Fassett v. Smith. Before that change the husband had, during the joint lives of himself and his wife, a life estate in the wife's lands; and if they had a child, he became a tenant by the curtesy. But, independently of this common-law right, which perhaps did not apply to this property, if it was purchased subsequently to their marriage, as it may have been, I am of opinion that the husband's possession of the real estate of his wife is not to bet considered hostile to the legal title, but, in the absence of any peculiar circumstance, is to be considered her possession. When, therefore, they mortgaged to the bank, the possession of Townsend was in no way inconsistent with the deed, and the bank was not under the necessity of making any inquiry. It is only where a person other than the grantor or mortgagor is in possession that it is necessary, in order to confer upon the purchaser or mortgagee a bona fide character so as to avoid any equity residing in the party so in possession, that he should make due inquiries of him as to his title. In general, the purchaser takes subject to the right of the party in possession. The rule, I conceive, has no application to the present case. Although Townsend had a lease from the plaintiffs, the bank had no notice of that fact. He continued in possession in the same manner ostensibly as before he took the lease, and that instrument constituted no part of the chain of title under which Mrs. Townsend, the real owner, held the land. But it was not enough that the bank had no notice of the plaintiffs' rights. It was also necessary that it should have advanced money, or other valuable thing, to obtain the mortgage, or in consequence of it. If it was executed simply to secure an existing debt, nothing being advanced and no obli gation or security given up, the plaintiffs are not precluded from setting up their equity against the bank as mortgagees of Townsend and his wife. (In the Matter of Howe, 1 Paige, 125; Arnold v. Patrick, 6 id., 310.) Upon this point, I think the defendant's case is defective. When the mortgage was given, Townsend was under liabilities to the bank to the amount of $145,000, which was many times the value of the property. But it was a continuing security for future advances Fassett v. Smith. and indebtedness, so that if this debt had been paid off in whole or in part, so as to reduce the amount remaining unpaid below the limit mentioned in the mortgage, and additional loans had been made without notice of the plaintiffs' equity, the bank would have been a bona fide mortgagee in respect of such loans. If there had been no limitation of the amount for which the mortgage was to stand as a security, all the subsequent advances might have conferred upon it the character of a bona fide transfer, notwithstanding the inadequacy of the property to secure the old and the new portions of the debt. But it was an express provision in the instrument that it was to be a security for an amount not exceeding $93,600. As the debt for which immediately upon its execution it became a security was much more than that amount, no subsequent advance could have any relation to the mortgage, unless the existing indebtedness should be reduced below the limit named. If payments had been made on account of that debt, so that so much as $93,600 did not remain due, then every future advance up to that amount would be a loan upon the mortgage security. When that amount of indebtedness was again reached, subsequent advances would not connect themselves with the mortgage until future payments should again reduce the debt below the amount mentioned in the mortgage. The findings of fact at the end of the case do not show that anything was paid after the execution of the mortgage to the bank. The contrary is inferable; for, it is stated that the liabilities of Townsend and of the Buffalo Car Company, at the time the mortgage was given, exceeded $145,000, and that the amount was increased by subsequent loans, up to August 27, 1857, to over $281,000. No inference can be drawn from this that anything had been paid during the interval; but, as Townsend continued to transact business with the bank, it is very probable the account fluctuated. The evidence of Mr. Davis, who seems to have managed Mr. Townsend's business and that of the Car Company at the bank, is, that the debt was not diminished at any time after the giving of the mort gage. It may possibly consist with this statement that the Fassett v. Smith. whole of the indebtedness constituting the. $145,000 may have been paid, and yet that the aggregate indebtedness of Townsend and the Company was not diminished; that is, they may have paid up the whole of the old debt while they were contracting a fresh one. As the security was a continuing one, the mortgage would attach, as has been mentioned, to the new loans as soon as the old debt was so far diminished as to leave a place, in the maximum amount for which the mortgage was a security, to be filled up. It is not improbable that the bank may have consented to make fresh advances because it considered so large an amount of the old debt secured by the mortgage; but this would not make it a bona fide mortgagee in respect to such new loans. To have that effect, the loans must have been made on account of the mortgage security, in such a sense as that they might be collected by a foreclosure and sale of the mortgaged premises, if the proceeds were sufficient. If the question were between the mortgagee and subsequent incumbrancers of the mortgaged premises, the former could not retain more than $93,600 out of the proceeds of the sale, and any residue would belong to the lien holders next in the order of time. If that sum remained due on the debt which existed when the mortgage was given, it is then clear that no advances have been made on account of the mortgage security; and there is nothing to show that so much has not at all times remained unpaid of that debt. I am, therefore, of opinion that the receiver must be considered as succeeding to the case of the mortgagors, and that his title is subject to the plaintiffs' equity. If this were agreed to, the judgment of the general term would have to be reversed, and that of the special term affirmed; but it appears that different views are entertained by a majority of the judges. DAVIES and MASON, Js., concurred in this opinion. Order affirmed, and judgment absolute for the defendants. Nichols v. Michael. 23 264 122 465 23 264 127 216 127 562 NICHOLS et al. v. MICHAEL et al. The fraudulent vendee of goods and his assignee thereof for the benefit of creditors, are liable to a joint action by the vendor to recover possession. Where the vendee, gave his negotiable promissory note for the goods, the vendor is not bound to tender such note at the time of rescinding the contract; it is sufficient for him to produce it upon the trial, and deliver it to the custody of the court. It is not necessary that the fraudulent representation, to avoid the sale, should be such as would sustain an indictment for false pretenses. The doctrine of this case, as reported (18 N. Y., 295), explained and reiterated. APPEAL from the Supreme Court. Action to recover the possession of certain goods, upon the allegation of property in the plaintiffs, and a joint detention by the defendants. In April, 1853, the defendant Pinner purchased of the plaintiffs, the goods described in the complaint (the purchase amounting to $6,500), on a credit of four and six months, for which he gave his two negotiable promissory notes. Pinner continued in business until the August, following when he failed, and made an assignment to the defendant Michael, for the benefit of his creditors, giving preferences. This action was brought to recover the possession of those goods, alleging they were fraudulently obtained. The judgment from which this appeal was brought, was obtained on a second trial. On the first trial the notes given by Pinner at the time of purchase were brought into court and delivered to, and left with the clerk thereof to be canceled. On this trial, the notes could not be found. When the plaintiffs rested, the counsel for each defendant moved for a nonsuit, separately, on the grounds: 1st. That no cause of action had been made out against either defendant, because it did not appear that Pinner had made any represen tations when he purchased the goods in 1853. 2d. It did not appear that the plaintiffs had been misled by any misrepresentations which Pinner had made. 3d. They had trusted to Nichols v. Michael. Pinner's former character for business and responsibility. 4th. That if Pinner had concealed, or not revealed, his insolvent circumstances, he had a right to do so, although knowing of them. That as to either defendant there was nothing to submit to the jury. 5th. That the declarations of Pinner, either before or after the assignment, were not binding upon Michael. 6th. That if the purchases by Pinner in April, 1853, were fraudulent, the plaintiffs having taken his notes therefor, should have tendered the notes back before suit brought. 7th. It appearing at the time this action was commenced, that Pinner had delivered over the goods to Michael, he cannot be responsible in this action. The motion for a nonsuit was denied, and the defendants excepted. The defendants then gave evidence on the issues; after which the cause was submitted. In his charge to the jury, the judge said: "If Pinner was insolvent, and concealed the fact of his insolvency with the design of procuring the goods and not paying for them, it was a fraud which rendered the sale void, if the plaintiffs so chose to regard it." "The point of inquiry in such case is, whether there was a preconceived design not to pay for the goods; that inquiry the jury must solve, taking into consideration the concealment and all the attendant and subsequent circumstances admitted in evidence, which may serve to throw light upon it." "If the jury find no other fraud in the case than the omission of Pinner to disclose his insolvency, it will not be sufficient to avoid the sale." "False representations in the case may be sufficient to avoid the sale, without being such as would be indictable under the statute against false pretenses." "A concealment on the part of the purchaser of his state of insolvency, known to himself at the time, accompanied by a preconceived design not to pay for the goods purchased, is such a fraud as would avoid the contract of sale." To all of which several parts of the charge, the defendants severally, and to each, duly excepted. The defendants then, severally, requested the court to charge the jury, that the non-disclosure of insolvency requisite to avoid the sale for fraud, must be of some marked and sudden SMITH.-VOL. IX. 34 |