Lowry v. Tew — 3 Barb. Ch. 407

Majority

p. 407

Lowry vs. Tew.

Headnote

The principle upon which courts of equity hold that a part performance of a paroi agreement respecting land is sufficient to lake a case out of the statute of frauds, is that a party who has permitted another to perform acts on the faith of such an agreement, shall not be allowed to insist that the agreement was invalid because it was not in writing, and that lie is entitled to treat those acts as ifthe agreement in compliance with which they were performed had not been made.

Taking possession of land under a paroi agreement, and in compliance with the provisions of such agreement, accompanied by other acts which cannot be recalled so as to place the party taking possession in the same situation that he was in before, has always been held to take such agreement out of the operation of the statute of frauds.

Although a party who has gone, into possession of premises under an agreement to purchase the same is, at law, a tenant at will to the holder of the legal title, yet if he is in under a written agreement, made by the owner, to sell and convey the prem

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isci to him; or'tirider a"parol agr'eeitiBtit"Which lias-bedfl’so-far consummatdd^as. ta'< éntillé liiiri-t'o a specific'perfórmance; lid is’in-equity considered-the owner of. that:title'for which he contracted; and which the vendor-is able to give him. And if that title is an equity of redemption,, he has the same claim to redeem, except as' against bona fide purchasers without notice’of his equitable rights: as if the equity’ o'f rcderiiption liad been CotiVéy'ed’to'hita at the"time whert his eqnilablb rights! accrued under the"contract.

It-is'a general* rule of equity pleading thht a defendant Who claims protection as' a’bona fide purchaser without notice,, must deny such notice although it is mot distinctly charged in'the bill.

This was an' appeal from a decretal order of the vice chan-' c'ellor of the eighth circuit, overruling a demurrer to the coinplainant’s bill. Thé object of the'hill was to redeem a farm, of about 203 acres of land- in the county of Chautiatique, fvdm’ A mortgage, and from a foreclosure1 and sale’under the same.

The bill stated1, in substance; that in June; 1833J J. Sherman,.-" being the owner of the farm* hr question, mortgaged it to The'New-York Life insurance and' Trust Company, to* secure: the payment of $1000' and interest. Three* judgments were1 after-wards recovered against Sherman, which became liens upon his equity of redemption in the farm; one in favor of A. Varney of about $250, which was the oldest lien upon the farm, and two others, amounting together to about $1000, both of which belonged to the complainant N. A. Loxvry, on and previous'; to the first of March, 1843. In January, 1843, the farm, was sold upon an execution issued on the oldest judgment, and was purchased by Varnejq the plaintiff in that judgment. And in March, 1843, Sherman, for a valuable consideration, bargained and sold* to the' complainant all his right, title and interest in the farm subject to-the* mortgage and5 judgments;-&c.- and* his equity and right of redemption, and surrendered' the possession thereof to him*,, with the exception of a portion of the farm house. There was no-written agreement, but Sherman- agreed to give the complainant a deed of the premises; to carry into-effect the verbal agree'merit'. And tin the' 14th of the same month- the complainant rented the premises to a tenant, upon shaves; who tiioved into the farm bouse on that day, and continued in possession until after the- sale upon the- decree of foreclosure as

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here after mentioned. But the deed from Sherman for the farm, in pursuance of such agreement, was not made out and executed1 until about the last of May, 18-13, when it was duly acknowledged and recorded.

In April, 1813, The New-York Life Insurance and Trust Company filed a bill in chancery to foreclose the mortgage to the company; making the mortgagor and his wife, and Varney who had bid off the equity of redemption at the sheriff’s sale under his judgment, the only defendants in the suitand a notice of the lis pendens was duly filed on the 25th of the same month. A final decree of foreclosure- and sale was entered in that suit, and the premises were sold by the master, under such decree, in September, 1813, and were purchased by W. H. Tew, the defendant in this suit, for the price or sum of $2034,59. The master conveyed the premises to the purchaser, and brought1 the surplus moneys, amounting to $842, into court. Out of such surplus moneys Varney was paid the amount due to him upon his purchase at the sheriff’s sale; and1 the complainant applied for and received the balance, as a judgment creditor having liens upon the equity of redemption.

The bill also charged, that at the time of the master’s sale,, Tew, the defendant in this suit, knew that Lowry, the complainant, was in possession of the mortgaged premises, by his tenant. And the complainant had offered to redeem the premises, by paying the defendant the amount of his bid at the master’s sale, and interest thereon, and his expenses, upon being indemnified against a mortgage given to The Ncw-York Life Insurance and Trust Company upon the premises for a part of the purchase money on the master’s sale; or to take the premises, subject to the payment of that mortgage, and to pay the defendant the balance of his purchase money and interest. But the defendant refused to permit him to redeem the premises.

¡3. Matthews, for the appellant.

The paroi contract which (.he complainant sets up created no interest in the land. (2 11. (S'. G9, § G.) This section declares in express terms that “no estate or interest in land shall be created,” &c. except in the

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manner specified in that section. Section 8 declares the paroi contract to be void. ' In the revisers’ notes to the 6lh section the person making a paroi contract, and taking possession under it, is called a tenant at will. This was the necessary consequence. Lowry then had no interest in the land, but was a mere tenant at will. It will not be pretended that a tenant at will has a right to redeem. The tenancy at will terminated when Lowry took a deed, 29th May, 1843, more than 30 days after filing notice of lis pendens. There was no such change of possession as would be notice to the complainants in the foreclosure suit. The mortgagor still remained- in the bouse on the premises. Lowry’s cattle and sheep'were, on the prerm ises before the paroi agreement. The only pretence of a change of possession was, that the son of the mortgagor'went into the house on the farm, with his father, and worked the farm oc shares. The mortgagor still living on the place, the presumption arising from the appearances would be, that the son was occupying under his father. Lowry’s cattle and sheep being on the premises was no change, for they were there before the paroi contract. The defendant was an innocent purchaser at the sale, and Lowry was present at the sale and did not give any notice of his intention to redeem, or that he had any rights that were hot foreclosed. All the notice that the defendant had is set forth between folio 23 and 24 of the bill. The fact that Lowry was in possession, by his tenant and cattle and sheep, on the day of sale, and that the defendant knew it, amounts to nothing. Suppose he did know that Lowry was in possession by virtue of his purchase, that could only relate to the legal purchase when he took his deed. He" was informed by the record of the deed. Lowry does not say that he told him or notified him, but that “ he toas informed.” No particular kind or mode of information being expressed, the presumption is that it rvas the legal information obtained from the record, and this information notified the defendant that Lowry had no right to redeem; his deed being subsequent to the filing of the notice of lis pendens. Lowry stood by and saw the defendant purchase the land, and did not set up any right or claim different

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from what the record showed. This state of facts, as detailed in the bill, makes out against Lowry an estoppel in pais, and forever precludes him from redeeming, if he before had the right. (Cowen & Hill’s Notes to Phil. Ev. vol. 1, p. 207 to 209. Dezell v. Odell, 3 Hill, 215 .) It was no part of the paroi agreement that Lowry was to have possession. After making the paroi contract he says the mortgagor surrendered up to him the possession. The power reserved to the court of chancery by the 10th section of the statute of frauds, does not affect the operation of the 6th section, so as to make a paroi agreement create a present interest in the land. The statute is positive and unequivocal in its terms, and prevents the creation of any interest, whatever, either legal or equitable. There is no more foundation for saying that it created an equitable interest, than a legal interest. It excludes any interest. The vice chancellor bases bis decision upon a remark of Chancellor Kent. (4 Kent's Com. 162.) The words there used are, “ Every person who has an interest in, or a legal or equitable lien upon, the lauds,” has the right to redeem. This is not disputed, and it seems a little strange that he should cite an authority so exactly against his position, as the only foundation to rest it upon. Chancellor Kent does not say a legal or equitable interest. It is not pretended that Lowry’s claim was a legal or equitable lien. I know of no authority allowing the owner of a mere equitable interest in land to redeem. It is not, however, conceded that Lowry had even an equitable interest in the land. An executory contract in writing, does not create any interest in lands. The 6th section of the statute declares that nothing short of a conveyance creates an interest in land. In this view of the case, if Lowry’s paroi contract had been reduced to writing, it would not have authorized him to redeem, for the reason that such a contract does not convey an interest in presenti. (Jackson v. Moncrief, 5 Wend. 26 .) The object of the 10th section of the statute of frauds was to permit the court of chancery to compel a specific performance of agreements where there had been part performance; but no power is there given to the court to say that a paroi or written contract creates an interest

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in land, when tile statute has expressly-declared that- it, shall, not create any interest in land. The complainant’s bill does-not show such a contract, as; the court; of chancery would; en-force specifically. The-giving possession-formed no-part*of t-hej contract. The complainant’s bill does not show that any parti of the contract was performed prior-to the-giving-of'the- deed: When the deeds was- given-., it put an- end’ to- all power of the, court of chancery to- enforce performance, if it bad before existed,, so that the 10th section- of the statute becomes entirely nugatory; so far as; this case is concerned-. The complainant- acquired' no right to the -crops on the ground at (he time of (he* master’s- sale, nor to- the use of the- premises after the-sale; Suppose he hada right to redeem, that gave- him-no- right to tlie use of the- land until lie perfected his redemption. Remade no- attempt to redeem until a* year after the sale.

A. Taber, for the respondent.

The-complainant has a right? to-redeem as a* purchaser of the equity of redemption previous-to- the filing of the bill to forecloseand- he is not* barred by the* decree;foreclosing the equity of the- mortgagor; as:he was not a party to-that suit.. The complainant purchased the premises; of the mortgagor, by paroi; previous- to the- commencement of, the foreclosure suit, and this purchase xvas subsequently- consummated by a deed' of conveyance- from the -mortgagor to the* complainant. This purchase by paroi, or contract! of purchase;, would be decreed to be specifically- performed by the mortgagor,, (the vendor,) as-it was made upon “ a good and valuable-consideration,”’and was immediately followed by part? performance; which takes the- case out of the statute of frauds. The, complainant entered into possession of the premises-immediately after hi's-parol purchase; and was- in- possession- by- his tenant?. wlieti- the foreclosure suit was commenced: The-complainant’s: cattle, sheep, and stock were on the premises* when he purchased, and his tenant went to- work, ifcc. Possession has always been held' a part performance- which wilt take a ease- out? of the statute. The complainant was in possession at* the time* the foreclosure suit was* commenced, and this-was notice to tlie

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■mortgagees, the complainants in that suit, and they should have made the complainant in this suit a party, in order to bar his equity. The complainant has a right to redeem simply to protect his interest in the crops .raised by him and his tenant, and to protect himself from the claim made for the value of the crops.

Upon the facts stated in this bill it .must be presumed that Lowry, the complainant, was in the open and notorious possession of the mortgaged premises, by his tenant, at the time the proceedings to foreclose the mortgage were'instituted. I think also, upon the face of this bill, it appears that the verbal agreement for the sale of the premises had been so far consummated, by a part performance, at the time of the institution of the foreclosure suit, as to give to Lowry an equitable right to redeem the premises from the "mortgage as well as from the sheriff’s sale. For he had not only taken possession of the premises, in conformity to the •terms of the agreement, but had actually rented them fora year upon the faith of that verbal contract of purchase. So that if the vendor had resiled from his contract, instead of giving the deed in conformity with tile terms of that contract, it was not in his power to place the purchaser in the same situation in which he was previous to the taking possession under the agreement.

The principle upon which courts of equity hold that a part ■performance of a paroi agreement is sufficient to take a case out of the statute of frauds, is that, a party who has permitted another to perform acts on the faitli of an agreement, shall not be allowed"to insist that the agreement is invalid, because it was not in writing, and that he is entitled to treat those acts as if the agreement, in compliance with which they were performed, had not been made. In other words, upon the ground of fraud in refusing to execute the paroi agreement after a part performance thereof by the other party, and where he cannot be placed in the same situation that he was in before such part performance by him. Taking possession under a paroi agreement,

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and in compliance with the provisions of such agreement, accompanied with other acts which cannot be recalled so as to place the party taking possession in the same situation that he was in before, has always been held to take such agreement out of the operation of the statute of frauds. (See 2 Story’s Eq. § 761, and the cases there referred to ; Keats v. Rector, 1 Pike’s Ark. Rep. 419.)

It is true a party who has gone into possession of premises under an agreement to purchase the same, is at law a tenant at will to the holder of the legal title. But if he is in under a written agreement, made by the owner, to sell and convey the premises to him, or under a paroi agreement which has been so far consummated as to entitle him to a specific performance, he is in equity considered as the owner of that title for which he contracted, and which the vendor is able to give him. And if that is an equity of redemption, he has the same claim to redeem, except as against bona fide purchasers without notice of his equitable rights, as if the equity of redemption had been conveyed” to him at the time his equitable rights accrued under the contract. This complainant, therefore, should have been made a party to the foreclosure suit, in order to cut off his equity of redemption in the mortgaged premises. And if the complainants in the foreclosure suit, at the time of the commencement of such suit, had either actual or constructive notice of his rights, and if the defendant Tew, at the time of his purchase of the premises under the decree, had such notice of those rights, the equity of redemption was not foreclosed as against Lowry.

The deed from Sherman to Lowry, and which was long subsequent to the commencement of the foreclosure suit, was sufficient to account for the possession of the latter at the time of the master’s sale. Such possession at that time0, therefore, was not constructive notice to the purchaser of the complainant’s equity. But it is a general rule of equity pleading that «a defendant who claims protection as abona fide purchaser without notice, must deny such notice, although it is net distinctly charged in the bill. A plea or answer, therefore, denying such

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notice, appears tobe necessary in order to protect the defendant as a bona fide purchaser at the master’s sale.

It is alleged by the defendant’s counsel that the complainant was present at the master’s sale, and concealed from t.he bidders at such sale the fact that he claimed that the foreclosure was invalid, as against him, because he had an equitable right to the premises, subject to the incumbrances thereon, and was in possession, by his tenant, at the time the foreclosure suit was commenced. That fact, however, if it is a fact, does .not appear in the bill. But if set up and insisted on in the defendant’s answer, and established by the proofs, in connection with the fact that Lowry subsequently claimed and received the surplus moneys as a judgment creditor of the owner of the equity of redemption, I should not hesitate to declare such silence a fraud upon the bidders at the master’s sale, and intended to increase such surplus for his own benefit; and that he had no equitable claim to relief as against the purchaser at such sale.

This is a question, however, which does not properly arise upon the demurrer, but must be brought before the court by answer to the bill. The order of the vice chancellor overruling the demurrer was therefore right, and must be affirmed with costs.

It appears by the bill that the defendant had given a mortgage to The North American Trust and Banking Company for a part of the amount due them out of"the proceeds of the sale. And I am inclined to think they should have-been made parties to this bill, to redeem the premises on the ground that the foreclosure and sale were invalid as against him. But es that objection was neither specified in the demurrer, nor urged ore tenus upon the argument before the vice chancellor it cannot benefit the defendant on this appeal.

Cases cited

Jackson ex dem. Shipley v. Moncrief 5 Wend. 26 N.Y. Sup. Ct. p. 411