Norton v. Stone, 8 Paige Ch. 222

Norton v. Stone

8 Paige Ch. 222 | New York Court of Chancery | 1840

The Chancellor.

It is stated in the report of the master that Woodruff, the appellant, procured the assignment of this second instalment on the Paige bond and mortgage to be made to Rosseter. But it does not appear that such assignment was held by Rosseter, or by any of the subsequent assignees, in trust for the appellant. On the contrary, the first, as well as the subsequent assignment, appears to be an assignment for the sole benefit of the assignee. The appellant can claim no interest in the surplus moneys, therefore, except such as he is entitled to under the last assignment, and. which Murch would have had the right to claim as against the respondents, at the time of that assignment, in March, 1839. I am not aware that this fact can have any bearing upon- the decision of the cause, and I only advert to it because the appellant’s counsel appears to suppose that Rosseter, and the subsequent assignees of this second instalment, were mere naked trustees for the appellant.

It does not appear in this case that Mitchell bid off the premises at the master’s sale, and took the conveyance to himself absolutely, without the consent of Morse who was then the assignee of the second instalment, or in violation of any trust; unless the agreement of July, 1837, accompanying the assignment to Rosseter, is of itself a valid stipulation that Mitchell shall bid in the property and hold it upon the trusts specified in that agreement. There could not, therefore, be a resulting trust in favor of the assignee, merely on the ground that the second instalment, which formed a part of the consideration of the master’s deed, was paid by such assignee. For the revised statutes do not permit a resulting trust in real estate to be raised in that manner, except in favor of the creditors of the person who pays the purchase money. (1 R. S. 728, § 51, 52, 53.) The assignment itself, which was the instrument put on record, contained no stipulation as to the bidding in of the property, at the sale under the decree. And the guaranty that the second instalment should be collectable was a mere personal agreement, which would authorize the assignee io *226bid upon the property, to the extent of the second instalment, beyond the amount of the first instalment and interest and costs ; and to have that amount paid to him. out of the purchase money, under the direction of the court. To have protected such an interest against subsequent purchasers of the legal estate -which might be conveyed by the master’s deed, the assignee should' have given notice of his rights to the master who made the sale, and requested such master not to give the deed to Mitchell until that amount of the purchase money was paid to su h assignee. And he might, if necessary, have applied to the court under whore direction the sale was made, to protect his rights as assignee; by directing the master to pay over to him the amount of that instalment and interest, out of the purchase money. If the respondents stood in the situation of mere judgment creditors of Mitchell, having only a general lien upon the land in the hands of their debt- or, it might not perhaps be too late to consider the unpaid purchase money, upon the master’s sale, and which ought independent of the special agreement to have been paid to the assignee of the second instalment, as a subsisting equitable lien in favor of such assignee upon the lands in the hands of Mitchell, so as to give it a preference over the general legal lien of the judgments against him. But the subsequent sale under those judgments turned’ what was before a mere general lien into a specific lien upon the premises, in behalf of the purchasers at the sheriff’s sale, to the extent of their purchase money and interest. And in the absence of any allegation to the contrary, the respondents must be considered as bona fide purchasers without notice of the equitable rights of the assignee. Even if the registry of this assignment to Rosseter, in the book of mortgages, would be constructive notice to a purchaser, under a decree of foreclosure in a suit commenced before that assignment was made, which I am inclined to think it would not be, (as no one thinks of searching the book of mortgages subsequent to the commencement of the foreclosure suit under which he purchases, unless it appears *227that the complainant has neglected to file the notice of the lis pendens which he is required to file b.y the 133d rule,) it clearly would not be notice to a subsequent purchaser, that the original purchaser at the master’s sale had not paid the full amount of the purchase money to the master before he 'obtained his deed. It does not appear from the report of the master whether the amount bid at the sheriff’s sale was more or less than the amount of the respondents’ judgments. But that purchase discharged the lien of their judgments upon any other real estate which then belonged to their judgment debtor, to the extent of their bid, and all personal claim against him pro tanto. I cannot, therefore, in the absence of any allegation that they were not in any way injured by that bid, deprive them of the protection of bona fide purchasers, without notice of any equitable lien upon the property for the unpaid purchase money on the master’s sale.

I do not think, however, this case turns upon that question. The agreement, which was made at the same time with the assignment to Rosseter, although separate therefrom, must be taken as a part of the same transaction, for the purpose of ascertaining what the parties intended. And taking both instruments together, I think it is evident they intended to give to the first instalment a preference in payment out of the proceeds of the sale of the mortgaged premises ; though they undoubtedly supposed the property was sufficient to pay both instalments, and the prior incumbrance of the Norton mortgage, if they knew that mortgage was still a subsisting lien. By that agreement the property was not to be sold until the second instalment became due, and then was not to be sold for less than the amount of both instalments. And such sale was to be for the use and benefit of the assignee of the second instalment, to the extent of that instalment and interest, after the satisfaction of the first payment due on said mortgage. The only rational construction I can give to this latter clause of the agreement is, that Mitchell should not let the property be sacrificed, at the master’s sale, for the amount of the *228first instalment merely ; in case the assignee should not then be able to raise the amount of that instalment and costs. But that Mitchell should see that it was bid up to the amount of both instalments, at least. And that if in so doing he was compelled to bid in the property, he should hold it in trust to pay the assignee out of the proceeds of the premises, upon a subsequent sale, the amount of this second instalment, after deducting from such proceeds the amount of the first instalment; or in trust to convey the same to the assignee upon being paid the amount of the first instalment, with interest and the costs of the foreclosure. Whether a deed from the master conveying the property to Mitchell upon such a trust would have been valid, under the provisions of the revised statutes relative to uses and trusts, is not material to consider ; as the master’s deed appears to have been an absolute conveyance. And all the appellant had a right to claim in any event, as against the legal lien of the respondents under their purchase at the sheriff’s sale, was that this agreement should be carried into effect, so far as it could be, according to the intention of the parties to it. That intention I think was, that the first instalment should be first satisfied out of the proceeds of the property that Mitchell might be compelled to bid in, at the master’s sale, to prevent a sacrifice thereof. And as the respondents had a legal lien upon Mitchell’s title under the master’s deed, and a preferable equitable lien to the extent of the first instalment, they would as judgment creditors merely have been entitled to the whole surplus money now in controversy ; even if they had not become such bona fide purchasers at the sheriff’s sale without notice of any of these equitable rights of other parties.

The order of the vice chancellor which is appealed from must therefore be affirmed with costs.