Burank v. Babcock — 3 N.Y. St. Rep. 458

Majority

p. 458

John M. Burank, Resp’t v. James Babcock, App’lt.

(Supreme Court, General Term, Fifth Department,

Filed September, 1886.)

Headnote

1. MoBTGAG-E—CONTBACT—EQUITABLE LlEN—FOHECLOSUBE.

The plaintiff was the owner in fee simple of two separate parcels of land, upon one of which there was a mortgage, called the M. mortgage; for the payment of the debt thus secured the plaintiff was not personally liable. Upon both jiarcels there was another mortgage lien, called

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the S. mortgage, which was to secure the plaintiff’s individual obligation to pay that debt. He entered into a written contract under seal to sell and convey both of said parcels to the defendant subject to the said mortgage, which the defendant agreed to pay. The contract was executed by the defendant, and the further sum which he was to pay as purchase-money was left blank in the contract, but it stated that such payments were to be made in payments of $200 a year, of principal and interest from the date thereof, with semi-annual interest from the date thereof, until the whole sum shall be paid; also the vendee agreed to pay all taxes ar.d assessments upon the promises from the date of the contract until the purchase-price should be fully paid. The contract provided that the plaintiff on receiving such payment should execute and deliver to the defendant or his assignee a deed and conveyance thereof, with a release of wife’s dower and covenants against his own acts, except as against the 8. mortgage, which defendant was to pay. In an action by the plaintiff to foreclose his lien under the covenant, the trial court found as facts the amount the defendant agreed to pay as purchase-money; that the purchaser went into possession of the premises and made payments of the interest on the mortgages and no other payments on the purchase-price; and among other facts that on a certain date with the consent of the defendant the plaintiff conveyed one parcel of the land to L. L., who assumed the payment of both of the mortgages and paid the balance of the purchase-money which was claimed by the plaintiff to be due under the contract. It was also found as a fact that at the time of the commencement of the action an amount was due the plaintiff and that the balance of the purchase-money fell due before the trial. The defendant neglected to pay the taxes upon the property and they were paid by the plaintiff; the S. mortgage remained unpaid. The judgment provided that upon payment by the defendant of the amount found due the plaintiff, the defendant was entitled to a conveyance of the parcel of land unconveyed; that as between the plaintiff and defendant the latter was entitled to a conveyance free and clear from the lien of the S. mortgage. Upon appeal; held, that as no personal judgment was awarded against the defendant, no right of his was affected by the judgment unless there was a valid- and subsisting contract between the parties by which he had an equitable interest as purchaser in the land. That the contract was not void for uncertainty, there being evidence to support the finding of the trial court as to the amount of purchase-money.

3. Same—Sale subject to tbe mortgage of part of mortgaged property.

Held, that the sale of one of the parcels, with the consent of both parties, subject to the S. mortgage which was a lien upon the parcel unsold as between the purchaser and the parties to this action, makes that parcel the primary fund out of which that mortgage is to be paid, and as the owner of the property sold was not a party to this action, the decree properly makes it a condition to granting any relief that he should procure a release of the S. mortgage as a lien on the premises.

3. Sale of lands—Interest of vendor prior to conveyance.

The vendor prior to the conveyance to the vendee holds the legal title in trust for the benefit of the latter.

4. Same—Interest of parties—How considered—Equitable conver-

sion.

By the^ doctrine of equitable conversion the vendor’s interest under the contract is treated as personal estate, and the vendee’s interest as real estate which descends .to his heirs.

5. Vendor’s lien—In an action to enforce, tender is not necessary.

In an action by a vendor to enforce an alleged equitable lien for unpaid purchase-money under a contract for a sale of lands, it is no defense that a tender of a deed was not made before the suit was brought.

p. 460

6. Costs dt foreclosure proceedings.

It is usual in foreclosing liens upon property to charge the funds with the costs of foreclosure, unless some sufficient reason is shown why the lienor should not receive the protection of having his reasonable costs and expenses, so that he may realize his debt if the property is sufficient for that purpose.

Equity action to foreclose a land contract heard at the Monroe special term; the judgment granting the prayer of the plaintiff’s complaint. On the 17th day of September, 1872, the plaintiff was the owner in fee simple of two separate parcels of land, upon one of which there was a mortgage lien of $1,000, called the Murray mortgage. For the payment of the debt thus secured the plaintiff was not personally hable. lipón both pieces there was also a mortgage lien for the sum of $961.70, called the Selden mortgage which was to secure the plaintiff’s individual obligation to pay that debt. On that day he entered into a written contract, under seal, to sell and convey both of said parcels to the defendant subject to the said mortgages, which the vendee agreed to pay as the same became due and payable. The contract was executed by the defendant and the further sum which he was to pay as purchase money was left blank in the contract, but it stated that such payments were to be made “in payments of $200 a year of principal and interest from the date thereof, with semi-annual interest from the date thereof until the whole sum should be paid.” The purchaser also agreed to pay all the taxes and assessments that shall be taxed or assessed upon such premises from the date of the contract until the same shall be fully paid. The contract contained a stipulation, to wit: “That the party of the first part, on receiving such payment at the time and in the manner above mentioned, shall at his own proper cost and expense, execute and deliver to the said party of the second part, or his assigns, a good and sufficient deed of conveyance thereof, with a release of wife’s dower and covenants against his own acts, except as against a mortgage by said party of the first part to H. R. Selden of $961.27, which Babcock is to pay.”

The court found as a fact that the defendant agreed to pay the plaintiff as purchase money the sum of $1,057.87 at the times and in the manner stated in the contract. The purchaser went into possession of the premises and made payments of interest upon each of said mortgages, and on the trial the court found that he had made no other payments upon the purchase price of the premises. It was also found as a fact Mi at on the 27th of April, 1877, there was due and unpaid on the Murray mortgage $1,070 and upon the Selden mortgage $961.27 of principal and $168.38 interest, and on that day, with the consent of the defendant

p. 461

the plaintiff conveyed one parcel of the premises to Levy Lamey for the sum of $3,200, who assumed the payment of both of the mortgages and paid the balance of -the purchase money, $1,000, to the plaintiff, which was applied upon the unpaid purchase money claimed by the plaintiff to be due under the contract. It was also found as a fact that there was due and owing the plaintiff at the time of the commencement of this action, by the terms of the contract, $358.31, and that an installment of $57.87, the balance of the purchase money, fell due on the 17th day of September, 1378, which was before the trial of the action. The defendant neglected to pay the taxes assessed upon the property and they were paid by the plaintiff. The Selden mortgage remained unpaid at the time of the entry of the decree, and upon which there was due $961.77, making due for unpaid purchase money and taxes paid the gross sum of $843.17.

The judgment' provided that upon payment by the defendant of the amount due the plaintiff, he was entitled to a conveyance of the parcel of land unconveyed by the plaintiff. That as between the plaintiff and defendant the latter is entitled to a conveyance free from the lien and charge of the Selden mortgage, and that the plaintiff shall, within ten days from the entry of judgment, procure a delivery to the said defendant of a release of the premises from the lien of that mortgage. That the defendant may, within thirty days from the notice of entry of said judgment, and the tender or delivery of said release, pay the plaintiff the amount found due with interests and costs, and upon making said payment the plaintiff shall execute and deliver to the said defendant a deed of conveyance of said premises with covenants of warranty, and if the defendant shall fail to make payment of that sum, then the premises are to be sold at public auction upon the usual notice. And out of the proceeds there is directed to be paid:

First. The fees and expenses of the referee making said sale.

Second. The plaintiff’s costs and taxes.

Third. The amount due the plaintiff upon his contract, and the surplus, if any, to be paid the defendant.

A referee was appointed to make the sale and to carry out the decree. From this judgment the plaintiff appeals.

J. & Q. Van Voorhees, for app’lt; Josiah Sullivan, for resp’t.

No personal judgment was awarded against the defendant, consequently no right of his was affected by the judgment unless there was a valid and subsisting contract between the parties by the terms of which the

p. 462

defendant had an equitable interest as purchaser in the lands described. The title to the lands was vested in the plaintiff. The action was in the nature of proceedings in rem, therefore, the decree was harmless so far as the defendant was concerned, if the written agreement was void on the ground of uncertainty because the blank was not filled with the amount of the purchase money to be paid by the defendant. The trial court found as a fact that it was one of the terms of the agreement that the defendant, in addition, to assuming the mortgages upon the premises, was to pay to the plaintiff the further sum of $1,057.27 as part of the purchase money. .1 think the evidence fairly' supports this finding.

It is alleged in the complaint, that the blank left in the contract executed by the parties was intended by them to be filled with the sum to be paid by the defendant; at the time of the execution of the contract this was omitted by reason of neglect or' mistake. This aEegation as set forth in the complaint the defendant did not deny in his answer. It is the position of both of the parties that there was a valid written agreement for a sale of the premises by the plaintiff, and a purchase of the same by the defendant, and the controversy upon the trial and on this appeal is as to their respective rights under the same. They do not agree as to the sum which should be inserted in the blank left in the contract.

Upon the facts as found, the judgment should be upheld as just and equitable in all of its provisions, and as fully protecting every right and interest secured to the defendant under the contract. The sale of one of the parcels, with the consent of both parties, subject to the Selden mortgage which also was a lien upon the parcel unsold as between the purchaser and the parties to this action makes that parcel the primary fund out of which that mortgage is to be paid, and as the owner of the parcel sold is not a party to this -action the decree properly provides and makes it a condition to granting any relief to tne plaintiff that he should procure a release of the Seldon mortgage as a hen on the premises in question. Should the premises fail to sell for a sum sufficient to pay the Selden mortgage, then the defendant, by virtue of his covenant contained in the agreement with the plaintiff, would be under a personal obligation to the holder of the Selden bond and mortgage to pay the deficiency. But that is no reason why the plaintiff is not entitled to the decree awarded him in this action, for the reason, that as between himself and the plaintiff he assumed the obligation to pay that mortgage in full, and relieve the plaintiff from his obligation to pay the debt secured thereby, and to pay the plaintiff a further sum in

p. 463

addition, and by the terms of the decree the surplus moneys, if any remain after paying the amount fixed by the decree, are to be paid over to the defendant.

The vendor of lands prior to the conveyance to the vendee holds the legal title in trust for the benefit of the latter. By the doctrine of equitable conversion the vendor’s interest under the contract is treated as personal estate, and the vendee’s interest as real estate which descends to his heirs. The vendor holds the legal title as a security for the performance of the vendee’s obligation and as his trustee subject to such performance. In equity the vendor is regarded as having a lien upon the premises for the unpaid purchase money, although as a vendor before a conveyance has the legal title there is no need of saying that he has a lien, as his title is more efficient security since the vendee cannot affect it by a transfer or transaction even of any bona fide purchaser. Pomeroy’s Eq. Jur., vol. 3, §§ 1260-1263, and the cases cited.

The appellant presents and urges the point that the plaintiff was not entitled to relief for the reason that the vendor did not tender him a deed of the premises prior to the commencement of this action. This he was not required to do. In an action by a vendor to enforce an alleged equitable hen for unpaid purchase money under a contract for a sale of the lands, it is no defense that a tender of a deed was not made before suit brought. The action is in effect an equitable one to enforce a contract, and in such a case a tender is not required. Freeson v. Bissel, 63 N. Y., 168 . By the terms of the executory contract all the purchase money was to be paid in full before the plaintiff was required to part with the title. So if this had been an action at law founded upon the defendant’s promise seeking a personal judgment against him the plaintiff could have recovered the sum then due as other installments would thereafter mature, and the right of action was not dependant upon a conveyance being made by the vendor. But here no personal judgment was demanded or awarded against the defendant. A portion of the purchase money was unpaid and the plaintiff sought to enforce its payment by foreclosing a lien which the law gave him upon trust property.

The other point made by the appellant, that the plaintiff could not maintain this action for the reason that prior to this action he had caused the Selden mortgage to be released from the premises, is without merit. The defendant agreed to pay that mortgage in full as it became due, and the plaintiff did not promise to procure its discharge, nor was' his right to the purchase money that was to be paid to him made to him made dependent upon procuring the release. In view of the terms of the sale, this court prop

p. 464

erly made it a condition that a release should be procured by the plaintiff before any steps should be taken to enforce the decree, and this was so ordered with a view of relieving the defendant and protecting his rights..

The respondent admits that a mistake was made in ascertaining the amount of taxes in the sum of $119.23? and upon reviewing the calculations of the respective parties as to the amount due, and after reading the evidence we are unable to discover any other error.

The respondent also complains that it is unfair and inequitable to charge the funds with the costs of the action. There is no ground for the complaint. It is usual in foreclosing hens upon property to charge the fund with the cost of foreclosure, unless some sufficient reason is shown why the lienor should not receive the protection of having his reasonable costs and expenses paid so that he may fully realize his debt if the property is sufficient for that purpose.

The judgment is modified by deducting from the sum found due the plaintiff the sum of $119.23, as of the date of the decree, and as modified affirmed with costs. .

All concur.