Smith v. Smith — 20 N.Y. St. Rep. 597

Majority

p. 597

John W. Smith, Resp’t, v. Martha Smith, App’lt.

(Supreme Court, General Term, Fourth Department,

Filed January, 1889.)

Headnote

1. Lien—Equitable—Eon money expended in erection of building ON LAND OF ANOTHER.

Where a husband proposed to his wife to erect a building with his own means on the land of the wife so that he might derive a larger revenue from his money,and the wife replied by saying that it would be a good thing; that he could go on and build there, and that if he got in any way distressed he could have the right to sell the building, and that it was at his disposal at any time, Held, that the arrangement made between the parties as to the erection of the building, and the employment of the plaintiff’s money for that purpose was in effect an agreement that the plaintiff should, if he so' invested it, have a lien thereon for the amount, with a right to sell, if necessary, to recover the same, and that the plaintiff acquired such an interest in or lien upon the premises in question for the money expended by him thereon as can be enforced in a court of equity.

2. Statute of frauds—Part performance, paroi contract respecting LAND.

A paroi contract in respect to land cannot be avoided in equity because not in writing where there has been a part performance of it.

Appeal from a judgment entered .in Onondaga county on the 17th of April, 1888, in favor of the plaintiff and against the defendant, Martha Smith.

Baldwin, Lewis & Kennedy, for resp’t; M. M. Waters, for app’lt.

The plaintiff and the defendant, Martha Smith, are husband and wife. In 1863 the plaintiff owned the premises described in the complaint. Upon the 21st day of September in that year, the plaintiff, through the defendant, Lilly, conveyed the premises in question to his wife.

By this action the plaintiff sought:

First. To set aside the conveyance from him through the defendant, Lilly, to his wife, or to compel her to re-convey the premises to him.

Second. To establish an equitable lien thereon for the

p. 598

purchase price of the premises and the moneys expended -by him in erecting a building thereon.

The court denied the plaintiff the relief sought, except that it held that the plaintiff was entitled to a lien on a portion of said premises for the sum of $4,500 for money ■expended by him in improvements made thereon. As the plaintiff has not appealed, the only question involved is, whether the plaintiff was entitled to a lien on said premises for the money thus expended by him.

The trial court found, “that in 1879 the plaintiff with his own means built upon a portion of said premises a brick block at an expense of $4,500; that in the spring of 1879, and prior to such building, he told his wife he had some money in the bank drawing only three and a half per cent interest, and he. could take it and build a block on a portion of the property and get more for his money than in the.bank, and she replied, that would be a good thing, that he could go on and build there and if he got anyways distressed in any shape or manner he had a right to sell the block, that it was at his disposal at any time, and he replied, all right,.he would go on and build it; that thereupon, relying upon this arrangement, he went on and built the block; ” that the defendant, Martha, upon demand declined to re-convey, and claimed that the plaintiff had no interest in the property; that by reason of the building of theblock the property was increased in value by the amount of $4.500. We think that the facts as found are fairly established by the evidence, and that the findings should be sustained.

Upon these facts the court held that the plaintiff acquired a lien on said block, including the land upon which it stands, for $4,500, and provided that if the said sum, interest and costs were not paid by the defendant, the block and land should be sold, and the avails of the sale, as far as necessary, employed to pay the amount thus expended.

While the court at special term did not expressly find that it was tlie agreement or understanding of the parties that the plaintiff was to.have a lien upon the premises for the money expended by him in the erection of such block, yet it seems to us that such is a fair construction of the findings of the court and of the evidence upon which such findings are based. The arrangement was that the plaintiff was to put his own money into a building upon defendant’s land, that he might derive a larger revenue from it than he would by leaving it on deposit in the bank, and when built if he got in any way distressed, he was to have a right to sell the building, -it was to be at his disposal. We are Of the opinion that the arrangement made between the parties as to the erection of such building

p. 599

and the, employment of the plaintiff’s money for that purpose was_ in effect an agreement that the plaintiff should, if he so invested it, have a lien thereon for the amount with a right to sell if necessary to recover the same. Assuming then, as I think we must, that such was the arrangement between the parties, and it follows that the judgment appealed from was proper if such an agreement can be enforced either at law or in equity.

In Pomeroy’s Equity Jurisprudence it is in substancé said, that every express executory agreement, whether verbal or in writing, whereby a party indicates an intentio» to make, some particular property, real or personal, a security for a debt or other obligation, or whereby the party promises to convey or transfer the property as security, creates an equitable lien on the property so indicated, at least, as between the parties. 3 Pomeroy’s Eq. Jurs., 233, et seq.

Courts of equity have not confined the doctrine of compensation or lien for repairs and improvements to cases of agreement or joint purchases. They have extended, it to other cases where the party making the repairs and improvements has acted bona fide and innocently, and there has been a substantial benefit conferred on the owner, so that ex cequo et bona he ought to pay for such benefit. 2 Story’s Eq. Jur., § 1237.

The case of King's Heirs v. Thompson (9 Pet. U. S. 204) was a case quite similar to the case at bar, and it was there held that a party who expended his money for repairs and improvements on premises of another was entitled to an equitable lien or mortgage for the amount so expended, and that the property should be sold and the proceeds first applied to the payment of the money so expended in such improvements.

In Chase v. Peck ( 21 N. Y., 581 ), where, upon receiving a grant of land, the grantee executed an agreement, not under seal, to support and maintain the grantor, pledging for that purpose the produce of the land, and should that prove insufficient, appropriating the entire fee, it was held that the agreement being the consideration of the grant, takes effect as an equitable mortgage of the land.

In Husted v. Ingraham ( 75 N. Y., 255 -257), where certain carpets were delivered upon an agreement that the purchase-price should be secured by a mortgage thereon, it was held that the agreement could have been specifically-enforced in equity and constituted an equitable lien upon the property against the purchasers and all persons claiming to own it except bona fide purchasers having no notice of the lien. The case of Hale v. Omaha National Bank ( 49 N. Y., 626 ) is to the same effect.

p. 600

In Freeman v. Freeman ( 43 N. Y., 34 ) it was held that a paroi promise by the owner of land to give it. to another, accompanied by actual delivery of the possession thereof to him, will be enforced in equity by a decree for specific performance, where the promisee, induced by such promise,' has made substantial improvements and considerable expenditures upon the premises, with the knowledge of the probáis sor, and that the real ground upon which equitable jurisdiction is exercised in such cases, either of sale or of gift, is to prevent a fraud being practiced upon the paroi purchaser or donee.

In Perry v. Board of Missions, etc., of Albany ( 102 N. Y., 99 ; 1 N. Y. State Rep., 169), the diocesan convention of the Protestant Episcopal church of the diocese of Albany appointed a committee to take steps for procuring a residence .for the bishop of the diocese. The plaintiff under the advice of the bishop, and with the consent of the committee, purchased certain premises for the purpose specified; and at the request of the bishop commenced making necessary repairs and improvements. At the annual meeting of the ,convention the committee made a repbrt, stating the fact as to the purchase, and referring to the repairs and improvements, which was adopted, and a resolution passed directing a transfer of the title to the property to the defendant, to be held and used as a residence for the bishop, and authorizing and directing defendant to execute a bond and mortgage thereon to secure the payment of a prior mortgage, and' of the sum advanced for the repairs and fitting up of the same for the Episcopal residence. At the time- of the passage of the resolution the work of repair was: in progress, but only a small portion thereof had been paid for. The plaintiff went on and completed the work, advancing the money to pay for the same. The premises were conveyed to defendant as directed, and at a regular meeting of the board, a resolution was passed accepting the conveyance, and directing the execution of a bond and mortgage for a sum specified, to be applied to the payment of the prior mortgage, and the expenses of the repairs and improvements. This was done, and the moneys realized thereon were applied as directed, but were insufficient to pay the whole amount so advanced by the plaintiff.

In that case it was held, that the plaintiff was entitled to a lien in the nature of a mortgage upon the premises for the balance, both because of the special agreement embodied in the resolution of the convention, and under the general doctrine of equity, which, gives a right equivalent to a. lien, when the rights of parties cannot be otherwise secured. In delivering the opinion in that case the court says: “ The plaintiff’s case is within the general doctrine of equity which gives a right equivalent to a lien when in no other way the rights of the parties can be secured. The

p. 601

advances were directly for the benefit of the real _ estate; they were approved by the convention by whose direction the title was conveyed to the defendant, but neither the convention nor the defendant have incurred any corporate liability, and while it may be said that the advances were made on the promise of, or in the just and natural expectation that, a mortgage would be given, it is also true that they were made on the credit of the property, for the improvement of which they were expended.

The repairs and improvements were permanently beneficial to it, made in good faith, with the knowledge and approbation of the parties interested, and accepted by them, not as a gratuity, but as services for which compensation should be given. The plaintiff’s right to remuneration is clear, and unless the remedy sought for in this action is given there will be a total failure of justice. See also Willetts v. Brown, 42 Hun, 140 ; Williams v. Ingersoll, 23 id., 284 ; affirmed 89 N. Y., 508 ; Burdick v. Jackson, 7 id., 488; In the Matter of Howe, 1 Paige, 124; Lanning v. Tompkins, 45 Barb., 308 : Payne v. Wilson, 74 N. Y., 348 .

This examination of the authorities seems to render it quite manifest that the plaintiff acquired an interest in or lien upon the premises in question for the money, expended by him thereon which can be enforced by a court of equity. This right or lien is founded not only upon the agreement between the parties, but also upon the fact that it would be contrary to natural justice to allow the defendant to retain the building erected upon her laud by the plaintiff without compensating him for the money thus.expended. The plaintiff expended his money for the direct benefit of the defendant’s real estate.

The building erected by him was a permanent impróve- . ment to such real estate. This improvement was made in good faith, with the knowledge and approval of the plaintiff. The defendant incurred no individual liability; by reason thereof, but the building was erected with the understanding that the plaintiff was to have a right to withdraw his money thus invested by a sale of the property if necessary. The erection of this building was permitted and accepted by the defendant in pursuance of such understanding. The plaintiff’s right to receive the amount thus expended by him seems to be clear, and unless the remedy awarded in this action be'Upheld; there will be a failure of justice. We think the plaintiff’s case is within the doctrine held in the cases cited, which gives a right equivalent to a lien where the rights of the parties can be secured in no other way.

Nor do we think the plaintiff’s right of recovery barred

p. 602

by the statute of frauds. A paroi contract in respect to land' cannot be avoided in equity because not in writing Where there has been a part performance of it. Freeman v. Freeman, Burdick v. Jackson, supra; Pomeroy on Specific Performance, 30.

These considerations lead us to the conclusion that the judgment appealed from should be affirmed.

Judgment affirmed, with costs.

'Pollett, P. J., and Kennedy, J., concur.