Snyder v. Stafford

11 Paige Ch. 71 | New York Court of Chancery | 1844

The Chancellor.

I think the vice chancellor erred in this case, in supposing that the master who made the sale was incompetent to act on account of his connection by affinity with Conrad Cramer. In the first place, C. Cramer was not a party to the suit, nor was he a party in interest in the sale of the mortgaged premises, or in the proceeds of the sale. ' He had indeed become security for J. P. Cramer for the payment, to the-complainant, of the amount of the purchase money agreed to be paid upon the assignment of the decree. He was also security, that J. P. Cramer would indemnify the assignor against trouble and costs to which he might be put by A. Stafford, on account of that assigmhent. But I am not able to perceive how his liability as such surety gave him any interest whatever in the performance of the duties of the master upon the sale, any more than if he had bScome an endorser upon a note to the bank, to enable the drawer thereof.to raise money to purchase this decree.

Again; there was nothing in the directions of the decree, under which the sale was to be made, giving to the master any judicial powers whatever, so as to bring the case within the equity of the provision of the revised statutes, which declares that no judge of any court can sit as such in any cause in which he would be excluded from being a juror by reason of consanguinity or affinity to either of the parties. (2 R. S. 275, § 2.) Had the decree contained a provision that the master should inquire and ascertain in what order the different parcels of the mortgaged premises should be sold under the decree, in order to protect the equitable rights of the several persons claiming to have interests therein, or liens on the -respective parcels, the master, in determining that question, would have been quasi a judge of this court. But in making the sale under the decree, in this cause, as the decree.was made and entered, he was performing a ministerial act, in the same manner as a sheriff who had an execution against two lots of land would act ministerially in determining which lot he would sell first.

The mistake which both parties fell into in this case was in supposing the proper time, to settle their conflicting claims to the surplus of the mortgaged premises, after paying the amount of the decree, was at the sale ; and without any previous order of the court in relation to the subject. And both also appear to have fallen into the very common error of supposing that the owner of the decree had the right to control the action of the master, and to direct which parcel should be sold first. Hence the contest between A. Stafford and J. P. Cramer to become the assignees of this decree; instead of applying to the court, as judgment creditors of. the mortgagor having liens upon the premises subsequent to the mortgage, for the proper directions, that the premises be sold in such a manner as to enable them to settle their respective rights upon the reference as to the surplus proceeds of the mortgaged premises. Here the situation of the several liens subsequent to the mortgage was such that the rights of the owners of those several liens could not have been protected by selling either parcel of the mortgaged premises first, and applying the whole prpceeds of that parcel towards the mortgage debt; even if the validity of A. Stafford’s judgment, and of his subsequent conveyance from the mortgagor, had not been disputed. For by the sheriff’s sale the general lien of the judgment upon the whole of the mortgaged premises was turned into two specific liens, upon the farm and the village lot respectively ; to the extent of the amount bid at the sheriff’s sale uport each, and the interest thereon. And as these specific liens were both created at the same time, the proper way to protect the holder thereof, and to give the owners of the two junior judgments, recovered in March, 1843, the benefit of those general liens, as well as the right to contest the validity of A. Stafford’s judgment, under which he claimed the two specific liens, was to direct the farm and village lot both to be sold, separately; even if one of them was sufficient to pay the amount of the decree ; and that the master should pay such decree, and the costs, rate-ably out of the proceeds of each parcel, and bring the residue into court, specifying in his report the surplus proceeds of each parcel. The amount of the specific liens, created by the sheriff’s sale, upon the farm and village lot respectively, if valid, would then be entitled to a preference in payment out of the surplus proceeds of the parcel of the premises upon which such liens existed at the time of the master’s sale; in the same manner as if R. Stafford had given to his brother separate mortgages upon the farm and village lot respectively, for the same amounts, on the day of the docketing of the judgment under which these specific liens were acquired. And the two judgments recovered before the conveyance of the equity of redemption by R. Stafford, to his brother, and which were general liens upon the residue of the surplus proceeds of both parcels of the mortgaged premises, would then be entitled to payment out of such proceeds, according to their legal priorities in reference to each other. If any thing remained, it would belong to A. Stafford as the grantee of the equity of redemption which was conveyed to him subsequent to the sheriff’s sale; unless the owners of the junior judgment of $500, which was subsequently recovered, should succeed in showing the conveyance fraudulent as against them.

The several claims upon the surplus moneys, after paying the amount of the decree and costs out of the proceeds of the farm and village lot rateably, would of course have to be settled upon the usual order of reference, after such surplus moneys had been brought into court; in order to enable all judgment creditors and others to file their claims to the same, as prescribed by the rules of the court. And upon such reference, the validity of the judgment under which A. Stafford claims the specific liens upon the surplus proceeds of the farm and village lot respectively, and the validity of the sale of the equity of redemption in both parcels to him, would form proper subjects of inquiry and settlement.

Under this decree, which only authorized the master to sell so much of the mortgaged premises as might be necessary to pay the complainant’s debt and costs, and which could be sold separately without injury, a special order of the court would have been necessary to enable him to sell both parcels, so as to protect the rights of the owners of the several subsequent incum-brances ; if the value of either parcel was more than sufficient to satisfy the decree and the costs of sale. But as the value of each parcel of the mortgaged premises was evidently insufficient, the master of course must sell both to comply with the directions of the decree. And if both were sold, it was perfectly immaterial which parcel was sold first. For if the master paid more than a rateable proportion of the proceeds of either parcel towards the satisfaction of the complainant’s debt and costs, the court would of course direct it to be refunded out of the proceeds of the sale of the other parcel, in settling the rights of the junior incum-brancers and claimants as between themselves. There was no error therefore in selling the village lot first; and I can see no sufficient excuse on the part of the respondent for refusing to complete his purchase. And if the master erred at all, it was in not refusing to adjourn the sale of either parcel, upon the application of the respondent.

The affidavits show that the offer was made to the respondent to allow him to deduct the amount of his interest in the decree from the $1200 which he had bid for the village lot. And as the master had no power to decide upon the validity of the claim to the $325, as a specific lien upon the surplus proceeds of that lot, the refusal of the purchaser to complete his purchase unless the $325 was deducted was unreasonable and improper. Nor was such purchaser authorized to wait and see what speculation he could make upon the sale of the other lot, before he decided whether he would comply with the terms upon which the village lot had been struck off to him. The master was therefore right in putting up the village lot again, and reselling it to the highest bidders who were willing to comply with the terms of the sale. The appellants were accordingly entitled to the benefit of their purchase; and the order setting aside the sale to them was erroneous. The order was also erroneous in granting an indefinite stay of the sale of the residue of the mortgaged premises.. For it deprives the junior judgment creditors of the power to litigate their claims to the surplus proceeds of the mortgaged premises, upon the usual order of reference; and leaves the whole decree standing in full force against both portions of the mortgaged premises. Under this order no one could with safety redeem either parcel of the premises «from the sheriff’s sale; as the expense of the further litigation which would necessarily arise in adjusting the claims upon each parcel, under the decree, would deter any prudent man from redeeming.

The order appealed from must therefore be reversed, and the motion to set aside the sale of the village lot must be denied, with $15 costs; and the purchasers of that lot are to be entitled to the rents and profits thereof which have accrued subsequent to the purchase. But to protect the rights of all parties, the. master must be directed to proceed to the sale of the farm, upon a notice of three weeks. And he must pay, out of the proceeds of the sale of both parcels rateably; first, the costs of the foreclosure and the costs of the master, &c. upon both sales; next, to J. P. Cramer, as assignee of the decree, the amount which would have been due to the assignor, exclusive of the $900 advanced to him by A. Stafford; and thirdly, to A. Stafford as the equitable owner of the residue of the decree, the $900 and the interest thereon from the dates of the respective receipts given for such advances. He must also bring the residue of the money into court, and.specify the amount of the surplus proceeds of each parcel of the mortgaged premises separately. And this order is to be without prejudice to the rights of these parties, or of any other persons claiming such surplus proceeds, or any part thereof, to give written notice of their claims to the master, or to the clerk of this court; and to have their rights to the same settled upon a reference, in the manner prescribed by the 136th rule of this court.

The object in directing a sale upon a three weeks’ notice is to enable the master to complete the sale of both parcels before the expiration of the fifteen months allowed to redeem the premises from the sheriff’s sale; in order to give the junior judgment creditors the same right to the surplus proceeds, without an actual redemption, as they would have had if the master had proceeded to sell the farm, in November last, instead of adjourning the sale of that part of the premises upon the application of the respondent’s solicitor.

The novel questions arising in this case render it proper that I should leave the appellants to bear their own costs on this appeal. Neither party, therefore, is to have costs as against the other in this court.