The Trustees of Union College &c. vs. William H. Wheeler, Executor &c., and others.
An assignee of a mortgage is a purchaser, arid if a Iona fide purchaser, is not chargeable with his assignor’s notice of incumbrances upon, or estates in, the mortgaged premises.
Though possession of land is notice to all the world of the possessor’s interest, the definition of the word possession is restricted to an actual, open, visible occupancy, accompanied by improvement of the premises.
Fencing, pasturing, cutting and selling timber, and clearing part of the premises, do not constitute such possession.
Where, prior to January 1,1880, the purchase money of land was paid equally by A., S. and N., hut a deed of the whole was taken by A. alone, who, after that date, conveyed an undivided two-thirds to S., and the premises were sebsequently, by A. and S., contracted to be sold in parcels to various parties under whom the defendants claimed, and who paid portions of the purchase money to A. and S.; and before deeds were given, N. quit-claimed' to S. his interest in the premises and took back from S. a mortgage, which was subsequently assigned by N. to the plaintiff,Vho had no notice of the contracts, and paid value; Held, on foreclosure,
.1. That a trust resulted to N.'in one-third of the land.
2. That the trust was not divested by the conveyance to S. though subsequent *586to the Revised Statutes, but remained a valid charge upon the land, in S.’s hands.
3. That S. acted as N.’s agent, in giving the contracts, and that N. was chargeable with,notice of the contracts, as the acts of his agent; which notice was effective in the transaction of the mortgage.
4. That the mortgage, in N.’s hands, was therefore no lien upon the land, as against the contract purchasers.
Held, also, that the plaintiff, being a Ima fide purchaser, was not chargeable with the notice N. had; and that the mortgage in the hands of the plaintiff was therefore a valid lien upon the land of those of the contract purchasers whose possession did not amount to constructive notice of their rights.
APPEAL by the plaintiff from portions of a judgment entered upon the report of a referee.
The action was brought to foreclose a mortgage. Prior to October 1,1828, Benjamin hfott, Ohauncey B. Aspinwall and'Philo Stevens, purchased of James Mellen fifteen lots of land in the town of Seriba, described in the complaint, and they were equally interested in said purchase. On the 1st of October, 1828, Mellen conveyed all of said lots to Aspinwall. January 27, 1830, Aspinwall conveyed two undivided thirds of all of said lots to Philo Stevens, being the share of Eott and Stevens. Prior to the deed from Mellen, they had been selling portions of these lands, and subsequently and prior to July 18, 1833, had sold all of the fifteen lots, and more than half of the'lots had been conveyed and deeds recorded ; and as to the residue, Aspinwall, and Aspinwall and Stevens, had given contracts to the purchasers, and they had taken possession of the lands and commenced improving and clearing them, fencing, putting in and raising crops, erecting houses thereon-, and occupying them, and bad made large payments on account of the purchases, and of all of which hTott had notice, and he received from Aspinwall accounts of moneys received, and from whom, and received his third part of all of the moneys received from said sales. And the full contract prices were embraced in the accounting had between bTott, Aspinwall and Stevens, as to the proceeds *587of such sales. On the 18th day of July, 1833, Uott executed a deed to Stevens, of all his interest in these fifteen lots, and also three lots in the then village (now city) of Oswego, hTott’s interest in city lots being two-thirds, and worth $4000; and on the same day Stevens executed the mortgage in question to bTott, on the whole of the village lots, and also on the whole of the Scriba lots, and of which the purchasers had no notice until this action was commenced in 1868. After the purchasers of the Scriba lands had acquired all their rights to the lands, and after notice to ISTott and possession, and in 1835 and 1836, ISTott released two of the village lots from the lien of the mortgage, and which were worth and sold for more than enough to pay the mortgage. This action was commenced in 1868, more than 32 years after the execution of those releases by the trustees of Union College, the pretended owner of said mortgage by assignment from ISTott, and of which the owners of the Scriba lands had no notice prior to the commencement of the foreclosure. The complaint admitted the release of two of the village lots by ISTott, and as to which no claim was made, and ratified the act by ISTott, but claimed that the lien of the mortgage on all of the rest of the lands therein described was perfect. All of the holders of contracts, to whom deeds had not been given, at the date of the mortgage, were made parties, and most of them appeared and set up their rights in their answers.
The case was referred to a referee to hear and determine, and' on the trial the plaintiff abandoned all claim to about half of the Scriba lots, and the referee made his report, by which he ordered the complaint to be dismissed, as to all of the defendants that had answered, and adjudged and decided that the mortgage was not a lien, charge or incumbrance on their lands.
Judgment having been entered on this report, the plain*588tiff appealed from the same, so far as it dismissed the complaint as to all of the defendants except Carey Mitchell.
E. W. Paige, for the appellant.
I. The referee has decided this case upon the theory that the value of the premises released by Benjamin biott •must be subtracted from the amount due' upon the mortgage. But the notice, with which the mortgagee must be. affected, in order to sustain this ruling, must be of dealings between the mortgagor and the vendees subsequent tó the mortgage, by which rights to marshall were created; and those rights must have been defeated by releases. (Stuyvesant v. Hall, 2 Barb. Ch. 155. Howard Ins. Co. v. Halsey, 4 Seld. 273. Taylor v. Short’s Adm’r, 27 Iowa, 361.) But there is no proof of any notice subsequent to the mortgage, and the defendant’s theory below was that ilott had parted with his interest at that date. The referee must have supposed that knowledge of the contracts before the mortgage was sufficient. Again, the release must have been the act of the mortgagee, (cases eited supra;) but bTott had assigned the mortgage to the plaintiff" prior to his releases. But for the recording act, therefore, the plaintiff would have been the mortgagee as to all the world-; notwithstanding that act the plaintiff was mortgagee as to all but subsequnt purchasers. The defendants, however, must have been prior purchasers, or they could not plead the releases. See as to effect of assignment, Gillig v. Maas, (28 N. Y. 211 ;) Jones v. Gibbons, (9 Ves. 410.) The plaintiff" therefore was the mortgagee; but the release "was the act of bTott. For the same reason; notice to the plaintiff" of the right to marshall must be proved.
II. It appears that most of the land was held under contracts of sale given prior to' the execution of the mortgage. But to postpone the lien of the mortgage, notice of the contracts to Benjamin bTott must be proved. There is no proof of actual notice, and the referee expressly finds that *589ÍTott had none; but the attempt is made to charge him with notice in three ways : 1st. Constructive notice sufficient to “ put him on inquiry.” 2d. Constructive notice from his relations with Aspinwall and Stevens. 3d. Constructive notice from the possession of the owners of the contracts. The referee finds “ that Hott was informed from time to time of sales of said lands being, made,” &c.,' and that was sufficient notice to put him on inquiry. “ Said lands ” including much more than is in dispute. This is equivalent to holding that knowledge of the sale of one piece of land binds a party to inquire as to other pieces belonging to the same owners. But the doctrine of notice to put upon inquiry has never been carried to this extent. And it is submitted with confidence that the following are two of its requisites; or at least that there is no case, either in this country .or England, where notice to charge a party to inquire concerning the sale or incumbrance of land has ' been -held sufficient, without their presence. 1. The notice which puts a party upon inquiry must be actually proved to have been given, except in the cases where a systematic and suspicious avoidance has been proved; an exception which proves the rule. But in this case there is only a probability, or a suspicion of the notice which is to put upon inquiry. The referee specially finds that there was no actual notice. 2. The notice proved must be conuected with the vendee; there must be something to point him but, so that it may be known of whom the inquiry is to be made. But here there is only proof that sales were being reported; not a word as to the-parties to whom the sales were made. In the case of Jones v. Smith; (1 Hare, 55,) an attempt was made by Sir James Wigram, to define this kind of constructive notice; his construction was affirmed by Lord Lyndhurst, on appeal, (1 .Phil. Ch. 253,) and the definition itself was adopted by Chancellor Walworth in Stuyvesant v Hall, (2 Barb. Ch. 159,) and is therefore the law of this State. *590It is as follows: “ First, cases in which the party charged has had actual notice that the property in dispute was in fact charged, incumbered, or in some way affected, and the court has thereupon bound him with constructive notice of facts and instruments, to a knowledge of which he would have been led by an inquiry after the charge, , incumbrance, or other circumstance affecting the property of which he had actual notice; and second, cases in which the court has been satisfied from the evidence before it, that the party charged had designedly abstained from inquiry, for the very purpose of avoiding notice.” It will be observed that the notice must be actual; and that the actual notice must be of charges upon the property in dispute, and concerning which the inquiry is to be made. ¡Notice in regard to another piece of property in the same general tract, or belonging to the same owners, is not sufficient ; nor is a probability or suspicion of notice in regard to the same property sufficient. And since then the English courts have expressed their determination not to carry the doctrine of this kind of constructive notice any further. (Lord Lyndhurst in the same case of Jones v. Smith, 1 Phil. Ch. 253. Lord Cramworth, in Ware v. Lord Egmont, 4 De G., M. G. 460.) But in this State the doctrine has uniformly been applied with great caution. (Dey v. Dunham, 2 John. Ch. 182. Jackson v. Van Valkenburgh, 8 Cowen, 260. Frazer v. Western, 1 Barb. Ch. 220. Williamson v. Brown, 15 N. Y. 359.) IsTow here was a large tract of wild land, of which not more than one fifth or sixth part is concerned in this litigation; the title of which was in Aspinwall and Stevens, and which, whatever INott’s interest may have been, and as to that there is something to be said hereafter, Aspinwall and Stevens were alone concerned in' the business of selling; This tract was, by them, cut up into farms, and the business of selling those farms occupied full ten years, of which at least six or six and one-half were subsequent to the mort*591gage. Admitting that Benjamin Hott knew that sales of parts of this tract were being made, the question arises, of which sales was he cognizant? and the probabilities are in favor of the greater numbers. It is more likely that the sales which he knew of should fall during six and one-half years, than during three and one-half; and more likely still that they were upon the five-sixths than the one-sixth of the tract. Here is a double probability, of time and of position. The chances are fifteen to one that Hott did not know of the sales of the lots claimed to be subject to the mortgage. It is. not fair to presume in favor of the defendants, upon whom the burden of proof lies; but without presumption there is no notice, proved. The gist of the doctrine of notice to put upon inquiry is fraud ; (Williamson v. Brown, 15 N. Y. 364, 365; Wyatt v. Barwell, 19 Ves. 436;) “but you never can presume a fact in order to impute fraud to a party.” (Pearson v. Morgan, 2 Bro. C. C. 388.) The whole evidence amounts to no more than what the books call “ suspicion of notice,” which is never sufficient to charge a purchaser’s conscience. It appears that Uott paid one-third of the purchase money of this land, and the deed was given to another person, viz., Aspinwall, December, 1829. This, being before the Revised Statutes, would have worked á resulting trust to Hott, if there were any proof that the money was paid at the time the deed was given. But there being no such proof there was no trust. (4 Kent's Com. 317, 7th ed.) Even if there had been a trust, Aspinwall’s deed to Stevens, January 26, 1830, being since the Revised Statutes, divested Hott of his interest, according to the referee’s finding. We claim, then, that Hott had no interest at all. And there is not a particle of proof that he ever exercised a single act of ownership over the tract in question, or received any money from the sale of it. 1. But granting that he had a trust, the doctrine is clear that notice to a trustee is not notice to his cestui que trust. Because *592(1st.) There is no reported case which even hints at such a doctrine, nor does- any text book state it. (2d.) It is directly opposed to the rule, that no act of a trustee shall prejudice his cestui que trust, a rule which has but one exception, viz., a conveyance by a trustee to a purchaser without notice of the trust. (3d.) The theory upon which notice'to an agent or attorney is held to be notice to his principal, i. e., the theory of control, breaks down in the case of a trust. (4th.) In the case of constructive trusts, such cases as 3 Keman, 180, and 4 Keyes, 509, negative the doctrine; they hold a judgment to be a lien upon unpaid purchase money after express notice given. • If notice, to a trustee affected his cestui que trust, the rendition of. the judgment would be notice, because the trustee must necessarily know of it. (5th.) The cases of The National Bank v. Norton, (1 Hill, 572 ;) In re European Bank, Law Rep. (5 Ch. 362,) are direct authorities against it. 2. There is but one relation through which a person is held to be affected by the notice of another, and that is the relation of a person to his agent, attorney or solicitor. But there is no such relation here; for, (1st.) There is not a particle of proof of authority from bfott to support a theory of agency; (2d.) The relation of trustee and cestui.que trust is destructive of any other; because the law gives to the trustee every power which he could exercise as agent, and untrammeled by the authority which a principal could exert over him. (3d.) But even if there were an agency proved, both to Stevens and to Aspinwall, or if it were held that notice to a trustee could affect his cestui que trust, it would still be unavailing, because, first, the agency meant is an agency in the transaction of getting the mortgage, (Bank of U. S. v. Davis, 2 Hill, .461;) and second, the notice to the agents must be in the transaction of getting the mortgage. (Howard Ins. Co. v. Halsey, 4 Seld. 274. Ashley v. Baillie, 2 Ves. Sr. 370. Fitzgerald v. Fauconberge, Fitzg. 210. Warrrick v. Warrick, 3 Atk. 294. *5931 Story’s Eq. Jr. § 408.) Even if Eott had notice to put him on inquiry, or if it could be held that the knowledge of Stevens and Aspinwall affected him with notice of the contracts at the times when they were given, it would be insufficient to postpone the lien of mortgage; because he will not be “bound by notice in a previous transaction which he may have forgotten.” (2 Sugd. on V. and P. 1040.) The notice must be acquired in the same transaction. (East Greenstead’s case, Duke, 64, per Ld. Cowper. Hamilton v. Royse, 2 Sch. & Lef. 315, per Ld. Redesdale.) These defendants are therefore driven to their possession to prove notice to Eott. The general doctrine, that possession is notice to all the world of the possessor’s rights, is not denied; but it is claimed that the possession proved in this case is insufficient. The rules by which it is to be tested are as follows: 1. The possession must be actual, open, visible and exclusive; not a mere constructive pos- session. (Webster v. Van Steenbergh, 46 Barb. 215. Tuttle v. Jackson, 6 Wend. 226. Troup v. Hurlbut, 10 Barb. 358.) 2. It must at least be of a character to amount to a disseisin; acts of trespass are not sufficient. (McMechan v. Griffing, 3 Pick; 155, 156. Cook v. Travis, 22 Barb. 338, and 20 N. Y. 400.) 3. It must be continued to the time when the title of the party sought to be charged with notice accrued. (Miles v. Langley, 1 Russ. & M. 40. 2 id. 626, per Ld. Brougham. Stevens v. Wiswall, 8 Greenl. 94.) 4. Possession begins to be notice only from the time the legal title is conveyed in violation of the trust. (Scott v. Gallagher, 14 Serg. & R. 333. And see Fassett v. Smith, 23 N. Y. 258, 260.) 5. Cutting trees,- being but an act of trespass, is not notice. (McMechan v. Griffing, 3 Pick. 155.) 6. Making or repairing fence is not notice. (McMechan v. Griffing, 3 Pick. 155. Merritt v. N. R. R. Co., 12 Barb. 608.) 7. Entry on fifty acres of uncultivated land, clearing fifteen acres and working them, building house and still-house, and living upon, and using the *594premises twenty years, is not notice, where the boundaries of the fifty acres are not settled. (Billington v. Welsh, 5 Binney, 129.) 8. Possession being evidence of the pos- • sessor’s title only, the possession of a tenant is not' notice of his landlord’s title. (Barnhart v. Greenshields, 28 Eng. L. and Eq. 82. Flagg v. Mann, 2 Sumner, 557. Cook v. Travis, 20 N. Y. 402. Hanbury v.Litchfield, 2 M. & K. 629.)
III. To enforce these contracts against the mortgage, notice must be proved to the plaintiff, notice to Nott alone is insufficient. 1. The principle is elementary, that if a bona fide purchaser buy from one who is affected with notice, he will be protected in his title against a trust estate. The plaintiff purchased for value, and without notice. Is it then a purchaser ? That it is a purchaser within the definition of the recording act has been finally settled by the case of Belden v. Meeker, (2 Lans. 475;) and •if the defendants had held unrecorded conveyances, the case of Fort v. Burch, (5 Denio, 187,) where this precise point was decided, would be conclusive in favor of the plaintiff. As it is, these authorities are binding in the two cases where the contracts were executed. But the difficulty is that executory contracts of sale are excepted from the recording act, (§ 38,) and it is therefore necessary to prove the plaintiff a purchaser, within the meaning of the statute of frauds. That a mortgagee is a purchaser within the meaning of that statute, is unquestionable. That the assignee of a mortgage is a purchaser was decided in the eases of Martin v. Jollife, (Ambler, 313,) and Sweet v. Southcote, (2 Brown’s C. C. 66.) And in Matthews v. Wallwyn, (4 Vesey, 125,) Lord Rosslyn said, “the mortgagee inay convey the estate, the land vested in him, without the privity of the mortgagor.” And in Phillips v.Bank of Lewiston, (18 Penn. 394,) quoted in 1 Washburn, 520, the court say: “ A mortgage is in form a conveyance of the land, and an assignment of it is another conveyance of the same land.” In Graydon v. Church, (7 Mich. 58-62,) *595Ckristiancy, J., reviewing all the ¡New York authorities, comes to the same conclusion; and in Pierce v. Faunce, (47 Maine, 514,) Appleton, J., says: “ A mortgage is pro tanto a purchase, and the bona fide mortgagee is equally entitled to protection as the Iona fide grantee. So the assignee of a mortgage without notice is on the same footing with the bona fide mortgagee.” But if this be true, the point is proved. The ambiguity of the question comes from such dicta as that “the assignee of a mortgage takes it subject to all the equities which could have been enforced against his assignor,” and “that a mortgagee can assign no other rights than he possesses himself,” which are scattered quite plentifully through the books. But there are no decisions which go that length. • All cases which decide that an assignee takes subject to equities, belong to one of two classes—where equities were between parties to the chain of title, such as Bush v. Lathrop, (22 N. Y. 535;) or where the equities were- between a party to.the chain of title and a person who had acquired the equity of redemption, such as Hartley v. Tatham, (1 Keyes, 222.) But there is no case which holds that an equity between a third party" and the mortgagor, which has nothing to do with the debt, and has taken precedence of the mortgagee’s interest in the land, solely by means of personal notice to him, shall bind an innocent assignee. The purchaser of a bond and mortgage buys two things; a chose in action, and an interest in real estate; and there is no necessity of altering the character which either security bears in the eyes of the law. An assignee of a bond, he takes the bond subject to an equity which could in any action at law have been set off against it in his assignor’s hands. But as a purchaser of real estate he takes his interest in the land; that is, his right to get from the land whatever has been found due upon the bond, unaffected by notice to his assignor, and free from all secret trusts, *596equitable estates or unrecorded conveyances of .which he is ignorant.
To prove this construction, it is only necessary to examine the manner in which the doctrine that an assignee takes subject to equities was originated. The point first came up in England, in 1798, in the case of Matthews v. Wallwyn, (4 Vesey, 128,) and Lord Rosslyn said: “It is true there is a legal estate or term; but it must be apparent upon the face of the title that it is not an absolute conveyance of the term or legal estate, but as a security for a debt; and the real transaction is an assignment of a debt from A. to B.; that debt collaterally secured by a charge upon real estate. The debt therefore is the principal thing; and it is obvious that if an action was brought upon the bond in the name of the mortgagee, as it must be, the mortgagor shall pay no more than what is really due upon the bond; if an action of covenant was brought by the covenantee, the account must be settled in that action. In this court the condition of the assignee cannot be better than it would be at law, in any mode he could take to recover what was due upon the assignment.’’ The first case in this State was Clute v. Robison, (2 John. 612,) decided in February, 1807, where Ch. J. Kent, delivering the opinion of the court of errors, says: “ There is no rule of equity better settled, than that a bond, or other chose in action, is liable to the same equity in the hands of the assignee, that existed against it in the hands of the obligee. (2 Vern. 692, 765. 1 Vesey, 122.) The registry áct concerning mortgages has nothing to do with this case. The respondent does not stand here in the character of a bona fide purchaser of lands, but as assignee of a bond. He took the bond, as payment or security for a debt, and the mortgage by which that bond was secured, followed it as an incident.-” These cases—the earliest reported-show that the doctrine was originated by applying to a mortgage debt the ancient rules in regard to choses in *597action; and the conclusion is fair, that thosé rules are to be applied, so far as the debt is concerned, only to the chose in action. There is a class of later cases which confirm this view; cases where a mortgage is given as collateral to a negotiable note, instead of a non-negotiable bond; in which it is held that if the note be transferred before maturity to a bona fide holder, he will take it free from all equities; plainly showing that there is nothing in the mortgage which subjects the assignee to the obligation of his assignor, but that character, belonging only to the instrument which is the evidence of the debt, must be restricted to such equities as could be set off against the debt. Such cases are Fisher & Robinson v. Otis, (3 Chand. 83;) Reeves v. Scully, (Walker’s Ch. 248;) Martineau v. MeCollum, (4 Chand. 154;) Croft v. Bunster, (9 Wis. 510;) Taylor v. Page, (6 Allen, 86;) Howard v. Gresham, (27 Ga. 349.) The conclusion is that an assignee takes subject to the equities which could have been enforced against his assignor if there had been no mortgage, but only a bond, i. e., the amount and validity of the debt. And as far as the power of enforcing his lien upon the land is concerned, he is entitled to all the rights, and subject to all the liabilities of a purchaser of real estate. And the decisions bear out this construction. (See Jackson v. Van Valkenburgh, 8 Cowen, 260; Bloomer v. Henderson, 8 Mich. 402; Moore’s Appeal, 7 W. & S. 298; Mott v. Clarke, 9 Barb. 404; Pryor v. Wood, 31 Penn. 147; Glidden v. Hunt, 24 Pick. 225. Pierce v. Faunce, 47 Maine,' 514; Richardson v. Brackett, 101 Mass. 500.)
The case of Jackson v. Van Valkenburgh decided that the bona fide assignee of a mortgagee, who had notice of a prior unregistered mortgage, was not affected by his assignor’s notice. As this case was decided in 1828, before the Revised Statutes took effect, it is a direct authority.
2. But admitting, for the argument, that the rule in regard to choses in action has been extended to the mort*598gage, as well "as the bond; or, in other words, that the interest in real estate has been converted into personal property; this point can still be upheld upon the doctrine’ of “ latent equities,” originated by Chancellor Kent in the case of Beebe v. The Bank of New York, (1 John. 573.) That doctrine received a most exhaustive examination in the case of Bush v. Lathrop, (22 N. Y. 538,) when Justice Denio, after disapproving the doctrine in most cases, says that “ a distinction, of the nature suggested by Chancellor Kent, no doubt exists between the rights of the debtor in this-class of cases, and those of third persons who have dealt with the original creditor or his assignee,” (Id. 548,) and comes to the conclusion that an assignee is not prejudiced by notice of his assignor. (Id. 549.) See also James v. Morey, (2 Cowen, 298,) where the language of. Sutherland, J., at foot of page 298, is precise as to this question of notice. And see also Borough v. Moss, (10 B. & C. 558;) Croft v. Bunster, (9 Wis. 508;) Cicotte v. Gagnier and wife, (2 Mich. 389;) Bloomer v. Henderson, (8 id. 402.) To the contrary, as to the assignment of a judgment, Downer v. South Royalton Bank, (39 Verm. 25.) It follows that, to establish their defenses, these defendants must prove notice in the' plaintiff; and as there is no pretense of actual notice, and the referee specially finds that there is none, it can be done only by showing such possession as will amount to notice, down to July 1, 1834, the date of the assignment. But the evidence shows that there was no such possession. The records of the defendant’s deeds, in the cases where deeds were given before the date of the assignment, are not notice to the plaintiff, as would seem from Mickles v. Townsend, (18 N. Y. 580, 581,) because they are junior to the mortgage upon their faces, and if the plaintiff had’ read them all, no clue could have been gathered of a title superior to Benjamin Kbit's. Keither does the neglect of the plaintiff to record its assignment invalidate the lien, under the rule of 15 Wend. 588; 17 id. 25, and 3 Keyes, 450; be*599cause nearly all these contracts of sale were not conveyances, within the meaning of the recording act, and the deeds do not relate back; and the two contracts which' were executed, were never recorded.
IV. Admitting, for the sake of the argument, that the contracts take .precedence of the mortgage, the plaintiff has still a lien upon the land, to the extent of the unpaid purchase money, from the date of the record of the mortgage, August 8, 1833. There have been three decisions adverse to this doctrine: In Parks v. Jackson, (11 Wend. 442,) the court of errors decided that the filing of a lis pen-dens was not notice, to a vendee in possession under a contract, of the pendency of the suit; the chancellor basing his opinion upon the imperfection of a general lien; Senator Seward, upon the argument, from inconvenience. In Moyer v. Hinman, (17 Barb. 137, and 3 Kern. 180,) the Supreme Court, per Allen, J., decided that a judgment was a lien, to the extent of the unpaid purchase money; but the Court of Appeals reversed the judgment, requiring express notice to the vendee under the contract; Justice Denio basing his opinion upon the argument from inconvenience ; Hand, J., upon the imperfection of a general lien. So far there is nothing to negative the doctrine in the case of a mortgage, since the opinions specially distinguish a general from a particular lien. But the case of Smith v. Gage, (41 Barb. 90,) seems to decide that a judgment is not a lien upon the vendor’s interest, under any circumstances; that the doctrine of equitable conversion has changed the vendor’s interest entirely into personal property, which a judgment cannot bind. If that doctrine be sound, of course neither a mortgage nor a deed of the land by the vendor will pass any interest, because he has no right left ad rem—nothing but the personal obligation of the vendee. The cáse is opposed to the point contended for, only as holding that the vendor has no legal interest, upon which a lien can attach. But it is submitted that *600the decision is unsound; and that it is unnecessary to quote authority against it. It is to be noticed, however, that in that case the contract had been severed from the trust to convey, and the decision may be put on that ground. To the contrary of these decisions is Lefferson v. Dallas, decided by the Supreme Court of Ohio, January, 1871, if Albany Law Journal, 118.) It will be observed, then, that although it is decided that a judgment is not a lien upon the unpaid purchase money, without express notice, there is no hint of the same doctrine in the case of a mortgage. How, there is a great deal of difference between a mortgage and a judgment, which is all in favor of the mortgage; and to find an equitable title controlling the one, while it is controlled by the other, is rendered familiar by the analogies of the law. For instance, a contract of sale will control a judgment without notice to the judgment creditor, seeus a mortgage, (Matter of Howe, 1 Paige, 128;) and a mortgage will bind the equity of redemption, though a judgment would not, at common law; and a mortgage, though unregistered, is preferred to a docketed judgment. (1 Edw. Ch. 653. 8 Wend. 620. 4 John. 216.) The substantial, difference is, that a mortgagee is a purchaser; but “ one cannot call a j udgment creditor a purchaser, nor has such creditor any right to the lands; he has neither jus in re nor ad rem, and therefore, though he releases his right to the land, he may extend it afterwards. All that he-has by the judgment is a lien upon the land, but non constat whether he will ever make use thereof; for he may recover the debt out of the goods of the cognizor by fieri facias, or he may take the body, and then during the defendant’s life he can have no.other execution; besides, the judgment' creditor does not lend his money upon the immediate view or contemplation of the cognizor’s real estate, for the land afterwards purchased maybe extended on the judgment; nor is he deceived nor defrauded, though the cognizor of the judgment had be*601fore made twenty mortgages of all Ms real estate, whereas a mortgagee is defrauded or deceived if the mortgagor, before that time, had mortgaged his land to another.” (Brace v. Duchess of Marlborough, 2 Peere Williams, 491.) If, then, there be any authority for the principal doctrine, there is no reason why any of these quoted decisions should be held to negative it. The authorities are two: Ten Eick v. Simpson, (1 Sand Ch. 244;) Gouverneur v. Lynch, (2 Daige, 300.) The first is but a dictum, because express notice was proved in the case. The second is an exact decision, precisely in point. The chancellor says: “If the purchase money has been paid before notice of, and prior to, the recording of a subsequent mortgage, the mortgagee will have no claim upon the land; where a part remains unpaid, he will-have an equitable lien thereon, to the extent of the unpaid purchase money.” It is clear from this, that whether the mortgage has been recorded, or notice has been given, in either case the unpaid purchase money is bound. The chancellor continues: “ If the lands not contracted for at the date of the mortgage are insufficient to pay the amount due the complainant, with costs, the master must. ascertain and report the amount, of the purcha.se money which was due on the other lots, at the time of the.registry of the mortgage. Ho notice to the vendee was proved in the case;” The chancellor’s opinion was reiterated in the subsequent case of Farmers' Loan and Trust Co. v. Maltby, (8 Paige, 362.) He there stops to inquire whether the plaintiff had a legal mortgage or an equitable lien, holding that the first would bind the purchase money from its registry, the second only from the giving of actual notice. It is not a decision, because the plaintiffs proved to. have but an equitable lien. This decision is not to be put upon the ground that the registry is notice, for Chancellor Walworth himself many times decided that it was notice only to subsequent purchasers, but upon the power of a particular lien to control a partic*602ular equity, while a general lien would he controlled. It is a rule of the common law, or, more properly, of equity, and has nothing to do with the recording act. A statement of Sir Francis Vernon, arguendo, in the case of Finch v. Earl of Winchelsea, (1 Peere Wms. 278, 279,) the same case from which Chancellor Walworth deduced the doctrine of Matter of Howe, famous as a leading case, seems to have heen the origin of the doctrine. The chancellor’s authorities, to judge from his opinion in Parks v. Jackson,. already quoted, were 1 Atk. on Convey. 512; Hampson v. Edelin, (2 Har. & John 64,) and Fasholt v. Reed, (16 Serg. & R. 267.) The reason for dating the lien from the regis-' try was, perhaps, that since the recording act an unrecorded mortgage could not be considered as completely valid; it might be avoided by a subsequent conveyance. The only objection which can be urged to the doctrine is, that the inconvenience argument, upon which the opinions of Senator Seward and Justice Denio, already referred to, were based, is as destructive of the lien of a mortgage as of a judgment. But that is a reason of policy, and not law. There being no law to the contrary, it was perfectly proper in those cases to use such an argument to bolster up what law there was. in its favor, but such an argument can never be used to overthrow established decisions. . (See Justice Benia's own words to this effect in Bush v. Lathrop, 22 N. Y. 549.) But the case of Gouverneur v. Lynch has never been overruled, or even doubted. The point has .the chancellor’s unimpeached authority, and it is controlling upon this court.
V. But admitting that express notice is required to create the lien upon the unpaid purchase money, we submit that in the cases where the contracts were assigned, the record of the mortgage was notice to the assignee. The assignee wTould search the records to the date of his contract, and find that Stevens and Aspinwall had a good title; but from his presumed knowledge of the law, he *603would know that the contract did not convey all their interest ; that they still retained a right to the unpaid purchase money, which they .could mortgage or sell at pleasure. Sow, why was he not bound to continue his search to that time, and ascertain if they had not done so ? To support this position, two principles must be established : 1. That the assignee of a contract is a purchaser. 2. That the record of the mortgage is notice to subsequent purchasers. 1. To prove the first point there is the doctrine of equitable conversion, first stated in the case of the Lady Fohaine, about 1647; by which the interest of a vendee under a contract is held to be real estate ; so that it will descend to his heirs, (6 John. Ch. 401; 34 Barb. 173,) so as to be. bound by the lien of a judgment, until the statute expressly provided otherwise, (9 Cowen, 73; 18 John. 94.;) that a deed and a mortgage will convey it, (8 Paige, 361;) and that it will support a defense to an action of trespass. (2 .Bans. 451.) But if they are the owners of interests in real estate, their assignees must purchase interests in real estate, and become purchasers in a court of equity. 2. They come within the definition of the recording act. (1 R. S. p. 762, § 37, part 2, eh. 3.) The cases of Warner v. Winslow, (1 Sandf. Ch. 438,) and Warner v. Blakeman, (36 Barb. 519, 520, affirmed 4 Keyes, 509,) decide, the former, that one who has paid all the purchase money; the latter, that one who has paid a part only, are purchasers within the meaning of the act, and the statute especially places an assignee upon the same footing. To prove the record notice to a subsequent purchaser, the letter of the recording act is not sufficient. But the courts have carried its construction much further, and besides the quantities of dicta to the effect that the record is notice, here are at least two cases where, if the rule were otherwise, the decisions would havé been the other way. (Brinckerhoff v. Lansing, 4 John. Ch. 69. Williams v. Birbeck, 1 Hoff. Ch. 368.) That the cross title is no objection, *604see an'instance in Purser v. Anderson, (4 Edw. Ch. 20.) And it will be noticed that the inconvenience argument, which was opposed to the last point, strengthens this. Suppose a mortgagee to. have given express notice" to a vendee under the contract, the assignee, being a purchaser, will be unaffected' by personal notice from a third party to his assignor, and it will be impossible for .a mortgagee to protect himself from secret transfers, and large payments by assignees before notice. But on the other hand, it is no hardship, nor is it even an inconvenience to re-" quire an assignee, when he is about to purchase, to search down to that time against the original vendors. This point was met, on the trial, by two arguments : 1st. That
all rights under a contract are referable to the date of possession under it. 2d. That the assignee would be a purchaser from a bona fide purchaser, and entitled to his protection. The answer to the first is, that it is true as to the rank which the contract is to take among other contracts and conveyances, but not so as to prevent the unpaid purchase money from being bound by a lien. (See In re Oxford and Canterbury Hail Co., Law Rep. 5 Ch. 435.) That the assignee is entitled to his assignor’s protection is undoubted, but his assignor possessed two separate interests. The one was an undivided interest in fee to the extent of the unpaid purchase money; the other was a right to get the rest of the land in fee, when he had paid the rest of the purchase money. As to the former, the .assignor was a bona fide purchaser, secure in his title, and so is the assignee; as to the latter, the assignor was liable to be compelled to pay to the mortgagee whenever he received express notice, and he has transmitted that liability.
VI. And whenever" there is a lien for. the unpaid purchase money, interest is to be charged upon it. (Keirsted v. Avery, 4 Paige, 16.)
VII. The judgment should be reversed, and a decree ,be *605entered that two thirds of the land be sold to satisfy the mortgage.
B. B. and G. N. Burt, for the respondents John Aiken and others.
J. H. Towner, for the respondents Waugh and others.
I. The plaintiffs will not be permitted to enforce the alleged lien of the mortgage as against these defendants, not having deducted the value of the released premises. (Guion v. Knapp, 6 Paige, 35. Stuyvesant v. Hall, 2 Barb. Ch. 151.) 1st. It is not important as to whéther or not the releases were void as against the contract purchasers or their assigns. It is sufficient that the releases discharged the released premises from the lien of the mortgage, and so defeated the equity which the contract purchasers had, to- have the released premises first applied to the payment of the mortgage debt. These releases were neither good nor bad, as regarded the contract premises. The releases in no way affected the contracted premises. It is only by releasing premises which equitably were first liable for the debt, that they affected the contract premises inequitably. If the releases effectually discharged the released premises from the lien of the mortgage, then they were as good, as against these defendants, as under any circumstances it was possible that they could be. The equity that the released -premises should first be sold to satisfy the mortgage is defeated; therefore equity will not allow the mortgage lien to be enforced against a prior purchaser until the value of the released premises shall have been credited upon the mortgage debt.. 2d. Benjamin Hott knew of the'se sales. In truth and in -fact he was our vendor. He received, in money, his share of the payments, and had his full share of all the proceeds of the 'sales. The whole contract prices were accounted for to him in the settlement. Hott’s *606assignees are bound by all the acts of Hott, so far as parties had dealings with him in good faith, as the owner of the mortgage; at least until the recording of the assignment. 3d. -The plaintiffs cannot avoid this equity by insisting that these contract purchases were'prior and not' subsequent to the mortgage, and so not protected by the reeoi’ding acts, because, (a.) The validity of thé release only, is dependent upon the recording acts. Our right that the value of the released premises shall be credited, does not, in the least, depend upon the release, or the mode of its operation, but upon the effect which its operation .produces upon our equity, that the released premises shall first be sold in satisfaction of the mortgage. Hence we are protected, not by the operation of the statute, but because, under the statute, the plaintiffs have deprived us of our right to demand that the parcels be marshalled; and because, (b.) It is not true that these contract purchases were wholly prior and not subsequent. Payments made upon the contracts after the mortgage and before the ‘releases, gave to the purchaser so paying all the rights of subsequent purchasers, and entitled them as such, to the protection of the statute; and because, (e.) Many of the contracts were assigned, intervening the mortgage and the releases. ' Such assignee became a subsequent purchaser, within the definition of “purchaser” as defined in the recording act. (1 R. S. 714, Edm. ed.)
H. The plaintiff’s claim that assignees of contracts subsequent to the record of the mortgage, are chargeable with notice of the mortgage as subsequent purchasers, has no foundation in the statute, nor does it rest upon any authority; because: 1st., All rights under the contracts are referable to the date of possession under the-respective contracts. 2d. A purchaser, even with notice from a bona fide purchaser without notice, is entitled to all'the protection which was available to the first, or bona fide purchaser; otherwise it might happen that the title *607of the first purchaser would be impaired by the land becoming unmarketable. (2 Story’s Eq. § 1503, a. Fish v. Potter, 2 Keyes, 64; see foot of p. 80 and top 81.) A similar rule, and for a like reason, applies in cases of promissory notes, and in Shell v. Tilford, (4 N. Y. Leg. Obs. 307,) is stated as follows: “ That where a negotiable promissory note is trasferred by the payee to a Iona fide purchaser for value, before due, he acquires a perfect title which enures to the benefit of any subsequent holder, who may collect it, although he takes it with notice that the original consideration was fraudulent.” 3d. Bor can it successfully be insisted that such subsequent assignee succeeds to the rights of the assignor, as to the payments which had previously been made upon the contract, but is chargeable with notice of the mortgage, as to payments to be made subsequent to the assignment. This suggestion abandons the claim that the mortgage so recorded is a lien upon the lands in the hands of such subsequent assignee, and resolves itself0simply into a claim of an equitable lien upon the purchase money unpaid at the time of such assignment. The defendant’s answer to this claim will be considered in a subsequent point.
M. Benjamin Bott, the mortgagee, was and is estopped from claiming any interest in the lands hostile to the contracts. He more than stood by and saw the vendors sell the land. In truth and in fact he was one of the vendors. He received his third of all the benefits of the sales. (Tilton v. Nelson, 27 Barb. 595.) And this estoppel binds not only the mortgagee but his privies in estate, these plaintiffs. (Tilton v. Nelson, supra, p. 598. Mason v. Lord, 40 N. Y. 476, 486, 487.)
IY. This is not merely a case of tenancy in common, or merely a case in which, as between the parties, a trust existed. It is true that there was an unity of possession as between Bott, Aspinwall and Stevens, and the unity of possession constituted a tenancy in common. (Bing. *608on Real Estate, 173.) It is also .true, that from the payment by Kott of one-third of the purchase price, (the deed being in 1829,) a trust resulted in.Kott’s favor, and by the conveyance from Aspinwall to Stevens in 1830, Stevens became seised of the “Kott interest,” and undoubtedly stood, in regard thereto, in the shoes of Aspinwall. The effect of this agreement between the parties, that Stevens should hold Kott’s.interest, is in nowise impaired, so far as this case is affected, by the fact that the agreement rested in parol. In the language of the referee’s report, “Kott’s interest and equities were, in fact, never denied, and he continued to reap the benefits of it until he deeded to Stevens.” Levy v. Brush, (1 Sweney, 653,) is an authority showing that, even as between the parties, the agreement would be enforced and Kott’s interest protected. Much less can a stranger take advantage of any informality in the agreement, which is recognized by the parties as binding. We have, therefore, more than a tenancy in common, and more than a holding in trust. The three, Kott, Aspinwall and Stevens, were really and in fact partners, jointly and equally interested in the profits and losses. The acts of Stevens and Aspinwall were therefore the acts of all, on the principle of agency as among partners. From this it follows that the promise of these parties to pay the contract price due to the three, was made to the nominal vendors, Stevens and Aspinwall, with the assent of all, and Kott was bound by this direction to pay, at least until such time as he should give actual notice of revocation of his authority to Stevens and Aspinwall to receive such payment. It is not pretended that' such notice was ever given. Hence Kott or his assigns are bound by the payments made to Stevens and Aspinwall.
Y. The possession of the contract purchasers and their assigns under the contracts, was notice to all the world of the rights and equities of the purchasers in possession. *609(Moyer v. Hinman, 3 Kern. 180, 184.) “ The plaintiff in this case, being in possession under his contract, that circumstance was notice to all persons who might subsequently become interested in any way in the premises, not only of such possession, but of the terms of the contract; and of all his existing rights under it.” (Cook v. Travis, 20 N. Y. 400. 2 Story’s Eq. Jur. § 790. Willard’s Eq. Jur. 298. Wash. on Real Prop. 506, 507. Merithew v. Andrews, 44 Barb. 200; see foot of p. 206 and p. 207. Parsell v. Stryker, 41 N. Y. 480.)
VI. The conveyance from Benjamin Eott and wife to Philo Stevens, July 18, 1833, concurrently with the execution of the mortgage, not only shows that Nott had theretofore been a joint owner and jointly interested in the property, but also may properly be regarded as a ratification and confirmation of all the previous transactions of Stevens arid Aspinwall in regard to the lands, as regards his interest therein.
VIL The plaintiffs have no lien upon the purchase, money unpaid upon the contracts. And herein, 1st. If the defendant’s argument is sound as to the effect of the releases being to defeat the plaintiffs’ rights to enforce the alleged lien, unless and except they shall first deduct the value of the released lands; the same argument will be conclusive to show that any lien which ever existed upon such unpaid purchase money, cannot now be enforced without such deduction. 2d. The relation of Eott as vendor, directing the purchaser to pay the purchase money to the hands of Aspinwall and Stevens, would call upon him as mortgagee to give actual notice of his changed relation. If it be suggested that the purchasers did not know of Eott’s relation to them as vendors, the answer is suggested that neither did the purchasers know of Eott’s subsequent and changed relation as mortgagee. Eott kn§w of both. The purchasers were ignorant of both. Equity would require that Eott, who knew all the facts, *610should give the purchasers notice of his changed relation, and until he did so, payment in pursuance of his implied direction to the parties jointly interested with him, and who still had in hand their obligation, was payment to himself. 3d. These defendants dissent entirely from the proposition of the plaintiffs, that the mortgage, at the time of recording, became a lien upon the unpaid purchase money, so as to be enforced as against the purchasers, who paid the purchase money in good faith. We answer, (a.) The recording act does not give any such vitality. (6.) The case of Governeur v. Lynch, (2 Paige, 300,) upon which the plaintiffs’ counsel relies, is entirely barren as to facts, and unsupported by authority. The remark relied upon by the counsel is evidently made upon the asumption that the recording is constructive notice, for it is either coupled with, or else is placed upon an equality with, and is equivalent to actual notice, (e.) The case of TenEich v. Simpson, (1 Sandf. Ch. 244,) cites the case of Ooverneur v. Lynch, but in remarking .thereon makes no mention of either notice or registry. The assistant vice chancellor simply holds that the delivery of a deed which conveyed all the “ estate, right, title and interest, and claim and demand whatsoever, either in law or equity, of,' in and to the premises, with the appurtenances,” was an assignment of the unpaid purchase money, and that upon notice to the purchaser of such assignment, the grantee became entitled to receive the unpaid purchase money; and payment to the original vendor and assignor, after such notice and claim, did not discharge the debt nor entitle the purchaser to the deed. This case would not support the proposition that a mortgagee, even after actual notice and claim of unpaid purchase money, would .be entitled to demand or receive it. (d.) The case of Smith v. Gage, (41 Barb. 60,) is conceded to be an authority directly adverse to the plaintiffs’ claim in this case, and we deny that it is at all overruled by the case of Warner v. *611Blakeman, (4 Keyes, 487.) The ease last mentioned simply and very clearly holds, that where a fraudulent vendor held contracts upon which there was purchase money unpaid, the court could reach and apply such money upon a judgment which was. a prior lien upon the contractor’s lands, and so not injure the subsequent purchasers in good faith, even though they were such purchasers from a fraud-. ulent vendor. (e.) But it would seem as though the whole question was put at rest by the case of Moyer v. Hinman, (13 N. Y. 180.) In that case the general lien of the judgment had become a particular lien by the sale, on the execution, and the sheriff’s certificate of the sale had been assigned when the payment sought to be reached was •made. And it may here be properly remarked, that in the case of Parks v. Jackson, (11 Wend. 442,) the' lien was not general, but a lis pendens had been filed, claiming a particular lien when the contract payment was made to the vendor. The whole reasoning of Judge Denio is hostile, and, we think, fatal to the plaintiffs’ claim in this action. . Hear the bottom of page 184, he says: “ But as the vendee had no notice of the judgment creditor’s lien, and the creditor had full notice of the vendee’s situation, it would seem to be reasonable that, in order to interrupt these payments and divert them from the vendee’s hands into his own, the creditor ought at least to inform the vendee of the existence of the lien, and of his right to the unpaid purchase money.” On page 186, Judge Denio, in referring to the case of Parks v. Jackson, states the principle upon which his decision and opinion is based, very plainly, as follows : “ This case, therefore, proves something more than that judgments docketed against the vendor do not affect payments subsequently made by the vendee having ho actual notice of the judgments. It establishes, in effect, that payments made by the vendee, pursuant to an (the) executory contract, are not to be considered as a fresh dealing with the vendor regarding the land. The true inference from the *612case is, that such payments are referable to the original contract, and are not the purchase of a further interest in the land.” He then holds that the sale converted the general into a particular lien, but nevertheless the principle was the same. The purchaser paid the money to the person to whom he gave, and who held his obligation, .without notice of any adverse claim. The distinguished judge states his own opinion to be: “ That a vendee in possession, under such a contract, may safely continue to pay to the vendor, until he has notice that such other person has acquired an interest in the land or in the contract.” (f.) Hor can it successfully be insisted that the assignees of the contracts, subsequent to the recording of the mortgage, are subsequent purchasers in any such sense as to charge them with constructive notice of the mortgage when the assignor would not have been chargeable with such notice, because “ registry of a deed or mortgage is constructive notice, only to those subsequently acquiring some interest under the grantor or mortgagor.” (Moyer v. Hinman supra, p. 193.) In the case at bar, the assignee acquires his interest, not by any subsequent sale of the mortgage, but merely by a transfer to himself of the rights which the mortgagor had previously parted with to the assignor. In other words, the assignee is not a subsequent' purchaser from the mortgagor. (g.) And again, this transfer cannot have the effect which is claimed for it as to the purchase money unpaid at the time of such transfer, from the very nature of the relation between the parties, to wit: the vendor is the vendee’s trustee of the title, and the vendee is the trustee of the vendor, of the unpaid purchase money. The assignment is a mere change of the trustee, but can in nowise affect the equities, rights or liabilities resulting from the existence of the trust.
VIH. It would seem to be a monstrous proposition, and an exceedingly strange equity, that a party owning an undivided interest in lands, can enter into an executory *613contract for the sale of a parcel thereof, place the purchaser in possession, receive of the proceeds of the sale, convey his interest to his copartners, receive from Ms co-partners a mortgage conveying the same lands to secure the amount due to himself from his copartners on settlement, stand by for upwards of thirty years, give no notice to his vendee of .his mortgage, and allow his vendee to make payments upon the contract to the parties jointly interested with him in the proceeds of the sale, who all the time has possession of the obligation upon which the payments are made, and then, when the purchase price has been paid in full, and the lands have passed still further into the hands of bona fide purchasers, without notice, after a lapse of thirty or forty years, claim a lien upon the purchase money, which has been so paid. It is submitted that such is not the law. And we submit that it is quite absurd to claim that the mortgagee might assign' his mortgage to a stranger, who may hold it without either proving or recording his assignment, the mortgagee, in the meantime, releasing parcels and covenanting that he was still the holder of the mortgage, and yet this stranger possess equities greater than those claimed by the mortgagee.
IX. But even if .the case were put entirely upon the ground of the trust resulting in favor of Xott, while the title was in Aspinwall and Stevens, and if we exclude the principle of agency, still we have the case of a purchaser buying in good faith, paying the purchase price in full to the trusted. It is submitted that the payment is good, and at least that the purchaser cannot be called upon to pay a second time, and that to a party claiming under the trustee. (Patten v. Gardner, 12 Wheat. 498. Hadley v. Chapin, 11 Paige, 245.)
X. The plaintiff cannot have any benefit under its objection, on the trial, that in two or three instances deeds were given by Aspinwall and Stevens, without proof of written assignments of the contract, (a.) Because .a writ*614ten assignment was not necessary. (b.) A direction from the purchaser to convey, was all that, was necessary so far as Stevens and Aspinwall were concerned, in case they took the risk of conveying on that evidence alone, (e.) The. parties holding the contracts would be estopped by their acts, (d.) Slight proof of transfer, after so long a time, would be all that would be required on the trial, (e.) An acquiescence on the part of the parties for over thirty-five years is pretty good evidence of transfer.
XI. The judgment, so far as appealed from, should be affirmed, with costs.