Peck v. Peck

The learned counsel for the appellants has, with a most commendable desire to bring to an early termination this unfortunate litigation, waived all his exceptions taken upop, the trial which do not directly bear upon the merits of the important matters in dispute between the parties, and both counsel have united in submitting for our determination the three main subjects of dispute upon which the parties are wholly unable to agree.

On January 4, 1882, while the disputes still existed and the estate was unsettled, the whole interest of Ernest was sold on an execution issued upon a judgment against him, obtained by one Sehmidtz for $244. Thomas Morrell, the father-in-law of Ernest, bid in the property for that sum under an agreement with him that he might, at any time thereafter, redeem his interest and receive it back by paying the above amount and interest. The differences continued between the brothers in regard to the settlement of the estate and the various claims made by them in regard thereto, when, in the fall of 1882, the counsel for the respective parties consulted together, and it was finally understood between them, and ratified by their respective clients, that all matters of difference should be settled by an agreement between the counsel winch should be carried out by their clients. Humerous meetings of counsel were had, and, on February 21, 1883, an agreement had substantially been come to between them on most of the matters at issue. The fact of the counsel having substantially arrived at an agreement atameetingbetweenthemonor about. February 21, 1883, was known by the brothers Ernest. Theodore and Gordon almost immediately, and soon thereafter by

Immediately after tins meeting on February twenty-first, Gordon met and had a conversation with Ernest, and asked him for a confession of judgment to secure him for the debt Ernest owed him of about $100, for something wholly unconnected with the estate. Ernest told him he had no money and could not pay his debts until he got his dues from the estate, and he would not confess any judgment if it was to be enforced against him before such settlement. Finally, Ernest consented to give such a judgment, provided it was to be used only as a hen and not to be enforced, in any event, before May first following; and under such positive agreement on the part of Gordon, Ernest subsequently, and on the nineteenth of March, sent the confession of judgment to a lawyer at Haverstraw, who delivered it to Gordon. On the 3d of April, 1883, Gordon docketed this judgment, and with his brother Theodore went to the sheriff’s office and, by virtue of this judgment, redeemed the interest of Ernest from the sale under the Schmidtz judgment, and paid to the sheriff the amount of Morrell’s bid and interest, and on the f ourth of April the sheriff conveyed to Gordon all the interest of Ernest in the homestead, by deed duly delivered which Gordon had recorded. Theodore was present at the time of the redemption and had full knowledge of it and of the delivery and receipt of the deed. Ernest relied on Gordon’s promise not to enforce the judgment, and both he and Morrell, in good faith, believed that all the matters between the heirs had been settled, and by reason thereof neither took any steps or made any arrange

I do not pretend to have stated all the facts in this case relating to this special subject, but only those which I think are sufficient to make the question to be decided intelligible. That question'is, can Gordon maintain his claim that by this redemption he has succeeded in obtaining all the interest of Ernest in the homestead, and that he is now the absolute owner thereof? We do not think he can. We think it would be a fraud upon Ernest to permit it, and we do not know of any rule of law or equity which prevents a court from so declaring.

We think the meaning of the evidence upon which the finding of the court is based, as to the terms upon which the judgment was confessed, is that the defendant Gordon was to have his judgment as a security for his debt, and it was not to be enforced in any event until May first; and that if any • thing occurred in the meantime rendering it necessary for Gordon to act, in order to keep his judgment alive, he should do no more than the occasion called for, and the effect should be nothing more than to keep it alive as a security. We think the redemption under itiand the claim to thereby retain the whole interest of Ernest in the estate, operates with great injustice upon Ernest, and is, in effect, a gross fraud upon him. It is true, as stated by appellants’ counsel, that at the time of the redemption the right of Ernest to redeem under the statute from the sale on the Schmidtz judgment had terminated with the expiration of the year from January 4, 1882, but he still had an interest in the premises and the title thereto remained in him until the expiration of the fifteen months from the time of sale. During this three months he could still confess a judgment which would be a lien upon his interest, or he could mortgage it and the judgment-creditor or mortgagee could redeem. (See cases cited in opinion of Andrews, J., in Wood v. Rabe, 96 N. Y. 414 ,423, 424.) In addition to this, however, Ernest had his right to redeem under his agreement with Morrell, which was valid. (Ryan

We fail to see any reason why the agreement between Gordon and Ernest was not a valid one. It was on good consideration, for by getting the judgment Gordon obtained what he wanted, an acknowledgment of the existence of the debt, the amount thereof and security for it. He made the agreement that he would not enforce it for a certain time and thereby he obtained the judgment. He has violated his agreement, and while clinging to the results of it he denies its efficacy in law. He says the effect of what the plaintiff asks is to make him a trustee and to create a trust, by parole in lands under circumstances not permitted by law. - We do not think so. The effect of his conduct is that a court of equity treats him as a trustee ex maleficio, and, as in that capacity,

The negotiations for a settlement of all differences were substantially concluded and a settlement effected, one of the terms being that Ernest or Morrell was to pay or take care of all the judgments against Ernest, and all parties knew this; and Ernest and Morrell relied on this fact as a reason for talcing no steps to secure or protect the interest of Ernest, no one supposing that any hostile use would be made of any judgment, when, because of the supposed settlement, all reasons for it had ceased.

Under such circumstances there was a relationship existing between Gordon and Ernest upon the question of the use of this judgment by confession, grounded not only - upon the specific agreement already spoken of, but also upon the faith placed in the settlement of all differences, which made such relationship fiduciary in its character, and which naturally led Ernest to suppose that no advantage would be taken of him by his brother by a fraudulent and unfair use of the judgment which he confessed for a security only. And it is seen that the judgment was itself confessed only upon the assump

Under all the facts, we think the case of Wood v. Sabe (supra) is authority tor the statement that Gordon is placed in the position of trustee of Ernest with reference to his title to the interest of Ernest, which he claims to own under his redemption by virtue ot his judgment by confession, subject to the payments to Gordon as above described.

(2.) Theodore G. Peck, on the 2d of April, 1883, having the same knowledge in regard to the situation as his brother Gordon, purchased a judgment in favor of one Billings against his brother Ernest, amounting, with-interest, to about $6,600, for the sum of $3,000, and now claims that he is entitled to be paid the full amount of that judgment which he still holds. We think he has no such right. In addition to his knowledge of the circumstances which have been stated in regard to Gordon, Theodore had stated to Ernest at the Hoffman House, in 1882, that he would protect his interest in the estate, and had written him a letter, dated March, 1882, in which he reiterated the promise. He had been substantially the agent of Ernest in regard to the estate, and was under express obligations to look after and preserve his interest in it. It is true the authority of Theodore to collect rents and make leases, etc., of the .estate had been annulled by Ernest under the contract entered into between the brothers, and the power of attorney therein referred to had been by him revoked, yet Theodore was still, to some extent, m possession of the estate, attending to all the business in regard to it, and received all the rents, income and profits thereof, and Ernest might well have supposed from his conversation with Theodore and the letter referred to that he would fulfill his obligations and not seek to take advantage of him. notwithstanding the revocation of the power of attorney and the annulling of the contract

(3.) There was a mortgage upon a portion of the premises owned by John Peck at the time of his death which, in the fall of 1881, amounted, principal and interest, to between $16,000 and $17,000. So far as appears there were no threats on the part of the mortgagee to foreclose; nor was there, at the time of the purchase by Theodore, any immediate and pressing necessity to- forthwith take care of that mortgage. In the latter part of 1881, Theodore purchased the mortgage for $10,000, and took an assignment of it to lfimself, and now claims to hold .it for its full amount. We think he is not entitled to do this. One of the leading cases upon the subject of the right of one tenant in common to bid in an outstanding title or incumbrance on the estate is Van Horne v Fonda ( 5 Johns. Ch. 388 ,407). The learned chancellor there says that although he would not deny that one tenant in common might not, in any possible case, bid in an outstanding title for. his exclusive benefit, yet (continuing), he says, “ when two devisees are in possession under an imperfect title derived from their common ancestor, there would seem, naturally and equitably, tó arise an obligation between them, resulting from their joint claim and community of interests, that one of them should not affect the claim to the prejudice of the other. It is like an expense laid out upon a common object by one of the owners, in which case all are entitled to the common benefit, on bearing a due proportion of the expense. * * * Community of interest produces a community of duty; and there is no real difference, on the ground of policy and justice, whether one co-tenant buys up an outstanding incumbrance or an adverse title to disseise and expel his co-tenant; It cannot be tolerated when applied to a common subject m which the parties had equal concern, and which created a mutual obligation to deal

In this case, if the mortgage were due and the defendant Theodore desired to redeem, he must, of course, have redeemed by paying the whole mortgage, or whatever amount the mortgagee was willing to take. He could not redeem his share of the estate from the hen of the mortgage by paying simply what would amount to his share of the mortgage. If an incumbrance be bought in by a co-tenant or paid under such circumstances as exist in this case, the payment would operate as an equitable assignment from the mortgagee to himself, and his right under such equitable assignment would he to exact contribution from his co-tenants for the .amount he had paid to redeem the mortgage. Pomeroy, in his excellent work on Equity Jurisprudence (§ 1221), states this doctrine fully. The same principle is decided in Rothwell v. Dewees (2 Black [U. S.] 613); Weaver v. Wible ( 25 Penn. St. 270 ), and Lloyd v. Lynch (28 id. 419, 424 ).

The- case of Streeter v. Schultz ( 45 Hun, 406 ) is in no way adverse to this principle. In that case a mortgage upon the,.property was foreclosed. Schultz was a tenant in common with the plaintiff by virtue of a conveyance of an undivided half of the premises from the plaintiff to him, subject to a mortgage given by the plaintiff to secure the purchase-money. At the foreclosure sale of that mortgage, Schultz bid in the property for himself. He was also the owner of a subsequent mortgage given by the plaintiff to him on the plaintiff’s undivided part of the premises; and the court held that, under such circumstances, it being a public sale, judicial in its nature, and the relations between the parties being at arm’s-length, the case was taken out of the ordinary rule, and that the defendant, upon bidding in the property, obtained a good title thereto. In this case, on the contrary, at the very time when Theodore purchased the mortgage (which was at private sale), he was residing in the family mansion, where he had continued to reside since his father’s death, and for a long time before it, and he knew that Ernest was in greatly embar

Upon these facts, a court, which permitted Theodore to buy in a mortgage for much less than its face and to insist upon payment to him at the same rate as if he had paid all that was due thereon, would administer, in my opinion, neither law nor equity.

The counsel for the defendant Theodore claims, however, that even if he would not have the right at first to hold the mortgage for the full amount, yet, when informed of the purchase, the plaintiff’s assignor, Ernest, should have offered to contribute his share of the purchase-price of the mortgage, that such offer should have been made within a reasonable time after knowledge of the purchase, and the failure- of Ernest to make ‘it entitled the defendant to enforce the mortgage for its full amount.

We do not think that the defendant places himself within any rule permitting such a result. All that appears m -the evidence on the subject is that the defendant, Theodore, pur chased this mortgage in December, 1881, and that on the 9th of February, 1882, when a question arose as to leasing a rolling mill on his father’s premises, Ernest was present and heard that Theodore had purchased the mortgage. It is not found as a fact, but Theodore says in his evidence that the price he gave for it was mentioned, and that he then said that he should hold it for the full amount of principal and interest. Ernest says he does not think the amount paid by Theodore was mentioned. It was not a conversation addressed to him, and no demand for contribution and no intimation to that effect was made by Theodore. At that time the contract had been made by which Theodore was constituted the agent of the

The case of Lee v. Fox (6 Dana [Ky.], 171, 176), is- substantially an authority for the proposition announced here, although there is a mere statement contained :in the opinion that the election should be made within a reasonable time. We think that in this case there was no such presentation of the subject to Ernest as to call upon him to make an election, even if it could be assumed that such a purchase, under the circumstances, if a demand had been made, called for contribution at the peril of an enforcement of the mortgage for the full amount.

The above are all the questions submitted to.this court, and. in regard to each of them we think the decision of the General Term was correct.

Its order denying a new trial should, therefore, be affirmed, with costs.

All concur.

Order affirmed.