author: Merwin, J. Hardin, P. J.

text:
    John E. Hiles, Pl'ff, v. William R. Fisher et al., Def'ts.

      (Supreme Court, General Term, Fourth Department,

      Filed February 23, 1893.)

    Tenancy by entirety—Right of husband to mortgage.
    Certain land was conveyed to the defendants, husband and wife, the consideration for which was paid by the wife. Thereafter they borrowed money of plaintiff, and gave their joint note therefor, and a year later the husband gave a mortgage on the land to secure this debt and others, the wife not joining therein. The mortgage was foreclosed, and the premises bid in by plaintiff. Held, that the mortgage was operative at least so far as to convey an estate during the joint lives of the husband and wife, and the fee in case the husband survived the wife, and that plaintiff was entitled to possession.
    Submission of controversy under § 1279 of the Code. The submission was filed in Tompkins county October 10, 1892, and the following are substantially the facts as therein stated:
    The defendants are and for the past thirty years and upwards have been husband and wife. On or about the 22d March, 1866, ' the defendants, by a deed to them as husband and wife, took title to a -farm of about forty-four acres in the town of Diyden, Tompkins county, N. Y., which they have ever since occupied and possessed as their home under said deed, with no other title. This 'deed runs to “ William R. Fisher, of the town, county and state aforesaid, and Maria J. Fisher, his wife,” and the consideration therein stated is $3,000. It was duly recorded on 9 th May, 1866. The purchase price was wholly paid by the wife, who, however, consented to the form of the deed as taken by them.
    On or about March 31,1885, the defendant, William R. Fisher, borrowed of the plaintiff $1,400, for which he and his wife gave their promissory note. On or about February 20, 1886, William R., to secure the payment of this debt to plaintiff, and other small amounts of borrowed money, amounting then altogether to $1,550, executed and delivered to one Goodrich for plaintiff a mortgage in the usual form granting and conveying the said forty-four acres, and conditioned for the payment of $1,550, one-half in one year, and balance in two years, with interest at five per cent, annually. This mortgage was dated and acknowledged February 20, 1886, and was immediately assigned to plaintiff. It was recorded August 5,1890. Fisher, of the money which he borrowed of plaintiff, used $1,000 in part payment for thirty-five acres of land in the same town, the title to which he had taken in his own name.
    At the time the mortgage was given, the plaintiff knew that the wife’s money paid for the forty-four acres, and that she refused to sign the mortgage, but he supposed that William R. Fisher held the title and the wife had only her dower right therein, and he, therefore, said that the mortgage was good enough without her signature, and so took it, and he told the defendants that he did not calculate that William R. should ever pay the mortgage, that he calculated to give it to him by his will, and all he wanted was the interest while he lived. The description in the mortgage was copied from the deed which was present when the mortgage was executed and delivered.
    On 3d September, 1890, William R. Fisher conveyed to Maria J. Fisher both of said parcels of land by quit claim deed, recorded that day. Default was made in the payment of interest on the mortgage, and it was duly foreclosed by statutory foreclosure, and on the sale thereunder, which occurred February 6, 1892, the premises were bid in by the plaintiff for the sum of $500, the amount then unpaid on the mortgage being $1,863.37, besides the expense of foreclosure, thereby vesting in plaintiff the entire fee so far as the mortgagor could lawfully have conveyed at the date of the mortgage under the same circumstances. Notice of the foreclosure was duly served on both defendants. Mrs. Fisher thereafter, and before the sale, commenced an action in the supreme court against the plaintiff and said Goodrich and her husband, asking that the mortgage be declared void as to her, and be set aside as a cloud_upon her title, and that the foreclosure of the mortgage be restrained. A temporary injunction was obtained, but vacated by the court upon the papers upon which it was granted. On the foreclosure sale, Mrs. Fisher gave notice of her claims. After the sale the plaintiff duly demanded possession of each of the defendants, and they severally refused to deliver the same and now withhold it.
    Npon these facts the plaintiff claims the right to recover the possession of the premises, with the right to hold the same during the joint lives of the husband and wife, and full title to the same in case the husband survives the wife. The defendant, Mrs. Fisher, claims that the mortgage, not being signed by both, is void, and that now, Mr. Fisher’s interest having been conveyed to her, she is the absolute owner; that, by reason of her having paid for the property, she is the equitable owner of the whole; that, in any event, she is entitled to the possession during the joint lives of herself and husband, and to the fee in case she survives.

      George M Goodrich and M. M. Waters, for nl’if;

      Smith & Dickinson, for def’ts.
   Merwin, J.

This is, in substance, an action by the plaintiff to recover the possession of certain real estate and to have the nature and extent of his intereststherein declared. A defense is interposed both in a legal and equitable aspect. The plaintiff’s, rights depend upon the extent of the power of the mortgagor to. convey or transfer his interest in the property.

By the case of Bertles v. Nunan, 92 N. Y., 152, it is settled .that, under a deed like the one here to the defendants, the husband and wife take as tenants by the entirety and that upon the death of either the survivor takes the whole estate. This is by virtue of the rule at common law, and it was conceded in the Beriles case that under that law the husband had the control and use of the property during the joint lives. That was one of the characteristics of the estate, and it necessarily continues to be such, unless it has been eliminated by the married woman’s acts, so called. The defendants place reliance upon chap. 200, of the Laws of 1848, and chap. 90, of the Laws of 1860. The trouble with the defendants’ argument on this line is that the court of appeals in the Beriles case held that those acts do not affect the existence of the estate by the entirety, and if they do not affect the estate itself, they do not affect the incidents or characteristics, unless there i§ some special provision that may apply to the latter and not to the former. There is no such special provision. In Goelet v. Gori, 31 Barb., 314, it was held that the act of 1848, as amended in 1849, did not affect the right of the husband under such an estate to the entire use, and a similar doctrine was held in Farmers' & Mechanics' Nat. Bank v. Gregory, 49 Barb., 155, having reference to the act of 1860 as well as to the acts of 1848-9. In that, case it is said by-Judge Johnson : “Neither can sell without the consent of the other, and the survivor takes the whole. But during the life of both, the husband is entitled to possession of the entire estate, and to the rents and profits, and may even alien the wife’s interest during their joint lives. And the estate will, it seems, be in such alienee, subject to the right of the wife or her heirs to enter and enjoy the same, at the death of the husband, freed and discharged from all his debts and engagements." In Barber v. Harris, 15 Wend.,615, it is said of such an estate by Nelson, Oh. J., that ‘.‘during the life of the husband he undoubtedly has the absolute control of the estate of the wife and can convey or mortgage it for that period.” This right to mortgage is recognized in Snyder v. Sponable, 1 Hill, 569. In Beach v. Hollister, 3 Hun, 519, it was held that the husband had the absolute control of the estate of his wife during his life, and might mortgage, lease and convey his interest, and that it was subject to sale on execution. In Coleman v. Bresnahan, 54 Hun, 621; 28 St. Rep., 208, a like rule was held. In Demby v. City of Kingston, 60 Hun, 294; 38 St. Rep., 42, it seems to have been necessarily held that the husband was entitled to the use during the life of both parties. This case was affirmed in the court of appeals without opinion. 133 N. Y., 538; 44 St. Rep., 929.

The case of O'Connor v. McMahon, 54 Hun, 66; 26 St. Rep., 596, is pressed upon our attention by the defendants’ counsel. There it was held that where a conveyance is made to a husband and wife as grantees and they subsequently separate, the husband voluntarily leaving the wife in the possession and control of the premises, the wife is entitled to the possession as against a subsequent grantee of the husband alone. Force was given to the •circumstance that the husband had voluntarily yielded to the wife the possession and control, and it was said that the husband could then do no act which would deprive her of the enjoyment of such possession. In the same court, however, in a subsequent case, Grosser v. City of Rochester, 60 Hun, 380; 38 St. Rep., 572, it was said with apparent unanimity that, under the doctrine of Bertles v. Nunan, the husband during the joint lives of the husband and wife “ has the right to the exclusive benefit, use, possession and control of the land and may take all the profits thereof; and may mortgage or convey an estate to continue during the joint lives; but he may not make any disposition of the land that would prejudice the right of the wife in case she should survive him.”

In Gifford v. Rising, 55 Hun, 61; 28 St. Rep., 310, where a creditor’s bill was brought to reach the interest of the judgment debtor in an annuity created by the will of his father, charged upon real estate and payable semi-annually to the judgment debtor and his wife for their support, and that of their family during their lives, it was held that during the joint lives of the annuitants the husband was entitled to the entire annuity and the whole was liable for his debts. In Ward v. Ward, L. R., 14 Ch. Div., 506, it was held that in such a case the wife had no equity to a settlement. See 2 Kent Com., 141, marginal paging.

In the light of the foregoing authorities it must, I think, be held that the mortgage in question was operative at least so far as to convey an estate during the joint lives of the husband and wife. The farther question is what operation it had upon the fee. In Beach v. Hollister, above referred to, it is said that a purchaser upon execution sale against the husband becomes, in case the husband survives the wife, the absolute owner of the whole estate. This proposition is supported by the case of Ames v. Norman, 4 Sneed, 683; 70 Am. Dec., 269, and would apply with equal force to the case of a purchaser upon foreclosure of a mortgage that in form conveyed all the interest of the mortgagor. So in 1 Washburn Real Property, 5th ed., 707, chap. 13, § 6 sub. 3, it is laid down that, “if the husband convey the entire estate during ■coverture and dies, his conveyance will not have affected her, the wife’s, right of survivorship to the entire estate. But if in such a case the husband survive, his conveyance becomes as effective to pass the whole estate as it would have been had the husband been sole seized when he conveyed.” A similar view is taken in Freeman on Co-Tenancy, §§ 73, 74. In Bram v. Bram, 34 Hun, 487, the idea seems to be recognized that a conveyance from the wife alone would, in case she survived her husband, operate to' convey the title.

In some cases it is said that neither can alien any part of the estate without the consent of the other. Of such an expression the meaning is, according to Judge Co wen, in Jackson v. McConnell, 19 Wend., 180, that neither can alien the entire estate. Our attention is called to an expression in the opinion in Zorntlein v. Bram, 100 N. Y., 12, that the deed of the wife alone conveyed no title. This is to be taken in connection with the issue in that case, which was simply whether the grantee from the wife alone of an undivided half could maintain partition. The deed to the husband and wife was in 1878, and was, therefore, not affected by chapter 472 of Laws of 1880, though the deed to plaintiff from the wife was in 1881. The court held that the case was controlled by the Bertles case, and that plaintiff could not maintain partition. For that purpose, at that time, no title was conveyed. There was no occasion to decide whether the deed of Mrs. Bram would, in case she survived her husband, operate to pass the estate, and it is not to be assumed that there was any design to pass upon the question whether in any event the separate deed of the wife or of the husband would become or be operative upon the title. Under the Code, § 1532, tenants by the entirety are not given the right to have partition.

In the old cases, the limit of the power of alienation by the husband is that he cannot alien so as to cut off the right of survivor-ship of the wife. In Back v. Andrew, 2 Vernon, 120, decided in 1690, it is said 11 the husband cannot alien nor dispose of it so as to bind the wife." The question was whether a mortgage given by the husband barred the surviving wife after his death. In Doe v. Parratt, 5 Durnford & East, 652, decided in 1794, the question was whether the deed of the husband alone barred the wife, she surviving her husband, and Kenyon, Oh. J., said, “it has been settled for ages that when the devise is to the husband and wife they take by entireties and'not by moieties, and the husband alone cannot by his own conveyance, without joining his wife, divest the estate of the wife,” So in 1 Bright on Husband and Wife, 25, it is laid down that “ one peculiarity of this tenancy is that the husband cannot alone convey the property so as to affect the interest of the wife surviving, who will be entitled to the whole.” See, also, 2 Kent Com. 133; 1 Wash. Real Prop., 707, subd. 3a.

By our statute, 4 R. S., 8th. ed., 2434, § 35, expectant estates are alienable in the same manner as estates in possession, and by the term “ expectant estates,” as stated in Lawrence v. Bayard, 7 Paige, 76, the legislature intended to include every present right or interest, either vested or contingent, which may by possibility vest in possession at a future day. The husband in this ease had in substance a contingent remainder, and I see no good reason why he had not power to execute a deed which would operate to convey all hisdnterest and so operate to carry the fee in case he survived the wife. This conclusion is, I think, authorized by the weight of authority, although in some states a different conclusion is reached, based to some extent on statutory provisions. Chandler v. Cheney, 37 Ind., 391; Town of Corinth v. Emery, 63 Vt., 505.

But it is urged by the defendants that the fact that the wife paid the entire purchase price places her in a better position. As to this it is to be observed that she consented to the form of the deed as taken. It must, therefore, be assumed that she was content to have such rights as the law awarded to her in that kind of ownership. It was so held in Wade v. Krumm, 54 How., 95. In Persons v. Seargent, 132 N. Y., 590, 43 St. Rep., 966, it had been held at special term, in case of deed to husband and wife, that the fact that each paid one half the purchase price and that from the time of the purchase to the death of the husband they divided the proceeds of the property equally between themselves, did not prevent the wife from taking the whole as survivor. The decision at special term was affirmed at general term and in the court of appeals.

The mortgage was for $1,550. Of this $1,400 was to secure a note given the year previous and signed by the wife as well as the husband. One thousand dollars of the fourteen hundred was applied by the husband in part payment for thirty-five acres of land, the title of which was taken in his own name. Afterwards and in September, 1890, the husband conveyed to his wife both parcels of land. The consideration of this transfer, except perhaps by inference, does not appear, nor does the value of the thirty-five acres appear. Whether either party had any other property does not appear.

I think the wife has not made out a case for equitable protection against the mortgage.

It follows that the plaintiff is entitled to judgment awarding him possession of the property and declaring that his estate in the property is the right to the use during the joint lives of the defendants, and that he is entitled to the fee in case the husband survives the wife, and that the wife has no equity superior to plaintiff's rights under the mortgage.

Martin, J., concurs.

Hardin, P. J.

I am disposed to agree to the doctrine of the foregoing opinion; though the opinion in Albrecht’s Estate, 32 N. E. Rep., 632; 49 St. Rep., 65, gives rise to some hesitation.

That opinion says: “ What would be the legal rights of the parties, where, upon a purchase of real property, the husband and wife had each contributed from their separate estates equally or in any^ other ascertained proportion to the payment of the consideration does not, as yet, seem to have been the subject of judicial decision.”

Judgment ordered for the plaintiff as stated in the opinion, with costs.


source: Caselaw Access Project

author: Finch, J.

license: Public Domain

text:
    Mary T. Collier, Resp't, v. Emeline Miller et al., Ex'rs, Appl'ts, and Mary C. Stupplebeen et al., Resp'ts.

      (Court of Appeals,

      Filed February 28, 1893.)

    1. Mobtgage—Priority—Consideration.
    On the sale of land the grantee gave back two purchase money mortgages, one to each of his grantors, who were brothers, and who, previous to their delivery, agreed that one should have priority over the other and be first recorded. Meld,, that as the agreement was made at the time of the sale, and an element or condition of its final consummation, there was a consideration to support it.

      2. Same—Estoppel.
    While mere silence may found an estoppel, it must be when there is a duty and opportunity to speak, and the omission to speak must be, relatively to the party harmed, an actual or constructive fraud.
    Appeal from judgment of the supreme court, general term, third department, affirming judgment in favor of plaintiff in an action to foreclose a mortgage.

      Jacob F. Miller, for app’lts ;

      Levi F. Longley and C. P. Collier, for resp’ts.

       Affirming 43 St. Rep., 66.

   Finch, J.

The two mortgages given to the brothers, Harvey .and Richard Miller, respectively, by their grantee, and the priority of which, one over the other, is the subject of dispute, would have been concurrent liens upon the land in natural order and development of the transaction, and having reference only to the equality of a common ownership of the consideration. But neither mortgage, on its face, gave any notice of the concurrent existence and lien of the other, and its purchaser would not and could not be deceived merely by its terms. If he bought without examination of the record, and omitting all inquiry, his situation would differ in no respect from that of one whofinds his security subject to a prior incumbrance, the existence of which he might have ascertained by the exercise of proper diligence.

When Wise took an assignment of Richard’s mortgage, therefore, the mere transfer, in and of itself, gave him no information whether there was or was not another existing incumbrance of •equal or prior lien, and his duty was that of inquiry and examination of the record as in any other case of the purchase of a mortgage security, which may or may not be a subordinate lien upon the land. We are not at liberty to assume that Wise made any such inquiry. The counsel who acted for him testified that he did, and was told in the presence of the two brothers, and with their assent, that they had conveyed the land in which they were equal owners, and taken back a separate purchase money mortgage to each, which were equal and concurrent liens. There was a denial on the part of the brothers, and a sharp controversy over the question of fact, which was submitted to the jury osa special issue. They found in favor of the defendant, and their verdict, confirmed by the finding of the court, compels us to assume, somewhat against our impressions of the truth, that no such inquiry and no such representations were made, and leaves us confined to the bare inference that Wise had knowledge of the existence of the two mortgages from some extrinsic source. The mortgage which he took recited that the conveyance of the land to the mortgagor was by the two brothers and their mother, and while not necessarily giving information of more than one mortgage, is supplemented by the finding that Wise took his assignment in good faith, believing the two mortgages to be equal and concurrent liens. How he came to know that there were two such mortgages the evidence does not. specifically disclose, but does indicate the fact found, and we are at liberty to assume that he did know it, and that the arrangement between the brothers by which Harvey’s mortgage was agreed to be and became the first and prior.lien was concealed from and unexpected by him when he accepted the transfer.

That arrangement was by paroi, proved to the satisfaction of the court and expressly found. It is now urged that such agreement was void for want of a consideration to support it. We cannot concur in that view of the transaction for two reasons. The agreement was at the time of the sale, and an element or condition of its final consummation. It may fairly be assumed to have been one of the conditions upon which Harvey joined with Richard in making the sale and delivering the deed, and without which he might have refused to complete the sale by declining to accept a concurrent mortgage. Beyond that, the agreement was executed in fact by a prior delivery to Harvey of his mortgage, followed by a prior record, with the express consent of Richard, and for. the avowed purpose of fully executing the agreement.

Harvey's mortgage was recorded on April 1, and thereafter assigned to the defendant, Anderson. Richard’s was recorded the next day and assigned to Wise, from whom, through intermediate -owners, it has come to the plaintiff, who seeks to foreclose it. Both sides substantially concede that the record has not so changed the rights of the respective assignees as to prevent each from standing in the place of his original assignor. Greene v. Warnick, 64 N. Y., 220; Decker v. Boice, 83 id., 215; Westbrook v. Gleason, 79 id., 30. The question thus comes to the single point whether Harvey and his assignee are equitably estopped from asserting the agreed priority of lien as against Wise and his assignees, and that is the principal ground of the appellant’s argument.

In considering that question we must upon the findings assume as facts that Richard's mortgage to the eye of Wise, with the knowledge that he had, disclosed no defect and permitted a belief that it was concurrent and not subordinate; that the paroi agreement which postponed its lien would or might be unknown to a purchaser; that it so became an instrument or means available for a possible deception ; that Harvey, conscious of these facts, knew in addition that Richard was intending to turn the mortgage over to Wise in payment for land about to be purchased. So much Harvey knew, and that is all that he knew, and upon that knowledge it is insisted that Harvey, by his silence, is estopped from asserting any priority of lien as against Wise, who was thereby deceived.

Undoubtedly mere silence may sometimes found an estoppel, but it must be when there is a duty and opportunity to speak, when silence either is or operates as a fraud to the consciousness of the party who does not speak, and when he knows or ought to know that some one is relying upon his silence and will be injured by that silence. Viele v. Judson, 82 N. Y., 40. In other words, the omission to speak must be?, relatively to the party harmed, an actual or constructive fraud. Herman on Estoppel, § 954. The facts here approach, but do not reach, that standard. I do not think that they imposed upon Harvey the duty of seeking out Wise and disclosing to him the arrangement made. There was nothing to suggest to strict honesty of purpose the need of any such action. While he knew that Richard was intending to assign his mortgage to Wise, he did not know and was not bound to suspect that Richard would assign it as a concurrent mortgage, and conceal the existing truth and practice a deceit upon his assignee. Harvey had given his mortgage immediate priority of record. That fact shows that he meant and intended no concealment or artifice. He supposed it to be notice of the truth to all the world, and with some reason, at least, since the priority of record raised a presumption of priority of delivery. Freeman v. Schroeder, 43 Barb., 618. Nor was there anything in the priority which he obtained which so affected the value of Richard’s mortgage as to arouse in Harvey’s mind either a belief or suspicion that Wise would not accept Richard’s security if the truth was told. Something over $6,000 had been paid by the mortgagor in cash, over and above the two mortgages. Apparently the land was a full and ample security for both, and no peril attached to the holder of a second mortgage. Under such circumstances, it is impossible to say that Harvey, by silence, committed an actual fraud. There is no such finding and no request for one, except that contained in the request to find facts involving it, which were negatived by the verdict of the jury and the conclusion of the court. Nor can we say that Harvey’s silence was a constructive fraud. He had no reason to know and was not bound to anticipate that his brother would conceal the agreed priority. He had a right to assume that the truth would be told and the actual facts be made known. He did not know that Wise "would take the mortgage with any reliance upon his silence, and fins very certain that Wise did not, but relied upon and was deceived by the silence of Richard alone.

If Wise had given Harvey an opportunity to speak under conditions which made it his duty to do so, a very different situation would be disclosed, but here we are asked to hold that knowledge by Harvey that Richard’s mortgage was about to be assigned imposed upon him the duty of seeking out the new assignee and warning him, and that his non-performance of that duty would be justly relied upon by such assignee. That, I think, is going quite too far. The party asserting such an es. toppel should, at least, put his adversary consciously in the wrong, and the facts found in this case are entirely consistent with honesty of action and of purpose on the part of Harvey.

There is a further claim made in behalf of the appellant that "Wise, before the assignment to him, became the equitable assignee of Richard’s mortgage as it was to be given by the mortgagor, and so no change in its terms or lien was possible without the assent of Wise. There are no facts on which that contention can stand. Richard made a contract with Wise in January, 1870, for the purchase of the latter’s farm. The conditions of that contract are not disclosed. It is not shown that at that date Richard and Harvey had arranged to sell their farm or take any mortgages, and there is an utter absence of proof that Wise had agreed to accept such a mortgage, or that Richard had promised to furnish it. All that we know is that on the succeeding first of April Richard “ expected ” to use his mortgage in the payment of Wise. Out of that' bare exception, and in the absence of further facts, it is impossible to construct a theory of equitable assignment.

The further objections to the judgment as against the personal representatives and a legatee of the estate, of the guarantor of plaintiff’s mortgage, are sufficiently answered by the opinion of the general term.

The judgment should be affirmed, with costs.

All concur.


author: Earl, J.

text:
    William M. House, App'lt, v. John L. Lockwood et al., Resp'ts.

      (Court of Appeals,

      Filed February 28, 1893.)

    1. Res adjudicata.
    In a former action brought by defendant’s wife against H., the present plaintiff, she claimed that a deed was executed by L. and herself to H., and that at the same time a deed was drawn by H. to her, under an arrangement by which the real estate therein described was to be reconveyed to her, and demanded the delivery of the deed. H. claimed that the last named deed was executed two months after the first and was not to be delivered until defendant L. had paid an indebtedness to H; and that the deed to Mrs. L. was delivered by her into H.’s possession for safe keeping. L. had been adjudged a bankrupt on H.’s petition. The referee found ini accordance with the claims of H., and dismissed the complaint. In this action brought by plaintiff for strict foreclosure of the first deed as a mortgage, the facts were found as claimed by Mrs. L., and plaintiff’s complaint was dismissed. Held, no error; that the former judgment was not res adjudicóla,as the_ findings of the referee as to the character of the first deed in the prior action were wholly immaterial and unnecessary, and the question as to that deed was open to litigation upon the trial of this action.
    2. Same—Evidence.
    As plaintiff failed to establish that the deed held by him was a mortgage, the bankruptcy proceedings against L. were wholly unimportant, and any error committed in reference to admitting evidence concerning them became wholly immaterial.
    3. Same.
    Upon the trial of this action defendants were permitted to give evidence, under objection, that they had previously conveyed the house to H., and that he had reconveyed to Mrs. L. Held, no error.

      Appeal from judgment of the supreme court, general term, first department, affirming judgment at special term dismissing plaintiff’s complaint upon the merits, and granting affirmative relief to defendants.

      Fdiuard G. James and N. Quachenbos, for app’lt;

      Austen G. Fox, for resp’ts.

       Affirming 43 St. Rep., 750.

   Earl, J.

J.—On the 7th day of October, 1876, the defendant John L. Lockwood had the title to certain real estate situate in the state of Illinois, but his wife, the other defendant, was the real owner thereof. On that day lie and his wife executed a deed of the property to the plaintiff, and he claims that the deed, although absolute in form, was intended as a mortgage to secure an indebtedness due from Lockwood. Subsequently, on the 7th day of December, the plaintiff and his wife executed a deed of the same real estate to Mrs. Lockwood, which he claims was never delivered. His claim is that the deed was executed at the request of Mr. Lockwood and was not to be delivered until the indebtedness of Lockwood had been discharged. The defendants claim that both deeds were drawn at the same time under an arrangement by which the real estate was to be conveyed to the plaintiff, and by him to Mrs. Lockwood, for the purpose of vesting the legal title to it in her ; that the deed to him was executed in pursuance of that arrangement, and not as a security for any indebtedness due from Mr. Lockwood, and that the deed from the plaintiff and his wife to Mi's. Lockwood was also executed in pursuance of that arrangement and was actually delivered to her, and then by her placed in his possession as her bailee for safe keeping, to be returned to her upon her subsequent demand. Thereafter, on the 29th day of December, 1876, the plaintiff presented a petition to the district court of the United States praying that Lockwood might be adjudged a bankrupt; and such proceedings were had upon that petition that subsequently, on the ÍOth day of January, 1877, Lockwood was adjudged a bankrupt, and on the 23d day of September, 1878, he received a discharge in bankruptcy from all his debts. Subsequently Mrs. Lockwood demanded from the plaintiff the deed left in his possession and he refused to deliver it to her.

Thereafter, in December, 1879, she commenced an action against him to recover the possession of that deed. She annexed a copy of it to her complaint and alleged that she was the owner of the real estate therein described ; that she left the deed with him for safe keeping; that he promised to hold it for her and return it to her wien she requested him so to do; that she had demanded it of him; but he without any cause or right refused to deliver it to her; that the deed had never been recorded and that the record title appeared to be in him ; that there was danger that unless he was restrained by an order of the court he would not record the deed, but would sell or encumber the real estate or dispose of the deed; that she was entitled to the immediate possession of the deed, and that such possession was necessary to secure to her her right and interests in the property; and she prayed judgment for the immediate recovery and possession of the deed and. for such damages as she had sustained by its wrongful detention, and for an injunction restraining the defendant from in any way disposing of the deed or conveying or interfering with' the real estate described therein. The defendant denied the allegations of the complaint, except that Mrs. Lockwood had demanded the deed from him, and alleged that the title to the real estate was in him, and that he was lawfully entitled to have and hold the same as security for the payment of upwards of §3,000; that the real estate had been conveyed to him by Mr. and Mrs. Lockwood by a deed which, although absolute in form, was intended and agreed to be given as security for the payment of the money, and he demanded judgment in his favor that Mrs. Lockwood by a day to be fixed in the judgment pay the amount due him for which the real estate was security and on default thereof that she be debarred and foreclosed of any right, title or interest in the real estate, and that the defendant have such other relief in the action as might be just. The action being at issue was referred to a referee, and he found that the deed of December 7, 1876, had never been delivered to Mrs. Lockwood as alleged in the complaint ; that it was not left by her with House for safe keeping, or for any purpose; that he did not agree to receive the same for and return it to her, and that he did not receive the deed from her at all; that the deed was executed by Mr. and Mrs. House at the time mentioned in the complaint and was retained by him in his possession, and was never delivered to Mrs. Lockwood or to any one else on her behalf; that the property mentioned in the deed had previously to December, 1876, been conveyed by Mr. and Mrs. Lockwood to House, to be held by him as security for certain moneys then owing him or the firm of which he was a member, and that the deed mentioned in the complaint was executed by House and wife for the purpose of delivery to Mrs. Lockwood when the money for which the prior deed was given to secure was paid, and that it was retained by House for such purpose, and was never delivered to her, and thqt the money for which the real estate was secured had never been paid. He found, as conclusion of law, that she was not entitled to recover against him judgment as demanded in the complaint, but that he was entitled to judgment dismissing her complaint. Subsequently, upon the report of the referee, judgment was entered against her in that action, dismissing her complaint. Thereafter, in June, 1883, this action was commenced, and the plaintiff, in his complaint, alleges the execution and delivery to him of the deed of October 7, 1876, and that the deed, although absolute in form, was intended as a mortgage. He also alleges that it was adjudged in the prior action above referred to by Mrs. Lockwood against him, that that deed was executed and delivered to him as security. The defendants deny the material allegations of the complaint and allege that the deed was executed simply for the purpose of transferring the title from Mr. Lockwood to his wife. They also allege, as a defense to the action, the discharge in bankruptcy of Mr. Lockwood from his debts. The action was brought to trial at a special term, and there the plaintiff gave evidence tending to show that he held the deed as security, and, among other evidence, he introduced the judgment record in the prior action of Mrs. Lockwood against him. The defendants proved the discharge in bankruptcy and gave evidence tending to show that the deed was executed by them to the plaintiff in pursuance of the arrangement alleged by them. After hearing the evidence the following questions were framed, under the direction of the court, for submission to a jury:

First. “Was the deed, conveying certain premises in the state of Illinois, dated October 7,1876, and executed by the defendants, John L. Lockwood and Juliet R. Lockwood, his wife, to the plaintiff, William M. House (being the deed described in the complaint), delivered to said House by said Lockwoods, or either of them, as security for the indebtedness, past, present or thereafter to arise, of said John L. Lockwood to said House, or to the firm of S. A. House & Sons ?”

Second. “ Was said deed delivered to said William M. House by the said Lockwoods, or either of them, in order that said House might and should reconvey the premises therein described to said defendant, JulietR. Lockwood.”

The parties subsequently submitted their evidence to the jury, and they answered the first question “ Ho,” and the second question, “Yes.” Thereafter the action was again brought to a hearing at a special term, and the trial judge found, in accordance with the findings of the jury, that the deed of October 7,1876, was not a mortgage; that the real estate was not conveyed to the plaintiff as security for money due from Mr. Lockwood, and that the deed was executed and delivered to the plaintiff for the purpose of transferring the legal title to the real estate through him from Mr. Lockwood to his wife; and he found as conclusions of law that the complaint should be dismissed on the merits and that the defendants were entitled to a decree adjudging that the plaintiff re-convey the real estate to Mrs. Lockwood; and that judgment was entered in pursuance of the findings. That judgment having been affirmed at the general term the plaintiff has appealed to this court. ,

The findings of fact are against the plaintiff, and unless they can be successful!}'" assailed his complaint was properly dismissed upon the merits. He contends that the prior adjudication in the action of Mrs. Lockwood against him is conclusive upon the defendants in this action, and conclusively establishes that he took the deed as security, and that although absolute in form it. is a mortgage. The important matter, therefore, in this case is to determine the force and effect to be given in this action to that prior adjudication. As the defendants claim that Mrs. Lockwood was and is the real owner of the property, they are both bound by whatever was really adjudicated in the prior action. The general doctrine of res adjuclicata is well understood. The rule is founded upon convenience and public policy. Issues which the parties have submitted to a court of competent jurisdiction and had determined are put at rest, and are not to be reopened and re-litigated; and their adjudication is conclusive in all subsequent controversies between them where the same matter comes again directly in question.

But the rule is not always easy of application, and there are qualifications to it which must be carefully noticed. The rule, with its qualifications, is very well stated in the brief of the learned counsel for the appellant in this action, as follows:

“ A judgment does not operate as an estoppel in a subsequent action between the parties as to immaterial or unessential facts, even though put in issue by the pleadings and directly decided. But it is final as to every fact litigated and decided therein, having such a relation to the issue that its determination was necessary to the determination of the issue. Whenever the same question arises between the parties, in whatever form of action, and whether involved directly or collaterally, they are forever precluded from averring and proving the fact to be otherwise.”

And the rule as thus laid down is illustrated and sanctioned in many authorities. Bigelow on Estoppel, 152, etc.; Reynolds v. Stockton, 140 U. S., 254; Jackson v. Wood, 3 Wend., 37 ; S. C., 8 id., 9; Embury v. Conner, 3 N. Y., 511; Sweet v. Tuttle, 14 id., 465; Campbell v. Consalus, 25 id., 613; People v. Johnson, 38 id., 63; Woodgate v. Fleet, 44 id., 1; Hymes v. Estey, 116 id., 501; 27 St. Rep., 555; Lorillard v. Clyde, 122 N. Y., 41; 33 St. Rep., 303; Stannard v. Hubbell, 123 N. Y., 520; 34 St. Rep., 413. In Campbell v. Consalus, there had been an action to procure the cancel-ling of a mortgage as having been paid, and the pleadings therein put in issue the fact but not the amount due, and it was determined therein that the mortgage was not paid, but that the sum of $2,754 was due thereon, and the complaint therein was dismissed. In a subsequent action to foreclose the mortgage, it was held that the adjudication was conclusive upon the parties only of the fact that something was due, but not the amount. • In People v. Johnson, it was held that a judgment was conclusive upon the parties thereto only in respect to the grounds covered by it and the facts necessary to uphold it, and that, although a decree in express terms professes to affirm a particular fact, yet if such 'fact were immaterial to the issue, and the controversy did not turn upon it, the decree will not conclude the parties in reference to such fact; that hence the record of the court in such case cannot be admitted as evidence in a subsequent suit between the parties to establish the fact thus incidentally, but not judicially established and made conclusive upon the parties. In Woodgate v. Fleet, it was held that the parties to a judgment are concluded or estopped thereby only as to the facts or law material to the issue and directly involved in the litigation.

In the prior action all that Mrs. Lockwood claimed was that she was vested with the title to the real estate by the deed of December 7, 1876; that that deed had been delivered to her, and that she had placed it in the possession of Mr. House, as her bailee, for safe keeping, and that he had refused to deliver it to her upon her demand; and the purpose of that action was to compel the delivery of that deed to her. She based no right or claim whatever upon the deed which the - plaintiff is-seeking to foreclose as a mortgage in this action. The nature, purpose and.effect of that deed was wholly immaterial in that action. It was wholly unnecessary for House to make any allegation or proof in reference thereto in that action. Hi's claim there was that the deed of December 7th had never been delivered to Mrs. Lockwood; that she had never been vested with title to the real estate by virtue thereof, and that the deed was not delivered to him as bailee to be kept for her; and the only matter necessary for him to establish in that action was. that the déed had never been delivered to her by him, as claimed by her; and the finding of fact in the report of the referee, as to. the nature and purpose of the prior deed of October 7th, was wholly immaterial and unnecessary. It played no part and served no purpose in the determination of that action, or in the judgment, entered upon the referee’s findings. It was wholly unnecessary for the plaintiff in that action to give any proof in reference to the allegations of the defendant as to the nature and purpose of the prior deed. She could have admitted those allegations to the fullest extent, and yet if .she could have maintained the .allegations in her complaint, that the deed of December 7th was delivered to her for the purpose of vesting title to the real estate in her, and then re-delivered to him for safe keeping, she could have maintained her action. The defendants can defeat this action without giving any evidence of facts which Mrs. Lockwood was required to prove for the maintenance of the prior action.

The litigation there turned upon the character, purpose and effect of the deed of December 7. Here it turned upon the purpose,, character and effect of the deed of October 7. It is quite true that in the prior action it may have been competent for House to give evidence as to the character and purpose of the deed of October 7,, as bearing upon the deed of December 7. But it has never been hold that a judgment is qn estoppel as to all the litigated facts and all the evidence which the one party or the other may choose to-introduce upon the trial of the action, however important such evidence may have been. The estoppel extends to the material facts-which are in issue between the parties to the action, and to such as necessarily bear upon, control and are essential to the adjudication made.

While the referee in the former action found that the deed of October 7th was intended as a mortgage, no relief based upon that finding was awarded, and there was no adjudication in reference-thereto, and no affirmative relief could have been given in reference thereto. In that action to recover possession of the deed of December 7th, the defendant could not, by way of counterclaim, have a foreclosure of a prior mortgage. Code, § 501.

Therefore, the findings of the referee in the prior action, as to the-character of the deed of October 7th, were wholly immaterial and unnecessary, and the question as to that deed was open to litigation upon "the trial of this action, and the conclusion reached upon conflicting evidence is conclusive upon us. The judgment, must, therefore, be affirmed, unless some material error was. committed by the trial judge in his rulings upon questions of evidence.

Upon the trial, the defendants put in evidence the bankruptcy proceedings. Those proceedings were conducted in the United States district court by a lawyer named Fay. The plaintiff claims that he employed Fay to institute and conduct those proceedings, and Mr. Lockwood claims that he was acting as his lawyer. Upon the trial of this action, the defendants were permitted to give-in evidence certain communications, oral and written, made by the-plaintiff to Mr. Fay while engaged in conducting the bankruptcy proceedings.

The plaintiff objected to the evidence of such communications, upon the ground that they were privileged, under § 835 of the-Code; and he now claims that the trial judge committed error in overruling his objection. There are two answers to this allegation of error. The bankruptcy proceedings could only be important in the action, in case the plaintiff succeeded in establishing that the deed held by him was a mortgage to secure the payment of money due him from Mr. Lockwood; and as he failed in that, and it was held that he did not hold the deed as security, the bankruptcy proceedings became wholly unimportant,and any error committed in reference to the evidence of them became wholly immaterial. But if it could be supposed that the evidence received in reference to these communications was in any way harmful to the plaintiff, a further answer is, that it does not conclusively appear that Fay was his attorney. We think the preponderance of the evidence is that he was. acting as the attorney for Lockwood. House did not institute those proceedings for his benefit, or for the benefit of his firm. He and they could gain nothing whatever by them. They were instituted by him as a friend of Lockwood, for Lockwood’s benefit, and carried through for his benefit, and Fay, from beginning to end, was acting as his attorney, the expense to be ultimately paid by him. So, in any aspect of the case, the plaintiff could not claim that there was any error in receiving the evidence objected to.

Upon the trial of the action the defendants were permitted to give evidence, which was objected to by the plaintiff, that they had previously conveyed the same lands to Mr. House, and that he had reconveyed them to Mrs. Lockwood. And it is. claimed that error was committed in the reception of this evidence. Before the admission of this evidence the plaintiff had given some evidence of dealings in this same real estate between the parties. The evidence was competent to show that the plaintiff knew that the real estate, at the time it was conveyed to him, actually belonged to Mrs. Lockwood. She claimed that the deed was executed for the purpose of conveying the title of the real estate through the plaintiff to her, and that if her husband delivered the deed to the plaintiff for security it was so delivered without her knowledge, authority or consent. Therefore, if the plaintiff knew at the time he took this deed, absolute in form, that the land really belonged to Mrs. Lockwood, he could not hold it as against her as security for a debt of her husband. Hence it was important and material for the defendants to show that he knew at the time he took the deed that the land belonged to Mrs. Lockwood. Furthermore, this evidence was competent to show the relations of confidence existing between the parties at that time, and the course of dealing between them in reference to. this same real estate.

The defendants answered separately, and in their answers simply demanded that the complaint be dismissed. The court at special term found the arrangement as to the giving of the deed as claimed by the defendants, and not only dismissed the plaintiff’s complaint but adjudged that the plaintiff should execute a deed of the real estate to Mrs. Lockwood in pursuance of the arrangement alleged in the answer and found by the court. It is now claimed on behalf of the appellant that the court committed error in awarding this affirmative relief to Mrs. Lockwood. The court having found that the deed was not delivered to the plaintiff as security and that it was delivered to him for the purpose of conveying the title through him to Mrs. Lockwood, he could no longer claim to hold the title to the real estate. He has not in any stage of the litigation between these parties claimed to have any right to the real estate except to hold it under the deed as security, and it having been found that he had no right to hold it for that purpose he was equitably bound to convey it to her; and in this equitable action, where all the facts were alleged in the answer, proved upon the trial and found by the judge, we think the court had the power to administer full relief, although it was not specifically prayed for in the answer.

It is said that the plaintiff should not have been compelled to re-convey this real estate, because there was evidence tending to show that Mrs. Lockwood conveyed it to him to keep it away from her creditors. There was no such allegation in any of the •pleadings, and the fact was not found by the trial judge. He found that the sole purpose of conveying it was to vest the title in her. There is some proof that at some time she put the title to this real estate in the name of Mr. House because she expected some trouble from her brother’s creditors, to whom she had become liable by the indorsement of a note for him. But there is no satisfactory evidence that she intended to cheat or defraud those creditors of her brother by vesting the title to this property in Mr. House. Hpon any facts appearing in this case no court of equity would upon that ground refuse to compel Mr. House, in a proper action, or under a proper prayer for relief, to re-convey this property to Mrs. Lockwood.

We are, therefore, of the opinion that the judgment should be affirmed, with costs.

All concur, except Peckham and Maynard, JJ., not voting.


author: O’Brien, J.

text:
    Frank P. Jenks, Resp't, v. Thomas Quinn, App'lt.

      (Court of Appeals,

      Filed February 28, 1893.)

    1. Foreclosure—Sale—Inverse order op alienation.
    A loan commissoner’s mortgage covered two pieces, one of which was conveyed by deed containing a covenant by the grantee to pay such mortgage and save his grantor harmless therefrom. The other piece was conveyed to defendant, and by him to plai .tiff's grantor by deed containing covenants of warranty. The- mortgage was afterwards foreclosed, and plaintiff’s premises sold at the request of the owner ot the other parcel, although the other piece, if first sold, would have paid the mortgage in full. Plaintiff, who was not found to have had any knowledge of the covenant in the first deed, and his grantor, were present at the sale, but did not request the sale of tbe oilier piece ; but defendant, though notified and promising to be present a id protect the property from sale, did not appear, by reason of sickness. Plaintiff, upon demand of the purchaser, surrendered possession to him. Held, that as to the holders of the mortgage, it was still a lien on all the land, and an omission to sell in the inverse order of alienation was not such an irregularity as affected the jurisdiction or vitiated the title.
    2. Same.
    Plaintiff could not be charged with knowledge of the covenant in the deed of the other parcel by the fact that it had been recorded twenty years before, in a transaction to which he was not a party.
    (Gray and Maynard, JJ., dissent.)
    Appeal from judgment of the supreme court, general term, fourth department, affirming judgment entered on decision of the court, a jury trial having been waived.

      A. P. Smith, for app’lt;
    17 O. Grombie, for resp’t.

       Affirming 41 St. Rep., 22.

   O’Brien, J.

The judgment from which this appeal was taken was recovered by the plaintiff as his damages for breach of a covenant of-quiet enjoyment in a warranty deed. On the 2d day of October, 1871, John and Daniel Curtin were the owners, as tenants ’ in common, of a farm in Cortland county, described as containing one hundred and thirty-seven acres and seventy-seven and a half rods of land. This land was encumbered by a mortgage of S496, given by a former owner, June 20, 1887, and which the Curtins had, upon the purchase of the land, assumed and agreed to pay. On that day they severed the joint ownership and divided the land. John received from Daniel a deed of that portion of the land which was situated west of a certain road, containing fifty-six and a half acres. In this deed Daniel covenanted as follows: “ and the party of the first part herein covenants and agrees to save the party of the second part harmless from, and pay off and liquidate a certain loan mortgage of four hundred and ninety-six dollars upon the premises herein described.” At the same date John conveyed to Daniel the remainder of the parcel described as containing seventy-nine acres. The effect of these conveyances was to make Daniel not only personally bound for the payment of the mortgage, but to charge Ms part of the land primarily as the security. Both deeds were recorded on December 11, 1871. On the same day there was recorded a deed from John Curtin to the defendant Thomas Quinn, which was dated on the 8th of December. The defendant by the conveyance became the owner of the fifty-six and a half acres that had been assigned to John and as between him and the owner of the other parcel, which had been conveyed to Daniel, the latter was primarily liable for the payment of the mortgage. On the 8th of March, 1873, the defendant, by deed containing the usual covenant of quiet enjoyment and warranty, conveyed his parcel to William T. Jenks. The consideration expressed in this deed is $2,200, and the grantee was to assume and pay a junior mortgage of about $1,400 which had been executed by the Curtins when they owned the whole parcel together.

On the 4th day of February, 1881, William T. Jenks and wife conveyed the land to the plaintiff, who is their son, and the grantee went into possession. This deed does not appear in the case, and there is no finding as to its form, or the particular consideration paid, if any. In the meantime, and at the date of the transactions which will be presently referred to, the title to the other parcel of seventy-nine acres, that had been conveyed to Daniel Curtin, became, through mesne conveyances, vested in one William D. Hunt. On November 1, 1887, the loan commissioners began a statutory foreclosure o,f their mortgage, and on the 7th of February, 1888, the fifty-six and a half acres conveyed to the plaiñtiff by his father were sold and conveyed to the purchaser, by the perfection of the foreclosure proceedings, for about $600. The plaintiff upon the demand of the purchaser surrendered possession to him, and the purchaser then leased the premises to the plaintiff’s mother, and the wife of his immediate grantor, and in this way an eviction is made out. Both the plaintiff and his father were present at the sale, under the mortgage foreclosure, and neither of them made any objection to the sale, or gave the' commissioners any information as to the facts above stated, or that the land of Hunt was primarily charged with the payment of the mortgage. The commissioners evidently wanted to proceed fairly, and had no purpose or motive to sell the plaintiff’s land improperly, but it seems, that in consequence of some mistake in the search procured from the clerks’ office, they supposed that the fifty-six and a half acres, instead of the seventy-nine acre parcel, was primarly charged with the payment of the mortgage, whereas the reverse was the true state of the case. It is found as a fact that the plaintiff’s father and grantor, who was present with him at the sale, had knowledge of all the facts, but it does not appear that the plaintiff himself had any knowledge, except such as he is legally chargeable with from the record of the deed, which contained the covenant of Daniel Curtin. The trial court has found that the plaintiff’s land was sold under the mortgage at the request of William D. Hunt, the then owner of the Daniel Curtin parcel, and in order to to save his own farm from sale on the foreclosure, which was more than sufficient in value to satisfy the mortgage.

The defendant not only had the usual statutory notice of the sale, but it is found that prior to the sale the plaintiff’s grantor, to whom the defendant’s covenant directly ran, notified him personally of the foreclosure and proposed sale, and requested him to be present at the sale and protect the title of this land, and that the defendant promised to do so, but he was not present at the sale, the evidence tending to show that it was by reason of sickness. This constitutes the breach of the covenant of defendant’s deed for which the judgment was recovered, and the damages were based upon proof of the value of the land at the .time of the foreolosure sale, and did not exceed the consideration in the deed containing the covenant. It also appears from the findings that since the deed of the seventy-nine acres to Daniel Curtin, he and his grantees paid the interest on the mortgage, and no part of it was paid by the grantees of the other parcel. While the judgment under review has some badges of suspicion, and it is difficult to resist the conclusion that it may have been the result of bad faith or some adroit management on the part of the plaintiff and his father, in co-operation with Hunt, and that it is morally unjust, notwithstanding the notice to the defendant, yet the appeal cannot be sustained on any of the grounds discussed at the argument or presented by the briefs submitted Equity would doubtless have required the.sale of the land first that was primarily chargeable with the payment of the mortgage, and it would have been sold had the commissioners been aware that it was so liable. Even after the sale, the defendant and the plaintiff could have applied to the court, in a proper action for relief against it, and, no doubt, upon the facts before us, the sale would have been set aside. But as no remedy of this kind was sought, it cannot be held that the sale was void for the reason that the other parcel should have been sold first. As to the holders of the mortgage, it was still a lien on all the land, and an omission to sell in the inverse order of alienation was not such an irregularity as affected the jurisdiction or vitiated the title. Hor do we think that the plaintiff" is estopped from maintaining the action by reason of his silence at the sale. An eviction brought about by collusion would not sustain the action for breach of covenant. Uor could the plaintiff recover any damages which could have been prevented or avoided by reasonable diligence on his part, and he owed a duty to the defendant to so conduct himself as to make the damages as little as possible. Whatever the fact may be, it is not found that the plaintiff had any actual knowledge of the covenant in the deed from Daniel Curtin, or its legal effect. IE he had, then his silence at the sale and his omission to object, or to request the sale of the other parcel, would present a serious, if not an insurmountable obstacle to his recovery. Hamilton v. McPherson, 28 N. Y., 72; Thomas v. Bartow, 48 id., 193.

But, in reason and justice, a person cannot be charged with an omission to perform a duty which he may owe to his neighbor to save him from unnecessary loss unless he has actual knowledge of the facts out of which the duty springs. It must be assumed, for the purposes of this question, that the plaintiff was ignorant of these facts. Constructive notice from the record of the deed was not, I think, sufficient to impose upon him the active duty of preventing a result which subjected the defendant to a responsibility that did not belong, to him, but to another. The general language used by the courts in numerous cases, as to the effect to be given to the record of a deed, is, perhaps, broad enough to include this case. There is no doubt that a party is chargeable with knowledge of the facts disclosed by a deed which is part of his chain of title, but that rule must be understood and interpreted with reference to the facts of the case where it is to be found. As to everything that charges the land or affects his title that is true, but the rule does not apply to a case like this, where it is sought to charge a party with knowledge of a lien on his neighbor's land. Ilere, the plaintiff is to be charged, if at all, with the consequences of omitting to act upon certain facts and to communicate them to the loan commissioners, because the legal evidence of such facts could be found in a deed executed and recorded nearly twenty years before and to which he was not a party and as to the contents of which he was, in truth, as we must assume, wholly ignorant. Such a principle would be evidently contrary to reason, and I am. not aware of any authority that sanctions it, and there is, I think, recent authority to the contrary. Collier v. Miller, 50 St. Rep., 784. The defendant’s covenant; did not run directly to the plaintiff, but to his grantor. Neither the findings nor the evidence disclose anything as to the form of the conveyance to the plaintiff. It does not appear that it contained any covenants or that his father, his immediate grantor, would have been liable to him upon the eviction. But the defendant’s covenant became annexed to and passed with the land, and it doubtless is the law that, though the plaintiff’s deed from his father was a mere quit claim, it was sufficient to transfer to himself the benefits of the covenant upon which he recovered. Hunt v. Amidon, 4 Hill, 345; Beddoe's Ex’r v. Wadsworth, 21 Wend., 120; Jackson, etc., v. Groat, 7 Cowen, 285.

We are thus constrained by the record to affirm a judgment that seems to be unjust, and which we have carefully examined with a view to secure relief for a party who is subjected to large damages by reason of events which, there is reason to believe, have not occurred in the natural order of things. The defendant, however, does not seem to be entirely free from blame in not attempting to protect himself at.or before the sale, and by neglecting to move after the sale to open it. It may be that he is not without some remedy against others. The covenant of Daniel Curtin to pay the mortgage charged him and his land with its payment. If the same obligation devolved upon his grantee, and the benefit of it passed to the defendant, then these grantees may be liable to him upon the facts adjudged. Wilcox v. Campbell, 106 N. Y., 325; 8 St. Rep., 885. These, however, are not questions now properly before us, though they are naturally suggested by an examination of the case.

The judgment must be affirmed.

Judgment affirmed, with costs.

All concur, except Gray and Maynard, JJ., dissenting.


author: Per Curiam.

text:
    Mina Seymour, Resp't, v. The Village of Salamanca, App'lt.

      (Court of Appeals,

      Filed February 28, 1893.)

      1. Villages—Negligence—Sidewalk.
    The objection that village trustees omitted to declare by formal resolution, on the presentation of a petition for laying out a ctreet, their decision that the improvement should be made and enter the same on their minutes, cannot be taken by the village as a defense to an action for an injury sustained through slipping into a hole in a sidewalk, provided the village proceeded to open the street, and the injury resulted from its negligent omission to keep it in a safe condition.
    2. Same.
    In 1882, when the order laying out the proposed street was made, the land embraced therein was open, unclosed ground, except a private way. In 1883, quite a number of houses were erected adjacent to the street on both sides. In September the trustees instructed the clerk to_ notify these people to build a sidewalk. November 7tli, the clerk was instructed to notify F. to “ extend his sidewalk,” etc., and in May, 1884, the road commissioner was instructed to take down fences and all obstructions on Water street and open up the same,” etc. Held, that enough was shown to justify the jury in imposing a liability upon the village resulting from the unsafe condition of the sidewalk in front of F.’s land.
    Appeal from judgment of the supreme court, general term, fifth department, affirming judgment in favor of plaintiff.

      William H. Henderson, for app’lt;

      W. S. Thrasher and J. B. Fisher, for resp’t.

       Affirming 35 St. Rep., 999.

   Per Curiam.

Villages incorporated under chapter 291, of the Laws of 1870, possess the power to open and improve streets within the corporate limits and maintain sidewalks therein, and may require the owners or occupants of lands on the streets to construct sidewalks in front of their premises, and in case of default of such owners or occupants to comply with such requirement the trustees are authorized to make the improvement and charge the expense upon the lands. Title 7, § 1; title 3, § 4.

The exercise of the power to lay out and open streets, given by the act, is quasi judicial and discretionary, and no private action lies for the omission by a village to exercise the power, although it may be made to appear that the public interests require its exercise. But where the discretion has been exercised and the street has been opened for public travel, the ministerial duty to keep the street and sidewalk in repair attaches, and for a negligent omission by the village authorities to perform such duty, whereby a person, lawfully passing along the streqt and himself using due care, is injured, an action lies in his favor against the village for damage. Nelson v. Village of Canisteo, 100 N. Y., 89.

The present action was brought for an injury sustained by the plaintiff from slipping into a hole in a plank sidewalk on the north side of Water street in the village of Salamanca, on the evening of November 24, 1885. The sidewalk was originally constructed by one Farnam in front of his premises in 1881 or 1882, before any proceedings had been taken to open Water street. A private way had been opened between the lands of Farnam and •one Hevenor, extending easterly from William street to the west line of Farnam’s land. He had built five houses on the tract fronting on the private way, and the sidewalk was constructed for the accommodation of his tenants. In June, 1882, proceedings were instituted by petition in conformity with § 1, title 7, of the act of 1870, for the laying out of a street, particularly described in the petition, extending westerly from William street 1,269-^ feet, and thence northerly 578j- feet to Eiver street.

■The proposed street included the private way laid out by Farnam, and it is inferable from the evidence that the sidewalk constructed by him was along the north bounds of the proposed street.

The proceedings resulted in the making of an order by the board of trustees of the village on the 26th day of June, 1882, laying out the street in accordance with the prayer of the petition. The land owners w'hose lands were included in the street, with two exceptions, released any claim for damages, and a jury was duly summoned and an award of damages made July 5, 1882, to the two land owners who had not released their claims, and on or prior to April 21, 1883, they accepted the sums awarded them respectively.

There are but two questions of law presented by the record which require special consideration. It is claimed by the learned counsel for the defendant that the street was not legally laid out, for the reason that on the presentation of the petition the trustees -did not decide, by resolution entered in the minutes, that the improvement petitioned for should be made. The act provides, Tit. 7, § 1: “On the presentation of such petition the trustees shall and must meet, and examine the same; and if they decide the improvement shall be made, they shall so decide by resolution to be entered in the minutes of ike board; and they shall thereupon put up, in five public places in said village, a correct description of the lands to be taken to make such improvement, and a notice that the trustees at a place and on a day, and at an hour therein specified, not less than five days from the date and posting thereof, will meet and hear any objections."

The record does not show, nor is there any evidence that the trustees, prior to posting and serving the notices of the meeting to 'hear objections, decided by formal resolution to make the improvement. There was no other irregularity in the proceedings. The hearing of objections was had pursuant to the notice, and after the hearing tíre trustees, by resolution, declared their intention to make the improvement, which was entered in the minutes, and made an order laying out the street in due form, and proceeded to have assessed the damages to the persons who did not release their claims, and they were paid.

We deem it unnecessary to inquire whether the omission of the trustees to declare by formal resolution, on the presentation of the petition, their decision that the improvement should be made and to have the same entered in their minutes, was a jurisdictional defect. Assuming that it would have furnished a defense to a person whose lands were sought to be taken, the objection cannot be taken by the village as a defense to this action, provided it proceeded to open the street, and the injury resulted from its negligent omission to keep it in a safe condition. The village, by the proceedings and the voluntary release of the land owners who consented to release their claims for damages, and the payment to the others of the award made, acquired the right to open the street as against the land owners. No objection was, in fact, interposed so far as appears by any one. The irregularity in the proceedings was due to the omission of the trustees. to precisely follow the direction of the statute, and the village ought not to be permitted to escape liability, if in other respects it was established, by alleging this informality. Sewell v. City of Cohoes, 75 N. Y., 45; Saulsbury v. Village of Ithaca, 94 id., 27; Jewhurst v. City of Syracuse, 108 id., 303; 13 St. Rep., 623.

The other principal defense is that, in fact, the street had not been opened in November, 1885, when the alleged injury happened. It appears that in 1882, when the order laying out the proposed street was made, the land embraced in the proposed street was part of open, unclosed ground, except the part forming the private way of Farnam near William street. There were some stumps standing upon the ground, and otherwise the land was in its natural state. But in 1883, after the laying out of the street, quite a number of houses were erected adjacent to the street west of the Farnam lot,. on both the north and south sides. On September 24, 1883, the trustees instructed the clerk of the village to notify the persons occupying these houses to build a sidewalk in front of their premises on “ Water street.”

November 7, 1883, the clerk was instructed to notify Farnam ■“ to extend his sidewalk to fill up a gap on premises owned by him on Water street.” May 19, 1884, the road commissioner was instructed “ to take down fences and all obstructions on Water street and open up the same.” At this time, May 19, 1884, the street was used west from William street so far as the houses extended and sidewalks had been constructed in front of all or most of the houses, and people were accustomed to use the sidewalk on the north side of Water street to reach William street and the centre of the village, passing over the sidewalk in front of the Farnam houses. West of the residences on Water street the street was not used, and some part of it was covered with water.

Some work was done by the village on the street west of the residences in 1884, but that part of Water street was not rendered fit for travel until 1886 or after. It does not appear that the clerk served the notices to build sidewalks required by the resolution of September or November, 1883, but they seem to have been built. The accident to the plaintiff occurred while walking on the sidewalk in front of Farnam’s houses.

The court charged the jury that if the village had, at the time of the accident, “adopted Water street and assumed control over it, directed in reference to it, it became a street and it was required to keep the street and sidewalk in reasonable repair.”

It is insisted, on the part of the defendant, that the street had not been so far opened at the time of the accident as to impose any duty on the village to maintain any supervision over the sidewalks, and that while it was iu an unfinished condition and was in the process of being adapted for travel, it was not liable for any injury resulting to individuals from defects in the sidewalks.

We are of opinion that enough was shown to justify the jury-in imposing a liability upon the village for injury resulting from the unsafe condition of the sidewalk in front of Farnam’s land. The public had a right to assume that the street, from William street, so far as the houses extended, was in use by the permission of the village as a public street. The orders made by the trustees assume that sidewalks were necessary. It treated Farnam’s walk as a public passageway, by requiring its extension. The open and continued use of the street, as such, by the inhabitants of the village, it must be assumed, was known by the corporation.

In the view we have taken, it is unnecessary to examine the exceptions to the charge relating to the street. The charge, as made,, properly presented the question to be decided, and we think no error was committed by the trial judge in his rulings on this branch of the case. Nor are there any valid exceptions to the rulings upon the requests upon the point of contributory negligence of the plaintiff. The court stated the correct rule to the jury, and this was all to which the defendant was entitled. Niven v. City of Rochester, 76 N. Y., 619. The negligence of the defendant, assuming that it was bound to exercise care in keeping the sidewalk in a safe condition, was, upon the evidence, a question for the jury.

We find no error in the record, and the judgment should, therefore, be affirmed.

Judgment affirmed, with costs.

All concur.


author: Follett, J.

text:
    The Manufacturers & Traders' Bank, App'lt, v. Abram Folk Impl'd, Resp't.

      (Supreme Court, General Term, First Department,

      Filed January 13, 1893.)

    1. Injunction—Final decision—Action on undertaking.
    Where an injunction is not granted on affidavits, hut on a verified complaint, the plaintiff’s right to injunctive relief depends upon the establishment judicially of the facts pleaded as the cause of action, and a dismissal "of the action for want of prosecution is a final decision within the meaning of § 620 of the Code.
    9. Same—Damages—Loss of profits.
    In proceedings to recover damages sustained by reason of an injunction restraining the operation of a factory, it appeared that the factory had capacity to make a certain amount of goods. Held, that it could not be inferred from such evidence that the owner, during the operation of the injunction, would have received orders of that amount, and the loss of profits thereon cannot be allowed.

      3. Same.
    Fees paid in a reference in such proceedings, which were not sustained, cannot be recovered.
    Appeal from an order confirming the report of a referee appointed to assess the defendants’ damages sustained by reason of the granting of an injunction herein.
    For some time prior to October, 1887, the O. W. F. Dare Company, a corporation, had been engaged in manufacturing toys at the city of New York. On the 5th day of October, 1887, the corporation was insolvent, and indebted to many creditors. On the 7th of October, Charles F. Lawrence, Charles Frazier and Henry 0. Marshall recovered a judgment against the corporation for $1,211.97, and on the next day the same plaintiffs recovered against the corporation a second judgment for $2,060.02. October 8th, Thomas Frazier recovered against the corporation a judgment for $1,803.20. These judgments were all entered and docketed in the city and county of New York, and on October 8, 1887, executions were issued upon them to the sheriff, who levied upon the property of the corporation, and October 18, 1887, sold it pursuant to the executions, the judgment creditors in the first two judgments becoming the purchasers. The amount bid was applied towards the satisfaction of the executions of the purchasers, and the execution issued upon the Thomas Frazier judgment was returned wholly unsatisfied. October 14, 1887, the Manufacturers’ & Traders’ Bank, the appellant, recovered a judgment against the corporation for $1,841.33, which on the next day was docketed in the office of the clerk of the city and county of New York, and an execution issued thereon, which was returned wholly unsatisfied. ■ The purchasers at the execution sale sold the property to one Campora, who in October sold it to Abram Folk, who immediately began to carry on the business of manufacturing toys, continued therein until December 6, 1887, when he was restrained by the injunction issued in this action, which was begun on that date against the corporation, Charles W. F. Dare (who had been the general manager of the corporation), and Abram Folk. It was alleged in the complaint that the judgments upon which the executions were issued and the property sold were fraudulent, without consideration, and recovered for the purpose of procuring a sale of the assets of the corporation, in order to defraud the plaintiff and other creditors. It was also alleged that Folk was a party to the fraudulent scheme.
    An injunction was obtained and served, which enjoined and restrained the defendants, and each of them, “from disposing of, selling, encumbering or in any manner interfering with any of the goods, merchandise or chattels, or stock in trade which was the property of the defendant corporation at the time of the sale by the sheriff, * * * or which are the proceeds of any of the property held by said corporation at the time of such sale.” This injunction was served on the 6th of December, 1887, and was obeyed by the defendants. Folk appeared in the action by P. & D. Mitchell, his attorneys, and answered, denying the allegations of fraud contained in the complaint. The corporation and Charles W. F. Dare appeared by another attorney, and filed separate answers, denying the allegations of fraud. After the service of the answers, and' on the 23d of January, 1888, the injunction was vacated by an order, the defendants having executed an undertaking with sureties, conditioned for the payment of any judgment the plaintiff might recover in the action. The issues joined in the action between the plaintiff, the corporation and Charles W. F. Dare, were referred to a referee to hear and determine, who afterwards made his report that the judgments under which the sale was made were valid, recovezed on claims j ustly due and owing by the corporation, and that there was no conspiracy or attempt to defraud its creditors. This report was made on the 14th of May, 1890, and on the 28th day of that month an order was granted dismissing the action as against Folk, “ for want of prosecution,” with costs, together with costs of the motion. The motion to dismiss was not contested by the plaintiff. May 29, 1890, a judgment was entered on the referee’s report, “ dismissing the complaint on the merits,” with costs in favor of the corporation and Charles W. F. Dare. On the 25th of July,- 1890, a judgment was entered, on the order of May 28, 1890, dismissing the complaint as against Folk, with costs against the plaintiff. When the injunction was granted, an undertaking was executed and filed, by which the sureties undertook “ that the plaintiff will pay to the defendants enjoined such damages, not exceeding the sum of $2,000, as they may sustain by reason of such injunction, if the court shall finally decide that the said plaintiff was not entitled thereto ; such damages to be ascertained by a reference, or in such other manner as the court may direct.” The defendants obtained an order to take proof and report as to damages, if any, sustained by them, or either of them, by reason of the injunction. A report was rendered in favor of the defendant, Folk, which was confirmed at special term, but was reversed by the general term, and .after-wards the present referee was appointed to take proof and report. He found that the defendant Folk had sustained damages by reason of the injunction to the amount of $3,740.66, but that the other defendants had not been damaged. The plaintiff excepted to the report, but the exceptions were overruled and the report confirmed at special term.

      Rogers, Locke & Milburn, for app’lt;

      L. A. Gould, for resp’t.
   Follett, J.

The appellant asks for a reversal of the order assessing the damages sustained by the respondent on two grounds: (1) That the court has not finally decided, within the meaning of § 620 of the Code of Civil" Procedure, that the plaintiff was not entitled to the injunction as against the defendant, Abram Folk; (2) that several of the items allowed were too remote and contingent to be included within the term, damages sustained by reason of the izzjunction.” A few minor grounds of alleged error are argued on the brief submitted, some of which may be considered later.

Section 620 of the Code of Civil Procedure provides that an undertaking must be given when an injunction is applied for, “to the effect that the plaintiff will pay to the party enjoined such damages, not exceeding a sum specified in the undertaking, as he may sustain by reason of the injunction, if the court finally decides that the plaintiff was not entitled thereto.” The final clause of the foregoing paragraph is the one which it is important to consider, “ if the court finally decides that the plaintiff was not entitled thereto.” This provision, and in the same words, was contained in § 195 of the Code of 1848, and remained part of the Code of Procedure until it was superseded by the present Code. Before the Code of 1848, the thirty-first rule of chancery provided that an undertaking should be given, conditioned to pay to the party enjoined “ such damages as he may sustain by reason of the injunction, if the court shall eventually decide that the complainant was not equitably entitled to such injunction.” The injunction in this action was not granted on affidavits, but on the verified complaint, and the plaintiff’s right to injunctive relief depended upon the establishment judicially of the facts pleaded as the cause of action. The onus of proving the cause of action alleged was upon the plaintiff; and if, for any reason, it failed to sustain this burden, the action fell, and with it the injunction. Upon the trial of the issues joined between the plaintiff and the C. W. F. Dare Company and Charles W. F. Dare, two of the defendants, the plaintiff failed to establish the allegations of the complaint, and it was decided that the transactions complained of were free from fraud, and a judgment was entered in favor of those two defendants, dismissing the complaint on the merits.

After this decision on the merits, and before the entry of the judgment thereon, Folk made a motion, on notice to the plaintiff, that the action be dismissed as against him for want of prosecution. The plaintiff did not contest the motion, and it was granted by default, and subsequently a judgment was entered on this order dismissing the complaint as against Folk, for want of prosecution. By these two final judgments it was determined by the court that the plaintiff was not entitled to a judgment in the action against either of the defendants. The right to the injunction being dependent upon the same facts as those alleged as a cause of action, it was, in effect, decided that the plaintiff was not entitled to the injunction. In Palmer v. Foley, 71 N. Y., 106, the action was discontinued upon the agreement of the parties, the plaintiff paying to the defendant $100 as costs. It was held that this was not equivalent to a final decision of the court that the plaintiff was not entitled to the injunction order when it was granted. In discussing the case it was said:

“ It is claimed that this is equivalent to the court finally deciding that the plaintiff was not entitled to the injunction order. Cases are cited which almost hold to that effect I will not name them. In most of them there was some action of the court upon the validity or merit of the injunction order adverse to the plaintiff’s right to have it allowed. The plaintiff, after such action, discontinued of his own motion, and presumably in consequence thereof. In none of them was the discontinuance a matter of agreement between the parties to the action.”

In the case at bar the action was not discontinued by agreement, but by an order of the court, upon a motion made which was undefended, presumably upon the ground that it had already been decided that the action could not be sustained. Benedict v. Benedict, 76 N. Y., 600, was brought to compel the defendant to convey to the plaintiff land, which the defendant was restrained from selling or encumbering during the pendency of the action. The final judgment rendered was that the plaintiff was not entitled to a conveyance of the land, but that he had an equitable lien thereon, and a sale was ordered to satisfy the lien and costs. The defendant moved for a reference to ascertain his damages sustained by reason of the injunction, which was refused upon the ground that it had not been finally decided that the plaintiff was not entitled to it.

In that case the action had not been determined in favor of the defendant, and it may well have been that the plaintiff was entitled to the injunction to restrain the conveyance or encumbrance of land on which the plaintiff had an equitable lien. In Pacific M. S. Co. v. Toel, 9 Daly, 301; 85 N. Y., 646, a temporary injunction was granted, which the plaintiff’s attorney afterwards voluntarily vacated. After the cause was at issue, the plaintiff entered an ex parte order without the consent of the defendant, discontinuing the action on payment of costs. The right to damages sustained by reason of the injunction was contested on the ground that the court had not finally decided that the plaintiff was not entitled to the injunction. In considering this question it was said in the court of appeals:

“The orders vacating the injunction.and discontinuing the action entered by the plaintiff are, in effect, a determination, or, at least, equivalent to a determination, that the plaintiff was not entitled to the injunction granted.”

In Amberg v. Kramer, 29 St. Rep., 958, the general term of this department held that a voluntary vacation of an injunction, and the subsequent discontinuance of the action on the plaintiff’s motion, were equivalent to a determination that he was not entitled to the injunction. The rule contended for by the appellant would require defendants, in all cases-where injunctions are granted on verified complaints, and the actions are dismissed for want of prosecution, or by voluntary discontinuance, to take upon themselves the burden of showing that the allegations in the complaint were unfounded, and of procuring an express adjudication that the plaintiff was not entitled to the injunction, as a prerequisite to the right to have the damages assessed. Such was not the intended effect of the provisions of the Code under consideration.

The referee reported that Abram Folk sustained damages, by reason of the injunction, to the amount of $3,740.66. The items found by him seem to overrun this sum, and it is not exactly apparent how his conclusion was reached. The following are the items reported:

Bent paid for factory while use was enjoined........ $416 66

Watchman for 7 weeks, at $12 per week........... 84 00

Keeping horse, use restrained.................... 20 00

Salary of manager, 7 weeks, at $25 a week.......... 175 00

Loss of wages paid............................. 25 00

Defendant’s counsel fees on the reference........... 250 00

Orders on hand when injunction was served and received during its continuance, $4,826.77.

Ten per cent, profit thereon lost.................. 482 67

$1,453 33

The factory had capacity to produce toys during the 7 weeks the injunction was in operation of the value of $17,500.

Loss of profit thereon, 10 per cent................ $1,750 00

Injury to good will............................. 500 00

Beferee’s fees on first reference.. ■.................. 120 00

Counsel fees on first reference.................... 150 00

$3,973 33

Upon an examination of the record we think the evidence was sufficient to sustain the first seven items, aggregating $1,453.33, but that it was insufficient to sustain the last four items. It cannot be fairly inferred from the evidence that the defendant, during the seven weeks he was under restraint, would have received orders for, and been able to manufacture, toys to the value of $17,500. Dor is there any evidence that he lost $500 by the injury to good will. The defendant is no more entitled to recover the $270 paid in the first reference, which was not sustained, than he would have been to recover counsel fees paid in an unsuccessful attempt to have procured the injunction to-be vacated. We think, under the evidence, that the defendant’s damages recoverable on the bond are $1,453.33.

It appears that after the conclusion of the first reference Folk assigned his interest in the sum reported to. one Marshall, and it is urged that the respondent has no interest in the damages, and that the reference cannot be prosecuted in his name. The terms of the assignment do not appear. It may have been absolute, but it may have been conditional, or by way of security. We do not think that the record discloses- such a want of interest in the damages as to preclude the defendant from the right to prosecute this proceeding. The referee’s report, and the order of the special term entered thereon, should be modified by fixing the amount of damages sustained by reason of the injunction at $1,453.33, and, as modified, affirmed, without costs to either party.

Van Brunt, P. J., and O’Brien, J., concur.