Farrell v. Noel

Rumsey, J.: This was an action brought for -specific performance of a contract by which the defendant agreed to sell to the plaintiff certain premises situated in the city of New York. The contract was made .on the 22d day of Hay,. 1895,. and was to have been, performed on the second day of July in that year. The performance was postponed ■hy consent until "the eighth day of July, at which time the parties met to examine the- title offered by the defendant. At that time the plaintiff insisted that the title was imperfect,, and -for' that reason refused .to carry out the contract. , The objections then made were five in number, but subsequently, as was'found by the learned justice before.whom this case was tried, all the .objections but one'were abandoned. ■' The court upon the trial held that the objection which was'insisted upon was not valid ; that-the defendant had. a marketable title which the plaintiff'had no right to refuse, and that for that reason the plaintiff was in default. The court-also held that by reason' of- the facts subsequently occurring, it would be inequitable to direct specific performance, and for . that reason dismissed the complaint. The important .question presented upon this appeal is whether the objection of the plaintiff to, the defendant’s title, -as it appeared- at the time when performance was tendered on the 8th of Jutyj 1895; — 321 — was a valid objection, or whether the title then offered was a marketable title. ■ The facts were that one link in the defendant’s title was a referee’s deed given upon the foreclosure of a mortgage in the month of May, 1876. This mortgage was foreclosed 'in an action. There is-no complaint on the part of the plaintiff that the proceedings down to and including the entry of judgment in the action were not perfectly valid, or that the court did not acquire jurisdiction of all the parties defendant. The complaint is that there is no proof of the publication of notice of sale by the referee pursuant to the judgment. The facts are that the sale took place on the 26th day of May, 1876; that the referee’s deed was given in due time after that sale in the ordinary way, but the referee’s report of the sale was never filed up to the time of the trial of the action. A report of the salé made by the referee, and dated the 2d of April, 1896, was introduced in evidence by the plaintiff, which contained proof of the due publication of the notices, but no such report, of course, could have been in existence in 1895, and it is apparent that there was not, at that túne, in the possession of either party to the action, any proof that the notices were properly published. So the question presented is whether a person who takes a deed from a referee in proceedings to foreclose a mortgage by action, acquires a marketable title to the property, so that one contracting to buy that property from him will be compelled to take such a title, although it has -not been made to appear by him that the notices of sale were published as required by the statute. It may be conceded that the omission to publish the notice of sale is an irregularity and will afford good ground for vacating and setting aside the sale, but it is one which the parties are competent to waive. (Bechstein v. Schultz, 120 N. Y. 168.) But the fact that a failure to publish is an irregularity is not decisive here. The question here is whether, after the deed has been given, the purchaser under the foreclosure is bound to show, as a part of his title, that the notice of sale was actually published, or whether the person who insists that there was no proper publication is bound to make that fact appear before he can insist that the title under the foreclosure sale is not good. We will.be aided in the examination of this question by a consideration of the order in which the proceedings are taken in sales in actions of foreclosure. As is well — 322 — known, the referee, having been appointed by the judgment of foreclosure and sale, publishes a notice of sale such as is required by the statute, 'and, at the time specified in that notice, proceeds to the sale. The purchaser at the sale is usually required to pay down a certain percentage of the amount of his bid, and to pay the remainder of his bid at some short time after the sale, at which time the referee executes and delivers to him a deed. The rules do not require that there should be any application to the court for leave to give a deed, nor any report to the court of the proceedings which have been taken between the time of the sale and the giving of the deed. In the nature of things there is no occasion to make any such report, . because the duty of the referee is, after having sold the property, to. distribute the money in accordance with the provisions of the judgment and then to make his report, to which, in the ordinary practice, is attached the notice of sale, with proof of its proper publication and service. But the purchaser who has bid off the property at the sale is bound, as we all know, to pay his purchase, money and to take a deed before the report of sale has been made. . To be sure, if the proceedings have not been regular he may refuse to do it, but he refuses at his peril, because, if the regular course of proceeding has been pursued, he will be bound to complete his purchase and to pay the expenses of any effort to be released from it. So we see that, in the ordinary course of events, the purchaser at a foreclosure sale is bound to do everything that is necessary to cariy out the sale and to receive from the referee his muniment of title before the proofs of publication are filed with the report of sale; and the law does not require, by any express provision, that the referee shall afterwards. take any steps to complete the proof of the regularity of the sale. This proceeding differs from the proceedings in. an action of partition -in a very important particular. In partition the referee makes his report of sale before any further steps are taken, and he does not execute a deed until after the report of sale has been confirmed (Code Civ. Proc. § 1577), so that before the deed is executed it has been made to appear to the court that all the steps necessary to the transfer of a regular title have been taken. Nothing of this kind is required in an action for foreclosure, but so far as the purchaser at a foreclosure sale is concerned the proceedings are ended when ■ he pays his money and takes his deed, although — 323 — proof of the publication of notice of sale has not then been tiled. It must be that when the purchaser has paid his money and taken his deed as he is required to do, that deed is a protection to him, and passes the title which the referee is authorized to give upon the foreclosure sale. Such, we think, is the result of the authorities in this State. In the case of Fort v. Burch (6 Barb. 60) this question was squarely presented. The purchaser in an action for foreclosure had brought an action for ejectment, basing his title solely upon the master’s deed. It appeared that the order confirming the sale had not been entered at the time he brought the action, and indeed was not entered until just before the trial. At the close of the plaintiff’s case, that fact having appeared, a motion for a nonsuit was made upon the ground that the title did not pass by the master’s deed until the sale had been properly confirmed, and, therefore, the action was prematurely brought. The court denied the motion, holding that the title passed by the master’s deed. This holding of the court was sustained and the case affirmed at the General Term. The same question had been previously jiresented to the Supreme Court in the case of Fuller v. Van Geesen (4 Hill, 171), where the question was presented in precisely the same way and received the same answer. In the case of Clason v. Corley (5 Sandf. 447) it was held that the statute vested an estate in the purchaser upon and by force of the execution of the master’s deed. The case of Peck v. Knickerbocker Ice Co. (18 Hun, 183), which is apparently to the contrary, is not in fact so. The action was to recover rent upon a lease, and the question was whether the facts proved made out an eviction of the defendant under a paramount title. ' The defendant was the lessee under a mortgagor. The mortgage had been foreclosed, and the judgment of foreclosure provided that the tenant was entitled to the possession of the mortgaged premises until a certain date, unless the purchaser presented his deed and an order of confirmation of the sale. It was claimed that the execution of the referee’s deed of itself operated as an eviction, which was denied. The court held that, as by the express terms of the judgment the purchaser was not entitled to go into possession until the sale had been confirmed by an order of the court, there was no eviction until that time. The court was not called upon to and did not pass upon the question as to the effect of the deed standing alone. — 324 — It appears, therefore, that the title passed to Mrs. Noel’s grantor' when the referee’s deed in foreclosure has been made to him.- Was that title effective and marketable in the absence of any proof of an irregularity, or was. it necessary that the person who insisted that the title was not'valid should put his finger"upon the irregularity which invalidated it ? We think that the person objecting to' the title was bound to show that, some act which' was essential to its ■validity had been omitted; and* in the absence of that proof, the defendant was entitled to.stand upon the deed which the referee had made. Undoubtedly an omission to publish a notice of sale would have been an irregularity, and any person interested might, at the proper time, have taken advantage of it by a motion to set. aside the ■sale ; but such an irregularity is one which must be taken advantage ■of within a reasonable time, or it will be deemed to have been ■waived, and the person seeking to take advantage of it is bound to show.that the.irregularity actually existed. He must show that the ■notice of sale was not properly published. The presumption in all ■these cases is that everything was done, properly by the referee, who ■was an officer of the court, and any one insisting that 'a necessary ■step w;as not taken is bound to make some proof of it. . (Greenblatt v. Hermann, 144. N. Y. 13.) The only person who could take advantage of any such irregularity as this was a person who was interested in the estate,, and hei is bound to take advantage of it within a reasonable' time,: and he- cannot lie by for many years and then set aside the sale upon-a mere technicality which does not. go to the jurisdiction- of the court.' It this case the sale took place on the.-26th of May, 1816. The objection to the title was made in July, 1895. So far as appears the objection was entirely negative in its character. There was no claipr that the proper steps had not' been taken preliminary to the sale, and in fact, as it- appeared, they had ' been taken. . ■ ■ The claim was that it.had not been made to appear by the defendant that the notice of sale had been- published. We do not think that the defendant was required to' make that proof, but' we think that the person who insisted that there was a defect in the proceed- • in'gs was bound to put his finger upon the defect and 'show that it actually existed. Especially is this the case where no steps had been taken to question the sale for só many years. We think that the — 325 — learned justice at the Trial Term was correct in holding as he did, that there was no defect in- the title but that it -was good. The other objections, which were taken at the time set for closing the title, were waived upon the trial, as is found by the court, and if they had not been waived they were of no importance. (Campbell v. Prague, 6 App. Div. 554.) As the plaintiff was not, therefore, .justified in refusing the title at the time when a perfect title was offered to him, he is not now in. a situation to insist that he should have a specific performance of this contract, and the court was justified in dismissing his complaint. The judgment must be affirmed, with costs. Williams, Patterson and Parker, JJ., concurred; Van Brunt, P. J., dissented. Judgment affirmed, with costs.