Curtis v. Hitchcock

10 Paige Ch. 399 | New York Court of Chancery | 1843

The Chancellor.

Two questions are presented for the consideration of the court in this case : First, whether this was a good and sufficient notice under the provisions of the act of May, 1840; and Second, if it was not, whether the eighth and ninth sections of that act are merely directory, so as to make the decree of foreclosure, and the sale of the mortgaged premises, an absolute bar of the equity of redemption of all persons claiming under a judgment, or decree, which was subsequent to the mortgage, although the provisions of the statute have not in fact been complied with. Previous to the act of May, 1840, the standing rules of this court required a notice of the lis pendens to be filed, in a mortgage or partition suit, immediately after the filing of the bill. The object of that notice, however, was to enable the master to give to the purchaser, under the decree, a good title as against all persons claiming, under the defendants in the suit, by a subsequently acquired title. But it had no effect whatever upon persons who did not claim undej the defendants, or whose rights accrued previous to the commencement of the suit, and who were, not made parties. (2 R. S. 174, § 48. Rule 133, 174.) These notices are still required to make the filing of the bill a constructive notice to subsequent purchasers. But as the notice of lis pendens, in mortgage cases, which is to be filed under the 8th section of the act of May, 1840, contains all the requisites of the notice which the revised statutes required to make the filing of the bill a notice to subsequent purchasers^ and is to be filed in the same office and indexed in the like manner, only one notice is now required to be filed, for both purposes, in foreclosure suits.

The notice in question in the present case was filed in conformity with the provisions of the revised statutes, and the 133d rule of this court. And until the act of May, 1840, went into effect, it certainly could not in any way affect the rights of judgment creditors who were not parties, or any persons claiming under them. Indeed the notice was that the judgment creditors, whose rights the complainants now insist were barred by the decree, were in fact made parties to the suit; so that if they had seen that notice, subsequent to the time when the act of May, 1840, went into effect, and without being informed that the bill had afterwards been dismissed as to them, they could hardly have supposed it was necessary for them to apply, under the statute, to be made parties to the suit, to enable them to protect their rights as judgment creditors of the mortgagor. The safer course, where the complainant dismisses his bill, in a foreclosure suit, as against a judgment creditor who has a subsisting lien, or leaves his name out of the bill by amendment, is to file a new notice of the pendency of the suit against the remaining parties ; so as to render it perfectly certain that the judgment creditor, whose name is left out after the filing of the first notice, will be barred by the foreclosure and sale. And when the bill is amended, by adding new parties, after the filing of the notice of lis pendens, a new notice is absolutely necessary, to bar the rights of the judgment creditors of such new parties, as well as to make the amended bill constructive notice to subsequent purchasers from such new parties.

But what is to my mind a conclusive objection to the notice, in this case, which was filed several months before the passage of the act of May, 1840, is the fact that a subsequent incumbrancer would not be required to search the clerk’s index previous to the time when that act went into effect; nor would he think of searching long previous to that time, to see whether a notice had not been filed, for the purpose of barring his equity of redemption, under a law which had no existence when such notice was filed and indexed. The filing of such previous notice of lis pendens, in-this case, therefore, was -not a compliance with the provisions of the act of May, 1840 ; and was not a good constructive notice to the judgment creditors, as to whom the bill was subsequently dismissed, of the proceedings against the other parties alone, to foreclose the mortgage upon the premises upon which these judgments were liens. They have not, therefore, had the opportunity which the legislature intended to give them, to come in and be made parties to the foreclosure suit, and to protect their rights, if they had any.

The remaining question to be considered is, whether their equity of redemption is barred by the decree of foreclosure and sale, although the provisions of the act of May, 1840, as to the filing of a notice of lis pendens, have not been complied with either in form or in substance. That question is one which is comparatively of small importance to the complainants in the present suit, as I presume the equity of redemption of these judgment creditors is of little or no value, and that the complainants will only have to wait until the five years, from the 4th of June, 1840, have expired, or to advertise and sell under the statute, in order to get a perfect title to the premises in controversy. It is a question of great importance, however, to all purchasers of real estate under decrees of foreclosure. For I have observed there is great carelessness in many cases in filing the notices of lis pendens in mortgage suits. And with all the vigilance which the chancellor and vice chancellors are able to exercise, in such cases, I have no doubt that many decrees are entered where the notices filed have not been in substantial compliance with the statute. Indeed, it is impossible for the court to know with certainty, in any case, whether the statute has been complied with, without a particular acquaintance with the description and location of the mortgaged premises. For although the notice on its face purports to be in compliance with the statute, and tq state the town and village, or city and ward, as well as the county in which the mortgaged premises are situated, and the date of the mortgage, the parties thereto, and the time of recording the notice stated in such notice, it may be, and undoubtedly often, is, incorrect in some of these particulars, from the want of the requisite information on the part of the solicitor who drew the notice, and his neglect to take the necessary means to obtain it. From the division of towns, and the changes in the names of towns and villages, &c. it often happens that at the time of filing the notice of lis pendens, the mortgaged premises are in a different town, or ward, or village, from the one in which they were when the mortgage was given ; and the solicitor who resides at a distance from the premises may not be aware of the fact. In such cases if he relies upon the description in the mortgage alone, in drawing his notice of lis pendens, he will generally get it wrong, so that it will not be in compliance with the statute. The only safe course for the solicitor who draws the notice, where he is not personally acquainted with all the particulars which the statute requires to be inserted therein, is to make proper enquiries and obtain the necessary information before he commences the suit. And he cannot safely and conscientiously make the usual affidavit, that more than forty days previous thereto a notice of the pendency of the suit, containing all the particulars required by the act of the 14th of May, 1840, to reduce the expenses of foreclosing mortgages in the court of chancery, had been filed in the office of the clerk of the county-in which the mortgaged premises were situated at the time of filing the bill, and at the date of such .notice, until he has made the necessary enquiries to ascertain that all these particulars were correctly and truly stated in the notice filed, as required by the statute.

The question under consideration is also of importance to persons not parties to the suit, whose equity of redemption is to be barred by the foreclosure and sale; especially if the statute should be construed to extend to the owner of the equity of redemption, who had become such by a purchase at a sheriff’s sale under a judgment or decree, previous to the commencement of the foreclosure suit. As to creditors who have only a general lien upon the equity of redemption, but no fixed and certain interest in the land itself, as purchasers or' mortgagees thereof, at the time of filing the complainant’s bill, the legislature probably had the constitutional right to declare that such genera] lien should cease and terminate, as against a bona fide purchaser under the decree, unless such creditor should proceed and enforce his lien by a sale of the lands, by execution, previous to the sale in the foreclosure suit; although such creditor should have no notice of such suit except a mere constructivenotice arising from the lis pendens itself. And if the legislature had such a right, the neglect to file a correct notice of the pendency of the suit, in the county clerk’s office, as required by the 8th section of the act of May, 1840, might be considered as an irregularity merely, which would enable the creditor to apply and set aside the decree and sale within a reasonable time after he had notice of such irregularity ; but without prejudice to the rights of a bona fide purchaser, who had parted with his money upon the faith of a decree of this court, and without any notice of the irregularity in the proceedings. Such, I am inclined to think, is the fair construction of the act in relation to the rights of such creditors. The 8th section directs the filing of the notice of lis pendens, and prescribes the form and substance thereof. And the next section directs that it shall not be necessary that any person having a lien by any judgment or decree, upon the land contained in any mortgage, subsequent to such mortgage, or any person having any lien or claim by or under such judgment or decree, be made a party to the suit for the foreclosure of such mortgage. It then declares, in general terms, without reference to the 8th section, “ that every decree of foreclosure and sale of lands mortgaged, shall bar and foreclose all claim of equity and redemption of every person having such subsequent judgment or decree, and his heirs and personal representatives, and all persons claiming under him or them, subject to the provisions of the subsequent sections of the act.” And the last clause of the 9th section, which directs that no such decree shall be made unless proof should be given, in such manner as shall be required by the court, that such notice of the pendency of the suit has been filed, as is required by the next preceding section, for at least forty days before such decree phall be made, does not make the decree absolutely void as to the creditors who are not made parties, where such proof is in fact given; although it should afterwards turn out that the person who made such proof was under a mistake in supposing that a notice had been filed which contained all the particulars required by the act.

The want of notice of lis pendens is not an objection which goes to the jurisdiction of the court. For the 9th section of the act renders it unnecessary to make the lien creditors parties; and by necessary implication authorizes the court to make the decree upon due proof of the filing of the notice of lis pendens. In this respect, therefore, it is analogous to the case of a proceeding against an absentee, where, by mistake or otherwise, proof of the due publication of the order to appear is made and the usual decree entered thereon ; and it afterwards turns out that the order has not been published for the length of time required by the statute. Such a decree would undoubledly be irregular ; and might, as against the complainant in the suit, be opened upon the application of the absentee, if he applied within a reasonable time after he had notice that a decree had been entered against him. But a bona fide purchaser under the decree of foreclosure and sale would be protected in his purchase. (Jackson v. Rosevelt, 13 John. Rep. 97.)

The case under consideration, however, is not the case of a bona fide purchaser who has paid his money and obtained title to the land under a decree, valid upon its face, and without notice of any irregularity in obtaining such decree. Here the complainants in the foreclosure suit themselves were the purchasers under the decree, and they are chargeable with notice of the irregularity in obtaining it. (Jackson v. Caldwell, 1 Cowen’s Rep. 622. Simmons v. Catlin, 2 Caines’ Rep. 61.) And the defendant in this case, who had himself discovered the irregularity before he had completed his purchase, would not have been entitled to protection, as a bona fide purchaser, if he had proceeded to complete it by paying the consideration .money after-wards j although he would have been protected if he had paid the purchase money and obtained the deed before the irregularity was discovered. As the case now stands, it will be a matter of course to permit these judgment creditors to come in and make a defence, if they have any, upon the usual terms, upon an affidavit that they have applied the first opportunity after they discovered that the decree had been entered. Or, if the property has been sold below its true value, although they have no defence, to the suit itself, they will, upon a similar affidavit, be permitted to have a resale of the premises, upon giving security to pay the costs thereof, in case the premises upon such resale do not bring sufficient to pay the amount reported due to the complainants upon the mortgage, with interest and the costs of the suit. But as the foreclosure is valid as to the defendants in that suit, and as to all persons claiming under them subsequent to the filing of the bill and the notice of lis pendens, as required by the revised statutes, the decree as to them cannot be opened, so as to impair the rights of the complainants in any way, as against them, either on a resale or otherwise. But this defendant was not bound to complete his purchase, under the written contract set out in the bill, without a release of the equity of redemption from these junior judgment creditors.

The defendant’s ciemurrer is therefore allowed, with costs.