Foster v. Roche — 27 N.Y. St. Rep. 818

Majority

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Margaret Foster v. Theodore M. Roche, as Trustee, App’lt. Charles B. Fitzpatrick, a Purchaser, Resp't.^[1]

(Court of Appeals,

Filed December 10, 1889.)

Headnote

Judicial sale—Ibbegulabity nr payment.

By an amendment to a decree in partition, after the sale had been adjourned several times, it was directed that the purchaser pay the money to the Farmers’ Loan & Trust Company to the credit of the action, to be drawn only upon order of the court, upon notice by the referee to the attorneys of the parties. The purchaser, who had not been served with the amended order, paid the money to the referee, who deposited it in their presence with the Trust Co. as referee, and drew it nearly all out. For this error Boche, a defendant, but who suffered no loss, moved to cancel the deed, although his attorney was present at the sale and the payment, and he had consented to cancel the amended decree. His motion was denied at special and general term. Held, no error; that Boche was guilty of loches himself in not serving the purchaser and Trust Co. with a copy of the order, and as the referee had immediately turned the money over to the Trust Co., the payment was made to the proper party.

Appeal from judgment of the supreme court, general term, first department, affirming order of special term denying appellant’s motion to vacate deed executed by the referee in partition, and compel purchaser to surrender the same.

The appellant Roche was made defendant as one interested in the property to be partitioned, and, as such, appeared in the action by attorney. On the 15th of June, 1886, the trial resulted in a judgment that the premises in question be sold at public auction by James Kearney, who was “ appointed referee for the purpose of making the sale and carrying out the provisions of the judgment.” He was directed to give notice of the time and place of sale according to law, and the practice of the court, and after confirmation of the sale execute a deed or deeds to the purchaser or purchasers at such sale, upon their complying with the conditions on which the deeds were to be delivered, and that such sale and conveyance be valid and effectual forever. Out of the proceeds of sale he was directed to pay the costs of the several parties, retain his fees, discharge taxes and liens, including mortgages and judgments, and from the share or interest given to the defendant "Roche, pay certain judgments against the estate represented by him, in the order of their priority. It was then ordered that after such payments and deductions should have been made “ an accounting shall be had and taken between the plaintiff, Margaret Roster, and the defendant, Theodore M. Roche, as substituted

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trustee, etc., before the said James Kearney, Esq., who is also hereby appointed referee to take such account, to ascertain the amounts to which they shall be respectively entitled from the proceeds of such sale, after such payments and deductions as aforesaid, and after the making of such allowances, credits and disbursements respecting the said premises as between themselves as they may be respectively entitled to,” and that having been ascertained, divide the residue in such proportions as the proper credits and allowances would permit, between the plaintiff Foster and the defendant Boche, and pay one of such shares to each.

The referee, on the 15th of June, 1886, gave notice that the sale would take place on the 13th of July, then next, but by subsequent notices it was postponed to October 5, 1886. In the meantime and on the 29th of September, 1886, the decree was amended by the further order, made by consent of the parties to the action, “ that the purchaser or purchasers at the sale of said premises to be had as aforesaid pay the amount of the purchase money due by them respectively to the Farmer’s Loan & Trust Company, to the credit of this action, to be drawn from said trust company only upon orders of this court, after two days’ notice of an application therefor, to be given by the referee to the respective attorneys for the plaintiff and. for the defendants, or by either of said parties to the other.” It is stated in the appeal book as conceded, “ that at the sale of October 5, 1886, Mr. Fitzpatrick bought the lot No. 47 Great Jones street, for $20,550; and also that under the terms of the sale he was to deposit ten per cent at the time and place of the sale of the purchase money with the Farmers’ Loan & Trust Company, for which their certificate was to be given, and that the balance of the purchase money was to be paid on the 5th of November, 1886, at the office of said company,” and from the terms of sale it also appears that 12 o’clock noon was named therein as the hour when payment, as above provided, should be made, and “ when,” as was also stated, the referee’s deed would be ready for delivery. On the 30th of April, 1887, Boche made an affidavit, showing in substance the decree and sale as above stated; the filing by the referee of report of sale, and stating that the referee, on -the 6th of November, 1886, executed and delivered to the purchaser a deed of the premises, and that the same was recorded on that day, but upon information obtained by him March 21, 1887, that the purchaser, Fitzpatrick, “ has not complied with the provisions of the interlocutory judgment herein, or of the terms of said sale, by depositing with the Farmers’ Loan & Trust Company, to the credit of this action, the amount of the purchase money due by him on his purchase as aforesaid, or any part thereof, and that by reason thereof he is not and never has been entitled to a deed of said premises, and that if any money was paid by him on account of said purchase, it was paid to the said referee personally or put under his control, in such manner as to enable the said referee to convert the same to his own use.”

Upon this affidavit, the judgment in partition and the report of sale, he moved at special term that the deed given to the pur

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chaser be “vacated, cancelled and discharged of record.” The purchaser opposed the motion, showing that the attorney for the plaintiff ana the attorney for Roche attended the sale; that he then paid the ten per cent, called for by the terms of sale, and that on the day named, viz., November 5th, he attended with counsel at the office of the trust company, prepared to pay the residue of the purchase money and take the deed; that the referee was not ready to pass the title, and the matter was adjourned to the following day, November 6, when he again attended as before. The referee and plaintiff’s attorney came also. Allowance was made by them for the sum paid on the day of sale, also for taxes and assessments, and the residue, $17,371.29, was handed by him to the referee, who in his presence and the presence of the plaintiff’s attorney, who had taken part in computing and ascertaining the sum clue, and in the negotiation with the trust company, deposited the money so paid to the trust company to the credit of the action.

The special term being of opinion that the facts should be more fully disclosed to the court, sent the matter to a referee to ascertain what the facts were, and postponed the final hearing of the matter until his report should come in. The plaintiff, defendant and purchaser appeared before the referee. Neither the defendant, Roche, nor his attorney in the action, offered themselves as witnesses, but upon such proof as was produced the referee found that at the time and place of sale there was no person present on the part of the Farmers’ Loan & Trust Company to receive the ten per cent, required by the terms of sale to be paid; and the purchaser, with the consent and acquiescence of the attorneys present at the sale, paid the ten per cent., amounting to $2,055, to the referee, and took his receipt therefor. He also found that no copy of said order or of said interlocutory decree as amended was ever served upon the said purchaser or upon the Farmers’ Loan & Trust Company, and that there was no proof presented that the said purchaser ever knew or heard of the provisions of said order.

The referee also finds the transaction at the office of the trust company to have been as stated in the affidavit of Fitzpatrick, and above recited, “that no part of the money paid by the purchaser for taxes has ever been returned or offered to be returnedthat the trust company received the sum paid by the purchaser, November 6th, “ and opened an account therefor on that day with said James Kearney, referee, in the matter of Foster v. Roche" and give to him a bank deposit book. That the said sum so deposited in said company was all drawn out by said referee prior to February 15, 1887, excepting the sum of $109.46; “that no proof had been presented before him that the parties to this action, or any of them, have not received each his distributive share of said purchase money,” and that “on the 14th day of March, 1887, the said defendant, Theodore M. Roche, who makes this motion to cancel said deed, gave his consent in writing that the said order, directing the purchaser to pay the amount of his bid to the Farmers’ Loan & Trust Company, to the credit of tfye

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action, should, be cancelled and vacated; and that the said order amending said decree as aforesaid was absolutely vacated and set aside by an order of this court, dated March 15,1887.” He therefore reported that in his opinion the motion to vacate and cancel the deed should not be granted.

The special term, before whom the matter was again brought upon the original papers and the referee’s report, after hearing counsel, were of the same opinion, and denied defendant’s motion. Upon appeal the general term of the supreme court affirmed the order of the special term, and from that decision the defendant appeals to this court.

E. C. Perkins, for app’lt; J. A. Deady, for resp’t.

Assuming the order to be subject to review in this court, I find no reason to differ from the conclusion reached by the three tribunals which have passed upon the questions embraced in it. On the contrary it seems to me that a different result would tend neither to right nor equity. It is to be borne in mind that the only ground of this proceeding is the omission of the purchaser to deposit the money actually paid into the trust company in a manner technically different from the mode adopted. The appellant does not show that anything is coming to him from that money, or even that the accounting has been had which may entitle him to something. He went before the supreme court, and not only asked it to exercise its extraordinary powers over a purchaser for value, without notice, but to do so in favor of one who had himself, or as trustee, so far as appeared, incurred no loss, or who, if any loss was in fact incurred by any one, was morally culpable in respect to the circumstances which led to that loss. The appellant stood as trustee for others. With a supposed regard to their security, he obtained a direction as to the sale and disposition of the purchase money, and thenceforth gave the matter no attention whatever. The order was permitted to lie in the obscurity of the record until the mischief was done, and was then produced only to be vacated by his consent. The purchaser knew nothing of it. The money was to be paid into the trust company. This much, but no more, was brought to the attention of the purchaser. Although a party to the action, and active in procuring the order, the defendant neither served the purchaser with a copy of the order nor did he give him any notice of it. The purchaser knew, indeed, of the conditions or terms of the sale as prepared by the referee, and which the bidder was to sign. It contained, however, no reference to an order or other action of the court, but, so far as appeared, the terms were either suggested by the parties or prescribed by the referee, these terms concerned no one but the parties to the action. The order had been made by their consent, and they were competent in like manner to change, or vary, or waive its terms. If, under the conditions of sale, the purchaser was to deposit ten per cent at the time and place of the Sale with the trust company, it was competent for his attorney, and the attorney for the plaintiff, and the referee, to agree that

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the referee, in the absence of an officer or agent of the company, at the time, and from the place of sale, should act in his place. And so they did agree, and by an act in which the appellant, through his attorney, participated, the ten per cent called lor was paid. Again, the terms of sale notified the appellant, as they did the purchaser, that the balance of the purchase money was to be paid at twelve o'clock, on the 5th of November, at the office of the trust company, and that the deed was then and there to be delivered.

On the adjourned day the purchaser again appeared, and the referee, and the balance of the money was then paid by the purchaser, received by the trust company, and credited by that company in the way such moneys were usually received and entered upon their books. It is of no significance that the money passed from the referee to the trust company, instead of coming to it directly from the hand of the purchaser. The plaintiff’s attorney and the referee were both interested, and it was their duty to see that the computation was correct, that the sum paid corresponded to it, and it is entirely immaterial whose hand conveyed the money over the counter to the officer of the company who received it. Payment of the money was made, and to the proper party. No loss could happen from anything then done, or with which the purchaser was concerned. The loss, if any, occurred because the order of the court as to the mode of withdrawing the money was not complied with, and that was made possible because no one charged with the carriage of the decree thought it worth while to notify the trust company or serve upon it a copy of the order. That duty was not imposed upon the purchaser. It was the duty of the defendant to see to it that the trust company had notice of the limitations put upon the authority of the referee. It would be in the highest degree dangerous and opposed to every principle of equity, if it should be held that a payment so made could be impeached or invalidated because the parties interested in the proceeds of a judicial sale allowed a referee, for whose conduct the purchaser was in no way responsible, to have an advantage which the letter of the decree denied. As bearing upon the claim that the court should exercise over the purchaser its summary jurisdiction, it is also to be considered that the moving party deliberately consented to the annulment of that portion of the decree which by amendment regulated the disposition of the purchase money. The referee does not find, and was not asked to find, when Roche first learned that the money had been drawn out from the trust company by the referee. There is no suggestion, except his own affidavit, that he did not know the terms or manner in which it was in fact deposited. If he did not, it was because he did not choose to inquire. According to his affidavit he became aware of it on the 21st of March, 1887, four months after the transaction which he knew was to be completed on the 5th or 6th of the November preceding, and in the meanwhile, upon an occasion sufficient to put him upon inquiry, he consented in

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writing, as did also the other parties to the action, to vacate the order for the breach of which he now complains.

He seems to have distrusted the referee appointed to make the sale as early as September and before it took place, but he took no precaution to prevent third persons or the purchaser from dealing with him as one entitled to be trusted, and finally vacated and set aside the order which his mistrust had called into being. The ■order was vacated before he applied to the court to enforce it, and then only against a person wholly innocent and who had acted with circumspection and caution.

There are, however, other circumstances. The appellant, as we have seen, discloses no loss either on his own part or that of any ■other person; he fails to show even that the referee who drew the money from the trust company did not apply it to the payment of debts or liens superior to his own interest, or that the referee is insolvent or even unwilling to account for the money obtained. But without regard to those considerations, the appellant’s own negligence was quite sufficient to justify the court below in refusing its assistance, especially against a purchaser who, without notice, paid the purchase money in good faith, and, as the court finds, dis•charged his entire duty. The appeal from the order which followed that finding is without merit and, therefore, fails.

The order appealed from should be affirmed, with costs.

All concur.