Chautauque County Bank v. White

by the terms of the sale, under which the defendant claims title to the premises in question, the purchaser was to take his title subject to the liens and„ incumbrances thereon. And that those who attended the sale might be apprised of the extent of such incumbrances, a schedule of judgments was exhibited, to the amount of about $20,000. The sale was conducted under the direction of the defendant; and it must be presumed that it was with his knowledge and approbation that those present at the sale were informed, that the purchaser of the lands to be sold, must take the property charged with this formidable amount of judgments. The defendant must himself admit, that when he purchased he supposed all these incumbrances actually existing and chargeable upon the property. This conclusion is necessary, for the vindication of his integrity in the transaction. For, if he then believed that the purchaser would hold the premises subject only to the lien of such judgments as had been docketed prior to the assignment by Saxton to the receiver, it was a gross fraud for him to have it understood by all attending the sale, except himself, that all the judgments then outstanding against Saxton, were incumbrances upon the property. The defendant knew then, that Crosby was primarily liable for the payment of the $1260, for which judgment had been recovered against Saxton. He knew that the Webb &• Douglass judgment had, in fact, been paid. He also knew that the receiver then had actually in

But I think the defendant took a more correct view of the question, in his letter of the 4th of April, 1840, than he seems to have entertained since he became the purchaser. He then believed, and acted upon the belief, so at least I must assume, that all the judgments which had been recovered against Sax-ton, were liens upon the real estate. Hence he said to the receiver, that it would be mere form for him to sell; that the property was worth nothing above the judgments, except the value of the use of it, until a title could be perfected under a sheriff’s sale; and that after the sale by the receiver, the whole real estate would remain “ a, bone” for creditors, who would redeem over each other, until it should be run up to the amount of $4612, or such other amount as it might be supposed to be worth. I am inclined to concur with the defendant in the correctness of this opinion. The receiver was, what Chancellor Walworth, in Verplanck v. The Mercantile Insurance Co. (2 Paige, 452,) called a common law receiver. Such a receiver is defined to be a person appointed by the court, to receive the rents, issues and profits of land or any other thing in question in the court of chancery, pending a suit, where it does not seem reasonable to the court that either party should do it. ( Wyatt's Prac. Reg. 355.) He is appointed to protect some fund during the litigation, and has no powers, except such as are conferred by the order for his appointment, and the course and practice of the court. (2 Paige, 452, above cited.)

I propose, therefore, in the first instance, to inquire what has

In Hadden v. Spader, ( 20 John. 554 ,) the doctrine, which had previously been held by Chancellor Kent, was settled by the court for the correction of errors, that a judgment creditor, whose execution had been returned unsatisfied, might file his bill in chancery, to have his judgment satisfied out of the equitable interests of the debtor which could not be reached by execution, and that the commencement of such a suit gave the creditor a lien upon such equitable estate of the debtor. In Edmeston v. Lyde, (1 Paige, 637,) the chancellor extended this principle, so as to reach an equitable interest of the debtor in real estate. This decision was made just before the revised statutes took effect. The doctrine of Hadden v. Spader having been questioned in Donovan v. Finn, (1 Hopkins 59,) the revisers, with a view as they state, to preserve the rule as laid down in that case, proposed to introduce it into the statutes. Two sections were accordingly reported, which provided for the filing of a bill upon the return of an execution unsatisfied, “to compel the discovery of any property, or thing in action, belonging to the defendant, and of any property, money or thing in action, due to him or held in trust for him, and to prevent the transfer of any such property, money, or thing in action, or the payment or delivery thereof to the defendant,” and further declaring that “the court should have power to decree satisfaction, fyc. out of any property, money, or things in action, belonging to the defendant, or held in trust for him, which should be discovered by the proceedings in chancery, whether the same were originally liable to be taken in execution or not. The legislature amended the latter section as prepared by the revisers, by inserting the word “personal” before “property," and as thus amended, adopted it. The fact that the court is thus authorized, in terms, to decree satisfaction, &c. out of personal property, would probably of itself be sufficient to justify the in

The course and practice of the court of chancery will be found to correspond, uniformly I think, with the power thus conferred by the legislature. The court has never, within my experience, asserted its power to decree the sale of the real estate of a judgment debtor to satisfy the judgment. In a case which recently came before this court, at a general term in the fifth judicial district, Mr. Justice Gridley holds the following language: “It is not within the scope and object of a creditor’s bill, properly so called, to direct a sale of the real estate of the judgment debtor.

By the decree of the first of November, 1838, which was the only order or decree made against Saxton in the Webb & Douglass suit, the assignment which had been executed to Crosby and Crane, was declared void, and a receiver was directed to be appointed, who was to possess the usual powers and authority. And when such receiver, with such powers and authority, should be appointed, Saxton was required to “ assign, transfer and deliver over on oath to such receiver, all the money, equitable interests, property, things in action, rents, real es- . tate and effects, which were in his possession, custody or control, at the time of the service of the injunction. Was it the intention of the court, I ask, in view of what we have seen of the power conferred upon it, and its uniform course and practice in such cases, to clothe the receiver to be appointed with power

I think, too, that the plaintiffs had a right to ask a court of equity to remove the cloud' upon their title which the receiver’s conveyance to the defendant had created. Whether a bill in equity can be maintained to avoid an instrument, to which there is, appearing upon its face, a valid legal objection, on the ground that, though void, it tends to cast a cloud over the plaintiff’s title, is a question by no means well settled. Chancellor Kent, in Hamilton v. Cummins, (1 John. Ch. 517,) holds the affirmative of this question. He says, the weight of authority and the reason of the thing are equally in favor of the jurisdiction, whether the instrument is, or is not, void at law, and whether it is void for matter appearing upon its face, or from extrinsic proof. Justice Story maintains the same position. “Whatever may have been the doubts or difficulties formerly entertained upon this subject,” says he, “ they seem by the modern decisions to be fairly put at rest, and the jurisdiction is now maintained in the fullest extent.” (2 Story's Equity Juris. § 700.) Chief Justice Nelson, in delivering the opinion of the court for the correction of errors, in The Mayor, &c. of Brooklyn v. Messerole, ( 26 Wend. 132 ,) seems also to concede the jurisdiction of the court in such cases. On the other hand, Chancellor Walworth, in Van Doren v. The Mayor, of New York, (9 Paige, 388,) asserts that, where a valid legal objection appears upon the face of the proceedings through which the adverse party can alone claim any right to the complainant’s land, it is not in law such a cloud upon the complainant’s title as will authorize a court of equity to interfere. In Piersoll v. Elliot, (6 Peters, 95,) Chief Justice Marshall, referring to this question, says: “ The court forbears to analyze and compare the various decisions which have been made on this subject in England, because, after considering them, much contrariety of opinion still prevails on the question of general jurisdiction where the instrument is void at law on its face. .The inclination of my

However the question may be determined, all the authorities agree in conferring jurisdiction where the claim, whose shade is cast upon the plaintiff’s title, is not utterly void upon the face of the instrument itself, but is shown to be so by extrinsic evidence, or where it is shown to be against good conscience to allow the party to set up his claim against the plaintiff’s title. “ Such jurisdiction,” says Story, “is founded on the true principles of equity jurisprudence, which is not merely remedial, but is also preventive of injustice.” (See cases above cited ; also Pettit v. Shepherd; 5 Paige, 493.) Unless, therefore, I have wholly mistaken the principles upon which this case depends, the plaintiffs had a right to appeal to a court of equity for relief against the inequitable claim of the defendant, and have established their right to such relief. '

My opinion is, that the decree appealed from should be reversed, and a decree should be entered, declaring that the plaintiffs’ judgment, at the time of the receiver’s sale, was a lien upon the lands purchased by the defendant at such sale; that, by the sale on the 18th of July, 1840, under the plaintiffs’ judgment and the sheriff’s deed executed in pursuance of such sale, the plaintiffs acquired a title to the lands so sold, superior to the defendant’s title derived from the receiver.. The decree should direct that the defendant and his tenants, and any other person claiming under him, surrender to the plaintiffs the possession of the lands purchased by them at the sheriff’s sale, except the lot conveyed to the defendant by William H. Seward and wife, on the 12th of January, 1842; that the defendant should be charged with the rents and profits of the property, since, by virtue of their sheriff’s deed, the plaintiffs became entitled to the possession of it, and credited with the value of any permanent improvements made by him upon the property; and also the amount paid by him on account of any incumbrances upon the property prior to the plaintiffs’ judgment; that it be referred to some suitable person to take an account upon these principles, and that the defendant pay to the plaintiffs any amount which may be

Watson, J. concurred.

Parker, J. dissented.

Decree accordingly.