Price v. Phillips — 26 N.Y. Super. Ct. 448

Majority

p. 448

James C. Price et al. plaintiffs, vs. John D. Phillips, defendant.

Headnote

1. By the entry of a decree in bankruptcy, under the act of 1841, and the appointment of an assignee, the latter becomes ipso facto, the legal owner of all .the real estate belonging to the bankrupt, and is as fully vested with all legal and equitable rights pertaining to such ownership as the bankrupt had theretofore been.

2. Where premises owned by a bankrupt are subject to a mortgage which is a lien thereon, such mortgage is not an adverse claim, within the meaning of the 8th section of the bankrupt act, which requires all suits to be brought by the assignee against any person claiming an adverse interest, touching -the property, &c. of the bankrupt, within two years after the decree in bankruptcy.

3. Nor will the foreclosure of the mortgage,- in a suit to which the assignee in bankruptcy is not a party, and the purchase of the property, by the mortgagee, at the sale under the decree, change the legal position and relation of the rights of the parties.

4. Such assignee, being entirely unaffected by the decree to which he was not made a party, still remains the owner in fee, and entitled to the possession.

5. Where there has been no time, since the publication of the decree, when the assignee was required by the statute of bankruptcy to institute a suit against

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the purchaser at the mortgage sale, as an adverse claimant, he would not he barred by the limitations contained in that act, but may take possession of the premises, if vacant, or maintain an action for the recovery of their possession.

(Before Moncrief, Barbour and Garvin, JJ.)

Heard June 16, 1865;

decided December 30, 1865.

This was a controversy submitted, without action, under the 372d section of the Code of Procedure, upon the following facts: On the 28 th of December, 1864, an instrument in writing was duly made and entered into between the above named plaintiffs, then being in possession as owners of the premises hereinafter described, and one Warren Brady, by which the plaintiffs agreed to sell to the said Brady, or his assigns, the certain gore lot described as follows :

“ All that certain lot, piece or parcel of land, situate, lying and being in the twelfth ward of the city of New York, and distinguished on a map of a piece or parcel of land purchased by Ely Moore of Noah Sewell, by an indenture dated November 1st, 1827, which map was made by Isaac T. Ludlam, city surveyor, July, 1827, and is filed in the office of the register of the city and county of New York, entitled the Canal Tract, as the gore, on the northwest corner of the Eighth Avenue and 118th street, and being bounded northwardly by land of Hart-wright, eastwardly by the Eighth Avenue, and westwardly by the middle of 118th street, said parcel containing the quantity of half a lot, more or less.”

And the said Brady agreed to purchase the same for the sum of $900 at a time and place named in said agreement; and the plaintiffs agreed on receiving such payment at the time and in the manner above mentioned, to execute, acknowledge and deliver to the said Brady or his assigns, “ a proper deed containing a general warranty and the usual full covenants for the conveying and assuring to him or them the fee simple of the said premises, free from all incumbrance.” Brady assigned his said contract to the defendant. At the time and place named in the contract the parties hereto were present, and the plaintiffs tendered to the defendant a deed in form as

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required, by said agreement, but the defendant refused to receive the same.

It was, and is admitted, that on the 5th day of September, 1835, one John Scudder purchased and received a conveyance of the premises in question, with other premises, from one Edward Price, and thereupon executed a mortgage back to said Price, to secure a part of the purchase money upon such purchase. On the 23d of March, 1836, Scudder sold and conveyed the said premises to one Ebenezer L. Williams, subject to said mortgage.

On the 27th of May, 1843, said Williams, by decree of the District Court of the United States for the southern district of New York, the proper court having jurisdiction of proceedings for that purpose, was duly, pursuant to the act of congress entitled “ An act to establish a uniform system of bankruptcy throughout the United States,” approved August 19th, 1841,. declared to be a bankrupt, and all his property and rights of property became, under the provisions of said act, vested in William C. H. Waddell, the assignee, duly appointed by said court for said purpose.

In the year 1845, Edward Price, the mortgagee above named, filed his bill in the court of chancery in this state against said John Scudder and others to foreclose the said mortgage, and on the 17th of June, in that year, a decree for foreclosure and sale of said premises under said mortgage was entered, and the premises were, pursuant to said judgment and decree, sold by- Philo T. Euggles, master in chancery, and by him conveyed to said Edward Price, by deed dated September 8, 1846. The plaintiffs are heirs at law of said Price. Neither said Ebenezer L. Williams nor Wm. C. H. Waddell were made parties to said foreclosure suit.

The defendant’s refusal to take the deed tendered by the plaintiffs was based wholly upon the objection that said Williams and Waddell had not been made parties to the said foreclosure, and that the title was for that reason defective.

This question is now submitted to this court.

If the court shall decide that the omission of the said par

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ties from such foreclosure suits prevents a good title being given, judgment will be for the defendant. If otherwise, judgment is to he entered for the plaintiffs, decreeing a specific performance of said contract by the defendant.

H. H. Anderson, for the plaintiffs.

Townsend Wandell, for the defendant.

As the official assignee in bankruptcy was not a party to the foreclosure suit, and is, for that reason, wholly unaffected by the judgment and sale had thereunder, the only question for our consideration is, whether such assignee now has such an estate and interest in the premises which are the subject of this controversy as materially to affect the title of the plaintiffs.

Upon and by the entry of the decree in the bankruptcy proceedings, and the appointment of Mr. Waddell as assignee, such assignee became and was, ipso facto, the owner in fee of the premises in question, and as fully'vested with all the legal and equitable rights pertaining to such ownership as the bankrupt himself theretofore had been. (See Bankruptcy Act, 5 U. S. Stat. at Large, p. 442, § 3.)

The 8 th section of that act provides that the circuit and district courts of the United States shall have concurrent jurisdiction of all suits that may be brought by an assignee of the bankrupt against any person claiming an adverse interest, or by such person against such assignee, touching any property or rights of property of said bankrupt, transferable to or vested in such assignee ; and that no suit at law or in equity shall, in any case, be maintainable by or against such assignee, or by or against any person claiming an adverse interest, touching the property and rights of property aforesaid, in any court •whatsoever, unless the same shall be brought within two years after the declaration and decree in bankruptcy, or after the cause of action shall have first accrued. (Id. p. 444.)

Although the power of congress to deprive any person, not

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being a party to or connected with the bankruptcy proceedings, - •of the right to bring.in and maintain his suit in a state court, within the time limited by the laws of such state, may well be doubted, it is quite clear that the same statute which vests the assignee with all the property and interests of the bankrupt, may also provide that no suit shall be brought by him against an adverse claimant, unless the same shall be commenced within two years after the right of action shall have accrued, and that the assignee will take his title subject to that restrictive provision.

Neither when the mortgage in this case was executed, nor at any subsequent period, did such mortgage itself constitute an • adverse claim within the meaning of the act. For it conferred • upon the mortgagee no estate in the land, nor did it vest him ■ with the possession of the premises. It was, simply, a lien and charge upon the land, which, for aught that appears, was •never disputed by the mortgagor or the assignee, and which .both were estopped by the mortgage itself to deny.

Nor did the foreclosure sale, and the purchase of the property by the mortgagee, change the legal status of the parties. The assignee in bankruptcy being entirely unaffected by the ■ decree to which he was not a party, still remained the owner in fee and entitled to the possession, while Price took no greater . interest or right, as between himself and. the former, than he ■ had before the commencement of that proceeding, to wit, that ■ of a mere mortgagee.

.Had such purchaser informed the assignee that he claimed •’ the ownership or right of possession by virtue of the master's . deedj or,- even, if he had entered into the actual possession of and ocpiipied the premises in such a manner that the assignee ".must be presumed to have had notice thereof, as was the -case in Stevens v. Hauser, ( 1 Rob. Rep. 50 ,) such assignee ■ would have been bound, no doubt, to commence an action ■ for the- recovery of the premises, or to quiet his title, within •two years thereafter. .But the case before us neither shows that such possession was ever taken, nor that the assignee -has, ever Jhad notice, constructive or otherwise, that such

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purchaser had or claimed any right or interest in the premises adverse to his own title, nor, indeed, that the mortgagee ever claimed any interest, except as such mortgagee, prior to his agreement to sell to the defendant. So far as appears from the submitted cáse, therefore, there has been no time, since the publication of the decree, when the assignee was required by the statute of bankruptcy to institute a suit against the purchaser as an adverse claimant; and it follows that he is not barred by the limitation contained in that act, but, when such agreement was made, lawfully might have taken, and still may take possession of the premises, if vacant, or bring and maintain his action in ejectment for the recovery of the possession, if occupied by any other person against his will.

J udgment must, therefore, be rendered for the defendant, under the stipulation, with costs to be regulated by the 273d section of the Code.