Hyperlawhypertext legal database Jaycox v. Smith 17 A.D. 146

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Jaycox v. Smith

17 A.D. 146 Court N.Y. App. Div. English

Delivered by Landon, J.:

Contents

Majority

p. 146
James A. Jaycox, Respondent, v. Earl V. Smith and Constantine Hovencamp, Appellants.

Headnote

Priority of a subsequent mortgagee over a vendor’s equitable lien — the title at a foreclosure sale relates bade io the date of the mortgage -t- a lis pendens relates only- to ■ rights claimed by parties named in it what knowledge in a bidder for a purdiaser at a foreclosure sale does not affect the 'purchaser.
In an action of ejectment, it.appeared that, by a deed recorded in 1867, Bernardos Swartwout, the- common grantor, conveyed the fifty acres of land, in question .to John B. Stillwell, retaining an equitable lien thereon for a part of the purchase money. In 1888' Swartwout began an action to foreclose his lien, making Minor T. Jones, to whom ¡Stillwell had executed two mortgages upon lands including the fifty, acres in ¡.question, a party, but omitting to make a party the holder of a third mortgage, executed -by Stillwell to one Owen upon .the same lands. "
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The Us pendens in this action was filed in March, 1889, and, at a sale had pursuant to the judgment of foreclosure obtained therein in 1894, the plaintiff purchased the fifty acres in question.
In the meantime, in 1881, a j udgment foreclosing the Owen mortgage was obtained, ■ and Jones, who was a party to the action and had notice of Swartwout’s lien, purchased the entire mortgaged premises at the sale, the sheriff’s deed to him bearing date June 4, 1881, and being recorded September 8, 1881. Swartwout ■was not made a party to this foreclosure of the Owen mortgage.
■On December 28, 1881, Jones mortgaged all" the property to Sherman Tichenor, who had no notice of Swartwout’s equitable lien and was not a party to the action brought to foreclose it. This mortgage to Tichenor was foreclosed in-1890, the judgment directing the entire mortgaged premises to be sold in one parcel; they were bid off by Jones, pursuant to a previous arrangement between Jones and the defendant Smith, in accordance with which the referee deeded to Smith a part of the premises including the fifty acres in question.
Held, that, Tichenor having taken his mortgage in 1881, without notice of Swartwout’s equitable lien, and having paid value for it, the judgment obtained in the action, commenced in 1883, to foreclose Swartwout’s lien, did not affect Tichenor’s rights, he not having been a party to that action;
That the Us pendens filed in the Swartwout action in 1889 did not affect Smith’s rights, as his title obtained in 1890, under the foreclosure of the Tichenor mortgage, related back to the date of the mortgage, viz., December 28, 1881; and for the further reason that a Us pendens only operates as a notice requiring all • persons to beware of acquiring rights in the subject-matter of the litigation from any of the parties named therein, and that Tichenor was not a party to that action, nor were his rights affected thereby;
That, assuming, but not deciding, that Jones’ knowledge while acting as Smith’s bidding agent was imputable to Smith, and that Smith knew every fact connected with the title, these facts would not affect the validity of Smith’s title, as a purchaser at a sale in foreclosure takes title by virtue only of the judgment and conveyance, and acquires the title of both the mortgagor and the mortgagee and one which relates back to the date of the mortgage.
Appeal by the defendants, Earl Y. Smith 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 Schuyler on the 29th day of -July, 1895, upon the decision of the court rendered after a trial at the Schuyler Circuit before the court without a jury.
Ejectment. The plaintiff’s title is thus derived: Bernardus :Swartwoufc is the common source of title.. He conveyed the fifty .acres in question by deed recorded April 10,1867, to John F. Still-well, retaining an equitable lien thereon for $1,500 of the unpaid ■purchase money. . January 18, 1883, Swartwout commenced an action in this court against Minor T. Jones individually, and with
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others as administrators of said Stillwell, then deceased, and against Stillwell’s widow and his heirs at law, and other lienors except ' Sherman Tichenor, a mortgagee-, under whom defendant claims,, filing notice of - Us pendens March' 28,-1889, and obtained, judgment therein April 4,1894, for the foreclosure of his lien and. tlie sale of the- premises. The premises were sold under this judgment to the plaintiff by referee’s deed May 17, 1894. The-plaintiff’s title is-clear, unless-"the defendant Smith’s' title obtained under the Tichenor mortgage is better.
The defendant Smith’s title is .thus derived : John F. Stillwell entered into possession on the date of the'deed from Swartwout-to ' him, and'retained possession until his death intestate, April -26,1880. He also owned and was "in possession of 300 acres of other' ad j dining '.lands. ! April 18, 1880, John-F. Stillwell executed three mortgages upon the fifty acres and Ms other lands.., In two of them- Minor T. Jones, was mortgagee.. Stillwell gave the; third mortgage, junior to the two mortgages to Jones,, to Levi IT; Owen, who assigned it to John E. Bates, who, in aiv--action against Minor T. Jones and the mortgagees in the two mortgages of the same date, and the widow and heirs of John F. Stillwell, and not including Bernardus Swartwout-, obtained judgment :of foreclosure April 21,. 1881,- under, .which the mortgaged premises, including the fifty acres in question; were .sold to Minor-T. Jones, the sheriff’s-deed of sale to Jones bearing date June 4, 1881, and being recorded .September 8, 1881. Thus,, according to the paper and record title, Jones became the owner of the premises, -including the fifty acres. December 28, -1881,-Jones gave á mortgage, recorded that, day, to Sherman Tiche^. nor for $11,000, upon the -entire preinises. ■ Tichenor had no notice, of Swart wont’s equitable lien. -It was decided in Swartwbut’s judgment that Jones had notice of "it. Tichenor- subsequently died, and .his. executor "foreclosed this mortgage in an action against -Jones and his tenants in possession, ‘ judgment being entered January 27, 1890. The referee appointed to make the sale offered the premises fór sale in one parcel, pursuant to the direction of the. judgment. His report of sale recites that he - struck the same off to Minor T. ■ Jones and Earl Y.-Smith. : By previous arrangement of contract between Jones and. the defendant Earl Y. Smith, Jones bid -off the premises, and, pursuant to such arrangement, -the referee gave to
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the defendant Smith a deed, dated April 1, 1890, and recorded two days later, for 111£ acres, including the 50 acres here in question, the referee’s deed reciting, “ at which sale the premises hereinafter described were struck off to the said party of the second part (Smith) for the sum of $5,017, that being the pro rata proportion of the highest sum bidden for the same.” The deed recites the payment by the defendant Smith of such sum as the consideration. Smith entered into possession and still retains the same. This is his title.
The trial court held that Jones was the purchaser of the premises at the Tichenor foreclosure sale; that the defendant Smith was his legal privy, and was bound by the judgment foreclosing Swartwout’s' equitable lien, as he purchased after the Us pendens was filed in the action brought for that purpose, and, therefore, gave the plaintiff judgment for the possession of the premises.
Gabriel L. Smith, for the appellants.
Frederick Collin, for the respondent.

The defendant Smith’s title to the fifty acres in question, if directly acquired under the Tichenor foreclosure, relates back to the date and record of the Tichenor mortgage, namely, December 28, 1881. (Rector, etc., Christ P. E. Church v. Mack, 93 N. Y. 488 ; Batterman v. Albright, 122 id. 484; McFadden v. Allen, 134 id. 489.) Jones, when he gave that mortgage to Tichenor, had a record title to the fifty acres, good upon its face, derived through Stillwell’s mortgage to Owen. Swartwout did not commence his action against Jones and others to foreclose his equitable lien upon the fifty acres until January 18, 1883. He did not make Tichenor a party to that action. The judgment in that action, therefore, in no way affected Tichenor’s mortgage. (Campbell v. Hall, 16 N. Y. 575 ; Zoeller v. Riley, 100 id. 102; Masten v. Olcott, 101 id. 152; Foster v. Derby, 1 Ad. & El. 781.) Tichenor was a mortgagee of the whole 350 acres, including the 50 in question, in good faith for value, namely, $11,000, the amount expressed in the mortgage. (Wood v. Chapin, 13 N. Y. 509 ; Lacustrine Fertilizing Co. v. L. G. &

p. 150
Fer. Co., 82 id. 476.) The learned trial court, as we see by his-.' holding upon the trial and by his opinion, refused to find that Swartwout was in possession of the ■ fifty acres at the time Jones . gave the mortgage to Tichenor!, and thus that- Tichenor was not charged with notice of Swartwout’s equitable lien.

"We have examined the evidence in that respect.' It shows that when Jones gave the mortgage to Tichenor, Swartwout was not living' upon the fifty acres, but was working the same on. shares under Jones and the Stillwell estate. Knowledge of these facts would not have impaired Tichenor’s mortgage. Probably Tichenor; whs not made a party to the Swartwont action, because it was not thought. to be safe to challenge his rights under his recorded mortgage. Thus the ¡Recording' Act protected' the Tichenor mortgage ’against the unrecorded lien of Swartwout, and against his subsequent .judg- • meht foreclosing it.

The Tichenor mortgage was- foreclosed . and the fifty acres in question sold- to the defendant Smith under the judgment entered in the action brought for that purpose during the pendency of the Swartwout action, judgment being . entered' ■ January 27,,. 1890. Swartwout filed notice oí Ms pendens in his action March .2.8, 1889. The notice of Us pendens-, filed in, the Swartwout action, was notice to all-the world.to beware of acquiring any of .the rights in the • subject-matter of that litigation from any of the parties thereto, ' but as Tichenor was not.a party,, nor his rights in litigation in that action, the notice of lis pendens in no .Wise affected him or them, and, therefore, in no wise-affected the defendant Smith’s title under Tichenor’s mortgage. . (Code Civ. Pi-oc. § 1671.; Kursheedt v. U. D. S. Inst., 118 N. Y. 358 ; Hayes v. Nourse, 114 id. 595.) This must be so, otherwise Swartwout,, by filing a notice of Us pendens, after he'had lost the priority of his equitable lien over Tichenor’s mortgage, could reacquire that priority against any purchaser upon the foreclosure of that mortgage,- thus nullifying the mortgagee’s protection under the ¡Recording Act, and also the rule that places a purchaser under the foreclosure -of the recorded mortgage under the same protection as the mortgagee. (Lacustrine Fer. Co. v. L. G. & Fer. Co., supra; Wood v. Chapin, supra.)

■ The learned trial judge held that the defendant Smith was the . legal privy of the .mortgagor, Jones, deriving title under him, and,

p. 151
therefore, as we infer, was charged by the Swartwout judgment with the priority of Swartwout’s equitable lien. Aside from the notice of lis pendens in the Swartwout action, disposed of above,, this view seems to rest upon the fact that at the Tichenor foreclosure sale Jones, in pursuance of a previous understanding with the defendant Smith, bid off the whole mortgaged premises in one parcel, but really 111£ acres of them for the defendant Smith, and the rest for himself. It is unimportant whether the defendant Smith bid off the premises in person or by another. It is not the person of the bidder that determines the nature of the title acquired under a foreclosure sale, but the judgment and the conveyance given under it" to the real purchaser. It is the “ conveyance upon a sale made pursuant .to a final judgment in an action to foreclose a mortgage” that vests the .title. (Code Civ. Proc. § 1632.) .Such conveyance vests in the person to whom it is given the title of both mortgagor and mortgagee (Id.), and relates back to the date of the mortgage as we have stated above.

Assuming, but not -deciding, that whatever knowledge Jones had while acting as the bidding agent of Smith was imputable to Smith, and in like manner further assuming that at the foreclosure sale Smith knew every fact connected with the title, the result would be that he knew that if Jones should, under the Tichenor foreclosure, take title to the fifty acre's, Swartwout’s original equity in it might reattach, but would not attach if he himself should take the title. (Clark v. McNeal, 114 N. Y. 287 .) And he also knew that whatever was defective in the title from Jones as-.mortgagor would be supplied by title from Tichenor as mortgagee. But this is of no importance since Smith took his title under the foreclosure judgment, and not otherwise.

Our conclusion is that the plaintiff’s title was subject to the Tichenor mortgage, and that this mortgage was valid, and the defendant Smith holding title under the judgment foreclosing it •has, upon the record before us, the better title to the fifty acres. As Swartwout was not a party to the foreclosure of the Tichenor mortgage we do not intend by this decision to prejudice any right which the plaintiff may have, upon facts which may be adduced hereafter, either to subject it to his judgment or otherwise to impeach it.

p. 152
The judgment, should he reversed' and new trial granted, with costs to abide the event.

All concurred.

' Judgment reversed and a new trial granted, costs to abide the. event, •

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