Lacustrine Fertilizer Co. v. Lake Guano & Shell Fertilizer Co., 82 N.Y. 476 (1880)

An unrecorded conveyance of an interest in real estate, such as the right to remove marl, is void against a subsequent purchaser in good faith for valuable consideration, and the doctrine of constructive severance cannot be applied to defeat the rights of such purchasers under the recording act.

Summary

This case concerns a dispute over ownership of marl deposits. Torrey, the original landowner, excavated marl and deposited it on his land. He then sold the land to Spaulding, excepting the marl with a right to remove it within ten years. Torrey later conveyed the marl to Barnum, but this conveyance was unrecorded. Torrey reacquired the land and sold it to Evans, who had no actual notice of the Barnum conveyance. The court held that the unrecorded conveyance to Barnum was void against Evans, a subsequent good faith purchaser, and that the marl was real estate subject to the recording act, not personal property due to constructive severance.

Facts

Between 1851 and 1853, the State excavated marl from land owned by Torrey during canal construction. The marl was deposited on the banks of the cut. In 1865, Torrey conveyed the land to Spaulding, excepting the marl deposits with a ten-year right of removal. In 1866, Torrey conveyed the marl to Barnum. This conveyance was not recorded. Torrey reacquired the land in 1869 through foreclosure. In 1874, Torrey’s devisees conveyed the land to Evans. Evans had no actual notice of the conveyance to Barnum. The plaintiff, deriving title from Barnum, sued the defendant, who succeeded to Evans’s title, claiming ownership of the marl.

Procedural History

The Special Term dismissed the complaint, and this appeal followed to the Court of Appeals of New York. The Special Term originally dismissed the case arguing a legal action was needed to determine title before an equitable injunction could be issued. The Court of Appeals affirmed the judgment, though on different grounds, focusing on the application of the recording act.

Issue(s)

1. Whether the marl, after being excavated and deposited on the land, remained part of the real estate?
2. Whether the conveyance of the marl from Torrey to Barnum was a conveyance of real estate within the meaning of the recording act?
3. Whether Evans was a good faith purchaser for valuable consideration without notice of the prior unrecorded conveyance to Barnum?

Holding

1. Yes, the marl remained part of the real estate because it was incorporated into the soil and intended to remain permanently.
2. Yes, the conveyance of the marl was a conveyance of an interest in real estate under the recording act because it involved the sale of a part of the soil.
3. Yes, Evans was a good faith purchaser because he paid valuable consideration and had no constructive notice of Barnum’s unrecorded deed.

Court’s Reasoning

The court reasoned that the marl, once deposited on Torrey’s land, became part of the realty. The exception in Torrey’s deed to Spaulding was a reservation of an interest in the land, terminable after ten years. The subsequent conveyance to Barnum was a conveyance of an interest in real estate. Because the Barnum conveyance was unrecorded, it was void against Evans, a subsequent purchaser in good faith and for valuable consideration. The court rejected the argument that the marl became personal property through constructive severance, stating that such a theory would undermine the purpose of the recording act, which is to protect bona fide purchasers. The court emphasized that “the term ‘conveyance,’ as used in that act, ‘shall be construed to embrace every instrument in writing by which any estate or interest in real estate is created, aliened, mortgaged or assigned; or by which the title to any real estate may be affected in law or equity.’” They distinguished growing crops from standing timber or marl deposits, noting the latter are interests in land and subject to the recording act. The court also noted that Evans’s status as a good faith purchaser protected subsequent grantees, regardless of their knowledge of the unrecorded conveyance, citing Wood v. Chapin. The court also noted the trial court could have refused to hear the equitable action until the legal title was settled in a pending replevin action. The court noted: “We think it must be a general rule that the owner of land cannot, by agreement between himself and another, make that which in its nature is land, personal property, as against a subsequent purchaser for value, without notice, there having been no actual severance of the subject of the agreement, when the subsequent grant was made, and we are also of opinion that, in the case supposed, the doctrine of constructive severance cannot be applied to defeat the rights of subsequent purchasers under the recording act.”