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Bennett v. Murphy

123 A.D. 102 Court Fourth Department, Decision date 1908-01-08 English

Delivered by Spring, J.:

Contents

Majority

p. 102
George W. Bennett, Respondent, v. Ada M. Murphy and George P. Murphy, Appellants, Impleaded with Edgar Knapp, Defendant.
Fourth Department,
January 8, 1908.

Headnote

Beal property — vendor’s lien — facts not showing waiver — priority,
A vendor of lands has an equitable lien thereon for the. unpaid purchase price even without specific agreement to that effect. But if he accept the note of a third person for the consideration without reserving the lien expressly or by implication, it is waived.
When on the day of passing title a third person who had promised to lend the vendee money sufficient to pay the- full consideration, the loan to be secured by mortgage, states to the vendor who demanded a cash payment that he is then unable to get the money from the bank but will pay it in a few days after returning from a short journey and gives á due bill reciting that the balance is unpaid, the vendor by accepting the due bill does not waive his lien. This, because, under the circumstances, the due bill did not extend the time of payment, but .was q mere memorandum indicating the sum unpaid.
In such case the vendor’s lien is superior to the mortgage of the third party " who agreed to make the loan, as he accepted the mortgage knowing that the purchase price had not been paid in full.
Appeal by the defendants, Ada M. Murphy and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of ¡Niagara on the 20tli day of June, 1907, upon the decision of the court, rendered after a trial at the ¡Niagara Special Term, establishing a vendor’s lien in the sum of $3,186.98 upon certain lands described .in the complaint.
On January 30, 1907, the plaintiff owned a farm of 100 acres in the town of Boyalton, in the county of ¡Niagara, subject to a savings bank mortgage of $2,800, besides interest; On that day" he
p. 103
entered into a written agreement with the appellant Ada M. Murphy, whereby lie agreed to sell and convey said premises to her for the sum of $8,000, the deed to be delivered and the possession of the premises given on the. first of April following. By the contract the purchaser was to assume the payment of the mortgage and pay the balance of the purchase price in cash.
The parties, in compliance with the terms of the agreement, met. at Middleport, and the deed, at the request of Mrs. Murphy, was made to herself and her husband and coappellant'. The Murphys had only $2,000 to pay on the purchase price of this farm. They had arranged with the defendant Knapp to loan them $6,000, out of which the existing mortgage and the balance due the plaintiff, were to be paid. Knapp, who was known to the plaintiff, was present when the papers were prepared, and advised the plaintiff that he did not have the cash with him to pay the sum due, whereupon the plaintiff stated that he was willing to wait a day or two for the money.
The deed and ...mortgage were delivered and the $2,000 paid by Mrs. Murphy. Her husband was not present. Knapp said he was going to Albany for two days, but would pay as soón as he returned, which the plaintiff said was satisfactory to him.
The plaintiff, as surviving partner of a firm, had moneys in his hands belonging to Knapp as administrator of the deceased partner, which the latter desired paid over. A memorandum was prepared and signed by Knapp correctly certifying the balance due the plaintiff on the purchase price of the farm, and containing this clause, “ which sum I agree to pay upon the settlement of my account with said G. W. Bennett,” and which referred to the moneys already mentioned.. The plaintiff refused to receive this paper, claiming that he was to receive cash for his farm, and nothing had been said in regard to the partnership matter.
Thereupon a due bill was signed by Knapp, dated that day, reciting there was due George W. Bennett $3,145.56, and'which, was the balance unpaid, and was satisfactory to the plaintiff and he accepted it. Three or four days later he asked Knapp to pay the due bill, which he declined to do until the partnership matter was adjusted. Afterwards a demand was made of the vendee for the .payment of the purchase price unpaid, and, on refusal, this action
p. 104
was commenced against them, as well as Knapp, to establish a lien upon the premises for the sum unpaid.
The judgment is against the vendées, directing a sale of the premises, with costs payable out of the avails of the sale, and is superior to the mortgage of Knapp, who has not appealed and who paid the savings bank lien. ' There is very little controversy over the facts.
George F. Thompson, for the appellants.
George D. Judson, for the respondent.

The legal principles applicable to this situation seem to be well settled. Tiie vendor, as a rule, has an equitable lien upon the land conveyed for the unpaid purchase price, even though there is no-agreement to that effect. (Hubbell v. Henrickson, 175 N. Y. 175 ; Sprague v. Cochran, 144 id. 104, 112; Mc Whorter v. Stewart, 39 App. Div. 212 ; Bach v. Kidansky, 186 N. Y. 368 ; Pom. Eq. Juris. [3d ed.] § 1249 et seq.)

Knapp accepted the mortgage knowing that the purchase price had not been paid in ,fnil; so, of course, if any lien was permissible it was superior to his mortgage. (Seymour v. McKinstry, 106 N. Y. 230 .)

There is, however, an exception to the rule equally well established. If the vendor accepts the note of a third person he waives his right to enforce the lien upon the premises, unless its retention is reserved, or unless the facts overcome the .inference. (Maroney v. Boyle, 141 N. Y. 462 ; Vail v. Foster, 4 id. 312; Fish v. How land, 1 Paige, 20; 2 Washb. Real Prop. [3d ed.] 91.)

The appellants rely upon this exception or departure from the general principle. They claim that by the acceptance of the due bill the vendor relinquished his .equitable lien and elected to rely exclusively upon the responsibility of Knapp for the large balance of the purchase price unpaid.

The principle and the exception are presumptions, and which., shall prevail depends upon the facts in a given case denoting the intention of the parties. ",

Pomeroy in his Equity Jurisprudence (3d ed. § 1259) states the rule as follows: “The grantor may of course waive-, his lien;

p. 105
whether he does so is a matter of intention, which must appear either expressly or by acts directly inconsistent with its existence and indicating a clear intent to waive.”

In this case it is important to keep in mind that Knapp was the agent or representative of the appellants. He furnished the money for them, and the plaintiff understood he was acting in their behalf. All the parties appreciated that the purchase price for the farm was to be paid in cash. "When they came together to consummate the sale and conveyance there was no intention to depart from the cash payment. Knapp had his money deposited in a bank not accessible that afternoon.’ He intended to go to Albany for a day or two, and the plaintiff was willing to wait until his return for the balance of the purchase price. He did this for the accommodation of the . appellants and Knapp. The vendees depended upon Knapp for the money and they were, therefore, unable-to pay on that day. All the parties comprehended the reason for the delay and it was not in any respect at the solicitation or for the convenience of the plaintiff.

The due bill given did not extend the time of payment. It was not an obligation, in the circumstances disclosed, which abrogated the plaintiff’s equitable lien on the premises he had conveyed. It was intended by all the parties as a mere memorandum indicating the sum unpaid. It was signed by Knapp because he was to furnish .the money, as the plaintiff knew, but it was signed by him while' representing the appellants. It has no greater effect than if signed by Knapp and the vendees for they all participated in the transaction and it was for their common benefit. If the grantor had taken a promissory note from the vendees his equitable lien would not have been waived thereby. (Maroney v. Boyle, supra.)

The due bill signed by Knapp has no different effect for it was given for his benefit. He is not the third person whose obligation may operate as a waiver. - He is a party interested in the principal transaction.

Much is made of the plaintiff’s statement that he accepted the due bill. He did receive it, but the purpose of it as explained by the undisputed evidence countervails tire claim that it was intended to nullify the provision in the agreement that he was to be paid in cash. Whe.n confronted with the first memorandum providing for the adjustment of the partnership dealings in connection with the

p. 106
payment of the purchase price of the land he was swift to repudiate any such plan and contended distinctly that lie was to be paid in cash for his farm,, and all acquiesced in this understanding.

Knapp and Murphy were represented by attorneys in the transaction and plaintiff was alone and probably knew nothing whatever about a vendor’s lien. He did comprehend, however, that he was to be paid in cash and he never swerved or abated from that purpose.

Beyond the costs which are imposed upon them the appellants are not grievotisly injured by the' decision in this case. They are only liable on the mortgage to Knapp to the extent of the moneys advanced by him for their benefit. When demand was made of them to pay the purchase price théy were called upon to perform their contract about which there.was no misunderstanding, but apparently they preferred to be controlled by their codefendant. The litigation is unfortunate for the man responsible for the con* troversy is not burdened with any of the costs.

The facts found by the trial court in its decision are in accordance with the plaintiff’s position and are fairly sustained by the evidence.

The judgment should be affirmed, with costs.

All concurred.

Judgment affirmed, with costs.

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