IRA SEYMOUR, Respondent, v. ALEXANDER McKINSTRY, Jr., et al., Appellants
Court of Appeals of New York
June 7, 1887
106 N.Y. 230
The defendants have failed to show any defense to plaintiffs demand, and the judgment in its favor must be affirmed, with costs.
All concur.
Judgment affirmed.
IRA SEYMOUR, Respondent, v. ALEXANDER McKINSTRY, Jr., et al., Appellants.
Plaintiff conveyed to his son I., certain premises by deed with warranty, pursuant to and in reliance upon an agreement that I. should execute to a third party a first mortgage upon the premises for $5,000, the amount of purchase-money unpaid, which sum was to be paid directly by the mortgagee to plaintiff. The proposed mortgagee declined to make the loan. I., however, recorded his deed, and without the knowledge or consent of plaintiff, executed to defendant McK. a mortgage for $5,000, the consideration therefor being partly certain claims held by McK. against I. and the balance a check payable to the order of I., which he transferred on the same day to plaintiff. McK. had knowledge at the time, and before he advanced any of the consideration, that plaintiff claimed to be entitled to $5,000 as part of the purchase-price. The mortgage was recorded, and shortly thereafter McK. sold and assigned the same to defendant S. for the sum of $5,000. Plaintiff had remained and was at the time of such assignment in possession of the premises. In an action to have an equitable lien declared in plaintiff‘s favor prior to the lien of the mortgage, for the balance of purchase-money unpaid, S. failed to show that he had no notice of plaintiff‘s equitable rights. Held, that McK. was not a bona fide purchaser save for the amount paid by check; that plaintiff was not estopped from asserting his lien as against S. by reason of his conveyance to I.; that the fact that the premises were in the actual possession of plaintiff was sufficient to put S. upon inquiry, and the burden of proving good faith in the transaction was upon him, and in the absence of such proof, plaintiff was entitled to the relief sought.
The lien of a vendor of real estate for unpaid purchase-money is good against the vendee and the whole world, unless waived or defeated by an alienation of the property by the vendee to a purchaser without notice.
In an action by the vendor to enforce his lien, as against a mortgage executed by the vendee, it is not necessary for the plaintiff to allege in
Where a claim can be sustained only upon the ground that the person asserting it is an innocent purchaser, he must positively deny notice of the equitable rights of another, although it be not charged.
Simpson v. Del Hoyo (94 N. Y. 189) distinguished.
(Argued May 6, 1887; decided June 7, 1887.)
APPEAL from judgment of the General Term of the Supreme Court in the fourth judicial department, entered upon an order made January 13, 1885, which affirmed a judgment in favor of plaintiff, entered upon a decision of the court on trial at Special Term.
This action was brought by plaintiff, as vendor of real estate, to have an equitable prior lien declared in his favor as vendor for unpaid purchase-money.
The facts are sufficiently stated in the opinion.
Louis Marshall for appellant. The taking of any benefit under a deed, will or contract, or from the act of another after knowledge of its true character, whether it might have been avoided by reason of a fraud or other vitiating cause, is a ratification thereof, and estops the person receiving the benefit from denying the validity of the act. (Allen v. Roosevelt, 14 Wend. 100; Masson v. Bovet, 1 Denio 69; Cobb v. Hatfield, 46 N. Y. 533; Brewer v. Sparrow, 7 B. & C. 31; Lythgoe v. Vernon, 5 H. & N. 180; Garret v. Goater, 42 Penn. St. 143; Mills v. Hoffman, 92 N. Y. 181; Rapalee v. Stewart, 27 id. 310; Patterson v. Pierronet, 7 Watts, 337; Wroten v. Armat, 31 Gratt. [Va.] 228; Baird v. Mayor, etc., 96 id. 589; Schiffer v. Deitz, 83 id. 300; Vernol v. Vernol, 63 id. 45; Chipman v. Montgomery, 63 id. 221; Met. Life Ins. Co. v. Meeker, 85 id. 614; Mills v. Hoffman, 92 N. Y. 181; Rodermund v. Clark, 46 id. 354; Morris v. Rexford, 18 id. 552; 2 Herman on Estoppel, 1157, 1164.) The plaintiff having voluntarily conferred upon Ira B. Seymour the apparent
M. M. Waters for respondent. The lien of the plaintiff for the purchase money, as between him and Ira B. Seymour, attached as matter of law under the rule that “in the absence of an agreement, express or implied to the contrary, the vendor of lands has a lien on them for the unpaid purchase-money. (Boone‘s Law of Real Property, § 393.) The mortgage to Alexander McKinstry attached only to that interest which rested in Ira B., under the conditional sale which was only in part performed. (Dusenbury v. Hulbert, 59 N. Y. 451; Boone‘s Law of Real Property, § 393.) The plaintiff, under the arrangement or contract of which his deed was merely a part performance, never parted with that interest in his land which is represented by his claim for purchase-money. (Dusenbury v. Hulbert, 59 N. Y. 541) As the deed made by plaintiff was only a partial execution of the conditional sale, and as plaintiff did not surrender possession of the premises to the vendee, the plaintiff‘s possession was ample notice to Sabey of the plaintiff‘s equity. (Spafford v. Manning, 6 Paige, 383; Trustees of Union College v. Wheeler, 61 N. Y. 88.) The purchaser of a non-negotiable chose in action, secured by mortgage, takes it subject to the latent equities not only of the mortgagor, but of third persons. (Trustees of Union College v. Wheeler, 61
DANFORTH, J. The questions in this case are between the plaintiff, as an unpaid vendor of real estate, and the defendants, one as mortgagee and the other as assignee of the mortgage given by the vendee of the land. The controversy relates to the priority of their claims in those capacities. The court below decided in favor of the vendor‘s lien, and both defendants appeal.
It appeared that on and prior to the 7th of August, 1872, the title to and the possession of the premises in question were in the plaintiff, and he on that day conveyed them to his son, one Ira B. Seymour, by a deed, with warranty, for the price of $9,100, of which all but $5,000 was paid or satisfactorily arranged for; that, to enable Ira B. to raise that
The court finds that “McKinstry before he assigned said mortgage, and before he advanced any part of its consideration, had notice of the equity of plaintiff arising from the non-payment of said purchase-money, and the defendant Sabey has not shown that he, when he took the assignment, did not have notice of plaintiff‘s equitable rights, or of the facts from which they arise,” and, as matter of law “(1), the plaintiff has an equitable lien upon the premises for the balance due him for the purchase-price of the same; (2) that such equitable lien is superior to the lien of the $5,000 mortgage given to said McKinstry, and assigned by him to said Sabey; (3) that the said Sabey, as assignee, has no better rights than his assignor McKinstry; (4) that the plaintiff is entitled to a decree establishing his equitable lien and declar-
So far as McKinstry is concerned it is entirely plain that he was not a bona fide incumbrancer, nor a purchaser for value beyond the sum of $2,100.27 (Ins. Co. v. Church, 81 N. Y. 221), which he included in the check, and which was in fact indorsed by Ira B. to his father and paid to him. We may turn to Sabey‘s Case as presenting the only question which requires discussion. He is not found to have had notice of the plaintiff‘s equities, and is charged because (1) he did not show that he took without notice, and (2) because he could, in the nature of the transaction, have no better right than McKinstry. On the other hand, the contention made on his behalf on this appeal is that the plaintiff is estopped from asserting a lien as against Sabey because he voluntarily conferred upon Ira B. Seymour the apparent absolute ownership of the premises and the apparent authority to mortgage the same. The learned counsel for the appellant says there is no finding nor evidence that he was not a purchaser in good faith. As we have seen, the finding is that Sabey has not shown that he took without notice of the plaintiff‘s equitable rights as an unpaid vendor. If this will not sustain the judgment the appellant must succeed. His contention is that the precise question came up in Simpson v. Del Hoyo (94 N. Y. 189), and was answered in his favor by this court. There is this important difference: In the Simpson Case the party giving the mortgage was clothed not only with the record title to the land mortgaged, but was in possession of it under that title. Here possession was in the plaintiff, and an inquiry of him would have led to a true statement of the situation. It does not appear that he made such inquiry, nor is there the slightest evidence that he informed the plaintiff he was about to purchase the mortgage, or had been asked to do so. He himself says that he did not call upon the plaintiff directly, but on the twenty-eighth of
There are many circumstances in the case which would have warranted this refusal, but it is enough that the plaintiff flatly contradicted the statement of the defendant Sabey in every respect and particular, saying not only “I never saw him at the time the conversation is alleged to have taken place,” but also, “I never had any conversation with him on the subject in any manner or form; I should certainly have remembered it if I had; I never had any conversation with him until this suit was commenced.” The general testimony creates no surprise that the trial court did not credit the defendant in face of this contradiction. But as it was a question clearly within its province, and not within that of this court, the case must stand on its conclusion, and we have only to see whether the burden of alleging and proving innocence and good faith in the transaction was upon Sabey.
In the first place it was sufficient to put Sabey on inquiry that the property was in the actual possession of the plaintiff (Cook v. Travis, 20 N. Y. 400), and it was his duty to ascer-
There is a like or greater difference between the present case and the others cited by the appellant. Fisk v. Potter (2 Keyes, 64), was an action to enforce an equitable lien for the purchase-money against a subsequent purchaser under a mortgage executed by the vendee while in possession, and failed for that and other reasons which have no place in the record before us.
To meet the question of pleading and proof the appellant relies upon an averment in the answer that “he took the assignment of the mortgage upon the faith of plaintiff‘s admission that the mortgage was a valid mortgage, accompanied by a denial of knowledge or information of the alleged facts upon which the allegations of fraud or conspiracy are based.” So far as reliance is placed upon the admission, it is the finding that none was made, and as a pleading the allegations are far short of the affirmative allegation which the law requires of one who is bound to allege that he took his security without notice. Moreover, he must both allege and prove it.
It is a defense founded upon new matter. The plaintiff‘s lien, as an unpaid vendor, is good against the vendee and against the whole world, unless waived by the vendor or defeated by an alienation of the property by the vendee to a purchaser without notice. (Dusenbury v. Hulbert, 59 N. Y. 541.) It was not necessary for the plaintiff in this case to allege that he had not waived his lien. The defendant might and did
The reason for this rule may be the same ascribed to the doctrine which requires the holder of a note, shown to have been fraudulently obtained, to prove under what circumstances and for what value he became the holder, viz.: That when there is fraud the presumption is that he who is guilty will part with the instrument for the purpose of enabling some third person to recover upon it, and such presumption operates against the holder and it devolves upon him to show affirmatively the facts essential to overcome that presumption and relieve himself from its effect. (First Nat. Bk. v. Green, 43 N. Y. 298; Ocean Bk. v. Carll, 55 id. 441; Farmers’ Bk. v. Noxon, 45 id. 762.) So where the true owner sues to recover goods against a person claiming from the fraudulent vendee, the burden is upon the claimant to prove good faith and value. (Stevens v. Brennan, 79 N. Y. 258.) Indeed, the rule is entirely well settled that if a claim can be sustained only upon the ground that the person asserting it is an innocent bona fide purchaser, he must positively deny notice even though it be not charged. (Deming v. Smith, 3 John. Ch. 332.)
No error was committed therefore by the trial court in giving force to Sabey‘s omission to deny notice of plaintiff‘s rights and making it, in connection with other circumstances, a ground for postponing his mortgage to the plaintiff‘s lien for the unpaid purchase-money.
The other questions raised by the appellant relate to facts depending on evidence and have been found against him by the trial court and the General Term. They require no other
All concur, except RUGER, Ch. J., not sitting.
Judgment affirmed.
On motion for reargument the following opinion was handed down:
DANFORTH, J. The defendant Sabey moves for a reargument. The concession in the pleadings was that on the 7th of August, 1872, the plaintiff was possessed in fee and the owner of the premises in question. The finding of the trial judge was, that on that day the plaintiff was the owner in fee and in possession of those premises, and his subsequent findings show a sale made to Ira B. Seymour and a delivery of the deed, not absolutely, but for the specific purpose of enabling him to raise the money by mortgage, to be executed to the insurance company for payment by them directly to the plaintiff. There is no finding or suggestion that the possession was changed, and no inference could be drawn that it was to be changed until after the inchoate arrangements were completed. An examination of the evidence justifies the finding of the trial judge in this respect. It was not excepted to, nor was he requested by the defendant to find that the possession, which was in the plaintiff August seventh, was at any time given to or taken by Ira B. Seymour.
The distinction between the Del Hoyo Case (94 N. Y. 189, 193) and the present is obvious from other circumstances besides those briefly referred to upon the appeal. It was distinctly found in the Del Hoyo Case that the fraudulent grantee not only took the deed “but took possession of the property under that conveyance and was in possession thereof at the time of the execution of the mortgage and its assignment to the plaintiff.” The real owner was held to be estopped because she had clothed the mortgagor with the apparent title and possession, while as above stated there is no suggestion in the answer or findings or requests of counsel, or evidence in the case before us, that possession ever passed from Ira Sey-
It appeared in the case before us that McKinstry had from the beginning, and before the execution of the mortgage, full notice of the plaintiff‘s rights, and was so affected by it that in his hands the mortgage would be invalid as against the vendor‘s lien. As assignee Sabey is no better off than and is affected by all the equities which affect McKinstry. (Decker v. Boice, 83 N. Y. 215; De Lancey v. Stearns, 66 id. 157; Schafer v. Reilly, 50 id. 61; Bush v. Lathrop, 22 id. 535; Davis v. Bechstein, 69 id. 440.) As a purchaser his case under the recording act, if that act applies, might be better than that of McKinstry. If so, it would be because his assignment was not only recorded, but his legal title to the mortgage is based upon an actual pecuniary consideration, and upon the absence of notice. (Decker v. Boice, supra;
No ground appears to warrant a reargument The motion, therefore, should be denied.
All concur, except RUGER, Ch. J., not sitting.
Motion denied.