Ewing v. Wightman — 52 A.D. 416

Majority

p. 416

Henry O. Ewing, as Receiver of the Cardiff Coal and Iron Company, Appellant, v. George B. Wightman, Respondent.

Headnote

Promissory notes given to pay for land —• a receiver of the vendor must tender a deed before he can recover thereon — a personal judgment is only proper where personal service of process or an appearance is shown.

An action upon promissory notes given by a vendee of land in part payment therefor, cannot be maintained against him by the vendor’s receiver unless the latter'makes a tender of a deed conveying a valid title to the land.

Semble, that the United States Circuit Court, although it may dispose of the interest in land within its jurisdiction of a party defendant in an action brought therein, has no jurisdiction to grant a personal judgment against such party where he has not been personally served with process and has not appeared in the action. .

Appeal by the plaintiff, Henry 0. Ewing, as receiver of the Cardiff Coal and Iron Company, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of- the county of New York on 14th day of February, 1900, upon the report of a referee.

Henry H. Whitman, for the appellant.

William C. Cammann, for the respondent.

This action was once before tried, the plaintiff obtaining a judgment which was reversed by this court upon the ground that the notes in suit were given as the consideration pro tanto for the purchase price of land; and, as between the Cardiff Coal and Iron Company or its receiver, the plaintiff, and the defendant, are •open to all defenses available in an action by a payee against the maker of a promissory note. In the opinion delivered upon that appeal the court say: “It'appears that the lands mentioned in these contracts have been sold by the receiver,' and hence he is incapable of giving title thereto, in case the notes given in pursuance of said contract are'paid, and the consideration for the notes has, therefore, failed. The plaintiff by his sale has elected to terminate the contract, and his action is inconsistent with the enforcement of any rights under it. If a party insists upon his rights under a contract he must do nothing which destroys his power to comply with his obligations contained therein. The defendant is not bound to pay his notes'and get nothing in return.” (Ewing v. Wightman, 28 App. Div. 326 .) The main question is thus disposed of, and we have only to determine whether there were, any facts proved on the new trial which would justify a different result.

The action was brought upon certain promissory notes made by the defendant, whereby he promised to pay, twelve months after date, a sum of money named, with interest from said date. The answer admits the making, executing and delivery of the notes set forth in the complaint; denies that the same were for a valuable consideration, and alleges that they were given as the consideration for the sale of certain lands which were to be conveyed to the defendant by the Cardiff Coal and Iron Company on the payment of said notes; that at the time of" the execution of the said contracts and the making of the notes, the lands therein described were incumbered by a vendor’s lien or liens .for a large amount of the purchase money, the existence of which was unknown to the defendant at the time of the execution of the contract; that at the time • of the maturity of the said notes the said company was insolvent and unable to pay its debts and obligations,-or to perform and carry out said contracts to convey a title in' fee simple with covenants of

p. 418

general warrantythat subsequently the said lands were,sold in pursuance of the judgments to-enforce the liens thereon, and that an effective tender was never .made to the defendant of the conveyance-of- the lands to be conveyed to him under the contract.

Upon the trial the defendant had the affirmative, when the contracts between the Cardiff Coal and Iron Company and the defendant were put in evidence, and it was proved that the notes were-given as part consideration for the lands therein agreed to he conveyed. The defendant testified that no demand was ever made upon him for the payment of the notes; that no offer of a-conveyance of the lots mentioned in the contract was'ever made by the Cardiff Company or the plaintiff; that no deed was ever offered or tendered ; that a Mr. Haynes, who was an assistant to the receiver,, some time in 1894, after the appointment of the receiver, had a conversation with the defendant in relation to the affairs of the company ; that, he came to the defendant and said he was attending to-the matters for the receiver and wanted to talk- to him about the amount of the claim which the company had against him; that the-defendant said that he did' not owe anything and- would not pay anything under any circumstances; that Haynes then said that the lands-had been sold by the receiver and that they were gone. The defendant also'testified that before the notes in suit were due he had a conversation with a Mr. Young, who was a vice-president of the company; that Mr. Young said-that the company was in bad shape ;. that they had sold the property, but that there were liens on the property past due, and that he (defendant) had better not buy any more property. The defendant then rested and the plaintiff offered in evidence the record of an action commenced in the United States-Circuit Court for the eastern district of Tennessee between one George F. Bosworth as plaintiff and the Cardiff Coal and Iron Company and other defendants, in which a decree was entered appointing a receiver, with the usual powers and duties of a receiver appóinted in the United States court, and also the record of an action by the receiver against the defendant Wightman with others,, wherein the notes in suit were specifically described, together with the lots for which the same were given in part payment, in which action, on June 20, 1893, a decree was entered adjudging that the-defendants were justly indebted to the Cardiff Coal and Iron Com-

p. 419

pony for property purchased. This decree appoints a special commissioner and directs him to sell at public auction.all lots upon which the company had retained a lien for unpaid purchase-money notes, including the lots sold to this defendant. The commissioner reported that he liad sold the lots purchased by the defendant, and by a final decree entered, September 8, 1895, it was adjudged that the receiver have and recover of the defendant Wightman the sum of $38,387.62, being the amount due after allowing credit for the sum realized from the sale of his lots, and similar judgments were taken against the other defendants.who had received contracts similar to the Wightman contracts. There was evidence that on November 4, 1892, the lien which was upon a part of the property sold to the defendant was released; that of the seventy-nine lots sold to the defendant, thirty-two were on the “ McElwee Farm,” upon which there was no lien or incumbrance, and forty-seven were on the “ Hembree Farm,” upon which the lien existed. The aggregate amount received by the commissioner for the lots contracted to be sold to the defendant was $245. Upon this evidence the referee filed a short decision stating the grounds as follows: “ That the notes upon which this action is brought were given in consideration of land to be conveyed to the defendant; that the agreements to convey the land and pay the notes were concurrent and. dependent agreements ; that no action could be brought on the notes without a previous tender of a conveyance of the land; that no tender of such conveyance was ever made to the defendant, and that as to a large part of said land the plaintiff was not able to convey an unencumbered title until long after the maturity of the notes,” and directed a judgment dismissing'the complaint on the merits.

We think this judgment was the necessary result of the determination of this court on the former appeal. Assuming that the effect of a failure to tender a deed at the time the contract was to be performed did not abrogate the contract, the corporation had the right to tender to the defendant at a subsequent time a deed of the premises contracted to be conveyed and to demand payment of the amount due upon the notes, or it could elect to declare the contract void on the failure of the defendant to pay the notes when due. So far as appears no election was made. No demand was made upon the defendant at the time the notes were due and no tender of

p. 420

a' deed was ever made. The demand -of a representative of the receiver for a settlement of a claim against the defendant was not.a tender of a deed. A somewhat different account is given of this interview by the receiver’s representative from that testified to by the defendant. But it does not appear that any distinct offer to convey the land was made or that the defendant was told that he could have a conveyance upon payment of the amount; due upon the notes. The position of this representative of' the receiver appears to have been the same as is that' taken by the plaintiff in this action. That was, that, notwithstanding the -failure to convey the lands to the defendant, the plaintiff was entitled to recover from him the amount of the notes in suit. The result of this interview was a demand of. the defendant to pay the notes without tendering to him any deed of the property, or assuring to him in . any way the title to it; and the refusal of the defendant to accede to that demand was-certainly not a waiver of his right to require a tender of a deed which would- convey to him the land Which he had purchased. Assuming that the defendant’s absence from the State of Tennessee excused a tender of the deed when it was due, it did not destroy the obligation of the vendor to keep the title to the land so that it could make a tender of a conveyance when it sought to hold the defendant to his obligation to pay the notes. As we held on the former appeal, the vendor or its successor, the plaintiff, could not voluntarily divest itself or himself of the title to the property so that the contract to convey could not be performed and then recover upon the promise .to pay the money that was to be paid for such conveyance; and it was, I think, quite immaterial whether the vendor divested itself of such title by a conveyance, or instituted an action by the judgment in which the property was sold, when the vendee was not a party so as to be personally bound by the judgment. Before this defendant could be required to pay these notes it was essential that an opportunity should be given him to acquire a title to the lands, an agreement to convey which was the consideration for the execution of the notes. The corporation having failed to make a tender under which the-defendant could obtain a conveyance of the lands when the notes became due, before the defendant could be put in default, it was necessary for the vendor of the land to make a formal tender óf a deed to the defendant

p. 421

which would convey to him a valid title to the land, arid it is not claimed that any such tender was ever made and there is nothing in • the case from which a waiver of such tender could be implied. It may be conceded that the action in the Circuit Court of Tennessee, to which the defendant was made a- party, disposed of the defendant’s interest, whatever it was, in the land there located, and which was sold -under the decree of the Circuit Court. This defendant, however, never having been personally served and never having appeared in the action, the court had no jurisdiction to grant a personal judgment. It might dispose of his interest in the lands, if he had any, or cut him off from making any claim upon the land in question, but could not decree a personal judgment against him which could be enforced in this State. This action, however, is not to enforce the judgment of the Court in Tennessee; it is to recover upon the notes given by the defendant, the consideration for which has failed by the inability of the corporation to convey the land to the defendant, an agreement to convey which was the consideration for the notes, and for those notes the plaintiff was not entitled to recover.

The judgment should, therefore, be affirmed, with costs.

Van Brunt, P„ J., Rumsey and Mo'Laughlín, JJ., concurred.

Judgment affirmed, with costs.

Cases cited

Ewing v. Wightman 28 App. Div. 326 N.Y. App. Div. 1898-04-22 p. 416