White v. Carpenter

| New York Court of Chancery | May 24, 1830

The Chancellor.

.Before going into the general merits - of the cause, it may be necessary to examine an objection made on the argument as to the extent of the order for a rehearing. It was insisted by the complainant’s counsel ‘ that-the . order for rehearing was special, and was to be confined to the -question whether any thing was due from Sackett on the Farrelly judgment. The order for rehearing ■ ap-. pears to have been granted by the consent of the solicitor of the complainant, founded upon two petitions of the defendants. The grounds'of complaint, as stated in the petitions, are that the judgment of Farrelly ought riot to have been deemed a. lien on the Lylburn property so as to give the complainant any claim on,the money in court; and that the decree was -founded on the .assumption of the fact that the property had' been conveyed, to White under the sheriff’s sale, when in fact no such conveyance was ever executed. The order directs that the cause be reheard in regard to the question whether any thing and how much is due to the complainant, under or upon the judgment of Patrick Farrelly in the pleadings mentioned. This embraces the whole controversy so far as it has been decided against the defendants, except as to the question of costs. The late chancellor. had decided that White had no claim upon the fund by virtue of the deed from Sackett to Hart, as the property was conveyed to the latter subject to the prior equity of Willard to be first paid out of the proceeds of the sale; and the fund in court is admitted to be insufficient for that purpose. If this part of the decision was correct, the complainant was not entitled to any part of the fund unless it was due to him under or upon the judgment of Farrelly. The question as to the general costs in the cause was not embraced in .this order for a rehearing; and in respect to those costs the decree could not be varied under this order, unless the complainants had elected to consider the cause open as to that question. On the argument the complainant’s counsel did go into the question as to the validity of his paper title independent of the Farrelly judgment, which question I shall presently consider.

I think the. defendant’s counsel is under a mistake in supposing the late chancellor went upon the assumption of the fact that the property had been conveyed to White under the sheriff’s sale. In the first place it is impossible to suppose it had been so conveyed. The sale took place in July, 1822, and this suit was commenced shortly thereafter. Long before the expiration of the time allowed for redemption the land had been sold and conveyed under the partition sales. And White, under the agreement made with the parties in that suit, in February or March, 1822, had also relinquished to the purchasers under the decree all his claim upon the " land. When that agreement- was made, if the judgment was a lien upon the premises, Willard and-Miller as the" owners had a right to redeem by paying, the amount of the bid and ten per cent, interest thereon. The general lien of the judgment was turned into a specific lien to that extent; and the rights of the parties in the fund produced by the sale in partition are at this time the same as they were it) the land at the time _ the agreement of 1822 was made-;’ as the sale in petition under that agreement rendered it impossible to perfect the title under the sheriff’s sale. Although Chancellor Jones .considered' the sheriff’s sale valid, it is evident he did not consider it as materially varying the rights of the parties,' ■ or he would have decreed the whole fund in- court to the complainant, instead of the balance due on the judgment, ■

The deed to Miller gave a full and perfect lien upon the property to the extent of Willard’s'claim. And the title which White afterwards acquired, under the Hart conveyance, was only of the share of the surplus which would have belonged to some of the creditors if they had executed releases as required by the deed of trust. If the condition ■ rendered the deed fraudulent as against the creditors of Sackett, that objection cannot be urged by those who claim title through that deed. The conveyance to Hart was not for the estate purchased of Lylburn; but it was for the share which Sackett appropriated for the payment of .certain, creditors, out of the surplus to be raised by Miller on a sale by virtue of the trust deed. It did not profess to do any act inconsistent with that deed, but merely assigned to Hart the share of the surplus to which Sackett claimed to- be entitled under the deed. Willard, by the terms of the deed, was not ■ required to' execute any release to Sackett. - As to' the amount which was to be raised and paid to him; the deed was absolute and unconditional. Hárt and his- assignees and White took the interest of Sackett not only with notice of Willard’s right under that deed, but they took it professedly subject to that right. The proceeds of the estate being insufficient to satisfy the amount due to Willard; the complainant derived no valid claim to any part,of the fund under the-conveyance from the assignees of Hart.

. The only doubtful question in the case is that which the late chancellor decided in favor of the complainant. Was: the Farrelly judgment a lien on the Lylburn property, so as; to entitle the holder thereof to satisfaction opt of 'that property in preference to the claim of Willard 1

After a full examination of this part of the case, I have ar« rived at a different conclusion on this point from that of my learned predecessor. •

I concur with him in the opinion that there was no resulting trust in this case which could vest the legal estate in Willard. Such a trust cannot be raised in favor of a person by the mere payment of the purchase money, if it is not the intention of either party that the legal estate should vest in him. The office of a resulting trust is to carry into affect the in»' tention of .the parties, not to defeat that intention $ and it can never be raised in opposition to the written agreement of the parties on which the conveyance was founded. (6 John. Ch. Rep. 111.) The writings in this case show that ■ it was the intention of the parties to vest the legal estate in . Sackett, for the purpose of enabling him to raise money thereon for Willard to the extent of $3000. Notwithstanding the loose testimony of Sackett, I have not the least doubt, ■ from the other testimony and from the written evidence in the case, that the transaction was substantially as stated in' the answer of Willard. Although the deed is dated on the 19th of March, one day previous to the date of the other papers, it was not recorded until the twenty-first. And I think there is evidence on the face of the papers themselves to show that the actual consummation of the conveyance to Sackett, the execution of the bond to Lylburn for the Virginia lands given in exchange, the making of the order for the payment of the $3000 out of the proceeds of the Lylburn ■ property and the acceptance thereof by Sackett, were all one' transaction. These instruments must therefore be taken and construed together. (1 John. Ca. 91. 13 Mass. 51" court="Mass." date_filed="1816-03-15" href="https://app.midpage.ai/document/chickering-v-lovejoy-6404411?utm_source=webapp" opinion_id="6404411">13 Mass. Rep. 51. 1 Paige’s Rep. 455. l Greenleaf’s Rep. 11.) Taking . all these writings, which were executed at the same time and in relation to the same subject matter, and construing them together, there is no resulting trust so as to vest the legal estate in Willard. But there is an appropriation of the proceeds to be raised on the sale of the property, for the specific purpose, in the first-place, of paying the $3000. to Willard. It was in substance a declaration in writing on the part of Sackett that he had received the conveyance from Lylburn, in trust to sell or mortgage the property for the purpose of ■ raising the $3000 for Willard, in satisfaction for the- lands given in exchange, "and to retain the residue of the proceeds por jqs own .trouble and commissions in effecting such exchange. If he had given to Willard a writing containing an ■ express declaration that he held the lands on that trust, can there be any doubt that equity would compel a specific pei>. formance thereof 1 This view of the case is corroborated by the recitals in the trust deed to’ Miller. If the rights,of third ■ persons had. not intervened, can there be -any doubt in /.this case that á court of chancery would have compelled Sackett to execute the .trust, by selling the estate and applying the proceeds as directed in the order accepted by him ? If such was not the object and intention .of Sackett at the time • this, exchange took place, he intended to commit a gross fraud iffSon Willard; and the court must in that case convert him ' into á trustee for the person intended to be defrauded. Sackett had a right to sell, the estate and receive the money there-' for, as such was the manifest intention of the parties. But as the proceeds of the sale, to the extent of $3000, were specifically pledged and'appropriated to the payment of Willard’s claim, a creditor, of- Sackett, would not have been permitted to, receive a conveyance in satisfation of an antecedent debt If Sackett had sold the property to a bona fide purchaser, or had mortgaged it to secure money loaned on the-' credit thereof, the purchaser or mortgagee would have been . protected; and would not have been holden for the application of the fund. But if any person had advanced money there on with a knowlndge that Sackett intended to defraud Willard out of his purchase money, such -person could not-be considered a bona fide purchaser. :

If. Willard had a specific. lien upon the proceeds of the property, he is entitled to a preference over the general lien .ofa judgment creditor of Sackett. • At law a .judgment is a genera,! lien upon all 'the. legal interest of the., debtor in his-real estate; but in chancery that general lien is controlled by .equity so as to protect the, rights of those who are entitled to an equitable interest in the lands, or in the proceeds ■thereof. 1. have recently had occasion to examine that (juestion in the case of Howe and wife, (1 Paige’s Rep. 125,) and it would be useless for me to re-examine the authorities referred to on that occasion. The judgment of Farrelly only attached upon the interest which Sackett had in the real estate of Lylburn after satisfying Willard’s debt. And as White had notice of Willard’s claim previous to the sale under that judgment, the only effect of his purchase was to turn what was before a general lien upon the surplus, if any there should be, into a specific lien thereon to the extent of his bid. The decree of June, 1827, must therefore be modified so as to declare that the defendants Carpenter and wife» as the legal representatives of Willard, are entitled to the fund in court, or to so much thereof as is necessary to satisfy the $3000 and interest thereon from the date of the trust deed given to Miller.

If the question of costs was now open, I should not be inclined to allow them against the complainant, under the particular circumstances of this case. At the time the bill in this cause was filed, it was not known what the proceeds of the Lylburn estate would amount to. The complainant was certainly entitled to a preference over the creditors of Sackett named in the schedule annexed to the trust deed, at least to the extent of what was due on the judgment; and he has litigated in good faith. I think also that the order for a rehearing precludes me from altering that part of the decree which denies costs to the defendants.