Streeter v. Shultz — 10 N.Y. St. Rep. 115

Majority

p. 115

John H. Streeter, App'lt, v. Charles A. Shultz et al., Resp'ts.

(Supreme Court, General Term, Third Department,

Filed July, 1887.)

Headnote

1. Tenants in common—Co-tenant may buy at a foreclosure sale for HIS OWN INTEREST, LAND HELD IN COMMON.

A tenant in common of real property may buy it in, for Ms own interest, at a sale on the foreclosure of a mortgage resting thereon. And his relation to his co-tenant imposes no trust upon him in the transaction.

2. Acquiescence—In acts of ownership will bar claim to land originally valid.

Long acquiescence in the exercise of acts of ownership over land, and allowing the party thus acting to make improvements thereon, will bar a claim to an interest therein originally valid.

8. Notice of conveyance—Who not affected by.

Where one has released his interest in lands covered by a mortgage to his co-tenant, and the grantee upon the foreclosure of the mortgage has bought in the property at the sale, receiving a referee’s deed therefor, bona fide purchasers of the property from him are not chargeable with notice of the first-mentioned deed, it not necessarily appearing in their title.

This action seeks to redeem from a foreclosure sale the undivided half of the premises by payment of one-half the amount due on the decree and interest, and thereupon for a decree that defendants convey to plaintiff such one-half, and also that they account for waste and damage and for rents, etc.

In December, 1864, the plaintiff purchased the premises for $8,500, paying $1,000, by notes, and giving a purchase money mortgage for $7,500. In January, 1865, he conveyed an undivided half to Charles Shultz, subject to a mortgage of $7,500. This purchase and conveyance were in pursuance of a verbal agreement between plaintiff and Shultz that the land should be -bought for their common benefit and that the manufacture of brick should be carried on upon it. They were not partners, but the plaintiff made brick on the premises and Shultz sold the brick in New York. They were tenants in common of the premises. The mortgagee foreclosed his mortgage, making plaintiff and wife and Shultz and others parties; and the premises were sold May 29, 1875, to Henry Christie for $7,000. Christie leased the premises that day to Hasbrouck till January 1, 1876, Christie assigned his bid to Shultz, and the deed was executed to him by the referee June 16, 1875. The bid of Christie was in fact for Shultz.

At the time of said sale Shultz had a mortgage executed by plaintiff and his wife on his undivided part of the property, on which was payable $3,000, and interest from May 1, 1873, the date; and plaintiff was also indebted to Shultz $1,000, no part of either of which has been paid.

p. 116

There was no arrangement or agreement between Shultz and plaintiff that Shultz was to buy for joint benefit.

The price for which the property sold was its fair value at that time.

In October, 1877, Shultz obtained a grant from the state of lands under water; and he built docks and buildings on the property at an expense of $25,000.

October 5, 1878, Shultz conveyed the property to his sons Charles A. and George S. for $30,000. They gave back a mortgage of $20,000, and have since occupied and improved the premises.

On the 4th of May, 1876, the plaintiff conveyed all his personal property on the premises to Charles Shultz. The plaintiff never made any claim to the premises or to any interest therein from the date of the foreclosure till the commencement of this action in September, 1886.

Charles A. Fowler, for appl’t; E. S. Wood, for resp’t.

The plaintiff and Shultz were not joint tenants, but tenants in common, subject to the purchase money mortgage. Their estates in the land were separate and distinct. Each could sell his own share, and neither had any right in the other’s share. Shultz did not assume any part of the mortgage, and was not personally liable thereon.

The plaintiff insists that, because he and Shultz were tenants in common, Shultz could not purchase for his own benefit on the foreclosure sale; but that such purchase must be for the common benefit of both. This position rests not on the decision, but on some language in the opinion, in Van Horne v. Fonda ( 5 Johns., Ch. 407 ). It is important to see what was decided in that case. Douw Fonda and Henry Fonda were “joint and equal residuary devisees.” Henry conveyed, in May, 1794, by deed, all his interest in certain lands to Douw. This conveyance was held, as a matter of fact; to have been in trust, to facilitate thé acquisition of a good title. Afterwards Douw purchased, in his own name, for Moses Johnson, an outstanding title. The question, so far as the present case is concerned, was whether that purchase could be held to have been for his own benefit. In that connection the chancellor said: “I will not say, however, that one tenant in common may not, in any case, purchase in an outstanding title for his exclusive benefit. * * * I have no doubt, therefore, that, in a case like the present, and assuming what the evidence warrants us to assume, that the deed of May, 1794, was taken by the defendant (Douw) for trust purposes, that the purchase from Moses Johnson ought, in equity, to serve for the common benefit.”

p. 117

It is true that more than this is said by the chancellor, hut the question always should be what was decided. And if we look at the facts we find that the defendant had taken a deed from his co-tenant for trust purposes, and was so holding their common title, when he bought in the outstanding title. Thus we have the case of a trustee dealing in respect to trust property.

It is further to be noticed that in the opinion the acts of Bouw Fonda are said to be those of a person " clothed with the office of an executor" in respect to the estate of Henry; and also that the parties are spoken of as joint tenants and having a joint interest. The will of the ancestor was made after chapter 12, Laws of 1786. But whether, in that case, the devise made a joint tenancy or a tenancy in common is not clear. The distinction between the two is not considered.

Of course the principle is familiar that one who is, in any sense, a trustee cannot purchase the trust property, or deal with it, for his own benefit. But the question in this present case is whether a mere tenant in common, having no duties towards his co-tenant other than such as necessarily arise from the co-tenancy, may not purchase for his own benefit at a sale under a mortgage which covers both estates. If there were two separate pieces of land, each owned by one person, and both covered by a mortgage, on a foreclosure either person might buy for Ms own benefit. The estates in co-tenancy are separate and distinct. What prevents each owner from acting for his own benefit, unless some further element of trust exists ? The same policy of the law which (contrary to the old rule) construes estates as in common, if they are not expressly joint, gives each owner in common, the right to act for himself, unless he has assumed some trust duty to his co-tenant.

Ho such duty existed in this case. The plaintiff had mortgaged Ms share to Shultz, and was indebted to him besides. The foreclosure was open, and both plaintiff and Shultz were parties. It would be a great injustice to Shultz to hold that he could not buy for his own account. If he could not, then he would be compelled either to allow the property to be sacrificed, if there were no bidders, or with his own funds to buy for the benefit of the plaintiff as well as of himself. The plaintiff then would only need to keep still, and thus to throw the whole risk of the purchase on Shultz. Thus an irresponsible person might prevent Ms responsible co-tenant from protecting himself. We are satisfied that this is not the doctrine decided in Van Horne v. Fonda; and that even the language of the opinion does not justify this view.

There is another respect in which tMs case differs widely

p. 118

from that. _ In that there was a private purchase of an outstanding title. In this there is a public purchase, known to the plaintiff, not of an outstanding title, but under a mortgage executed by the plaintiff himself. And the plaintiff’s opportunity to purchase at the sale was as good as that of Shultz.

Furthei than this, the subsequent acts of the plaintiff are an acquiescence in the purchase by Shultz. The transfer to him of the personal property, the acceptance of a position in the brickyard on the premises as foreman, the knowledge that Shultz was expending some $25,000 on the property, and the delay to assert any claim for eleven years; all these facts show a complete acquiescence. If the purchase by Shultz was, as he believed, for their common benefit, he should have asserted this promptly. Shultz, after the sale, held adversely to plaintiff, as plaintiff knew; and Shultz acknowledged no trust duties to him.

The plaintiff calls this action one to redeem.a mortgage, and insists that twenty years is the statutory limitation. - Code, § 319. But the position of defendants is not merely that of a mortgagee m possession.'. The mortgage was validly foreclosed by the mortgagee against the plaintiff. The plaintiff’s claim is in fact that the purchase by Shultz was, to the extent of one-half, for the benefit of plaintiff. This claim grows out of the co-tenancy, not out of the mortgage. Perhaps the true limitation is stated in section 383, subdivision 5.

But it is unnecessary to decide that point. The plaintiff has permitted Shultz, as above stated, to make expenditures without objection. He has apparently waited until the property has increased in value. His long acquiesence would defeat his claim if it had been originally good. Kirk v. Hamilton, 102 U. S., 68 .

There is still another objection to plaintiff’s claim. Charles A. and Greorge S. are bona fide purchasers. They take title from Charles Shultz. His_ title came from the referee’s deed. And that title had its origin in the mortgage. In tracing their title, therefore, they did not necessarily see the conveyance made by plaintiff to Shultz. And they were, not chargeable with notice of it. For it was not in the line of their title. They did not. take title from Shultz as grantee from plaintiff of an undivided half, but from Shultz as grantee of the referee selling under the mortgage foreclosure.

The judgment should be affirmed, with costs.

Lakdon and Bookes, JJ., concur.