
    Fourth Department,
    January Term, 1902.
    Edwin Aldrich and Others, Respondents, v. Frank W. Ward, Appellant, and Seth Aldrich, Respondent, Impleaded with Others.
    —Judgment reversed and new trial ordered, with costs to the appellant to abide the event. —Appeal from a judgment of the Supreme Court, entered in the office of the clerk of the county o*f Chautauqua on the 1st day of October, 1900, upon the decision of the court rendered after a trial at the Chautauqua Special Term. The action was commenced on the 10th day of December, 1899, to procure a certain mortgage which is an apparent lien upon premises owned by the plaintiffs, together with an assignment thereof, to be canceled and discharged of record, upon the ground that it had merged in. a conveyance of the premises made by the mortgagors to one Mary A. Ward, the alleged owner of the mortgage; which relief was in substance awarded by the judgment appealed from.—
   McLennan, J.:

On the 23d day of December, 1870, and for many years prior thereto, one Samuel A. Patterson, now deceased, was the owner of the premises described in the complaint. On that day, by warranty deed, he conveyed the same to one Charles L. Chesbro, also deceased, for the expressed consideration of $10,000, the whole of which the grantee obligated himself to pay by the execution of his bond, conditioned for the payment of the principal sum after the expiration of nineteen years from the date or the bond and not before, with interest annually. 1 The bond was secured by a mortgage on the premises executed by the grantee and his wife, bearing even date with the deed, contained the same conditions as the bond, and was duly recorded on the 16th day of January, 1871. On the 27th day of March, 1871, Patterson executed and- acknowledged an assignment of the bond and mortgage, to- § ether with another bond and mortgage for 7,712 not involved in this action, to his daughter Mary A. Ward, now deceased, in trust,however, to receive the interest thereon for nineteen years from the 1st day of February, 1871, the interest thereafter to be payable one-half to the said Mary A. Ward during her natural life, and the other half, share and share alike, to her children, if any, then living; the principal after her death to be paid to her surviving children, if any; and if none, then to her brothers or their descendants. The respondents claim—and the trial court found —that such assignment was never delivered to Mary A. Ward by Patterson, or accepted by her, and was, therefore, without force or effect, but that Mary A. Ward became the absolute ownér of the bond and mortgage entirely independent of such assignment, and that merger took place when she became the owner of the fee, as she afterwards did. Such finding presents the chief question to be determined upon this appeal. The interest on the mortgage which became due at the expiration or the first year after its execution was paid to Patterson, but whether for his own or his daughter's use does not appear. The next year’s interest was paid to Mrs. Ward. The interest falling due at the end of the third year was not paid, although demanded by Mrs. Ward, and on the 7th day of April, 1873, an action was commenced in the Supreme Court by her, through her attorneys, Messrs. Sherman & Hull of Forestville, N. Y., to foreclose the mortgage. In the complaint in that action, which was duly verified on that day by Mary A. Ward, it was, among other things, alleged: “And that the said Samuel A. Patterson, on the 27fch day of March, 1871, by an instrument in his writing under his hand and seal, duly sold and assigned the said bond and mortgage to the said plaintiff, Mary A. Ward, who is the holder and owner thereof.” In the lis pendens, which was prepared by the attorneys on the same aay, it was, among other things, stated: “And said mortgage was by the said Samuel A. Patterson, by an instrument under his hand and seal in writing, on the 27th day of March, 1871, duly sold and assigned to the said plaintiff.” The bond and mortgage were delivered by Mrs. Ward to her attorneys for the purpose of having the same foreclosed, or by her husband, Wallace Ward, who was acting for her. The complaint in the foreclosure action was prepared by Mr. Hull and is in his handwriting, except the date of the alleged assignment, which was unknown to him. Patterson then brought the assignment to the attorneys’ office, and from it the date was ascertained and inserted in the complaint, with the knowledge of Patterson. Mary A. Ward then made oath to the truth of the allegations therein contained, and the attorneys, upon that information, prepared the Us pendens. After service of the summons and complaint upon Chesbro, he served through his attorneys, Messrs. Murray & Patterson, a notice of retainer. Thereafter and on-May 20, 1873, the action was discontinued, the giaintiff paying the costs; and Chesbro and is wife executed a deed of conveyance of the premises to Mary A. Ward, and at the same time delivered a horse of the value of about $200 to her or to Patterson, and the bond executed by Chesbro was surrendered to him, and thereby, as understood by all the parties, personal liability on the part of Chesbro upon such bond and mortgage ceased and terminated, and Mary A. Ward immediately entered into possession of the premises. Samuel A. Patterson died on the 12fch day of October, 1883, and the evidence of the witness James G-. Patterson, who was a brother of Mary A. Ward, is to the effect that after the death of his father he found the assignment in question among his father’s old and worthless papers; that he nevertheless delivered the same to his sister, Mary A. Ward, who immediately caused the same to be recorded under date of November 30, 1883. Mary A. Ward lived until after the expiration of the period of nineteen years mentioned in the bond and mortgage and in the assignment, and died on the 11th day of February, 1898, her husband having died previously, leaving as her heirs at law her children, the appellant Frank W. Ward, who is of full age, Leila Ward, an infant, and certain grandchildren, children of her deceased son, Perry P. Ward, all of whom are made defendants. Mary A. Ward, on the 2lst day of November, 1889, six years after she procured the assignment in question to be recorded, and when, according to the | records in, the county clerk’s office, the premises were incumbered by the Chesbro mortgage which she owned in trust, conveyed the same by warranty deed to Edwin Aldrich, the plaintiff in this action, for the expressed consideration.of $6,000, $3,000 of which he paid in .cash and the balance was secured by a mortgage on the premises given by him tó his grantor. January 23, 1894, Edwin Aldrich conveyed a portion of the premises to the plaintiff Charles Bedgar for the consideration óf $1,000, which was paid. On May 4, 1894, Edwin Aldrich conveyed another portion of the premises to the plaintiff George Aldrich for the consideration of $2,200, which was also paid. The plaintiffs, as owners of the fee of the premises described in the complaint upon which the $10,000 mortgage executed by Chesbro to-Samuel A. Patterson is an apparent lien, seek in this action to have the samó.and the assignment thereof discharged of record and canceled, which was done by the judgment appealed from. The relief granted was proper if Mary A. Ward was the absolute owner, in her own right, of the mortgage on the 23d day of May, 1873, the time when she became the owner of the fee of the premises by the deed executed by Chesbro, for in such case the mortgage would have merged in the conveyance.. It is equally clear that if Mary A. Ward held said mortgage by virtue of the assignment executed and acknowledged by her father on the 27th day of March, 1871, and, therefore, owned it only as trustee for the. benefit óf her children,- of whom the appellant Frank W. Ward is one, such merger did not take place,, at least as to the interest of such children, and, therefore, as to them the relief granted was improper. There is no dispute as to the law of the case. It is only necessary to determine whether or not the finding that Mary A. Ward did not take the,mortgage by virtue of the assignment, but became the absolute owner of it by some means entirély independent of the assignment, is supported by the evidence, or is against the weight of evidence. It is conceded by all parties that Samuel A. Patterson, the mortgagee,, parted with all his interest in the mortgage and transferred it to his;daughter, Mary A. Ward, either individually or as trustee, soon after its execütión, at least before the action to foreclose the same was commenced, and before Mary A; Ward took title to the premises as the result of the discontinuance of that action. The rights of the parties became fixed at the time of. such transfer, and, therefore, it is of no consequence what either of them did after that time or upon the conveyance of the property to Mary A. Ward, except as it may throw light upon the question whether or not she held the mortgage individually or as trustee. Neither is it important what Mary A. Ward subsequently did in respect to the property. It is quite possible—and the evidence indicates— that when she came to sell the property she claimed tó be the absolute owner, free and clear of all incumbrances, and in effect asserted thát her children hád no lieu upon or interest therein by virtue óf the mortgage; Her action, however, in that regard, her declarations respecting the property or-relating to the mortgage, could in no manner change the rights of the parties, and were only competent, if at all, for the purnose of throwing light upon the transaction between herself and her father, to the end that its true character 'may be ascertained. The fact, if it be a fact, that the.horse which Chesbro parted with .when he executed the. conveyance of the premises,.as a condition of being relieved from personal obligation upon the bond and mortgage, was delivered to and received by Patterson, or the fact that Mary A. Ward executed a warranty deed of the premises to the plaintiff and took a mortgage back for one-half of the purchase price, could not in any manner affect the rights of the parties. What, then, is the evidence bearing upon the character of Mary A. Ward’s ownership of the mortgage? The conditions for the payment of the principal debt secured'by the bond and mortgage are peculiar and unusual,, in that no part of the'principal slim could be paid until after the expiration of nineteen years. The interest, however, was, payable annually. Within three months after the mortgage was executed the mortgagee, by the terms of the ássighment in question, made provision for the support of his daughter and her children", if any, based upon that unusual "condition. It would seem that the inference is permissible that the condition as to payment was inserted, in the bond and mortgage to enable the mortgagee to make the provision for his daughter and her children which he did by the assignment. The assignment' as drawn included, as we. have seen, another bond and mortgage for $7,712 made by the husband1 of. Mary A. Ward', thus securing to her and to her children,rhe income of more than $17,000, secured by mortgages upon real estáte, which was to continue for a period of nineteen years. After the execution of- the assignment, it is true, the mortgagee collected the interest falling due at the end of the first year, but whether he did so for himself or for.his daughter does not appear and is not important in view of the fact that the assignment was not made until after the year was well advanced. The interest which beca in e due at the end of the second year was collected by and paid to Mary A. Ward,, in accordance with the terms, or the assignment; , She sought to collect the interest which fell due at the end of the third year, and being -unsuccessful she, through her attorneys, instituted foreclosure proceedings. Concededly, during this time Patterson had ceased to be the owner of the mortgage; he had transferred his interest in it to his daughter, "individually or as trustee, and during that time certainly nothing; occurred or was done by either party to indicate that" she owned or claimed to own the mortgage • absolutely rather than by virtue of the assignment. The action of- foreclosure was córnmenced only three .years after the assignment in question had been executed, and acknowledged, when the parties were living, when, all the facts were fresh in their minds, -and when there could have, been no purpose or opportunity to change them or for one-party to take advantage of the other. At that time when she verified the complaint in the foreclosure action the daughter, with the knowledge of the father, made oath that she was the owner of the mortgage by virtue.of the assignment in question,,he, the father, furnishing the data for such- allegation; and relying upon the information thus furnished to théin by the father,, the attorneys, reputable men in .their profession, certified in the Us pendens which was signed by them that such was the fact. Nothing occurred from the time .the complaint was prepared in 1873 until after the" death of Samuel A. Patterson, or until Mary A. Ward conveyed the premises in 1889, sixteen years after the date of the assignment, to indicate that the fact was not as, stated by her in the complaint which she had sworn to, with the knowledge.of her father. Certain statements made by her during that period are relied upon by respondents as proving a contrary state of facts, but no act is pointed out, done by either of the parties, which in any manner contradicts the fact as sworn to by the daughter with the knowledge of the father, and assented to by him, to wit, that Mary A. Ward owned the mortgage by virtue of the assignment. The son of Samuel A. Patterson testified that the assignment was found after his father's death among his old and worthless papers. That fact cannot be regarded as very important, in view of the relation which the parties sustained to each other and what had occurred between them. Mary A. Ward had sworn that she was the owner of the mortgage by virtue of the assignment; it was produced by the father in order that she might make such oath. Apparently both fully understood the facts, and, therefore, it is not surprising that the instrument itself was left in the custody of the father, and not guarded with the care which instruments of that character usually are. It is true there is no direct evidence that the assignment was ever delivered to, actually handed to Mary A. Ward by her father, nor is there any evidence that it was not. If at any time after its execution it had been delivered to her, the fact that it afterwards remained in the custodyof the father is of no importance; but while there is no direct evidence of delivery, the acts of the parties, the sworn statement of one with the knowledge of the other, and all attendant circumstances establish the fact of delivery beyond all reasonable doubt. There is no direct evidence that the bond and mortgage were ever handed over or delivered to Mary A. Ward by her father. Her absolute ownership is found solely because of the fact that she had possession of them, The conclusion is irresistible that she had such possession under and by virtue of the assignment which her father had executed to her, the validity of which both had solemnly recognized when the complaint in the foreclosure suit was verified. The assignment in question was evidently prepared with care; was formally executed under seal; its validity was recognized by both parties to the instrument, one of whom, with the assent and knowledge of the other, made oath that it had the force and effect which its terms imported, and produced it that such oath might be made. No act of the parties during the lifetime of the assignor, or of the assignee for a period of sixteen years, and until she assumed to sell the premises free from the lien of the mortgage, indicated in the slightest degree that such assignment did not, as it purported to, transfer the mortgage in question to Mary A. Ward in trust for her children. After the death of her father it is uncontradicted that Mary A. Ward procured the assignment to be recorded, thus recognizing its validity, and such act being in hostility to her interest, is entitled to be construed adversely to her. It cannot be said that she would have caused a paper to be recorded which she understood was worthless; one that had never had any force or effect; had never been delivered. There is no basis for the suggestion that it was the act of an ignorant person, or that it was done without knowledge of its purpose or effect. The husband who had charge of her affairs, as appears by the evidence, was a business man engaged in banking, and presumably knew the proper disposition to be made of such a paper, and there is no evidence that Mary A. Ward was not equally well informed as to such matters. Under all the circumstances, we think the evidence contained in the record in this case, given after all the parties to the transaction are dead, which it is claimed by respondents tends to support the finding of the learned trial court that the assignment in question was not delivered to Mary A. Ward, and for that reason had no binding force and effect, ought not to prevail as against the uncontradicted facts which tend to establish the contrary proposition. No equities exist in favor of the plaintiffs as against the appellant. When they took their respective conveyances the mortgage and assignment were on iecord, and they are conclusively proven to have purchased with knowledge of the fact. The conclusion is reached that the finding that the assignment in question was not delivered to Mary A. Ward by her father, Samuel A. Patterson, in his lifetime, and that Mary A. Ward took absolute title to the mortgage in question independent of such assignment, is against the weight of evidence, and for that reason the judgment appealed from should be reversed and a new trial granted, with costs to the appellant to abide event. Adams, P. J., Spring, Williams and Hiscock, JJ., concurred.  