Reeves v. . Kimball

This was an action to enforce the specific performance of a contract, bearing date the 2d day of March, 1857, for the sale of a piece of land, agreed to be sold by the defendant to Chester Folsom, and by him assigned to the plaintiff. The issues therein were tried by a referee, and his conclusions, both of fact and law, have been affirmed by the General Term of the Supreme Court in the fifth district. We must, therefore, on the appeal from its judgment to this court, assume his finding of fact to be correct. From those as stated in the case, and the admissions in the pleadings, it appears: 1st. That by the terms of the contract the said Chester Folsom agreed to pay to the defendant, at the expiration of three years from its date, the sum of $600, and the *Page 301 interest thereon half-yearly in the meantime, together with the ordinary cost of executing a deed for the premises in question; and the defendant on his part agreed, on the said payments being punctually made to him, "to convey in fee simple, by a good warranty deed," the said premises to the said Folsom or his assigns. It appeared that Folsom had originally a contract for the conveyance of the premises from one Knowlton, and was in possession; but, failing to pay according to its terms, had applied to the defendant to pay up the contract, take a deed from Knowlton, and give him, F., a contract. This was done, and the contract was given as above stated, on the 2d day of March, 1857. On the 12th day of the same month of March, the defendant executed a declaration in writing of that date, upon his deed from Knowlton of the said premises, to the effect that it had been given by Joseph Knowlton, the grantor, to him, instead of Folsom, to secure the payment of the said sum of $600, and interest, to him on said contract, and such other sums as he might "subsequently let him (Folsom) have for his note, or become holden for, by indorsement or otherwise, for him;" and then, further stating, "now therefore, be it known to my executors, administrators or assigns, in case I should suddenly be incapacitated for doing business, for what purpose the within deed is given to me, that strict and impartial justice may be done to all concerned, viz., the above named Chester Folsom and myself;" and adding at the foot of said declaration, after being signed, the following statement, also signed by him: "P.S. The within deed, instead of being given from Knowlton to Folsom, and from Folsom to me, is given from Knowlton direct to me, to save making out unnecessary deeds, and recording;" and the plaintiff, at the same time, signed below this declaration and statement a certificate, bearing even date therewith, in these words: "I hereby certify that the foregoing statement of D.S. Kimball (above), is perfectly just and true, and acknowledge myself, my heirs, executors, administrators and assigns equally indebted and obligated to pay the same before the delivery of a deed for *Page 302 the within premises, for any such additional sums, so advanced to me, as if originally incorporated in said contract." 2d. That on the 1st day of March, 1859, the defendant and Folsom had a settlement, under which Folsom gave the defendant two promissory notes, signed by himself and one Monroe Knowlton, jointly and severally: "One for $100, and the other for $101.75, the consideration of which was as follows: eighty-four dollars for two years back interest on the contract; fifty dollars cash lent at that time" (and which was the only money advanced by Kimball to Folsom after the 20th day of March, 1857); "note of twenty dollars or twenty-five dollars then held by Kimball against Folsom, and the balance book account;" and Kimball at the same time extended the contract one year in writing on the back thereof. 3d. That on the 21st day of April, 1859, Folsom sold, and, by an agreement in writing of that date, transferred all his right, title and interest in the said contract of 2d March, 1857, to the plaintiff for a valuable consideration. 4th. That the defendant put Folsom into the possession of the land under the said contract at the time of its execution, and Folsom delivered the possession thereof at the time of the assignment to the plaintiff, and he had no knowledge or information of the agreement of the 12th of March, 1857, or the claim under it at that time, or until after the tender and demand of the deed, as hereinafter stated; but he knew at the time of such assignment, of the additional debt of Folsom to Kimball above mentioned. 5th. That the plaintiff having paid all the semi-annual interest that became due and payable, after the 2d day of March, 1859, before the 2d day of March, 1861, on the contract, did, on that day, cause a tender to be made to the defendant of the full amount then due thereon, together with the expense of acknowledging a deed, and demanded execution of a deed then presented, which in all respects conformed to the requirement of the original contract; and the defendant refused to execute the deed or convey, on the sole ground *Page 303 that the two notes above mentioned, which he held against Folsom and Knowlton, should also be first paid. That Folsom went to the defendant on the 1st day of March, 1859, to get the extension of the contract with a view of making an assignment thereof to the plaintiff pursuant to a previous arrangement; he, however, did not communicate that fact to the defendant, but only told him, that the plaintiff was to assist him pecuniarily, and that he wanted to get the extension for that purpose. The plaintiff personally paid the semi-annual interest that fell due on the 2d day of September, 1860; and also had two interviews with him, one in May, and the other in June of the same year, "on the subject of the payment of the contract and assignment to him;" and nothing was said on either of those occasions by the defendant about the said agreement of March 12th, 1857, or any claim under it. It may be proper to state in this connection, that the referee in his decision, on which the judgment was rendered, found substantially the facts above set forth; and, in addition thereto, he also found that the sale by Folsom to Reeves, the plaintiff, of the contract "was an absolute one, and the purchase price was agreed to be paid by said Reeves by applying the same towards the payment of certain notes of said Folsom, which had been indorsed by said Reeves;" that the plaintiff, at the time of taking the assignment of said contract, made no inquiries of Folsom whether he owed any additional debt to the defendant, or whether there was any further claim on the land, and that the tender made by the plaintiff as above stated has been kept good by him. This decision is, however, not set forth in the case itself, nor referred to therein in any manner. It therefore cannot be regarded or considered at all by this court. The referee found and decided, "as matter of law," among other matters not now necessary to be noticed, that the defendant was entitled to recover, not only the sum of $600, agreed to be paid under the original contract, and the interest thereon from the 2d day of September, 1860, but also *Page 304 the sum of $134, and interest thereon from March 1st, 1859, being the said sum of fifty dollars paid in cash at the time of the settlement of the debt; and the sum of eighty-four dollars for the two years interest on the said sum of $600, which was included in the notes then given, but has never in fact been paid; and therefore ordered, that, upon the payment of the said amounts together with the costs of the suit, the defendant should convey to the plaintiff the premises described in the contract. The question is thus presented, whether the defendant was bound to execute the conveyance demanded without the payment to him of such sums as he had (to use the language of his declaration or statement of the 12th of March, 1857) "subsequently let him (Folsom) have for his note or become holden for by indorsement or otherwise for him." Assuming, but not conceding, the plaintiff to have been a bonafide purchaser of the original contract, without knowledge or notice of that declaration or agreement, he, by the assignment thereof, according to his own statement in the complaint of its terms, and as it is set forth in the case, only acquired Folsom's "right and interest" therein. He, after signing the certificate that such declaration or statement was "perfectly just and true," and acknowledging himself "equally indebted and obligated to pay the same before the delivery of a deed for the within premises, for any such additional sum so advanced to me, as if originally incorporated in said contract," clearly would have had no right to such conveyance, and his assignee, on general principles, could not obtain any greater or different interest than he himself had. Does the fact, that he became such bona fide purchaser without notice, give him any greater or different right than Folsom had? I think not. It is a fair conclusion, from all the facts found by the referee, that the sum of $600, mentioned in the contract, had been paid by the defendant, for Folsom, to Joseph Knowlton, the grantor of the premises described therein, and that the deed therefor had been executed to him instead of Folsom, not as absolute owner, but *Page 305 only as security for the said money so paid, and also for any other additional sums that might be advanced by him. The parties, therefore, stood substantially in the relation of mortgagor and mortgagee in relation to the whole of such moneys; and assuming that to be so, then even if Folsom had actually held the legal title to the land, instead of the contract therefor, and had executed a conveyance thereof to the plaintiff, such conveyance (the recording acts having no application to the case) would have been subject to the defendant's rights as such mortgagee. The rights of the parties would be the same if, as the appellant's counsel insists, Folsom, as purchaser, was to be considered "in equity as owner and his vendor as trustee of the legal title." His equitable title was subject to the payment of all the money he agreed to pay, as a condition of acquiring the legal title, and that was held by the defendant as security for such payment. The plaintiff, as the assignee of Folsom's interest, owned and held it subject to the same burden. The equitable right of the defendant to hold it as such security, was prior in time and superior to that of the plaintiff; and he, having such right as well as the legal title, could not be called upon to part with that title without payment of what was due to him. If these views are correct, then we must inquire whether the referee erred in deciding that the sum of eighty-four dollars, for arrears of interest, included in the notes, should be paid as well as the fifty dollars paid in cash, as a condition of the execution of the deed. That interest had not in fact been paid, nor does the referee find that the notes, or either of them, were accepted as payment. Under the circumstances, the construction most favorable to the plaintiff is, that this sum (assuming it to have been indorsed on the contract) was an advance within the meaning of the agreement of the 12th day of March, 1857. If not, then it was clearly payable under the original contract. In any aspect of the case, therefore, the referee decided correctly in directing its payment. *Page 306 These considerations, assuming them to be correct, lead us to the conclusion that the judgment, in the most favorable view of the question, was right. If, however, they are deemed erroneous, it is necessary to inquire whether the plaintiff is to be regarded as a bona fide purchaser without notice. The referee, in the findings of fact stated in the case, has not found what the consideration of the assignment was, but he finds, as a matter of law, among other things, "that the plaintiff is not a bona fide purchaser of said contract, on the ground that he parted with no value for the transfer; that it was taken in payment of a precedent debt." The ground so stated, although contained in the finding as "matter of law," is really a finding of fact, and, in the absence of anything showing a consideration or value paid at the time of the assignment, warrants the legal conclusion that he was not a bona fide purchaser. The referee has also found the following propositions, separately, as matters of law, in support of his final judgment: 1st. "That the plaintiff purchased and took the assignment of the contract, subject to all the equities at the time between Folsom and defendant." 2d. "That the assignment of the contract to Folsom to the plaintiff, was the assignment of a mere chose in action with all its incidents and equities." 3d. "That the defendant, at the time of the transfer of the contract to plaintiff, had an equitable interest or mortgage of the premises, by virtue of the agreement of March 12th, 1857, for the amount of advances and liability incurred after that date;" and 4th. "That the amount of such advances is the sum of $134, as of the 1st of March, 1859, being fifty dollars in cash, and eighty-four dollars the two years' back interest indorsed on the contract that day." A separate exception was taken to each of these findings. The first, third and fourth of them have been examined in *Page 307 the consideration of questions above decided, and are substantially correct. Assuming that the second proposition was not strictly accurate, in stating that the assignment of the contract was an assignment "of a mere chose in action," the designation of the interest assigned, by an inappropriate term, did not affect the judgment. It was, at most, only assigning a wrong or erroneous reason, or presenting an unsound argument, in support of correct decision on the merits, and the error, if any, is wholly immaterial, and affords no ground for a reversal of the judgment. The plaintiff also insists, in his points, that the defendant is estopped "from setting up his equitable mortgage or claim." He has not done or said anything, or omitted to do or say anything, by which the plaintiff was induced to take the assignment. Indeed, it does not appear that he had any knowledge or notice that the plaintiff intended to take it. All of the interviews which took place between plaintiff and defendant were subsequent to the assignment, and of course nothing that was then said or omitted could have influenced the action of the plaintiff in taking it; and although Folsom was in possession of the land at the time, the plaintiff knew that he held under the contract, and, I may add, that he also knew of the additional debt then owing by Folsom to the defendant, and if either party was chargeable with an omission, which led to a want of notice by the plaintiff of all of the defendant's claims and rights, it was, more properly, attributable to the plaintiff than to the defendant. During the progress of the trial, the following question was put to Folsom on his examination, "At the time you assigned the contract to Reeves did you have an agreement with Reeves to protect Kimball's notes?" This was "objected to as not admissible under the pleadings, and 2d, as leading." The objection was overruled, and an exception taken. It will be proper to say, in reference to this exception, that it is not relied on in the appellant's points, and therefore is probably *Page 308 abandoned, although it is not so stated. If not, it is not well taken. The first ground of the objection was not correct in fact. The answer does allege "that a part of the consideration of the transfer of such contract by the said Folsom to the plaintiff, was the agreement of the plaintiff to pay to this defendant, over and above the amount due upon said contract, the amount of said indebtedness under the last mentioned agreement," which had been previously stated and set forth, and the question was pertinent as tending to rebut the claim that the plaintiff was a purchaser without notice of the defendant's rights under that agreement. Conceding it to be leading, that is not a sufficient ground for the reversal of the judgment. Our conclusion, therefore, on the whole case is, that the judgment should be affirmed with costs.