Mills v. Bliss — 55 N.Y. 139

Majority

p. 139

Jane A. Mills, Appellant, v. Archibald M. Bliss, Respondent.

(Argued November 18, 1873;

decided November 25, 1873.)

Headnote

The right of filing a notice of lis pendens in all actions affecting the title to real property is an absolute one (Code, § 133), not depending on the discretion of the court; when once filed in a proper action, the court cannot order it canceled so long as the action is pending and undetermined.

Where upon the sale of real estate a portion of the purchase-price was paid in railroad bonds, and an action was brought by the vendor to recover the amount so paid, as unpaid purchase-money, and to charge the same as a lien upon the land sold, on the ground of fraudulent representations upon the part of the vendee as to said bonds, in which action a notice of lis pendens was filed, held, that the action affected the title to reaj property, and that an order directing the removal from the files and the cancellation of said notice was error.

It seems that such an equitable action is sustainable; but, whether so or not, the question is not determinable upon an interlocutory motion.

Appeal from order of the General Term of the Supreme Court in the second judicial department, affirming a Special Term order, directing the cancellation of a. notice of lis pendens filed in this action.

This action was brought to enforce an alleged equitable lien for unpaid purchase-money upon lands sold by plaintiff to defendant.

The complaint alleged, in substance, that plaintiff sold to defendant certain premises in the city of Brooklyn for the sum of $37,500; that $25,000 of the purchase-price

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was agreed to be and was paid in the bonds of Avenue 0 Railroad Compapy, in the city, of New York ; that plaintiff was induced, tp.take said, bonds by false and fraudulent representations of defendant, a, director of the company, that the bonds were good, and were for money actually advanced to the company to the full ajnount thereof, and. were secured by mortgage on property of the company, with various, other representations as to the character and value of such property, all of which were alleged to be false and untrue, and that the bonds were in reality worthless. The complaint alleged a tender of the bonds and demand of the amount, and asked that such amount, as unpaid, purchase-money, be adjudged a lien on the lands'.

Albert Mathews for the appellant.

The cancellation of the lis pendens was not authorized by the provisions of the Code. (Burkhardt v. Sandford, 7 How. Pr., 329 ; Code, § 132.) The court below had no power or authority whatever to grant this order, canceling this notice. (Pratt v. Hoag, 5 Duer, 631 ; Murray v. Ballou, 1 J. Ch., 576 , 581; Park v. Jackson, 11 Wend., 451 ; S. L. of 1823, chap. 213, § 11; 2 R. S., 174, § 43; Hall v. Nelson, 23 Barb., 92 ; Griffith v. Griffith, 9 Paige, 317; Meyers v. Buchannan, 46 Miss., 418 .) The Supreme Court has general jurisdiction of this case, and of all the rights of the parties in the premises, both legal and equitable," and may administer both kinds of relief in this action. (Code, § 167; N. Y. Ice Co. v. N. W. Ins. Co., 23 N. Y., 357 ;, Gridley v. Gridley, 24 id., 135, 136; N. Y. & N. H. R. R. Co. v. Schuyler, 34 id,, 46,; Wood v. Brown, id., 346.) It was error for the court below to decide this case on a mere motion before the actual trial of tl^e, issues in the action. (Chapman v. Tanner, 1 Vern. Ch., 267 ; Evans v. Bicknell, 6. Ves., Jr., 183; Burrowes v. Lock, 10 id., 475; Mackreth v. Symmons, 15 id., 329; Story’s Eq. Jur., § 1124; Hallock v. Smith, 3 Barb., 270 ; Dubois v. Hall, 43 id., 30; Fisk v. Potter, 2 Keyes, 68, 74; Manley v. Slason, 21 Vt., 271 ; Grant v. Mills, 2 Ves. & Bea., 306 ; Garson v. Green,

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1 J. Ch., 308 ; Hughes v. Kearney, 1 Scho. Lef., 135; Willard’s Eq. Jur., 124, 443.) The vendee became a trustee of the venddr, for the unpaid purchase-money represented by the bonds, through fraud, and the fact of fraud avoids the possible inference of an intention to waive or actual waiver of the lien by taking the bonds as if in payment. (4 Kent’s Com., 152; Bradley v. Bosley, 1 Barb. Ch., 151 ,152; Coit v. Fougera, 36 Barb., 200 ; Tóbey v. McAllister, 9 Wis., 469 .)

A. J. Parker for the respondent.

Plaintiff, by taking the bonds for the purchase-money, waived any equitable lien she might otherwise be entitled to. (Háre v. Van Dusen, 32 Barb., 92 ; Coit v. Fougera, 36 id., 195 ; Dubois v. Hall, 43 id., 26.) The notice of pendency of action having been improperly filed, it was proper to order it canceled. (Code, § 132.)

We are somewhat embarrassed for the want of the reason of the court below in granting the Order complained of. It is possible that there are reasons which were influential with the members of that court, which have not been brought out by the cotinsel here and have not occurred to us.

The right to file a notice of lis pendens which shall be constructive notice to subsequent purchasers or incumbrances of the property affected thereby, is given in all actions affecting the" title to real property. (Code, § 132.) This is an absolute right, not depending on the discretion of the court; and a notice once filed in a proper action, the court can only order canceled when the action 'shall be settled, discontinued or abated; that is, the court cannot interfere -with it, or derogate from its efficiency as a notice affecting subsequent purchasers or incumbrances, so long as the action is pending and undetermined. (Code, supra ; Pratt v. Hoag, 5 Duer, 631 .) If filed in an action not affecting real property, or when not authorized by the statute, it is a nullity; and, whether the

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court in that case could remove it from the files as a cloud upon the title, under color of a pending action, which did not in fact concern the title, need not be considered. If removed, in such a case, no substantial right would be affected. (Burkhardt v. Sanford, 7 How. Pr. R., 329.) If suffered to remain uncaneeled, its efficacy must depend on the notice of the action, and be determined by the complaint, and if, in fact, not authorized, no serious consequences could, ordinarily, result. Prior to the statutory regulation upon the subject, the mere pendency of an action in equity, a Us fen-dens, duly prosecuted, affecting the title to real property, was notice to the world; and the nature, character and object of the suit was necessarily ascertained from the pleadings. (Murray v. Ballou, 1 J. C. R., 566.) The notice filed under the statute, in connection with the pleadings, will always inform the public whether the title of purchasers of real property will be affected by the Us pendens referred to in the notice. But if filed in an action in which it is not warranted by statute, it is possible the court of original jurisdiction may, in their discretion, remove it from its files, or the files of the office in which, as an incident of a pending action, the statute authorizes it to be filed. Be this as it may, if the action is one in which a notice may be filed, the court, as conceded by the counsel for the respondent, has no power to remove or cancel it.

This action is not of a character exclusively cognizable, by a court of common-law jurisdiction, as an action for the recovery of damages for fraud, but for relief of an equitable nature, and such as a court of equity could aloné give; although founded on an alleged fraud, and the fact that the plaintiff might have had an action at law to recover the difference between the actual value of the lands transferred, in part payment for the lands sold, and their value as represented, does not bar a suit in equity for relief of a different nature. An action at law might be entirely ineffectual by reason of the insolvency of the defendant or his inability to render a pecuniary compensation, while, if the equitable

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relief can. be had, the remedy is effectual by reason of the lien which is established. The facts stated in the complaint would, doubtless, give an action at law; but if they also entitle the plaintiff to equitable relief, the character of the action must be determined by the frame-work of the complaint and the prayer for judgment. The action is not for the recovery of damages. It is true there is a single paragraph standing by itself, and for what purpose inserted is not apparent, alleging that the plaintiff had been damaged to the amount of $17,000; but in what particular way damage to this precise sum, or any amount, sustained, is not averred. The demand for judgment is that it may be adjudged that she has a lien upon the lands sold for the amounts of unpaid purchase-money “ as aforesaid, to wit: for the said sum of $25,000, and interest thereon, from the said first day of November, 1871, besides the costs of the actionand there is no prayer for relief of any other kind, or for general relief. The complaint avers a sale of the real property by the plaintiff to the defendant for $37,400, and that $25,000 of the bonds of a railway company were taken in part payment of the purchase-money upon the representations and assurances of the defendant as to the character and value, as well as to the manner and consideration of their issue, and of the character and responsibility and value of the property and franchises of the railroad company, the obligor, of which company the defendant was a director; and that these representations were false and fraudulent, and that the bonds were in fact of no value; and the plaintiff offers to return them, and claims to recover the amount thereof in money, and a lien, upon the property sold, for the payment, thereof. Whether the action can be sustained is not a question to be passed upon on this appeal. The plaintiff may fail to prove the facts alleged, or the court may hold that the action is untenable upon the facts stated; although the defendant, by taking issue upon the facts, has impliedly conceded that they are sufficient, if proved, to maintain an action. The questions of fact as well as of law must be disposed of upon the

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trial and hearing of the cause. They cannot be determined upon -an interlocutory motion. That the .action, upon the theory upon which it is brought and upon the complaint as framed, does affect the title to real property, asserting, as it does, a legal and equitable right to a lien thereon, cannot be questioned, and, upon the face of the complaint, .the notice of Us pendens was properly filed.

The action is not without preeedetit. Bradley v. Bosley (1 Barb. Ch. R., 125) was not unlike this-in its main features, and was sustained by the chancellor. There A. sold B. a farm, and agreed to receive, in part payment thereof, ¡a .lot owned by B. in Illinois, with the value of which A. was unacquainted; and B. thereupon made -false representations as to the character, situation and value of the Illinois lot, to induce A. to take the same in .part payment, for the farm sold, which A. accordingly did, allowing B., for the Illinois-lot, a sum greatly in excess of its value. It ¡was held that A. had an equitable lien upon the "farm sold by him for the difference in value between the Illinois lot, - as it really was, ¡and the value as it would have been had B.-’s ■ representations been true, with interest on such difference. The ¡measure of relief thus-granted was precisely that in- amount which would have been had in am action ¡at law for the-fraud, with' the- superadded equitable lien upon ■ the bands for this. sum, as so much . unpaid purchase-money; that is, the court; sustained, a suit in equity for the 'recovery of damages for the ¡fraud, -and declared the same a lien. The chancellor reiterated , the-well-settled principle that the vendor of real estate, has ¡an equitable lien upon the estate -sold for ¡the unpaid purchase-money, as between him " and the vendee, in .all .¡cases, ¡unless -there is either -an express or an implied agreement to ¡waive such lien; and held that-when, by the fraud :of-the vendee, a-part of the price of the estate sold in .fact remains unpaid, -although the vendor supposed-he had been 'paid imfull-.at the time, "there is no waiver of the equitable lien for 'the¡ part -of 'the price that actually remained unpaid. The measure or-the: terms of the relief to which, upon the facts which may be established,

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the plaintiff may be entitled, may depend upon circumstances. It is enough that there is a case for relief of some kind, and that the relief as demanded and to which she makes a prima faoie case, does affect the title to real property.

Hare v. Van Deusen ( 32 Barb., 92 ) is not in conflict with Bradley v. Bosley ; the lien was held waived, in that case, for the reason that the vendor had taken a covenant of the vendee against incumbrances of the land taken in part payment of the property sold, and had not relied upon the representations that it was unincumbered.

Upon the ground that the court had not the power to make the order appealed from, the order must be reversed and the motion denied.

All concur.

Ordered accordingly.