Galatian v. Erwin

1 Hopk. Ch. 48 | New York Court of Chancery | 1823

The Chancellor.

The second of these suits, is a cross bill; and both are in substance, one cause.

The proceedings in the supreme court, by which these lands were sold, appear to me to have been a gross fraud upon the children of Henry Cunningham." Almost every step taken in those proceedings, gives evidence of fraud; and the various proceedings which terminated in the sale of theiands, when viewed collectively, exhibit a case of fraud, plain and palpable. To state all the circumstances, which taken separately, or considered collectively, impress those proceedings with the character of fraud, would be to recite most of the facts before the court; and in a case so clear, such a recital is unnecessary. I consider all the proceedings in the supreme court and the sale conveying the lands to William Erwin, as one tissue of fraud; of which he, William Erwin, was the author, and in which, he was the principal actor. Without any necessity for converting the inheritance of Catharine Cunningham into money, and without any just reason in reference to her interests, William Erwin procured her title to her lands, to be vested in himself; and this was done, by the most odious of all frauds, a fraud practised upon a court of justice, under the forms of law. This was fraud in fact, the actual fraud of William Erwin; and the consummation of his fraudulent purpose, was the conveyance to himself. My conclusion from all thé facts, is, that the proceedings in the supreme court, the judgment of that court directing a sale.of the lands, the sale and ° e the purchase made by William Erwin, are fraudulent and void, against Catharine Cunningham.

Want of notice in a purchaster is natter of defence which he nust aver by way of defence and establish by proof. He must also deny all knowledge of facts charged from which notice may be referred.

The title of William Erwin being considered invalid, "as having been obtained by his own actual fraud ; it is unnecessary to decide the questions which have been raised, concerning the legality of the proceedings in the supreme court.

After the conveyance to William Erwin, he mortgaged the lot in the town of Cincinnatus, to Robert Wood and Charles Wardell; and they have assigned the mortgage to the complainants in the first of these suits. William Erwin has also mortgaged a part of the same lot, to John I. Galatian, one of the complainants in the original suit. These two mortgages are the foundation of this suit, and the subject of litigation now before the court.

If these complainants are purchasers for a valuable consideration without notice of the antecedent defect in the title of William Erwin, they are entitled to the benefit of their mortgages ; or if Robert Wood and Charles Wardell were purchasers for a valuable consideration without notice, the complainants may protect the mortgage assigned to them, by that fact.

The want of notice, by which a purchaser may protect his estate against an antecedent defect in the title of the vendor, being allowed to prevail as an answer to such a defect; it always forms a matter of defence to be alleged by the purchaser. It is his good faith and his honest ignorance of any defect in the title, which protect him; and he must always sufficiently allege his want of notice. If this were not so, any cunning or colluding purchaser might obtain a title infected by fraud or subject to trusts; and all rights not apparent upon the legal title purchased, would be easily destroyed. The burden of this defence, rests upon the purchaser ; and as his own knowledge or his own ignorance is the question, he must, if he seeks to avail himself of this defence in equity, deny knowledge upon oath. He must not only deny any knowledge of the title of the adverse party; but he must also deny any knowledge of circumstances charged, from which notice may be reasonably inferred. This defence never rests on proofs alone. It must always be ma¿e ag an al]egati0n ; and the denial of notice, must be full, positive and precise. The rule is necessarily strict; but it impor r j ? r ses no hardship on a purchaser ; who is always able to state 1 ; . - !: what he knows, and his ignorance of that which he knows not, These principles are fully established by authority. Mitf. 216, and the cases there cited; 2 Maddock, 322, 323, 324, and the cases there cited; 1 Johns. ch. 302.575.; 2 Johns. ch. 157.; 3 Johns. ch. 345.

This denial must be full positive and precise.

The complainants in the suit to foreclose the mortgages, are defendants in the cross suit; and by the cross bill, their title is directly impeached as void, by reason of the fraud which is the source of this controversy. They were therefore, bound to answer all the charges of the cross bill; and if they were purchasers without notice, and were desirous to take shelter under that fact, they were bound to allege it precisely and positively, in compliance with the established rules which have been mentioned.

The complainants answering the cross bill say, that “ they “ deny,” that when they received their securities, “ they had ac- “ tual notice of the said proceedings,” meaning the proceedings in the supreme court, “ and of the claim of the said Catharine “ Cunningham except” as is herein stated. The same idea is more vaguely stated in other parts of the answer; but I select this statement, as the strongest denial of notice, which the answer affords. They here deny actual notice of the claim of Catharine Cunningham; but if they had any notice whatever, it is sufficient to repel their equity. This denial of actual notice, is also accompanied with the limitation, “ except as is “ herein stated.” In other parts of the answer they admit that when they received their securities they had heard and believed, that the lands had belonged in part, to Catharine Cunningham, as an heir of her father; that she was a minor ; and that the lands had been purchased by William Erwin, while he was her guardian in the suit for partition. They then knew, by their own admission, that they were purchasing a title, which had belonged to a minor, and had been purchased by the guardian of the minor during the continuanee of his trust. The knowledge of these facts, was not an ignorance of the rights of Catharine Cunningham; and if they knew nothing else, these facts were sufficient to apprise them, that a title which had been so acquired might he impeached. It is not necessary to analyse this answer more minutely. It does not contain the averment, that these purchasers acquired their title, without notice of the claim of Catharine Cunningham; and without such an averment, in terms positive and unequivocal, they can not have the protection of equity against her rights. They can not hold in equity, as purchasers without notice, when they have not alleged that they are such purchasers, in the proper manner. These purchasers were entitled to resist the claim of Catharine Cunningham, by showing that the title of William Erwin was valid ; or if that was void, by alleging mid showing that they purchased without knowledge of its defects; mid either of these grounds would have been a defence. They have placed their defence upon the first of these grounds ; and though they partially deny notice of any objection to the title of William Erwin, yet this partial denial, their admission that they knew at least, a part of the history of this title, and all the facts of the case, sufficiently show, that the plea that they were purchasers without notice, could not have been made by them, in the usual form, with truth. That defence has not been here made, in the manner required, by established principles and authorities.

This view of the cause disposes of the question of notice to the complainants in the first suit, and also decides, that Galatian as one of them, is not entitled as a purchaser without notice, to hold the mortgage made to him by William Envin. The other mortgage was executed to Wardell and Wood, and ivas assigned by them to these complainants ; and in respect to this mortgage, I now inquire, whether want of notice to Wardell and Wood of the facts vitiating the title of William Erwin, is averred and supported, as a defence.

Wardell and Wood have been examined as witnesses ; and their testimony though vague, seems to show, that they had no notice of the defect of William Erwin’s title. As a question c>f fact upon the proofs before the court, it is very uncertain, whether Wardell and Wood took their mortgage, with notice of Catharine Cunningham’s claim, or not. But it is unnecessary to examine this question of fact, upon the testimony, as a want of notice to Wardell and Wood, is not alleged. The allegation upon this point, in the answer to the cross bill, is, that whether or not, Wood and Wardell when they received the mortgage from William Erwin, had notice of all the charges, circumstances and allegations of the cross bill, the defendants who answer it, can not set forth, from knowledge or information, except from the cross bill. This allegation, is not a denial of notice to Wardell and Wood; and as an averment of the ignorance of Wardell and Wood, it is clearly insufficient. Where a purchaser with notice, relies upon the ignorance of a prior purchaser, through whom the title has passed, though the ignorance of another person, may not be a fact within his own knowledge, he is still bound to aver the fact, if he desires to make it a defence. The cross bill charges expressly, that the three complainants and also War-dell and Wood, had notice of the facts and circumstances therein stated; and if these purchasers could not from their own knowledge, answer concerning notice to Wardell and Wood, they were able to state by plea or averment, that War-dell and Wood had no notice. A want of notice to Wardell and Wood, is not alleged, either by plea or answer : and War-dell and Wood are not stated to have been purchasers without notice, according to the rules of equity.

If he relies on want of notice in another, he must still aver the fact by plea or otherwise. Across bill is matter of defence.

Thus, neither the complainants nor Wardell and Wood, stand here, as purchasers without notice, according to the rules and principles which govern that defence ; and the rights of Catharine Cunningham must prevail.

The bill in the first suit, is the ordinary bill to obtain satisfaction from the land mortgaged ; and the two mortgages, are the subject of the suit. The cross bill seeks to set aside the proceedings in the supreme court, the sale of all the lands to William Erwin, and to revest in Catharine Cunningham all her rights; and the court has been asked to make a decree to that effect. This course would treat the cross bill as an original billfor relief, upon all the matters stated in it; and these matters are to a great extent, different from the subjects of the original suit, A cross bill is a defence : and being so considered, is confined to the matters in litigation, in the original suit. Without this restriction, new matters might he introduced into a litigation, by cross suits, without end. As a defence to the original suit, this cross suit is entirely proper : hut it can not be converted into a distinct suit, relative to other lands, or become the foundation of a decree concerning matters not embraced in the original suit. The original suit is founded upon these two mortgages; and no decree beyond those subjects of controversy, can be here made. The first suit is dismissed : and Catharine Cunningham recovers her costs of that . , . , „ , . suit, and also her costs OI the cross suit.

It cannot introduce new and distinct matter not embraced in the original suit, and if it does so, no decree can be founded on those matter. The original suit dismissed with costs in favor of C. C. both of that and of the cross suit.