Moyer v. . Hinman , 13 N.Y. 180 ( 1855 )

It was proved that the defendant knew that the plaintiff was in possession of the land in question; but I find no proof that Corning, the judgment creditor and purchaser at the sheriff's sale, had such knowledge. But Corning was the creditor and consequently paid nothing upon the sale (2 Stor. Eq., § 1503b.), and the defendant of course must have been apprised of that fact by the certificate itself. But admitting that the defendant has the same protection as Corning, the possession of the plaintiff was sufficient notice, or sufficient to put a purchaser upon inquiry (Tuttle v. Jackson, 6 Wend., 213; Gouverneur v. Lynch, 2 Paige, 300; Chesterman v. Gardner, 5 John. C.R., 29;Jones v. Smith, 1 Hare, 43 and Am. Notes; 2 Barb. C.R., 555; 3 Id., 316; 3 Paige, 421; Dart on V. and P., 408; 2Ves. Jr., 447.) We must then presume that the judgment creditor and the defendant both knew of the rights and interests of the plaintiff, or treat them as possessing that knowledge; and that the plaintiff had no knowledge of the judgment or of the sale under it until after he had made the payment now in question, was found as a fact by the court. The supreme court decided that the payment to the vendor after the sale by virtue of the judgment, could not be allowed to the plaintiff. I am unable to draw any distinction between the payments after the judgment and before sale, and the payment in question which was made after the sale. It is found that the plaintiff had no actual notice, and the sale by the sheriff was no more notice to him than the judgment. The object of notice on a sale of real estate is not to give information to the judgment debtor or those holding under him, but to make a fair sale of the property. The statute does not require notice to be given to the judgment debtor or an occupant or incumbrancer, and a sale to a bona fide purchaser without any notice is valid. (2 R.S., 369, § 40; 10 Barb., 467.) This case then, is narrowed down to the single question, whether a purchaser of land who, by virtue of the contract of purchase, pays a part of the consideration and enters into possession and makes improvements, is bound to take notice of a subsequent judgment against the vendor or a sale under it, of which he has no actual notice? The defendant contends that the legal title being in the vendor by force of the statute, the judgment became a charge upon the land from the time that it was docketed. (2R.S., 359, § 3.) And that in law and in equity, it was a lien to the extent of the purchase money unpaid at the time it was docketed. As a general rule, it is a lien upon the unpaid purchase money. (Darton V. and P., 219, 238; Bogert v. Perry, 17 John. R., 351;Gouverneur v. Lynch, 2 Paige, 300.) And if the purchaser in possession is bound to take notice of an after recovered judgment, this case was correctly decided by the supreme court. If, however, that be the true rule in such cases, it is because of the positive terms of the statute, for I think it will be seen that a different doctrine prevails in analagous cases.

I suppose it to be well settled here and in England, that the lien of a judgment is subject to all equities that existed at the time it was recovered. (In the matter of Howe, 1 Paige, 125;Ells v. Tousley, id., 280; White v. Carpenter, 2 id., 217; Keirsted v. Avery, 4 id., 9; Buchan v. Sumner, 2Barb. C.R., 165; Wilkes v. Harper, id., 338; Parks v.Jackson, 11 Wend., 442; Burgh v. Francis, 1 Eq. Ca.Ab., 320; Finch v. E. Winchelsea, 1 P. Wms., 282; and seeJones v. Smith, 1 Hare, 43, S.C., 1 Phill., 244.) A judgment being a general lien is bound by a particular equity. This principle was admitted by the court below, and applied to a certain extent. But had the plaintiff no equity beyond what he had paid at the time the judgment was docketed? This question, it seems to me, was answered by the case of Parks v. Jackson (11Wend., 442). In that case payments were made not only after the judgment, but pendente lite, and yet the vendee prevailed. It is true these payments were made to (and the deeds given by) the fraudulent grantee of the debtors who had the apparent title; but the case principally turned upon the point that no actual notice had been given to the vendee in possession. It is said that the vendor is trustee of the land and the purchaser of the price. If the contract made the vendor a mere trustee in the ordinary sense of that term, clearly, and upon familiar principles, a court of equity would protect the trust fund against the judgment creditors of the trustee. But in truth, he is trustee only submodo; and if the purchaser is not entitled to notice, the judgment creditor has a right to work out his legal lien through his judgment to the extent the interests of the vendee are not protected in equity, notwithstanding the contract of sale; for the supposed use is not executed and the title remains in the vendor, and did so before our Revised Statutes. (See Bogert v. Perry, 17 John. R., 351; Wall v. Bright, 1 Jacob Walker's R., 474.) The unpaid vendor, as was said in Wall v. Bright, is not a mere trustee, though he is in progress towards it. Registry of a deed or mortgage is constructive notice only to those subsequently acquiring some interest under the grantor or mortgagor. (Stuyvesant v. Hall, 2 Barb. C.R., 151; Stuyvesant v.Hone, 1 Sandf. C.R., 419.) And this principle obtains more strongly against a judgment which is only a general lien in this state, and had been applied to protect a prior equitable claim as an unregistered or equitable mortgage, or even a contract for a mortgage. In Ells v. Tousley (1 Paige, 280), the chancellor said "the lien of a judgment does not, in equity, attach upon the mere legal title to the land in the defendant, when the equitable title is in a third person." In the well considered case ofLangton v. Horton, the equitable claim to the fruits of a whaling voyage took precedence of the legal title. (1 Hare, 549.) And the vice-chancellor laid great stress upon the fact, that the equitable claimant first obtained possession of the property. Lodge v. Lyseley is also a strong case for the plaintiff. (4 Sim. 70.) G.C.M., tenant for life, and F.C.M., tenant in remainder in tail, joined in conveying the estate to trustees to sell and pay a sum to G.C.M., and the residue to F.C.M. The trustees contracted to sell the estate to the defendant, after which judgments were recovered against G.C.M.; and it was held that the existence of the judgments was no objection to the title. It was admitted by the counsel for the vendors and trustees, Sir E. Sugden, Mr. Preston and Mr. Wilbraham, that where an estate had been conveyed to trustees, it might be affected by a judgment confessed by the grantor, so long as it remained vested in the trustees But they contended that where a binding contract for the sale of the estate had been concluded, no judgment could be executed upon it. And the vice-chancellor, in commenting upon the opinion of Sergeant Hill, in a case submitted to him (see notea, 4 Madd. R., 506), said he should not have given the opinion that Sergeant Hill did, because it appeared to him that from the time H.A.S., entered into binding contracts to sell his estates to purchasers, he not having judgments against him at the time, the purchaser had a right to file a bill against him and have the legal estate conveyed; and if he had subsequently confessed a judgment, that judgment never could have impeded the progress of the legal estate to them. Now, the case put to Sergeant Hill was, that H.A.S. was seized in fee simple, subject to his mother's jointure and younger children's portions; and he contracted to sell in parcels to different purchasers and then conveyed to trustees to sell and convey the estate to the purchasers and invest part of the money in trust, to indemnify the latter against the jointure and the portions, and pay the residue to H.A.S. After the trust deed was given, H.A.S. confessed a judgment. Part of the purchase money had been paid and invested. He held that the trustees would be safe in paying the money as to judgments of which they had had no notice, but would not be as to those of which they had. (And see Forth v. D. Norfolk, 4Madd. R., 502.) Some remarks which were dropped by the lord chancellor in Whitworth v. Gangain, on a motion (1 Cr. andPh., 330), might seem more favorable to the judgment creditor; but on the hearing of that cause before Sir James Wigram (3Hare, 416), he decided that an equitable mortgagee of lands was entitled, in equity, to enforce his charge in priority to a creditor of the mortgagor, who, without notice of the equitable mortgage, had subsequently thereto, recovered judgment against the mortgagor and obtained actual possession of the land. He held that the equitable interest of a purchaser for value before conveyance, would be preferred in equity to the claim of a judgment creditor of the vendor. (And in Burgh v. Francis, 1 Eq. Ca. Ab., 320.)

The argument on the part of the defendant seems to be that, as between the judgment creditor and a bona fide purchaser without notice, as the title had not passed and the purchase money had not all been paid when the judgment was recovered, equity will leave the law to take its course. and that the statute gives and enforces the lien. It is true, that in some of the English cases we have noticed, the mere legal title may be said to have passed out of the vendor into trustees before the judgment; and it seems there it cannot be claimed, since Wall v. Bright, without disregarding that case, that the vendor, who had not been wholly paid, is a mere trustee. And in some of the cases we have cited, his interest would have been liable to the judgment if notice had been given in season; and although the effect of judgments at that time in England was different from that of judgments here, still the adjudged cases show how rigidly equity has required the subsequent creditor to give notice. And the cause now under consideration illustrates the justice and propriety of the rule. The plaintiff made the contract for the land about three years before the judgment, and the principal of the latter was not payable until 1847; and no sale was attempted until about six years after it was recovered. And then, without giving notice to the vendee in possession who had been suffered to continue his payments to the vendor and make improvements, and after the land had become double or treble the value of the contract price, the land was sold on the execution for one dollar per acre, of which sale the vendee had no actual notice until it was too late for the judgment debtor or his grantee to redeem. Even if he had known of the sale he could not have redeemed at law. (Lathrop v. Ferguson, 22 Wend., 116.) This seems to be an argument that the purchaser at the sheriff's sale should be considered as holding the legal estate in trust for him.

If the statute compells the plaintiff to take notice of judgments subsequently recovered, on the ground that docketing them is constructive notice, the hardship of the case is no answer to that requirement. But I find nothing in this statute changing the rule before existing as to the respective rights of the owner of the equitable title and the judgment creditor. It seems to me that the condition of a vendee in possession, fulfilling his contract of purchase, is certainly as favorable as that of an equitable mortgagee. And that upon principle and authority, we should hold that he is entitled to actual notice of subsequent judgments and other incumbrances. If so, it follows that the plaintiff should have been allowed the payment made by him to Schroeppel in October, 1845, and that the judgment of the supreme court should be modified and judgment given as directed in the foregoing opinion of DENIO, J.

Judgment accordingly.