Stephens v. Humphryes — 56 N.Y. St. Rep. 70

Majority

p. 70

Melvin Stephens, Resp’t, v. Robert Louis Humphryes et al. Edward H. Potter, App’lt.

(Supreme Court, General Term, First Department,

Filed November 17, 1893.)

Headnote

1. Mobtgage—Foeeclosube.

A purchaser at foreclosure sale will not he relieved on account of defects in title of which he had notice, and in reference to which he made his hid.

3. Same—Notice.

Such purchaser is affected with notice of defects in title which were known to the agent who represented him on the sale

Appeal by purchaser from an order directing him to complete his purchase.

McMahon & Handley (Dennis McMahon, of counsel), for app It; Smith & White, for resp't.

Pursuant to a judgment of foreclosure and sale granted in this action, the referee therein named offered for sale at public auction what purported to be an undivided three-fourths of the premises described in the judgment. Edward H. Potter, through one Chapman, his agent, was the highest bidder at such sale, and the premises were struck down to hirii at the price of $9,550. He paid to the referee immediately ten per cent, of the purchase money, and signed the terms of sale, thereby agreeing to pay the residue of such purchase money on the 6th day of June, 1893, at which time the referee’s deed was to be delivered. Subsequently the purchaser obtained an extension of time within which to complete his purchase on the ground that time was needed to enable him to secure, if possible, a conveyance, which should have the effect to give a good title to the premises. But his efforts, if any were made, apparently proved unavailing, for on the 6th of July he presented to the referee, in writing, certain objections to taking title. With one exception these objections were without merit, and will not be considered. The decree directed a sale of an undivided three-fourths interest in and to the premises therein described, and the objection made was that the mortgagors at the time of the execution and delivery of the mortgage, which was the subject of the foreclosure suit, did not have such an interest in the premises as the judgment decreed should be sold.

The facts upon which that objection was founded are not controverted, and may be briefly stated as follows: In June, 1883, the executrix of Johnson A. Jones began a suit to foreclose two mortgages made by Robert Humphryes in his lifetime, her testator being the mortgagee. Among the parties defendant in that suit were the widow and three children of Robert Humphryes, all of whom were personally served, and thereafter, and on July 17, 1883, appeared therein by attorney. Before the time to answer had expired, Margaret Maria Graff, one of the three children of the deceased mortgagor, died, but the attorney conducting the foreclosure neglected to bring in her heirs as parties defendant, but proceeded to judgment as if she were still living. The premises were sold pursuant to the judgment of foreclosure and sale October 10, 1883, and the property was struck down- in the names of the widow and children of the mortgagor, Humphryes. Subsequently a petition was filed in the name of the widow and three children, and signed by all of them except Margaret Maria Graff, who was then dead, but which fact was not mentioned in the petition, reciting the sale of October 10th, the purchase of the property by the petitioners, that they were entitled to the entire surplus, and praying an order directing the referee to deliver his' deed to them upon their paying to him the amount due the plaintiff, with costs and interest. Such an order was made, in pursuance of which the referee executed and delived his deed to the petitioners. The grantees in the deed then executed and delivered a mortgage, which this suit was brought to foreclose.

It has evidently been the view of the mortgagee that upon sale by the referee under the first foreclosure the title passed to the

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persons in whose names the property was struck down, four in all,, but, as Margaret Maria Graff did not — as, being dead, she could not — execute the mortgage, that by it there was mortgaged to him the interest of three of the four parties, and in pursuance of such contention it was adjudged that three-fourths of the estate should be sold. But this was error, as Margaret Maria Graff having died before any report of decision was rendered, the entry of judgment as against her was wholly without authority, (Code Civil Proc. § 755), and her estate in the premises sought to be foreclosed was wholly unaffected by the judgment It is apparent, therefore, that Potter, as the purchaser at the foreclosure sale of May 24, 1893,. could not have obtained a three-fourths interest in the estate. But the contention is that this objection is not available to the purchaser, because he had knowledge of the-facts upon which his objection is founded at the time of the sale. It is a well settled rule that a purchaser at a mortgage foreclosure sale will not be relieved on account of apparent defects in the property, or of defects in the title of which he had notice, and in reference to which he made nis bid. Riggs v. Pursell, 66 N. Y., 193 ; Fryer v. Rockfeller, 63 id., 268 . Mr. White, one of the attorneys for the plaintiff, and the referee, each made affidavit that at the sale, and before any bid was made, White, in the presence of the agent of the purchasor, who was standing within two or three feet of him at the time, read in a clear, loud voice the following :

“Supreme Court, New York County.

“Melvin Stephens, Pl’ff, agst Robert L. Humphryes et al,. Resp’ts.

“ Notice to Bidders: You will please take notice that the three-fourths interest of Robert L. Humphryes, Dorothy Humphryes and Mary E. Hall in the premises described are advertised for sale under the decree; that the title to the premises comes through a foreclosure suit in 1883 and 1884, entitled Jones v. Humphryes that it was claimed by the last purchaser on August 9th, 1893 ; that by the death of a party, Margaret M. Graff, pending that, action, that the interest of the said Robert L. Humphryes, Dorothy Humphryes and Mary E. Hall in the premises about to be sold is only two-thirds of the fee, instead of three-fourths. • The objection was overruled by the court, on the ground, among others, that the purchaser had notice. We do not state that the purchaser at this sale will not acquire title to more than two-thirds of the fee, but we believe that he will not, as we make this state ment for the protection of bidders as well as the plaintiff.

“ May 2Ath, 1893. Smith & White,

Plaintiff's Attorneys, 280 Broadway, N. Y"

It will thus be seen that notice was not only given of the facts which constitute the foundation of the purchaser’s objection, but the opinion was expressed that the purchaser would not acquire title to more than two-thirds of the fee. The purchaser, Potter, states in his affidavit “ that he purchased the three-fourths part of

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the property in good faith, relying entirely upon the referee’s statements made in his said advertisement.” But Chapman, who attended the sale, made the bid in Potter’s name, paid the percentage of purchase money required from him, and signed his name to the memorandum of sale, was his agent, and notice to him at the time of the sale was notice to his principal. Now Chapman, the agent, with the affidavits of White and the referee before him, asserting the reading of the notice, and Chapman’s close proximity to White at the time it was read, does not deny the reading of the notice, nor that he was stationed two or three feet from White at the time. Neither does he say that he did not hear the notice read, but contents himself with the declaration that he purchased in behalf of “ Potter, relying entirely upon the representations made by the said referee and auctioneer, through their advertisements and said terms of sale, that they were selling and said Potter was purchasing an undivided three-fourths part of said premises.” It is apparent, therefore, that the learned judge at special term was required to determine that Potter purchased with full notice of the facts upon which he founds his objection to a completion of the purchase.

The order should be affirmed, with ten dollars costs and printing disbursements.

All concur.