Heatley v. Finster — 2 Johns. Ch. 157

Majority

p. 157

Heatley and others against Finster and Muller.

Headnote

A purchaser is chargeable with notice of a suit pending in this Court; and after such notice all further proceedings towards completing the purchase, or paying the money, are fraudulent and void. A denial of notice of the pendency of the suit is not sufficient, if the defendant at the time knew the character of the person of whom he purchased, that he was a trustee, and had no power to sell.

see Murray v. last case,

August 13th.

[ * 159 ]

WINTER, one of the plaintiffs, was a trustee of certain estates of Heatley, the plaintiff, with power to sell parts of the same under certain restrictions. Heatley, having no children, granted the trust estates to T. Green, his sister, for life, with power to dispose of the same among her children. On the 17th of May, 1809, Winter sold 50 acres, part of the trust estate, to Muller, the defendant, for 750 dollars, payable in seven annual instalments, with interest; the first instalment to be paid on the first of April, 1811. Muller occupied the land so purchased of Winter until 1814, having paid 80 dollars of the purchase money, when he assigned *the contract for the purchase to Finster, the defendant, who entered on the land, and has improved it to this time. A bill having been filed against Winter for a breach of trust, an injunction was issued, to restrain him in the further exe

p. 159

cution of his trust, and Murray was appointed to manage the trust estates in his stead. Murray obtained an order of this Court that Winter should convey the premises in question to Muller, or to Finster, his assignee, on payment of what was due on the contract, or on his giving a bond and mortgage for the residue of the purchase money, which order was served on Finster, who refused to concur in carrying the order into effect, and Winter also refused to deliver the contract to Murray, alleging that it was mislaid. The bill stated that Winter and Finster, by concert, obtained an order of the Court, to carry into effect the contract between them, with a view to defraud the owners of the estate, &c.

[ * 160 ]

The defendant Finster put in a plea and answer. The plea stated that Muller, in 1812, assigned the contract to Finster, who agreed to pay the purchase money, but that he, Finster, had lost the contract, or delivered it up to Winter; that Winter having approved of- the assignment, the defendant Finster, in September, 1813, filed a bill against Winter for a specific performance of -the contract; and in the same month, a decree was entered, by consent, for carrying into effect the contract, on payment of the purchase money due to Winter, and giving him a mortgage for the residue. That in pursuance of that decree, Winter, on the 14th of January, 1814, in consideration of 1,015 dollars, due on the contract, conveyed the premises to the defendant F., who, at the same time, gave to Winter his promissory notes for about 300 dollars, and which, except one for 118 dollars, were negotiated, and had been paid by the defendant to the holders ; and that he paid the residue of the purchase money to Winter. The defendant F. averred, that at the time of purchasing the contract, and receiving the conveyance *from Winter, and making the payment of the purchase money, and giving the security pursuant to the said order or decree, he, F., had no knowledge of any suit in chancery against Winter, or of any order or injunction of the Court, as mentioned in the bill of the plaintiffs; and the defendant, therefore, pleaded the conveyance, &c. in bar of the relief prayed by the plaintiffs.

In his answer, the defendant F. denied any personal knowledge of the order or injunction against Winter, but he believed they existed as stated in the bill. He admitted the service on him by Henry Green, in August, 1814, of the order to carry into effect the purchase with Murray, which he refused on the ground that he had, before, without any knowledge of any order of injunction, received a conveyance of the premises from Winter, and had paid part of the consideration money, and given his notes for the residue. That, being an ignorant man, occupied in agriculture, he

p. 160

acted, in a great degree, under the influence of Winter, who represented himself to be, and was generally considered to be, the owner of the land in fee.

The bill was taken pro confesso against Muller

Gold, for the plaintiffs.

He relied on the case of Murray v. Ballou, ( 1 Johns. Ch. Rep. 566 .) and the cases there cited.

N. Williams, for the defendant Finster.

[ * 161 ]

When Finster took an assignment of Muller’s contract, the consideration had not been paid to Winter. The plea admits that 1,015 dollars were due and paid by the defendant to Winter, in 1814, when a deed was executed. The question is, whether the whole negotiation between the defendant and Winter, and the payment of the money, was not, in judgment of law, a fraud upon the rights of the plaintiffs. I consider the defendant as chargeable, at that time, with notice of the suit then *pending against Winter, for a breach of trust. In explanation of the rule on this point, I can add nothing to what was said in the case of Murray v. Ballou, ( 1 Johns. Ch. Rep. 566 .) The defendant denies notice of the suit, but there is no denial of notice of the character in which Winter dealt; and, indeed, after the proof that we have had in the case of Murray v. Finster,^[1] of positive and direct notice given to the defendant, as early as 1812, (and which notice is not even denied in that case,) the denial of actual notice here of the existence of any suit against Winter, when he made the payment in 1814, cannot but excite surprise and concern. The amicable suit instituted between the defendant and Winter in September, 1813, and terminated as soon as it was commenced, by a decree, by consent, adds nothing to the validity of the defendant’s claim. It was nothing more nor less than a private agreement put into the shape of a decree for a more imposing appearance. Muller’s original contract, though good in the first instance, was left inchoate, without delivery of the deed, or payment of the money; and when the party became chargeable with notice of the suit against Winter, he was bound to cease all further dealing with him, on the subject matter of the trust. (See cases cited in 1 Johns. Ch. Rep. 301 .) To allow the payment to stand good would be permitting trust property to be fraudulently dissipated in contempt of the authority, and in evasion of the process of this Court.

1 shall, therefore, decree, that the defendant Finster, within 40 days from the service of a copy of this decree,

† † Ante, p. 155.

p. 161

Pay t0 the solicitor of the plaintiffs, or bring into Court, the sum of 1,015 dollars, with interest from the 14th of January, 1814, unless he shall, within that time, elect to convey *n toe, and actually convey by deed, with proper covenants against his own acts, to be approved by a master, the premises in the pleadings mentioned, to Mary Green and Henry Green, to be held by them in trust, &c. • and that in either case, he pay the costs of this suit. ■