Brewster v. Power , 10 Paige Ch. 562 ( 1844 )

The Chancellor.

There is no allegation in the bill that the defendant ever gave to Ford a conveyance of his interest in the undivided half of the premises, to which the defendant acquired the legal title by the purchase under the statute foreclosure. The evidence of the declarations of Ford as to the pretended quit claim deed must therefore be laid entirely out of the question, even if they could have been legal evidence against the defendant upon any state of pleadings. Besides, if an allegation of that kind had been contained in the bill, it would have rendered it demurrable ; upon the ground that the remedy of the complainant, if any, was at law, by an ejectment suit to recover the possession of the undivided half of the premises claimed by the defendant.

The question then arises, admitting the allegations in the complainant’s bill to be true, whether Ford had such an interest in the half of the premises which was struck off to the defendant, upon the statute foreclosure, as to render it liable to a sale by the sheriff upon execution, and to a redemption by a junior judgment creditor. Previous to the revised statutes if a person purchased real estate and paid for it with his own means, and took a conveyance of the legal title in the name of another, there was, in equity, a resulting trust in favor of the one who paid the money ; except where it satisfactorily appeared that the purchase was intended as a gift or advancement to the person in whose name the conveyance of the legal title was taken. But such an equitable interest in land, where the legal title was in the person in whose name the conveyance was taken, could not be sold by the sheriff, upon execution against the cestui que trust, previous to the statute 29th Charles 2d, chapter 2d, § 10 ; which statute was adopted as a part of the law of this state, and continued in force here until the revised statutes went into effect, on the 1st of January, 1830. (See 1 R. L. of 1813, p. 74, § 4.) By that statute, where the judgment debtor had the whole beneficial interest in the land by virtue of a resulting trust, a sale by virtue of an execution against such debtor operated to vest the legal title in the purchaser, under the sheriff’s deed. And as a subsequent judgment against the cestui que trust was a lien in equity, though not at law, upon his interest in the land, probably the owner of such judgment, by the equity of the statute of the 12th of April, 1820, authorizing a redemption of lands sold on execution, would be authorized to redeem, and to take the title in his own name.

The revised statutes, however, made an entire change in the law on this subject. By the 51st section of the article of the revised statutes relative to uses and trusts, it is provided that where a grant for a valuable consideration shall be made to one person and the consideration therefor shall be paid by another, no use or trust shall result in favor of the person by whom such payment shall be made ; but the title shall vest in the person named as alienee in such conveyance, subject only to the provisions in the next section. (1 R. S. 728.) And the next section declares the-conveyance to be presumptively fraudulent only as against persons who were at that time creditors of the person paying the consideration ■ but not as against creditors whose debts were subsequently contracted. Here the legal title to one half of the lot in controversy passed to the defendant, by the purchase under the statute- foreclosure, on the 14th of January, 1831. For by the 14th section of the article of the revised statutes relative to the foreclosure of mortgages by advertisement, (2 R. S. 547,) where the mortgaged premises are purchased at the sale by the mortgagee, or his assigns, the affidavits of the publication and of affixing the notice of sale, and of the circumstances of such sale, are not merely evidence of the regularity of the foreclosure ; but they are, without the formality of a conveyance, to have the same effect as a conveyance executed by a mortgagee to a third person upon such a sale would have had. No parol evidence, therefore, can be received to establish either án express or an implied trust as to this half of the premises, in favor of Ford. And even if the defendant had given a written agreement to convey that half of the premises to Ford, upon his paying the whole amount of the purchase money of the mortgage, and the $100 to the representatives of Brace, Ford would not have had an interest in that half of the premises which could have been sold on execution against him. For by another provision of the revised statutes, (1 R. S. 744, § 4,) the interest of a person holding such an agreement is not bound by the docketing of any judgment or decree, nor can it be sold upon an execution. But to enable the creditor to reach such an interest of his debtor he must first exhaust his remedy at law, by the issuing of an execution and a return thereof unsatisfied, and then file a bill in this court, to have the defendant’s interest sold and applied to the satisfaction of the judgment. To obtain such relief, the debtor himself also appears to be a necessary party. Here there is no pretence that the remedy of the complainant has been exhausted at law, by the return of an execution unsatisfied, nor is Ford the judgment debtor a party to the suit. On the contrary, the whole claim to relief proceeds upon the supposition that Ford had an equitable interest, in this half of the lot, which could be sold upon the execution at law, and that the complainant acquired that right by virtue of the redemption and the sheriff’s deed.

The revised statutes having provided for a resulting trust in favor of creditors, whose debts are then existing, where the consideration for real property is paid by their debtor and the title is taken in the name of a third party in fraud of their rights, I am not prepared to say that a judgment for such a debt would not create a preferable lien in equity upon such real property, except as against a purchaser for a valuable consideration without notice, although such property cannot be sold upon execution on the judgment. (See Forth v. The Duke of Norfolk, 4 Mad. Rep. 504. Lynch v. The Utica Insurance Company, 18 Wend. Rep. 236.) But there can be no pretence in this case that there was a resulting trust, either in favor of the judgment creditors upon whose judgment the interest of Ford in this lot was sold, or in favor of the original complainant in this suit. For none of the debts embraced in either of these judgments appear to have been contracted until long after the title to the lot was vested in the defendant and in Ford, as tenants in common under the statute foreclosure. Besides, the statute makes the payment of the purchase money by the debtor and the taking of the title in the name of another, only presumptive evidence of fraud, even as to existing creditors. And at the time of the statute foreclosure and sale, in January, 1831, there was no inducement to vest the title to one half of this land in the defendant for the purpose of defrauding the creditors'of Ford. For that was more than three years before his failure. And no debts appear to have existed against him at that time, except those which were created by the purchase of this bond and mortgage and of the interest of the representatives of Brace ; for all of which debts the defendant was jointly holden.

No title whatever in this half of the lot, either legal or equitable, passed to the original complainant in this suit by virtue of the redemption and the deed of the sheriff. But he merely got—what W. Power professed to purchase at the sheriff’s sale—the undivided half of the lot which belonged to Ford the judgment debtor. And as to that half, I have no doubt he got the title divested of any claim in favor of the defendant, on account of the Smith note, whether the amount of that note was or was not included in the judgment given by Ford to his three brothers-in-law.

This would of itself be sufficient to sustain the decree of the vice chancellor dismissing the bill. For the complainant comes into this court for relief upon the sole ground that he acquired an equitable interest in the defendant’s half of the property by virtue of the sale and the sheriff’s deed ; and he has not framed his bill in such a manner as to be entitled to ask for relief upon any other ground. But I cannot dismiss the case without expressing my opinion also, that the complainant has failed in showing that it was ever the intention of the defendant and Ford that the bond and mortgage should be purchased for the purpose of acquiring the title to the whole lot for Ford exclusively, and that the defendant was a mere surety for him. The account of the transaction which the old gentleman gives in his answer is perfectly rational. And the fact which he states, that Ford agreed that if he did not pay for his half the defendant should be entitled to a claim upon that half for his indemnity, accounts for what is testified to by the witnesses, as to his only claim upon the land being for the payment of the note to Smith. The old gentleman was probably speaking of Ford’s half of the lot, upon which half he supposed he had a claim to secure the payment of the note to Smith, which he had signed with Ford to enable the latter to raise his half of one of the payments due to the original mortgagee. But the witnesses, not understanding the subject, no doubt understood him as speaking of the title to the whole lot.

The decree appealed from must be affirmed with costs.