAN BRUNT, P.J., concurred upon the ground that the appellants are not purchasers for value; PATTERSON, J., concurred in result.
Order affirmed, with costs.