Webster v. Kings County Trust Co.

30 N.Y.S. 357 | N.Y. Sup. Ct. | 1894

CULLEN, J.

This is an appeal from a judgment in favor of the plaintiffs, entered on a decision of the court at special term. The action is to compel the specific performance of a contract for the sale of land. The substantial question litigated on the trial was the validity of plaintiffs’ title to the land agreed to be sold. On this appeal the appellant raises further questions as to the form of the judgment entered, and as to the effect of the death of Agar, one of the original plaintiffs and vendors.

Before we deal with the main objection to the plaintiffs’ title, it will be convenient to dispose of some minor objections to it. First, it is objected that there are two outstanding mortgages on the property. Such was the fact. But both mortgages were past ■due and payable at the contract time for passing the title. Before that time defendant had notified plaintiffs that it objected to the title on other grounds, and would not complete the purchase. It was not necessary for the plaintiffs to pay off these mortgages in advance, knowing the sale was not to be consummated. On a sale of real estate it is only necessary that at the time of passing title the property shall be free from incumbrances. The delivery of the deed and the payment of the purchase money are simultaneous acts. The vendor whose property is subject to incumbrance is not bound to raise money and pay the incumbrance in advance. If he produces the holder of the lien, ready to satisfy it on payment, he can rely on the purchase money as the fund for such payment. Both mortgages being due, we mast assume that the plaintiff could have produced the mortgagees, ready to satisfy the mortgages, had the plaintiff been willing to pay the purchase money.

A second objection is a consent given by the plaintiffs that a street railroad in front of the premises might be operated by electricity. The premises described in the contract do not include the adjacent half of the street. Apart from this, the railroad was in operation at the time of the execution of the contract. We think that in case of street or elevated railroads in actual operation in front of property it must be assumed that, so far as the consent of the property holder is necessary, it has been given, and that the contract of sale is made subject to the open easement of the railroad, as is the rule in the case of a highway.

A further objection is made on the fact that the building erected on the premises to a slight extent encroaches upon the highway. It is a sufficient answer to this that the trial court held that all objections to the title were waived except that as to the defeasible character of plaintiffs’ title, arising from their position as trustees of the Long Island Savings Bank. There is no statement that the ease contains all the evidence, and hence we cannot review this question of fact.

The premises agreed to be sold were formerly the banking house of the Long Island Savings Bank of Brooklyn, and its property. In the year 1877 the bank became embarrassed. The attorney general brought an action on behalf of the people to dissolve the bank and appoint a receiver. To avoid a receivership, the trustees of the bank proposed to the depositors that they would pay to such of them as wished their money immediately 80 per cent, in cash, and to the others the full amount of their deposits in 6, 12, 18, and 24 months, the trustees personally guarantying such payment, and agreeing to pay any surplus that might arise from the assets of the bank to the depositors pro rata. On proof of the acceptance of this proposal by 94 per cent, of the depositors, and the filing of the personal undertaking of the trustees to carry out its terms, the court denied the motion to appoint a receiver, and directed the trustees to make the payments provided for.. The bank thus went into liquidation under the management of its trustees. By October, 1879, substantially all of the 80 per cent, class had been paid in full, and 75 per cent, paid to the 100 per cent, class. The principal remaining asset of the bank was its banking house, which, in the state of the market, appeared unsalable, though money had been raised on it by mortgage. On an application stating these facts an order was made by the court extending the time of payment of the final 25 per cent. Parts of the last dividend were paid from time to time, and extensions obtained from the court as to the remainder; the three original plaintiffs and one Delano advancing the balance— $20,000—to make the payment. Finally, in October, 1884, the court directed a sale of the banking house at public auction, by Ogden, vice president of the bank. The order gave leave to any of the trustees of the Long Island Savings Bank to purchase the property, and directed that out of the proceeds there first be paid the remaining unpaid deposits, and then the advances made by the plaintiffs and Delano. At the sale held under this order the property was bought in for the plaintiffs for the sum of $88,000. This sale was not reported to the court till 1893, when an order was made confirming the sale. The plaintiffs, in 1893, made their contract to sell the property for the sum of $201,600. The objection is made that this purchase by the plaintiffs is voidable. The general rule that trustees cannot purchase the trust property, or deal with it for their own advantage, is unquestionable. But to this rule there is a well-recognized exception,—that where a trustee has a personal interest to protect, he may, by the order of the court, purchase at its sale, and acquire a valid title. Scholle v. Scholle, 101 N. Y. 167, 4 N. E. 334. It is clear that the sale here had was a judicial sale, and that there was a proceeding in court in which the plaintiffs could apply for leave to purchase.. The action brought by the people was, in effect, to liquidate the bank. The agreement between the trustees and depositors was not an agreement made out of court, and that could only be enforced in an independent action by depositors. While the motion for a receiver was denied, the action was not discontinued, nor did the defendant recover judgment. The order of the court was that the bank be liquidated. It is true, the liquidation was to be made in an exceptional manner, the court considering that the depositors would fare better by the manner proposed than by a receiver, and the depositors being of the same opinion. Nevertheless, the liquidation was a liquidation under the order of the court to the same extent as if made by a receiver, for the court had power to make such an order. People v. Ulster Co. Sav. Inst., 64 Hun, 434, 18 N. Y. Supp. 960, affirmed 133 N. Y. 689, 31 N. E. 738. There was, therefore, at the time the order of sale was .made, a judicial proceeding pending in full integrity, in which both a sale could be ordered and the plaintiffs be given leave to purchase thereat. In such sale all the trustees had an interest to protect the contingent liability on their undertaking, and the plaintiffs had a further special interest,—their advances to the bank, then about $33,000.

It is claimed that the order granting the plaintiffs leave to purchase was ineffectual and irregular, in that it was made without notice of the application. Whatever force may have been originally in this objection, it has been obviated by the order of the court confirming the sale. The case is not similar to one where the trustee alone is a party to the action, and the cestuis que trustent are not parlies. There no order made without notice to the cestuis que trustent could bind them. In an action to dissolve and liquidate a corporation all creditors or stockholders are in one sense parties, and before the court. They are represented by the attorney general, and by the receiver when one is appointed. All the creditors are subject to the summary jurisdiction of the court in the distribution of the estate of insolvent corporations. Attorney General v. North America Life Ins. Co., 91 N. Y. 57; Attorney General v. Guardian Mut. Life Ins. Co., 77 N. Y. 278; Innes v. Lansing, 7 Paige, 584. The order of confirmation was made on notice to the attorney general. Thereafter a creditor named Hannah intervened on petition stating the facts relative to the purchase by the plaintiffs, and applied to vacate the order of confirmation, and to declare the purchase voidable or void. This application was denied, except so far as it permitted the depositor to intervene. The order denying the application was affirmed by the court of appeals (34 N. E. 514, mem.), and the order of confirmation stands in full force. If we are right in our position that the sale was a judicial sale, and that it was had in a judicial proceeding to which all the cestuis que trustent were parties, we cannot see how the title acquired by the purchasers on such sale can now be impeached.

Alexander Agar, originally a plaintiff, and one of the vendors, died after trial and before decision; therefore no decision could be made as to him. But we think it was not necessary to revive the action as to his heirs and personal representatives. The contract on the part of the vendors was joint, not several, to convey or cause to be conveyed to the vendee the entire title, not each to convey bis several shares therein; and a single payment of the purchase money was to be made. The rights and obligations' of the contract devolved on the survivors. If the survivors could give a full title, we do not see why they could not proceed with the ad ion. On the trial the plaintiffs produced a deed, properly executed, and acknowledged by the three vendors, and tendered it to the defendant. Upon the defendant’s refusal to accept it, it was, under the order of the court, deposited with the clerk for the defendant’s benefit. This was a delivery in escrow, and it is settled by authority that in such case the death of any of the parties before delivery to the grantee will not defeat the validity of the deed. On complying with the judgment, the defendant will be entitled to the deed, and acquire the title of Agar, despite his death. Hunter v. Hunter, 17 Barb. 25; Ruggles v. Lawson, 13 Johns. 285.

If the decision below7 is correct on the question of title, then the form of judgment is proper. As already said, all the defendant was entitled to was to have the mortgages satisfied when it paid the purchase money. As it will not pay the purchase money except on compulsion, and even that to be delayed by appeal, there is no justice in compelling the plaintiffs to discharge these mortgages, and lie out of the money, it may be, for years. It is as easy for the defendant to pay the money to the mortgagee in satisfaction of the mortgages as to the plaintiffs in satisfaction of the purchase price. If it contends that such was not its contract, the answer is that, the variance is caused by its own fault. The judgment appealed from should be affirmed, with costs. All concur.