
    Kate Howells, as Administratrix, etc., of William H. Howells, Deceased, Appellant, v. Matthew Hettrick, Respondent.
    
      ^Recording a mortgage in a deed booh — ineffectual as notice —conveyance in consideration of the discharge of a judgment — who is a bona fide purchaser — actual notice.
    
    The owner of an interest in certain real estate assigned her interest in it, in terms, to secure an indebtedness owing by her to.one Howells, which instrument was recorded in the proper clerk’s office in the book of deeds, instead of the book of mortgages.
    She subsequently, to secure an indebtedness she owed to one Hettrick, made a second assignment to him, which was also, by mistake, recorded in the book of deeds. Thereafter, in consideration of the relinquishment of a judgment which Hettrick had recovered on his claim, she gave to him a full covenant deed- of her interest in the real estate, which he duly recorded, and went into possession of the land, and continued in such possession until it was sold in an action for partition.
    
      Held, that the misrecording of the assignment to Howells was ineffectual to charge a bona fide- purchaser with constructive notice of its existence;
    That,-as Hettrick had actual notice before he took the deed of the assignment to Howells, he did not occupy that position.
    
      Quaire, whether the relinquishment of the judgment was a sufficient consideration to make Hettrick a bona fide purchaser for value.
    Appeal by the plaintiff, Kate Howells, as administratrix, etc., of William H. .Howells, deceased, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Hew York on the 29th day of June, 1896, upon the decision of the court rendered after a trial at the Hew York Special Term.
    
      George W. Dease, for the appellant.
    
      Charles Fox, for the respondent.
   Patterson, J.:

This action was brought to have a cértain assignment of the interest of one Margaret W. Hettrick in the estate of John H. McCunn (which assignment was made and delivered to the plaintiff’s intestate in 1879) judicially declared to be a superior lien to- a claim made upon the same interest by the defendant; and also to have it adjudged that the sum of $2,000 representing that interest and in the hands of a depository belongs to the plaintiff and should be awarded to her in this action. The evidence discloses that Margaret W. Hettrick became indebted prior to August 21, 1879, to William H. Howells, the plaintiff’s intestate, for merchandise sold and delivered; and on the date mentioned an assignment in form was executed and delivered by Margaret W. Hettrick to the plaintiff’s intestate of her interest in the McOunn estate, and it is specifically stated to be an interest to the extent of $2,000 which was thus assigned. It was expressly stated that the instrument' was given merely as collateral security for indebtedness incurred and to be incurred. The instrument was recorded on the 12th of -November, 1880, but it was erroneously- recorded, that is to say, in the book of conveyances in the register’s office and not in the book of mortgages. By a judgment obtained in October, 1882, the amount of the indebtedness of Margaret W. Hettrick to the plaintiff’s intestate was ascertained and liquidated at the sum of $2,391, and upon that judgment execution was issued and returned unsatisfied. In September, 1882, Margaret W, Hettrick made another assignment, as collateral security, of her interest in the McOunn estate, such assignment being to the defendant in this .action. The same error was made with, reference to the recording of this second instrument, it likewise being recorded as a conveyance and not- as a mortgage. The amount of the interest of Margaret W. Hettrick in the McOunn estate was subsequently realized in the form of money derived from a sale of the property in a partition suit, and the claim of the plaintiff is to priority in lien and right of payment of the $2,000 out of the money referred to, The defendant Matthew Hettrick sets up with reference to his assignment that he took the same only as collateral security; and he does not claim directly under it, but he avers that he did, on or about the 26th of September, 1892, without notice, .either actual or constructive, of the assignment to William H. Howells, and for a valuable consideration then given, purchase from Margaret W. Hettrick her interest in the McOunn property, referred to in her assignment to the plaintiff’s intestate; and that on the 26th of September, 1892, he (the defendant) received a full covenant deed of her interest in such property, which was duly recorded in the office of the register of the city and county of New York, and that he entered into possession under such deed, and remained so until the sale in ¡Dartition above referred to. The ease is, therefore, presented of the conflicting rights of one party claiming under an unrecorded instrument, and another party claiming the same interest under a subsequent but recorded conveyance. That the misrecording of the assignment from Margaret W„ Hettrick to the plaintiff’s intestate was ineffectual to charge a bona -fide purchaser or incumbrancer with constructive notice is so clear that it cannot be. controverted. (Gillig v. Maasy, 28 N. Y. 191.) But the question remains whether the defendant comes within the designation of a bona fide purchaser. So far as his assignment is concerned, that was taken as collateral security; but he claims subsequently.to have received an absolute conveyance or deed for a consideration then presently passing froni him to the grantor. • That consideration seems to have consisted merely in the relinquishment of his right to enforce a judgment which he recovered for a certain indebt- ■ edness. Without stopping to consider the sufficiency in law of the consideration which the defendant claims supports the conveyance to him, the. evidence in the case establishes that the defendant is not a bona fide purchaser, because' he had actual notice, when he took his deed from Margaret W. Hettrick, of the outstanding assignment and lien of .Howells upon Margaret’s interest to the extent of $2,000. In the first place, there is the testimony of the witness McOomb, who made the original arrangement in 1879, by which the assignment of the $2,000 interest was to be given as security to Howells for merchandise to be supplied. That arrangement was made with George Hettrick, the brother of the defendant, and the father of Margaret W. Hettrick. This witness testifies that he met Matthew Hettrick, the defendant, shortly after the transaction was completed and the assignment given to Howells, and that he and' Matthew Hettrick. talked the matter over, and he told Matthew Hettrick what was done and how it was done, and Matthew Hettrick said that he was glad that it was done. The witness says: “I told him that the bill for the back feed and the month preceding that was secured by this $2,000 * "" * I mean the assignment — $2,000 security on Judge McCunn’s estate.’’ The witness again testified that in May, prior to the trial of this action, he had a conversation with the defendant, and that he then recalled to him what he, the witness^ testified to, as above stated, and that he went over the matter with him again, and that Hettrick said he remembered something about it; “ it was so long ago that he had forgotten,” and that the defendant then remarked that the witness knew more about the case than he, the defendant, did. There is also testimony of Mr. Holberg, with respect to the knowledge of the defendant of the existence of the assignment to Howells, and of his having that knowledge prior to his taking the conveyance.

It is evident from the testimony that, sometime in 1892, the defendant became anxious respecting the situation of a claim he had against his niece, and that through his attorneys he attempted to put that claim in such a position that it could be protected against something. Mr. Holberg says that he heard a conversation, to which the defendant was a party, in which the defendant stated that he had a claim for $2,300 or $2,400, and that he wanted it put in judgment very promptly, and was told that the speediest way to do it was to get a judgment in the Marine Court, but that court’s jurisdiction was limited to $2,000. Thereupon the defendant waived all of his demand in excess of $2,000, but he incidéntally mentioned that there was a suit pending before a referee, and that the referee was about to make a report, and that he wanted to get his judgment in before the referee could make a report in that case. How, the only suit that was pending before a referee was the suit of Howells against Margaret W. Hettrick, in which suit the amount of Howells’ claim was to be fixed. The referee’s report is dated October 9, 1892. It is, therefore, clear that the defendant was making an endeavor to get a judgment which should have priority over one which Howells was seeking to obtain, manifestly for the purpose of liquidating the amount for which he might enforce the assignment held by him as security. That would not necessarily indicate knowledge on the part of the defendant, unless it be shown also that he knew that such a security existed; and that he did so know was shown by McComb, but it is also shown by the testimony of Holberg, which has much more probative force than was given it by the learned judge in the court below. Hot only does he testify to the desire of the defendant to secure his judgment in advance of Howells, but, Mr. Holberg, who is evidently an unimpeachable witness and entirely disinterested, says that there was a conversation with reference to making the defendant’s assignment valid; that is, “ to make good •■and valid some assignment.” That effect of the testimony of Hol-berg’s, and what both the witness and the court understood that •testimony to be, appears distinctly- o.n the record.- The question 'was asked : It was to get this assignment in ahead of some other ■suit that was against it ? ” This question was objected to, and the court remarked: “ I think he explained it. He says, as he rememn bers it, that this suit was prosecuted for the purpose of making the assignment valid which had been given, and to affect' another assignment, which was also existent at that time.” The court stating that to be the effect of the testimony of the witness, the witness himself adopts it and adds the statement, and to get ahead of another suit which was before the referee, and they expected a judgment to be entered.” The witness also testified that he was clear that there was talk about an assignment for $2,000, and the only assignment for $2,000 mentioned in the case is the assignment .from Margaret H. Hettrick to the plaintiff’s intestate; the one she made "to the defendant being for $2,375.

The defendant’s denial of notice in the face of all this testimony of disinterested and unimpeached witnesses for the plaintiff is worthless, and should not have been aHowed to prevail to defeat what •-appears to be a just and honest claim of the plaintiff.

The judgment appealed from should be .reversed and judgment ■entered declaring that' the plaintiff’s assignment, although not recorded, has priority over the defendant’s assignment and deed because of his taking the same with actual notice of the rights of the plaintiff’s intestate ; and it should be adjudged that the moneys in the hands of the trust company and now claimed by the plaintiff as applicable to her assignment be awarded and paid over to her; and that she recover the costs of this action.

Rümsey and Williams, JJ., concurred ;. -Van Brunt, P. J., and Barrett, J., dissented.

Judgment reversed and judgment ordered as directed in opinion, with costs to plaintiff.  