Macauley v. Smith — 32 N.Y. St. Rep. 745

Majority

p. 745

Antoinette Macauley, App’lt, v. Robert H. Smith et al., Resp’ts.

(Supreme Court, General Term, Fifth Department

Filed June 19, 1890.)

Headnote

Attachment — Deed.

• One T., being the owner of certain premises, conveyed the premises in 1871 by deed, and took back an agreement stating that the conveyance was security for a loan for a term not exceeding one year; that if the loan was repaid within the year the grantees would reconvey; if not, the deed was to be absolute; which agreement was never recorded. The loan was not repaid, and at the end of the year the grantor surrendered the premises, and the same were afterwards sold to a bona fide purchaser. In an action by judgment creditors of T. to have the deed declared a mortgage and the real estate adjudged to be subject to the lien of the judgment, which had been recovered by default on service by publication, held, that the rights of T. in the premises after the expiration of the year were at most of an equitable nature and not subject to attachment, and, therefore, the lien of the judgment could not attach thereto.

p. 746

Appeal by the plaintiff from, a judgment, entered on the findings and- decision of the court at special term.

J. Van Voorhis, for app’lt; B. Tracy, for resp’ts.

The judgment dismissed the complaint on the merits. The action was in the nature of a creditor’s bill to have certain conveyances of real estate, by warranty deeds, declared to be mortgages, and to have the real estate adjudged to be subject to the lien of a certain judgment recovered'by the plaintiff against the grantor in such deeds, and of an execution issued thereon. The action in which the judgment was entered was for the recovery of money only, and was commenced in August, 1879r by publication of a summons against the defendant therein as a nón-resident, and an attachment was at the same time issued against her property, which was in form levied upon the real estate in question. Judgment by default was entered in that action in July, 1883, and an execution issued thereon to the sheriff of the county where the property was situated, which has never been returned.

The facts bearing upon the status of the title to the property in question at the time of the commencement of the plaintiff’s action, and the issue of the attachment therein, were as follows:

On and prior to the 6th day of July, 1871, Lucilia Tracy was the owner and in possession of that property, consisting of two parcels of real estate on Alexander street in the city of Rochester, known as the Tracy seminary property, upon one of which parcels there were two mortgages of $5,000 and $2,000 respectively. On the 5th day of July, 1871, she entered into an agreement in writing with the defendants, Robert H. Smith and Calvin Tracy, and one Slocum Howland, since deceased (who is represented in this action by the defendants, William and Emily Howland, as -his executors) whereby in consideration of and for the purpose of securing a loan of $8,240, she agreed to execute and deliver to them a good and sufficient warranty deed of both parcels of land above mentioned; and the agreement proceeds as follows: “ And the said Howland, Smith and Tracy, in consideration- of, and before the execution and delivery of, said deed, hereby agree to advance the said sum of $8,240 (in a manner specified) to the said Lucilia Tracy. It is also hereby agreed by and between the parties hereto that the said deed is to be and is a security for said loan for a term not exceeding one year from the date of said deed, which is to be hereafter executed; and that upon the repayment of said sum of $8,240, with interest, within or at the expiration of said one year, by the said Lucilia Tracy, her heirs, executors, administrators or assigns, the said Howland, Smith and Tracy, their and each of their heirs, executors, administrators or assigns, are to reconvey said premises so conveyed, to said Lucilia Tracy, her heirs, executors, administrators and assigns, free from all incumbrances or liens thereon, except such as exist and are liens or incumbrances upon said premises at the time of the conveyance thereof as aforesaid by the said Lucilia Tracy.

“And in case the said sum of $8,240 shall not be repaid dur

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ing or at the expiration of one year as aforesaid, then it is understood and agreed that the said deed so as aforesaid to be executed by the said Lucilia Tracy is to become and be a deed absolute, and the said Howland, Smith and Tracy, or their heirs or assigns are to become and be the owners thereof in fee simple absolute.”

Accordingly, on the following day, Miss Tracy executed and delivered to the other parties to the agreement deeds of the two parcels of land, containing the usual covenants of warranty, which were on the same day duly recorded in the clerk’s office of Monroe county, in and by one of which deeds the grantees, as part ■consideration of the conveyance, assumed the payment of the two mortgages above mentioned.

The loan was not repaid and in December, 1872, the grantor quit and surrendered possession of the premises to the grantees, who remained in possession thereof, by tenants or otherwise, until the 1st of January, 1875, when they sold and conveyed the same to the defendant, the Hew York Baptist Union for Ministerial Education, which has ever since been in possession of the premises, claiming title thereto.

The agreement of July 5, 1871, was never recorded and the defendant, the Baptist Union, etc., had no notice thereof at the time of its purchase of the property.

It is conceded, on the part of the plaintiff, that her judgment against the grantor in the deeds above mentioned is of no force or effect for the purposes of this action unless as a judgment in rem by virtue of a levy of the attachment upon the property in question. Code of Civil Procedure, § 707.

It is also in effect conceded that mere equitable assets or interests in property, real or personal, are not subject to the levy of an attachment; but the contention on the part of the plaintiff is that the interest of the defendant in that judgment, in the property against which the attachment was directed, was the legal title and not an equitable interest merely; that the conveyances to the defendants, Howland, Smith and Tracy, interpreted in the light of the instrument of defeasance executed between the same par-ties, were mortgages merely, and did not pass the legal title to the property, but that the legal title, notwithstanding such deeds, remained in the grantor and was subject to the levy and lien of the attachment issued in the plaintiff’s action.

This contention, we think, cannot be sustained. The agreement of defeasance which preceded the execution of the deeds, while it provided that the deeds were to be security for the loan, also prescribed the mode and condition of defeasance, viz., by a reconveyance by the grantees, upon payment of the loan, with interest, within one year. The deeds were to be, and were, absolute in form and absolute in effect subject only to the right of the grantor to have a reconveyance upon repayment of the loan within the time prescribed. There was no undertaking or agreement on the part of the' grantor to repay the loan and no indebtedness was created by the agreement which could have been collected by the grantees in any form of action. The option to repay the moneys and take a reconveyance of the juoperty was a privi

p. 748

lege o£ the grantor and there was no corresponding option to be exercised by the grantees; they could not tender a reconveyance of the property and demand the repayment of their money.

We do not propose to extend the discussion to any inquiry as to what, if any, rights or remedy the grantor possessed under this agreement after the expiration of the time within which she might demand a reconveyance ; whether, for example, she might, after that time, have maintained an action to declare the deeds to be mortgages, and for the right to redeem. It seems to us very clear, upon the case above stated, that whatever her rights or her remedy, they were of an equitable character, and could be established only by a resort to equity; and that until they were so established she had no legal title or interest in or to the property conveyed which was subject to the levy or lien of an attachment.

In Thurber v. Blanck, 50 N. Y., 80 , 87, it was held that whenever debts and choses in action are so situated ag to require the exercise of the equitable powers of the court to bring them within the reach of legal process, they must be treated as equitable assets only, and are not subject to attachment. See, also, Anthony v. Wood, 96 N. Y., 180 .

And in this respect we suppose there is no distinction between real and personal property, rights and interests ; that where the interest of the debtor in either class of property can be established only by resort to equity, it is to be treated in respect to the application of legal process as an equitable interest only, and is not subject to the lien of an attachment.

Upon the ground so far discussed, we think the complaint in this action was properly dismissed, and that the judgment must be affirmed.

Macomber and Corlett, JJ., concur.

Judgment appealed from affirmed, with costa