Jackson ex dem. Titus & Weeks v. Myers — 11 N.Y. 531

Majority

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Jackson, ex dem. Titus and Weeks, vs. Myers.

Headnote

The parol declarations of a party, showing a deed of real estate held by him tobe void for fraud, are admissible in evidence in an action of ejectment against his tenant, where such declarations are made while in possession of the property, although subsequently and previous to the trial of the ejectment suit, the grantor of such party has assigned to a creditor the mortgage received by him as the pretended consideration of the grant, and the grantee has authorized the creditor to receive rents from the tenant of the mortgaged premises.

The plaintiff in such suit is not bound to call the landlord of the tenant as a witness, but may avail himself of his declarations or admissions.

The assignee of a mortgage does not, by the deed of assignment, acquire a legal title to the mortgaged premises, nor does he thereby become entitled to the rents, where the mortgaged premises are held by lease under the mortgagor.

It seems, that the principle that a purchaser for valuable consideration without notice is protected in certain cases where the title of his grantor is defeasible on the ground of fraud, is not applicable when the estate is taken in security or in discharge of an antecedent debt.

Whether a mortgagee in possession after forfeiture, without having invested himself with the legal title, may retain possession—que>-e

This was an action of ejectment for the recovery of a store and lot in Plattsburgh, tried at the Clinton circuit in June, 1831.

#The lessors of the plaintiff claimed the premises as purchasers at a sheriff’s sale, under an execution against one A. Parsons, issued on a judgment docketed 11th May 1827. The sale took place on the 31st December, 1827, and the deed from the sheriff to the purchasers was executed 4th April, 1829. The defendant, in his defence, produced a deed of the premises in question from A. Parsons to Charles H. Miller, purporting to be for the consideration of $2000, bearing date 28th February, 1827, and recorded on the 3d March, in the same year. The lessors of the plaintiff proved the deed from Parsons to Miller to have beep executed in fraud of creditors; and at the close of the trial, the defendant’s counsel abandoned the defence upon the question of fraud, and obtained leave to make a case for the purpose of reviewing the decisions of the circuit judge, upon the following questions of law. First. Among other evidence adduced by the lessors of the plaintiff to show the deed from Parsons to Miller to have been fraudulently

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executed, was the deposition of Samuel Pitcher, proving certain admissions made by Miller on the 23d April, 1827: the counsel for the defendant objected to its admission as evidence, on the grounds, 1. That a mortgage of the premises in question, given by Miller to Parsons at the time of the conveyance to Miller, to secure the consideration money expressed in the deed, had been assigned by Parsons to Joseph Russell, (although it was conceded that such assignment was made subsequent to the admissions of Miller;) 2. That the parol declarations of Miller were inadmissible ; and 3. That he was a competent witness to prove the fraud, if any existed, and ought to have been produced. The judge overruled the objection and directed the deposition to be read to the jury. Second. On the trial of the cause, the defendant produced the mortgage executed by Miller to Parsons bearing date 28th February, 1827, conditioned for the payment of $2000, in four equal annual instalments, after its date, with interest, and an assignment of the same from Parsons to Joseph Russell and John A. Hall, bearing date 21st September, 1827, and proved that in March, 1829, the defendant in this case was in possession of the premises in question as the tenant of Miller, and received notice *from Russell and Hall of the existence of the mortgage, of its assignment to them, of the moneys due thereon, and that he would be required to pay to them the rent due upon the premises. The defendant also produced a written authority from Miller to Russell, (one of the firm of Russell & Hall,) bearing date in November, 1829, to receive the rents of the premises in question due from the defendant, in which it was stated that Russell in equity had a good right to the same, and by which Miller engaged to execute to Russell a quit-cl aim deed of the premises when thereunto requested. The defendant also produced another written power to Russell to receive from a depositary the counterpart of the lease executed to Myers. On this evidence, the counsel for- the defendant insisted that Russell and Hall, as the assignees of the mortgage executed by Miller to Parsons, and as the substitutes of Miller to receive the rent, became in law and in fact possessed of the premises in question, and that Myers the defendant in the suit, was the tenant of Russell and Hall or of Russell alone, and requested the judge so to charge the jury, which he refused to do. Third. The defendant offered in evidence a mortgage of a lot of land, of which the premises in question are a part, executed by Parsons to R. H. Walworth, Esq. bearing date 1st February, 1817, to secure the payment of $1175, and an assignment from the mortgagee to Joseph Russell, bearing date 27th November, 1829, of the amount then due upon the same, viz. $190,12; which evidence was objected to by the plaintiff’s counsel, and rejected by the judge. The jury found a verdict for the plaintiff; the defendant made a case and moved for a new trial. The case was submitted on written briefs.

J. P. Cushman, for the defendant.

J. Paine, for the plaintiff.

By the Court,

Let us inquire who are the parties to this suit and what is the issue to be tried. The subject matter is a store and lot, the title to which was once in A. Parsons, which title the plaintiff says he has by operation of law, by means of a judgment and execution against *Parsons and a sale thereon. If the title was in Parsons when the judgment was docketed, in May, 1827, it is now in the lessors of the plaintiff. The title wras in Parsons at that time, unless it passed by the deed previously executed to Miller. If it did pass by that deed, then it is still in Miller; he has never conveyed it to any one, nor has the mortgage executed by him been foreclosed. If these facts are so, and so they appear in the case, then Miller is the party in interest—the real defendant. It is true that he has assigned the rent to Russell, saying that he has in equity a good right to the

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same ; but Miller had no legal title to the rents prior to the assignment, nor has he now any legal title to the property itself, from any thing appearing upon this case. If I am right in this assumption, then there can be no doubt about the propriety of Pitcher’s testimony. It was properly admitted. Miller’s declarations were competent testimony, because he is the party in interest; and for the same reason, he could not be a witness. But if he were not the party in interest, his declarations were properly received in evidence, if made when in possession of the premises in dispute ; and they are good evidence against him and all persons claiming under him. So is the doctrine in Jackson v. Bard, 4 Johns. R. 230, and many subsequent cases. There may be exceptions which will be hereafter considered.

The doctrine that parol declarations shall not be received to divest a legal title, is not applicable in this case. Such declarations cannot be received to divest an estate already shown to have vested, or when it is shown that there is higher evidence. The object here was to show that no title vested ; that the instrument which purported to convey the estate was void. It is always competent to show that a deed was delivered as an escrow, or that it was obtained by fraud. There can be no doubt that it might be shown, by any competent witness who knew the fact, that a deed was obtained by imposition, or by force, duress, or that it was executed for the express purpose of defrauding the creditors of the grantor. How can such evidence be given but by parol 1 By persons who were present at the concoction of the fraud, and knew the facts and the declared intents of the parties when the deed was executed. *If these facts could be proved by parol, by indifferent persons, why not prove them by the admissions of the parties 1 Had the subscribing witnesses been produced who had heard Miller make similar declarations to those made to Pitcher, there could have been no good objection to it on the ground of its being parol evidence. If that objection were to prevail in such a case, a deed would seldom be proved fraudulent.

The defendant’s counsel insists that Miller’s declarations were inadmissible, because the plaintiff might have produced him as a witness ; and it is said he might have done so because Miller’s interest was against him; and because the plaintiff might thus use him as a witness, therefore it is said he shall not give evidence of his declarations. It is in general true that the declarations of a person who is a competent witness cannot be given in evidence; but a party is not compelled to call a party in interest, merely because he may do so ; and if he did call him, such party in interest could not be compelled to testify. 7 Cowen’s R. 174. Miller was not a competent witness for the defendant, who was his tenant, and Miller himself the real defendant. The plaintiff was, therefore, not obliged to call him, and was entitled to the benefit of his admissions.

The defendant’s second point is, that Russell and Hall, being assignees of Miller’s mortgage, became vested with the legal title : that is, as I understand it, the mortgage is an outstanding title; for the defendant has not connected himself at all with Russell and Hall as their tenant, and can only avail himself of the mortgage, if at all, as an outstanding title. A mortgage before foreclosure is now regarded merely as a security for money. The decisions on this point were commented on in the court of errors in the case of Astor v. Hoyt, 8 Wendell’s R. 615, 16. Russell and Hall show no privity between themselves and the defendant. They have indeed given him notice to pay them the rent; but can they collect rent of him in their capacity as mortgagees 1 Surely not. As assignees of Miller’s lease, if they have an assignment, they may; but without an assignment they must institute proceedings in the name of Miller.

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The defendant has never attorned to Russell and Hall, and is not their tenant. It seems, therefore, to be travelling out of the case, properly before the court, to be discussing the question whether they can enforce their mortgage. All I mean to say now is, that they are not in the place of a bona fide purchaser from Miller, for valuable consideration paid without notice of the fraud. It is a general rule that a person having no title can convey none ; but there are cases where a party having a title defeasible in his hands, may convey to an innocent party for value paid, and the title of the purchaser will be held valid from considerations of public policy. Whether this is such a case, I do not mean to inquire ; but I will merely remark, that all the cases which I have examined, where the purchase from a fraudulent grantor was sustained, were cases where the purchaser gave value at the time of the purchase ; not where the premises were taken in security or discharge of an antecedent debt. This case presents a contest among creditors to secure each for himself what he can of the wreck of the failing debtor’s property. The lessors claim under a judgment. Where was the legal title to the property in question when that judgment was entered ? The sale to Miller being fraudulent as against creditors, as to them the title remained in Parsons. It did so, also, as between the creditors and Miller, the fraudulent purchaser, and all holding under him; though perhaps not as to a bona fide purchaser from him for valuable consideration. As between the parties to this suit, the title remained in Parsons, and the judgment became a lien upon it. The plaintiff’s title is therefore complete.

The defendant’s counsel contends that Myers was tenant to Russell and Hall. This point has already been answered, being involved in the previous point. I will however observe, that all the cases referred to by the counsel are cases decided in England, where the mortgagee is considered as having the legal title. It is not so here ; and it is contended by the counsel for the plaintiffs that a mortgagee in possession could not protect himself against an action by the mortgagor or his assignee, since by the revised statutes a mortgagee cannot maintain ejectment. 2 R. S. 312, § 57. That point does not necessarily arise, but it does not follow that he may not retain possession under a mortgage, though he could mot recover the possession upon it. This section of *the revised statutes strongly supports the view which the courts here have taken of a mortgage. It is not to be considered a conveyance of the title, else the mortgagee might bring ejectment after forfeiture; but he must invest himself with the legal title, by foreclosing his mortgage, before he can recover possession. The mortgage to R. H. Walworth was properly rejected ; it is not an outstanding title, but merely an encumbrance upon the premises.

New trial denied.