Wilson v. Parshall — 27 N.Y. St. Rep. 178

Majority

p. 178

Andrew Wilson, Resp’t, v. William A. Parshall, App’lt.

(Supreme Court, General Term, First Department,

Filed November 7, 1889.)

Headnote

Deed—Estoppel.

B., the owner of mortgaged premises, conveyed the premises by deed absolute in form to defendant, a member of the firm of T. & Co,, the mortgagee, upon an agreement that T. & Co. might sell the premises, returning to B. any surplus over the indebtedness. Between 1877 and 1880 B. became a bankrupt, and in his schedules included these premises, stating that they were subject to two mortgages, and that B. ’s interest was nothing. In 1880 defendant conveyed the premises to plaintiff for value by a deed containing a covenant of seizin. Thereafter the conveyance by B. to his assignee in bankruptcy was discovered, and for large expenses incurred in remedying this supposed defect in the title the plaintiff brought this action. Held, that it could not be maintained; that defendant’s deed conveyed an absolute and complete title, as B. by his deed to defendant had vested him with an apparently indefeasible title and was estopped thereby from questioning the effect of defendant’s deed.

Appeal from a judgment recovered on the verdict of a jury and from an order denying a motion for a new trial.

H. Aplington, for app’lt; Alfred B. Cruikshank, for resp’t.

The verdict was recovered for the sum of $1,666 as the expenses to which the plaintiff was subjected in completing the title to a parcel of land conveyed to him by the defendant. The land had been owned by John W. Bockhorn. He had executed two mortgages upon it, one for the sum of $6,000 and the other for the sum of $5,100. This latter mortgage had been given to Horace K. Thurber to secure an indebtedness of the grantor in the deed to the firm of H. K. & F. B. Thurber & Co. The grantor, not being able to pay the indebtedness, executed and delivered a deed absolute in form to the defendant, who was a member of that firm, and intended for its benefit.

This deed was executed and delivered in December, 1877, and on the 20th of May, 1880, the defendant conveyed the property to the plaintiff in this action. The deed by which the conveyance

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was made contained a covenant of seizin and the other usual covenants inserted in conveyances of land. Both these deeds were recorded in the office of the register of deeds of the county of New York near the time when they were respectively executed. The grantor in the deed to the defendant, intermediate the execution •and recording of these two deeds, went into bankruptcy, and among his assets he asserted a claim to this property as still held subject only to the two mortgages, adding that his interest in the property was nothing. The plaintiff entered into a contract to sell the premises to another person whose attorney, upon a search into proceedings affecting the title, discovered those in the bankruptcy court and because of the conveyance executed by the bankrupt to the assignee in bankruptcy declined to accept this title until it was perfected by a conveyance of the assignee and releases from the creditors, and it was to recover the expenses which had been paid out for that object by the plaintiff that this action was brought and the verdict was rendered. No question has been raised as to the amount of the recovery, but the appeals have been taken upon the ground that no right of action was maintained by the evidence.

It was proved upon the trial that the plaintiff paid the sum of $5,000 as the consideration of the deed executed and delivered to him by the defendant, and that he had no notice whatever of any defect or infirmity in the title, even if it was disclosed by the proceedings in bankruptcy, but that a search was made and the title considered to be satisfactory at the time when the deed was executed and delivered by the defendant. This evidence proved the fact to be that the plaintiff had been vested with the complete and absolute title to the property by the deed delivered to him by the defendant. For even though the grantor in the deed to the defendant retained a right of redemption, that could not be asserted by him against the plaintiff, who had purchased the property upon the faith and understanding of the deed delivered to the defendant in form conveying to him the absolute and unqualified title to the land. That deed at least vested the defendant with the apparent indefeasible title. It exhibited him to persons dealing, or proposing to deal, in the land, as the owner of this property, and where a person may invest another with that apparent title and it is after-wards acquired from him by a purchaser in good faith and for an actual consideration, the law will not permit the grantor in the deed, which might otherwise be shown to be defeasible, to question its effect as an absolute conveyance of the title to the property.

The principle upon which this substantial estoppel has been maintained is, that “ where the true owner holds out another or allows him to appear as the owner of, or as having full power of disposition over the property, and innocent third parties are thus led into dealing with such apparent owner, they will be protected. Their rights in such cases do not depend upon the actual title or authority of the party with whom they deal directly, but are derived from the act of the real owner which precludes him from disputing, as against them, the existence of the title or power which, through negligence or mistaken confidence, he caused or allowed to appear to be vested in the party making the convey

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ance.” McNeil v. The Tenth National Bank, 46 N. Y., 325 , 329. And this was afterwards approved as a general legal proposition in Merchants' Bank v. Livingston, 74 N. Y., 223 . Whatever may-have been the relations existing between the defendant and Bock-horn, his grantor, the former was, as to the plaintiff, the legal and absolute owner of this estate, and conveyed it to him by the execution and delivery of the deed. Stoddard v. Botton, 5 Bosw., 378 ; Mills v. Comstock, 5 Johns. Ch., 214 ; Meehan v. Forrester, 52 N. Y., 277 , 280.

It appeared further, both by the evidence of Bockhorn and that of Horace K. Thurber, that the agreement or arrangement was, before the deed was delivered to. the defendant, that the firm of Thurber & Co. should sell the property and pay over to Bockhorn whatever surplus might be realized by them from the sale. This, evidence proved the fact to be that a sale and conveyance by the defendant was actually intended to be consummated and sanctioned That which took place was within this authority, and neither Bockhorn nor his assignee in bankruptcy could question its regularity or in any manner dissaffirm the conveyance, for the rights of both were limited to the surplus if any should remain after the payment of the incumbrances upon the land There was no conflict or contradiction in this evidence, and the defendant was entitled to a direction to the jury to find a verdict in his favor.

The judgment and order should be reversed and a new trial ordered, with costs to the defendant to abide the event.

Van Brunt, P. J., and Barrett, J., concur.