Rankin v. Coar

The opinion of the court was delivered by Magie, J.

William Rankin, Jr., and C. A. Rodney Janvier, administrator of Mary R. Janvier (who are the appellants), filed the bill in this cause against Eleanor Coar (who is the respondent), for the strict foreclosure of a mortgage made by Robert B. Coar to *569 Mary R. Janvier, in her lifetime, on a house and lot in Jersey City.

Respondent, by her answer, claimed a right for life in certain rooms in the house, paramount to the mortgage, and issue was joined on that claim.

Respondent also, by answer in the nature of a cross-bill, claimed, that she had paid taxes and water-rents imposed on the property and was entitled to be reimbursed the amount so paid, with interest, out of the mortgaged premises.

Appellants, by their replication, contested this claim, and further set up in defence thereto, that Rankin, the appellant, was not affected thereby, because he had become a bona fide purchaser of the property for a valuable consideration and without ■notice of the claim.

The facts which appeared in the court below were as follows:

John Coar died in 1873 intestate and seized of the premises 'in question, leaving respondent, his widow, and Robert B. Coar, his only son and heir at law. By deed dated March 31st, 1876, ■and recorded November 18th, 1876, respondent released to Robert all her dower therein. Thereupon Robert made the mortgage in question to Mary R. Janvier, which was dated December 15th, 1876, and recorded February 5th, 1877.

By an agreement under seal, dated March 31st, 1876, between Robert B. Coar and respondent, it was, among other things, agreed, that she should have “ the use and occupation of the ■rooms now occupied by her in the house known as 228 Grand St., Jersey City, during her natural life, free of any rent or ■charge whatever.” This instrument was not recorded until August 12th, 1881, over five years after the mortgage in question.

The house was then known as No. 228, but has since been ■and is now known as No. 296 Grand street.

On March 21st, 1887, Janvier’s administrator filed a bill to foreclose the mortgage, but omitted 'to make respondent a party. It is said that the omission occurred because the instrument under which she claimed described the premises by its old number.

*570 Upon a decree in that cause against all the defendants, of whom Robert B. Coar was one, the premises were exposed for sale. Respondent gave public notice, at the sale, of her claim, under the agreement with Robert, to title in the rooms therein mentioned, paramount to that of any of the parties. Rankin, with that notice, bought the premises and took the sheriff’s deed, which was dated November 22d, 1887.

Before the death of John Coar, he and respondent occupied certain rooms in the house. Robert and his family occupied other rooms therein. The families lived separately. After John’s death, respondent continued to occupy certain rooms, while Robert and his family occupied other rooms. The house was not built in flats or suites of apartments, and would not appear to present, exteriorly, any indication that it was designed to accommodate more than one family.

Upon these facts, the decree declared Rankin entitled to all the premises except two rooms on the first floor occujned by respondent, and denied the relief asked as to those rooms.

It further appeared, that respondent had paid the taxes and water-rents imposed on the property, for the years 1873 to 1887,. inclusive. The decree declared respondent entitled to a lien thereon for the sums paid, with interest, paramount to the rights of appellants, and directed a sale of the premises to satisfy the-lien.

Appellants attack the decree in both its aspects.

The grounds on which the learned master advised the decree-have not been made to appear.

With respect to that part of the decree which established respondent’s claim to a part of the house, it is obvious that it must have proceeded on the ground that her occupation thereof gave constructive notice of her title to Mary R. Janvier when she took the mortgage. There is no pretence that actual notice was given. Since the instrument by which respondent claimed was not recorded, the record- furnished no notice. For lack of record, that instrument, by virtue of our recording acts, was void as against the mortgage, unless the mortgagee had notice of respondent’s title. Rankin, by his purchase at the sheriff’s sale, *571 acquired all the rights the mortgagee had obtained by the mortgage, and may stand upon those rights, notwithstanding the-notice of respondent’s claim received before his purchase.

The question on this branch of the appeal therefore is,, whether respondent’s possession, at and before the date of the mortgage, gave constructive notice to Mary R. Janvier or made it her duty to inquire, whereby she might have learned of respondent’s right.

This question was, in my judgment, erroneously resolved ■ below. I have reached a different conclusion, on the following-grounds :

In the first place, respondent’s possession (such as it was) having continued from the death of her husband, was further-' continued after she had conveyed to Robert, who was also in possession, all her dower right. Her deed was recorded imme- ■ diately before the Janvier mortgage.

In some of the states the continued possession of premises by one who has conveyed to another1, is held to put an intending-purchaser or mortgagee on inquiry, and to give notice of any title reserved or granted to the person in possession by unrecorded instruments. A different rule has been announced in this and other states. The conflicting cases are collected in the notes to- section 617 of 2 Pom. Eq. Jur.

Where a vendor remained in possession, our supreme court held, that one who purchased from the grantee was not bound to-inquire whether the vendor had reserved an interest in the premises. The doctrine was put on the ground that the vendor was estopped from impeaching his own deed by proof of an undisclosed arrangement impairing its force. Van Keuren v. Central R. R. Co., 9 Vr. 165 . A similar reason for applying a like rule was given in Michigan. Bloomer v. Henderson, 8 Mich. 395 .

But it is unnecessary to discuss the rule or its reason, for the same doctrine was approved in this court and applied in a case-where the vendor, who remained in possession, acquired an interest in the premises, not by a contemporaneous act, but by a subsequent reconveyance, which he did not record. Bingham v. Kirldand, 7 Stew. Eq. 229.

*572 Unless that case is to be discredited, for which no reason has ‘been given, it is impossible to escape applying the rule therein enforced to the case in hand. Indeed, this case affords stronger ground for its application, for respondent seeks to establish a title by an act contemporaneous with her own deed, and that deed completed title in one also in possession, and who continued in possession until the mortgage was made. The latter circumstance alone would justify the inference, that respondent’s •answer to any inquiry would be to the effect that her occupation was without claim of right, but by sufferance of her grantee, who was also in possession.’ Under such circumstances inquiry ■cannot be said to be a duty.

But without applying the rule above discussed, I think ■respondent’s contention is inadmissible.

Possession, to give notice or to make inquiry a duty, must be open, notorious and unequivocal. There must be such an occupation of the premises as a man of ordinary prudence, treating for the acquisition of some interest therein, would observe, and, ■observing, would perceive to be inconsistent with the right of him with whom he was treating, and so be led to inquiry.

The mortgagee in this case may be charged with notice that respondent lived in the house in question. But it is obvious that the separate possession by her and her son of different parts of the house was not apparent. There was nothing in the construction of the house to indicate separate possession by its inmates. It is not shown that houses of the same construction in that locality were customarily used by separate families. Nothing appears which, to a prudent observer, would tend to disclose the real facts. Those could not have been ascertained in •this case even by examining the interior of the house, but only by actually watching the habits and customs of its inmates.

Whether, under such circumstances, any duty of inquiry would be cast on an intending mortgagee, had a stranger to the family of the owner thus occupied part of the house, may be questionable. But where the possession of the person whom the record .discloses to be owner is shared by one connected in close relationship, a different situation is presented.

*573 A rule which would require an intending purchaser or mortgagee to make inquiry into the title or possession of a son or daughter of the owner, who, after attaining full age, has continued to live in the father’s house, would, I apprehend, be deemed to be absurd. A different rule could not be applied where a mother occupies a house with her son, who, by the dictates of nature as well as of law, is bound to support and care for her. In such cases the most cautious dealer would think inquiry unnecessary, for he would assume that the child or parent was living in the family rather than maintaining an independent possession.

The true rule is, that when the occupation by one is not exclusive but in connection with another, with respect to whom there exists a relationship -sufficient to account for the situation,, and the circumstances do not suggest an inconsistent claim, then such a possession will not give notice of,a right by unrecorded grant. It will be neither open, notorious nor unequivocal.

Where a widow contributed a part of the purchase-money of a farm, and her brother, who contributed the remainder, took title thereto in his own name without her knowledge, it has been held, that the fact that she lived on the farm with hkn, did not give notice of her resulting trust to a purchaser from him. Harris v. McIntyre, 118 Ill. 275 .

The possession of a plural wife of a Mormon, along with the possession of the husband and his lawful wife, has been held not to be notice of her right to a share of the property to one who, took a mortgage from the husband, who. held the record title. Townsend v. Little, 109 U. 8. 504.

Where a husband and wife were in possession of lands to, which the wife held title by the record, it was held, that the continuing possession was not notice of an unrecorded deed whereby her title had been conveyed to him. Atwood v. Beames, 47 Mich. 72 .

Upon either of these grounds, I think the decree in the respect thus discussed is erroneous.

The remainder of the decree, which charged on the property the taxes and water-rents paid by respondent, I also think erroneous.

*574 The claim in her behalf is two-fold. It is first insisted, that 'by Robert’s grant to her of a part of the house, free from any ■charge whatever, he became bound to her to pay these govern.mental charges, and that, though her payment discharged the lien of the city, she was subrogated to the right to enforce the same lien against Robert’s interest in the property.

But the obvious answer to this claim is, that if respondent ■acquired such a right, it was a mere equity, not enforceable against the property in the hands of a purchaser for value without notice. Rankin was such a purchaser, for he acquired Robert’s interest by the sheriff’s sale. PTo notice of the equity now claimed is shown, and the notice of title to part of the house, then given, justified the inference that respondent had no other claim.

It is next insisted, that respondent, being owner of part of the house, was obliged to pay all the taxes and water-rents to save her interest from sale. It is questionable whether she could have obtained an apportionment of these charges under the act of April 21st, 1876. Rev. p. 712. Her insistment is, that her compulsory payment of these charges, which are paramount to the lien of mortgages in Jersey City, entitles her to repayment out of the estate which has passed by the sheriff’s sale to Rankin.

To this claim, I think it might well be answered, that Rankin acquired not only Robert Coar’s title, but also the mortgagee’s interest, for value and without notice of the claim, and at a time when the taxes and water-rents appeared on the public records to have been paid and their lien was thus discharged.

Furthermore, it must be remembered that respondent’s ownership is now held to be subject to the mortgage which Robert had given. Her payments were therefore partly in her own right .and partly in Robert’s right.

But payments thus made cannot, in my judgment, acquire a ■priority to mortgages.

It is true that, by the charter of Jersey City, taxes and water-rents are made liens on real estate paramount to' mortgages. P. L. of 1871 p. 1155 § 151, § 81; Hardenbergh v. Converse, 4 Stew. Eq. 500; Trustees v. Trenton, 3 Stew. Eq. 667; Vreeland v. *575 Jersey City, 10 Stew. Eq. 574. But the plain intent of that charter is to make them a primary charge on the owner’s interest in the land. This appears from the mode prescribed for their enforcement, which is by a sale of the land subject to a right of redemption. A mortgagee has that right, and retains it until the ■expiration of a. six months’ notice from the purchaser. When the mortgagee redeems it is expressly provided that the money paid, with interest, shall be a lien on the lands, and on a foreclosure shall be directed to be made out of the same.

From these provisions, it is obvious that when taxes or water-rents are paid by owners, the lien of them must be discharged as •effectually as if the interest or part of the principal of the mortgage were thus paid. A like result must follow from a like payment made on behalf of the owner, which appears to be made by him. , '

Any other construction would produce disastrous results. When a public sale for taxes takes place, the mortgagee can acquire knowledge of it, and express notice must be given him before his interest can be cut off. But, if the doctrine argued for in this case be correct, a mortgagee might yearly ascertain that such charges had been paid and be thus induced to let his mortgage remain, and yet afterward some friend of the owner who had paid his taxes for him might be accorded priority over the mortgage for all such payments.. I think such a construction inadmissible. The true construction of such provisions will leave the mortgage interest in land unaffected and paramount, unless a sale for taxes has been made and, upon the notice prescribed, the mortgagee has failed to redeem.

Respondent’s counsel relies upon Schatt v. Grosch, 4 Stew. Eq. 199, and Fiacre v. Chapman, 5 Stew. Eq. 463, in which cases the court of chancery has held, that payment of taxes by second mortgagees may be established as a prior lien to the first mortgages. But if those cases can be deemed to have been correctly decided, I think it must be on the grosmd that such charters as 'that in question give a right of redemption to mortgagees generally, a circumstance which may possibly distinguish those cases from that now before us.

*576 Had respondent been made a party to the bill to foreclose and sell the mortgaged premises, her equitable lien on Robert’s interest might perhaps have been recognized and enforced in subordination to the Janvier mortgage. But Robert’s interest has passed to a bona fide purchaser for value without notice, and the relief now demanded is that of a mere foreclosure of her rights. Those-rights which are subordinate to the Janvier mortgage may be protected by redemption.

For these reasons, I think the whole decree should be reversed, with costs. The record should be remitted to the court of chancery, with direction for a decree giving appellants the relief prayed for in their bill, according to the practice of that court.

For affirmance — None.

For reversal — The Chief-Justice, Dixon, Garrison,. Mague, Scudder, Van Syckel, Brown, Clement, Cole,. Smith, "Whitaker — 11.