Hood v. Webster
2 N.E.2d 43 (1936)
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Rule of Law:
Under a race-notice recording statute, a subsequent purchaser whose deed is recorded first bears the burden of proving by a preponderance of the evidence that they are a purchaser in good faith and for a valuable consideration to defeat a prior, unrecorded conveyance.
Facts:
- In 1913, Florence F. Hood executed a deed for her farm to her brother-in-law, William J. Hood.
- She delivered this deed to William J. Hood's attorney to be held in escrow, with instructions for it to take effect upon her death.
- Florence F. Hood continued to occupy the property.
- In 1928, Florence F. Hood executed and delivered a second deed for the same farm to her brother and nephew, the defendants.
- The defendants immediately recorded their 1928 deed.
- The deed to the defendants recited consideration of 'One Dollar and other good and valuable consideration,' but the defendants offered no other evidence of actual consideration paid.
- Florence F. Hood died in 1933.
- Following her death, the 1913 deed held in escrow was delivered to William J. Hood, who then recorded it.
Procedural Posture:
- William J. Hood sued the defendants in the New York Equity Term (a trial court) to annul the defendants' deed.
- The Equity Term entered judgment in favor of the plaintiff, William J. Hood.
- The defendants, as appellants, appealed to the Appellate Division of the Supreme Court of New York (an intermediate appellate court).
- The Appellate Division affirmed the trial court's judgment.
- The defendants appealed to the Court of Appeals of New York, the state's highest court.
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Issue:
Does a subsequent purchaser of real property, who records their deed first, bear the burden of proving they paid valuable consideration to gain the protections of the recording statute against a prior unrecorded conveyance?
Opinions:
Majority - Loughran, J.
Yes. A subsequent purchaser claiming priority under the recording act has the affirmative burden to prove their status as a purchaser in good faith and for a valuable consideration. The court reasoned that the protection offered by section 291 of the Real Property Law is an affirmative defense, and the party asserting it must prove all its elements. The court distinguished prior cases like Brown v. Volkening by explaining that in those instances, proof of substantial consideration paid created an inference of good faith, which shifted the burden of producing evidence to the holder of the unrecorded deed. Here, the defendants offered no evidence of actual consideration, and the mere recital of 'One Dollar and other good and valuable consideration' in their deed was insufficient to satisfy their burden of proof. Therefore, the defendants failed to establish their status as purchasers for a valuable consideration and could not defeat the plaintiff's prior, unrecorded deed.
Dissenting - Crane, Ch. J.
No. The burden of proof should rest on the holder of the prior unrecorded deed to prove that the subsequent, recorded purchaser lacked good faith or did not pay valuable consideration. The dissent argued that for the sake of clarity and reliance on public records, a recorded deed should be presumed valid. The party challenging the recorded deed should have the burden of proving all elements of its invalidity, including lack of consideration. Additionally, the dissent argued on factual grounds that the plaintiff had breached his own agreement to pay the grantor $200 per year, and therefore should not be entitled to the property in a court of equity, regardless of the recording act issue.
Analysis:
This decision solidifies the principle that protection under New York's race-notice statute is an affirmative defense, placing the complete burden of proof on the party seeking its protection. It clarifies that the subsequent purchaser must prove both good faith and valuable consideration, and that a nominal recital of consideration in a deed is not, by itself, sufficient evidence. This ruling protects prior, unrecorded interests from being extinguished by subsequent grantees who record first but have not actually paid value, thereby reinforcing the statute's purpose to protect bona fide purchasers rather than any party who simply wins the 'race' to the recorder's office.
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