But, as Judge Reyes also observes, a subsequent grantee bears the burden of establishing that it purchased the property in question in good faith and for valuable consideration. See Provident Bank, 498 F. Supp. 2d at 568; see also Hood v. Webster, 2 N.E.2d 43, 44 (N.Y. 1936). Because Y & S Development has not proffered any evidence that it lacked actual or constructive knowledge of the mortgage, it has not rebutted Plaintiff's prima facie case, and the court cannot conclude that its deed has priority over Plaintiff's mortgage interest.
But as Judge Reyes also observes, a subsequent grantee bears the burden of establishing that it purchased the property in question in good faith and for valuable consideration. See Provident Bank, 498 F. Supp. 2d at 568; see also Hood v. Webster, 2 N.E.2d 43, 44 (N.Y. 1936). Because Y & S Development has not proffered any evidence that it lacked actual or constructive knowledge of the mortgage, it has not rebutted Plaintiff's prima facie case, and the court cannot conclude that its deed has priority over Plaintiff's mortgage interest.
Construing Section 291, the court held that "the burden is on the subsequent grantee [Merrill Lynch] to prove its status as a purchaser in good faith and for valuable consideration." Id. at *4 (citing Hood v. Webster, 2 N.E.2d 43 (N.Y. 1936)). The court concluded that, Merrill Lynch having met this burden, WAMU's mortgage lost its priority.
Only bona fide purchasers and lenders for value are entitled to protection from an erroneous discharge of a mortgage based upon their detrimental reliance thereon ( see Fischer v. Sadov Realty Corp., 34 A.D.3d 630, 631, 824 N.Y.S.2d 434;Karan v. Hoskins, 22 A.D.3d 638, 638, 803 N.Y.S.2d 666). Given that only limited discovery was conducted, it was improper for the court to determine, on this record, that Hughes established that she was a bona fide purchaser for value ( see Hood v. Webster, 271 N.Y. 57, 2 N.E.2d 43;see also Serota v. Power House Realty Corp., 274 A.D.2d 427, 711 N.Y.S.2d 778;Yen–Te Hsueh Chen v. Geranium Dev. Corp., 243 A.D.2d 708, 709, 663 N.Y.S.2d 288). Accordingly, the court should have granted Beltway's motion to vacate the July 2008 order and reinstate its mortgage.
The court also found that Dolphin's mortgage was invalid due to lack of consideration or due to inadequate consideration. While we disagree with the trial court's conclusion that Dolphin had actual or constructive notice of the prior, unrecorded mortgage held by Jaffe at the time Dolphin took his mortgage, we find that Dolphin failed to establish that he paid valuable consideration for his mortgage (see, Hood v Webster, 271 N.Y. 57; Barrett v Littles, 201 A.D.2d 444; Berger v Polizzotto, 148 A.D.2d 651). While Dolphin testified as to several payments he claimed to have made, as well as to mortgages, liens, and judgments he claimed to have assumed in exchange for the mortgage in question, he failed to submit sufficient documentation of these claims. On the other hand, Jaffe submitted proof of his $150,000 loan, the proceeds of which were used to satisfy liens and other mortgages encumbering the subject property.
However, even if this were true, it is conceded by all parties that no consideration flowed from Benjamin to Carlton Inman for the property other than the $1 recited in the deed. Since consideration of one dollar does not constitute "value", especially where the conveyance is a gift ( Hood v Webster, 271 N.Y. 57, 59-60), Benjamin was not a bona fide purchaser and did not acquire any better title than defendant Carlton Inman had (see Real Property Law, § 245). Finally, defendants argue that a property stipulation entered into by Carlton and Irene Inman on August 18, 1976, as a prelude to their uncontested divorce, bars this action.
The quitclaim deeds from Dewey Dietrich to his children recite that the conveyance is "in consideration of [$1] and other good and valuable consideration". While this language may constitute evidence that consideration was paid for the property (see Lacustrine Fertilizer Co. v. Lake Guano Fertilizer Co., 82 N.Y. 476, 483), it does not preclude a determination that there was a gratuitous conveyance of the property (see Hood v. Webster, 271 N.Y. 57, 60). There is clearly a factual issue requiring resolution at trial.
The burden of proof between these two claimants rested upon Coolidge to establish that the bank under whom he holds was a bona fide mortgagee. 43 Tex.Jur. 688; 29 Tex.Jur., Sec. 47, p. 851; Hood v. Webster, 271 N.Y. 57, 2 N.E.2d 43, 107 A.L.R. 497, 506. It is indefinite whether the loan committee saw the original or the recompiled financial statement, the banker being uncertain but of the impression that they saw the original.
Plaintiff offered in evidence a stipulation which recites that defendant paid Breen a valuable consideration for this deed. Therefore, defendant urges that it is a purchaser in good faith and for value and as its conveyance was first recorded, plaintiff's mortgage is void as against it. This is true ( Hood v. Webster, 271 N.Y. 57); but unfortunately defendant also failed to raise this point on the trial. Despite the fact that on the pleadings and the proof defendant was not entitled to succeed, we cannot overlook these salient facts which stand out clearly: In good faith defendant purchased Breen's title or equity of redemption and paid him a valuable consideration.
The referee found that the consideration for the transfer to plaintiffs was the cancellation of a pre-existing debt approximating $2,300 which Anthony Abbey (one of plaintiffs' grantors) owed to the plaintiff, Vernon J. Dankert, and plaintiffs' assumption of and agreement to pay an existing $1,400 mortgage on the premises. The assumption of the mortgage and the agreement to pay the same under a covenant in the deed to them, constituted a valuable consideration within the meaning of section 291 Real Prop. of the Real Property Law. (See Hood v. Webster, 271 N.Y. 57, and O'Brien v. Fleckenstein, 180 id. 350, and cases therein cited.) The referee also found that, at the time of the execution and delivery of the deed to plaintiffs, neither of the plaintiffs had any knowledge or notice of the existence of the defendant's timber contract.