Hagadorn v. Hart — 41 N.Y. St. Rep. 755

Majority

p. 755

Thomas J. Hagadorn, App’lt, v. John W. Hart, Sheriff, et al., Resp’ts.

(Supreme Court, General Term, Third Department,

Filed November 30, 1891.)

Headnote

1. Equity—Foreclosure—Deficiency judgment.

One John Hagaclorn died and left a will hy the residuary clause of

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which he left certain real estate equally to his two sons, Wilbur S. and the plaintiff Thomas J. He had no debts. He owned four mortgages-against a farm in another county belonging to Wilbur S., upon only the first of which Wilbur S. was personally liable. His executor foreclosed and' sold in October, 1866. Enough was realized to pay the first mortgage, but the avails were applied on the other mortgages. The executor entered a deficiency judgment against Wilbur S. upon the first mortgage, ayd in January, 1887, he sold the interest of Wilbur S. in the premises in question to Thomas J., the plaintiff, thereby partially satisfying the deficiency judgment. Judgment creditors of Wilbur S. prior in time to the deficiency judgment attempted to sell the interest of Wilbur S. in said premises, when Thomas J. brought this action to restrain them. Held, that the action could not be maintained, and equity would not interfere; that whatever may have been the reason for failing to apply the proceeds upon, the foreclosure sale to satisfy the first mortgage given by Wilbur S. to-John Hagadorn, that transaction could not be used to prevent the judgment creditors of Wilbur S. from reaching his interest in the lands now held by Thomas J.

2. Same.

As John Hagadorn had no debts one-half of the mortgages held by him. against Wilbur S. would, under the residuary clause of the will, have passed, to Wilbur S., and no reason for a foreclosure was apparent.

3. Same.

The plaintiff did not stand in the position of an executor attempting to-set off against a legacy a debt due the estate of his testator.

Appeal from judgment dismissing the complaint, with costs.

J. H. Clute, for app’lt; W. L. Norton, for resp’ts.

This is an appeal "by the plaintiff from a jxxfigment dismissing the complaint on the merits upon a trial "before the court without a jury. The action was brought to restrain the-sale of certain premises under two executions against "Wilbur S. Hagadorn, in the hands of the defendant Hart, asshei’iff of Albany county. The plaintiffs in the judgments in which the executions were issued are parties defendant.

John Hagadorn died March 8, 1885, having previously made-his will. By this will, after a devise to his wife for her use and for the benefit of two minor children," he gave and devised all the-rest of his property, after payment of debts, to his two sons Wilbur S. Hagadorn and Thomas J. Hagadorn, the present plaintiff, to be equally divided between them, share and share alike. The-testator was seized in fee at his death of the premises described in the complaint, situated in Albany county. These are not the-premises devised to the wife. They passed under the residuary clause above mentioned, to Wilbur S. and Thomas J. The two-judgments above mentioned were duly recovered and were docketed in Albany county, one on February 19, 1886, the other on February 28, 1886.

John Hagadorn at the time of his death held four mortgages-on a farm belonging to Wilbur S. Hagadorn, in Schuyler county. These were foreclosed by Tanner, the executor of John Hagadorn"swill, and a judgment of foreclosure was entered, June 22, 1886, for $20,002.75. The premises were sold under that judgment, October 15, 1886, "for $7,250. Wilbur S. was personally liable-only on the first of these four mortgages; and a judgment for deficiency was entered against him in that action in favor of the-

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executor for $6, 823.25, the amount of that first mortgage; which judgment was docketed in Albany county, November 22, 1886. Thus the avails of the foreclosure sale must have been, in some unexplained way, applied to the mortgages other than the first. No reason for this is given. On that judgment for deficiency the executor issued an execution, and by virtue thereof the sheriff of Albany county, on the 13th of January, 1887, sold the interest of Wilbur S. in the premises described in the complaint, for about $3,000, to Thomas J. Hagadorn, the present plaintiff. A sheriff’s deed of the interest of Wilbur S. in said premises was duly executed to the present plaintiff, and was recorded July 7, 1888, and the present plaintiff went into possession.

The sheriff returned said execution satisfied as to $3,008.45 and unsatisfied as to $3,814,85 ; which last sum remains unpaid. The present plaintiff now seeks to prevent the judgment creditors aforesaid of Wilbur S. from selling the interest of Wilbur S. in said premises on their execution, although their judgments were docketed several months prior to the docketing of the judgment under which he obtained his title. The plaintiff’s claim is that the judgment in favor of the executor of John Hagadorn had a preference in equity, so far as affects any property which came to Wilbur S. from, the estate of said John.

The plaintiff seeks to establish a priority contrary to the statute, on the ground of equity. One objection to this arises on the very judgment under which plaintiff claims. There were four mortgages on the same property; all foreclosed in the same action. Wilbur S. was liable personally only on the first. The avails of the foreclosure sale were, of course, first applicable on the earliest mortgage. So applied there could have been no deficiency against him. By what right the avails were otherwise applied we do not see. If by Wilbur’s consent, then he consented to a judgment against himself when there was no indebtedness. It would be inequitable that he, or the executor, should use such a judgment as an equitable ground of depriving honest creditors of their legal liens. The transaction may have been intended for -some such purpose.

There is another difficulty. It does not appear that John Hagadorn owed any debts. If this were so, then, on a division of the residue of the estate, one-half of the mortgages held by the estate against Wilbur’s farm would go to Wilbur himself. The same would be true if there had been enough other property to pay the debts. Why, therefore, a foreclosure should have been had is not apparent.

But it is urged by the plaintiff that the interests of Wilbur S. in the land inherited are subject to the debt owing by him to the estate. We have already seen that there was no valid debt owing by him to the estate after the foreclosure sale. And even if there were, the plaintiff bought, according to his own position, only Wilbur’s interests in the land. That is just what the defendants, judgment creditors, desire to sell; and they have the prior liens. The plaintiff is no better off than any other judgment creditor. He does not stand in the position of the executor attempting to set

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off a debt against a legacy. If the executor had any such right, he did not transfer it when he sold under judgment and execution all the interests of Wilbur S.

The plaintiff cites the well known doctrine that a debt due the testator from a legatee is to be applied in satisfaction, so far as may be', of the legacy. But that has no application here. The executor held a claim against Wilbur S. to the amount of the first mortgage. He did not attempt to set that debt off against any legacy. On the contrary he collected • the debt and received full payment by the foreclosure sale. There was then nothing to set off. And even if the plaintiff urges that the judgment of deficiency, improperly obtained, shows a debt owing by Wilbur S. to the estate, which may still be set off against Wilbur's share in the devised land, still the plaintiff, as the purchaser on the sale under the judgment, has no right to insist on this set off as against other judgment creditors intending to sell the same land and having prior liens thereon.

We are not here to consider any possible questions between Thomas J. Hagadorn, as devisee of an undivided interest in the testator’s estate and Wilbur S., or some person who may have acquired Wilbur’s undivided interest in the same land. That is not before us. We may, however, refer to the case of Smith v. Kearney, 2 Barb. Ch., 533 , 549. There it was held, that while the right of the executor is well settled to retain part, or the whole of a legacy in discharge of a debt owing from the legatee, yet that this rule did not apply to the proceeds of real estate descended to the debtor from the creditor.

The real estate in that case was not converted into personal by the will of the testator. Its conversion was accidental. Much more strongly then it might be said that the rule did not apply, to real estate not converted at all. But as above stated, that question is not before us. The plaintiff insists that a debt not in judgment owing the testator at his death from one of the devisees is a lien on the devise as against a judgment recovered against the devisee. We see no authority for such a doctrine. The title to land devised or descended passes at once to the -devisee or heir. It becomes subject to judgments recovered against the devisee or heir for his debts, and such judgments take priority according to the time of docketing. The case of Pierce v. Alsop, 3 Barb. Ch., 184 , is quite similar in principle to the present case, and sustains the views we have above stated.

Judgment affirmed, with costs.

Landon and Mayham, JJ., concur.