Hammond v. Bush

Hogeboon, J. The relief substantially which the plaintiff asks, is that his judgment may be reinstated and take effect from the time it was originally entered, and he seeks to accomplish — 161 — this in one of two ways. Either, first, by amending and reforming the judgment nunc pro time so as to supply the alleged defects in the statement and confession of judgment; or, second, by enforcing his claim as an equitable lien upon the lands in question, dating from the entry of the judgment. The plaintiff concedes that the judgment is irregular and defective. I think it is more—and that as against subsequent judgment or mortgage creditors, or subsequent purchasers, it is void. Within sections 382, 383 of the Code, as interpreted by the decisions of this court and of the Court of Appeals, there seems to me to be no alternative but to pronounce the statement insufficient and the judgment invalid. It gives neither the dates, amounts, nor time of docketing of any of the three judgments which entered into the consideration of the judgment in question—nor the balance due upon them, or any of them. Nor if it were necessary to show the consideration of those judgments, does it give any specific or valuable data to determine or .throw light upon that question. It says, it is true, they were obtained upon notes discounted at the Union Bank of Sullivan county for the defendants, and that they had the avails thereof. But it does not give the dates, amounts, time of payment, or other particulars in regard to said notes, nor the names of any of the parties thereto, nor does it state in express terms that the Union Bank discounted the paper or loaned the amount thereof. Nor does it show the amount advanced or loaned by the Bank to the defendants at the time of the statement. The information thus conveyed is therefore seen to be of a loose and indefinite character, wholly failing upon its face to establish a prima facie indebtedness on the part of the defendants to the Bank for the amount of the judgment, or to supply any sufficient or reliable materials to aid other parties who might be interested in ascertaining the foundation, nature, and amount of such indebtedness in prosecuting their investigations. I do not propose to review the authorities, I must take the law as settled by previous adjudications, and these seem to me decisive against the validity of the judgment. (Dunham a. Waterman, 17 N. Y. (3 E. P. Smith's) R., 9; S. C., 6 Abbotts' Pr. R., 366; Chappel a. Chappel, 2 Kern., 215; Von Beck a. Shuman, 13 How. Pr. R., 472; Purdy a. Upton, 10 Ib., 494; Kendall a. Hodkins, 7 Abbotts’ Pr. R., 312 ; Boyden a. Johnson, 11 How. Pr. R., 506.) — 162 — If then these radical defects exist, are they susceptible of reformation or amendment? The judgment in question is a statutory judgment—depending for its authority and validity upon a substantial compliance with the requirements of the Code. These requirements are, among others, that the debtors shall sign the written statement and verify it by their oaths— and this would seem to be indispensable to the validity of the judgment. Can this court substitute any thing else in its place? If not, how is it possible without the consent and co-operation of the defendants to create a valid judgment anew, and especially to antedate it, and give it effect as of the time of the original entry. The defendants have not signed any new or sufficient statement, and especially they have not verified it by their oaths. Can the court compel them to swear to it, and is it of any validity without the oath? (See Von Beck a. Shuman, 13 How. Pr. R., 472.) There are cases where the court interpose to correct mistakes and amend judgments—but these are generally, if not universally, where all the substantial elements of the judgment are already present, and there is some solid foundation upon which the amendment can operate—and usually such as arise from some inadvertence or clerical mistake, in which the parties themselves have not been at fault. (Seaman a. Drake, 1 Cai., 8 ; Close a. Gillespie, 3 Johns., 524; Baker a. Lewis, Common Pleas, 10 Wend., 545.) I have therefore great doubt whether even against the judgment debtors themselves, any substantial reformation of these proceedings ought to" be made, as to give the judgment a retroactive effect. But the case is entirely different where the rights of subsequent purchasers or subsequent creditors by judgment or mortgage are to be affected. They are regular in their proceedings— they have obtained valid judgments' or other incumbrances— they had a right to do so—they had valid debts, and if they have obtained a better lien by their superior vigilance or superior accuracy, they are entitled to retain it. The statute gives it to them (2 Rev. Stats., 359, § 4; Code, § 282), and I think it is not in the power of this court, either as a law or an equity tribunal, to deprive them of it. (Buchan a. Sumner, 2 B. C. R., 191.) I do not see that Tcnowledge of the plaintiff’s judgment makes such a difference as will defeat the preference thus acquired. — 163 — No person who succeeds in obtaining priority of lien, loses it because he may happen to know that another creditor has an older or a more sacred debt, or commenced his proceedings at an earlier date. It is a race of vigilance, and the law gives the prize to him who obtains the earliest valid lien. Nor does it seem to me that the vigilant creditor loses his lien because his judgment is recovered for an antecedent debt. In one sense all judgments are recovered for antecedent debts. No judgment can be recovered until the debt exists. There seems, indeed, to be a stronger equity in favor of that person who advances his money at the time, and who is supposed to rely upon the present ability of the debtor to pay, and his possession of an estate free from incumbrances. Nevertheless, the statute makes no such distinction. The judgment creditor must, it is true, be a bona fide creditor. But I do not think, in this connection, it means a creditor for value paid or advanced at the time of taking the judgment, or of commencing the suit on which judgment is obtained. A judgment obtained for an honest debt, and in a fair and regular way, is a bona fide judgment. We are not, on this point, without authority. In Lewis Common Pleas a. The People (15 Wend., 110, affirming Butler a. Lewis Common Pleas, 10 Ib., 541), it was held that if a judgment be signed by an officer without authority—as by a judge of the Common Pleas, not being a counsellor of the Supreme Court, where the sum intended to be secured exceeds $500—the roll was a nullity, and that its filing conferred no lien, and that upon its being properly signed after-wards, it could not be filed mme pro twno so as to confer a lien as of the time of the first filing. (See also Lawless a. Hackitt, 16 Johns., 149 ; Johnson a. Fellerman, 13 How., 21.) In Little a. Harvey (9 Wend., 151), the question arose as to the construction of the statute which terminates the lien of a judgment at the end of ten years from its docketing as against subsequent mortgages, judgments, or other incumbrances, and the court held that all purchasers are to be regarded as purchasers in good faith, except those who purchase with an actual fraudulent intent. In Tufts a. Tufts (18 Wend., 621), knowledge of the previous judgment was held no bar to the application of this rule. In Rettie a. Shepard (5 Page, 493), it was held that mere notice — 164 — of the existence of a judgment more than ten years old, and that it was unpaid, would not render a purchaser of land mala fide. It was argued that there were in fact no judgment creditors of the Messrs. Bush in regard to this land, except Rachel Hashrouck, inasmuch as to all except her, the land was conveyed hy the judgment debtors before the other judgments were recovered, and that as to her she consented on the argument to the proposed reformation of the judgment. But their judgments are still unsatisfied, and they have a right to be kept in a situation to litigate the subsequent conveyances, and some of them as to their deeds or incumbrances derive title through the grantees in those subsequent conveyances. Severyn Hasbrouck has a conveyance of the 24th September, 1857, of a parcel (No. 12) not then conveyed to any person, and of course he has an interest in opposition to the plaintiff’s judgment. The Goshen Bank, in addition to their judgment, have two mortgages given by parties who derived title from the judgment debtors, and of course that hank has an interest in protecting that title against the plaintiff’s judgment. The Middletown Bank, in addition to its judgment, has a mortgage of premises, part of which was, and a part was not conveyed away by the judgment .debtors at the time of the giving of the mortgage, and in either aspect their interest in this question is apparent. Equally apparent is the interest of the Stewarts, who claim under mortgages of parcels of the premises not conveyed away by the judgment debtors. Fobes, James E. Bush, and Ebenezer Bush are either still in possession of portions of the premises on which the plaintiff’s judgment would, if valid, be a lien, or.else they are interested as warrantors of the title, or as having given incumbrances (accompanied by bond), which it is important for them to protect. Thus it will be seen that as to all these parties the plaintiff’s judgment cannot be resuscitated by judicial action and restored to its original position'without directly conflicting with their rights. My conclusion upon this branch of the case is, that except as to parties who consent, and as to the original judgment debtors, who have suffered a default, the plaintiff is not entitled to the reformation or amendment of the judgment. There seem also to be decisive objections to aiding the plain — 165 — tiff in the way demanded, by enforcing an equitable lien upon those lands as of the date of the judgment. 1. If the plaintiff is entitled to such relief in this case, I do not see why it must not equally be granted in all other cases where the j udgment is radically unsound for an insufficient statement. In all cases, of course, the defendant intends to give a judgment, and to give a valid judgment, and to make and verify a sufficient statement to accomplish that result. In all cases the judgment is preceded by an actual agreement as to the items which shall enter into it, and that a proceeding shall be taken which shall give to the creditor a lien. Here are most of the elements of an equitable lien; and as between the parties themselves, independent of the objection that the statute rigidly requires a compliance with certain prerequisites in order to create a lien at all, I see no insuperable objection to judicially declaring and enforcing such a lien. But, as before stated, if it can be done in this case, it can be done in all others, and the consequence will be' that however faulty may be the statement, the creditor can obtain, under the name of an equitable lien, the precise relief which he has failed to obtain under his" judgment by confession, and thus the statute will be practically nullified. Before we reach this conclusion, we ought to be satisfied that we are inevitably drawn to it by well-recognized principles of equity jurisprudence. 2. There is no allegation in the complaint, and no evidence in the case, that the parties to the judgment in question intended to incorporate in the statement and confession of judgment any of the facts, for want of which the judgment is pronounced invalid ; and there may be .some question whether, without such allegation and proof, an equitable lien arises—in other words, whether the existence of the facts essential to constitute a valid lien, and the intent to make a judgment by confession, followed by a defective statement or confession, constitute an equitable lien, without, at least, an averment that the parties designed to embody these facts in the statement for the judgment. Can this court enforce that as an equitable lien, and give it the effect of a legal lien, which the parties never did put in the shape of a legal lien, and never yet, all of them, at least, have agreed to do, and have never been applied to do—that is, make up an amended statement, and verity it by their oaths ? — 166 — The court cannot compel the oath, and the parties have not agreed to make it. The absence of these facts would, I think, be fatal to the amendment of the record; and I am not sure but they are destructive to the existence of an equitable lien. 3. At all events, it seems to me inequitable to enforce such lien to the prejudice of the rights of intervening incumbrancers and purchasers, who have regular judgments and fair titles perfected in the usual way ; and I think the same considerations apply as to them, to defeat this equitable lien as to prevent the restoration of the judgment; that is, that they are in the eye of the law bona fide purchasers or incumbrancers, standing before the court as compared with the plaintiff—equal in point of equity, and superior in point of legal priority. 4. As before stated, in reference to the reformation of the judgment, their knowledge of an imperfect judgment cannot defeat a legal priority. The right of the plaintiff to this real estate depends upon his having a valid statutory judgment, and not upon the loan or advance of the money. It is not like the case of a party who has notice of a prior loan secured by an unrecorded mortgage, and who procures his own mortgage to be first entered of record. There the first mortgage is complete, the loan is made, the instrument is executed, and nothing is needed to its consummation as a perfect lien, except to have it recorded. The object of the record is to give notice—constructive notice—of these facts, to parties who subsequently deal with the debtor. In the case supposed the junior creditor has this notice—not record or constructive notice—but actual notice. The object of the record has, therefore, been accomplished, and it is well said the party is not legally prejudiced. (Jackson a. Burgett, 10 Johns., 461; Jackson a. Dubois, 4 Ib., 216.) So also it has been adjudged, that an agreement for a loan of money, accompanied with a deposit of the title papers, and an advance of the money, is in equity a mortgage. It has all the-elements of a mortgage—the agreement for the. loan—the advanee of the money—the deposit of the title papers, and through them the mortgage of the lands themselves, by .the deposit or pledge of the symbols, or evidences of title of the property. Hence the mortgage is substantially perfect, and parties who deal with the debtor with knowledge of these facts, deal at their — 167 — peril. (Jackson a. Parkhurst, 4 Wend., 369; Rockwell a. Hubby, 2 Sands. Ch. R., 9.) So also it has been held, that where a debtor owing a judgment supposed to be docketed in a particular county, sells his real estate for a specific sum, a part of which is agreed by the parties at the time to be applied to the extinguishment of the judgment, the judgment creditor will be held as against the vendee to have an equitable lien to the amount of the unpaid judgment, although by mistake or neglect it was not docketed in the county. (Haverly a. Becker, 4 Comst., 169.) This comes directly within the principle of an equitable lien for the unpaid purchase money; and in the case at bar, if I were able to find the facts that James F. Bush purchased the real estate under an absolute agreement to pay the plaintiff’s judgment as a portion of the consideration money which he was to pay, I should hold him liable for the amount of the'plaintiff’s judgment within the case last cited, and also the premises as equally liable in the hands of all parties who had notice of such agreement. But I have not thought it important to prosecute the inquiry how far other defendants were chargeable with notice of the circumstances of his purchase, because I am not satisfied that he himself undertook or agreed to pay the plaintiff’s judgment. Again, in the case at bar, there is no judgment, and consequently no lien. There is nothing out of which a judgment can be manufactured. There is no equitable mortgage because there was no agreement or intent to give a mortgage—and there is no judgment because the transaction lacks several of the essential features of a judgment—and it has not been shown that -it was ever intended to possess them—and without them, it is not entitled to the rank, or dignity of a judgment. Hence there is no lien of any kind—and there being none, other creditors were authorized to step in, and claim their rights and perfect their liens. 5. For reasons also before stated I regard the defendants as bona fide creditors and purchasers, although some of them may not have paid or advanced any new consideration at the time their titles or liens were perfected. Their debts are bona fide and their proceedings regular and fair, and that constitutes them for this purpose bona fide incumbrancers or vendees. And in point of intrinsic equity the claims of some of the — 168 — defendants will bear a favorable comparison with those of the plaintiff. The plaintiff advanced at the time nearly three thousand dollars in cash—and surrendered old and valid securities for previous loans to a large amount, and these constitute doubtless strong equities. But the plaintiff’s debt was a joint or partnership debt, and only had an equitable preference upon joint or partnership property. Rachael Hasbrouck, Sophronia Stewart, the executors of Levi Stewart, and the Middletown Bank in part, had individual debts secured on individual property. Severyn Hasbrouck seems to have parted with, and to have intended to discharge his claim against the partnership for the mortgage he got upon the individual property—and this perhaps may be regarded as a new consideration. (Padgett a. Lawrence, 10 Paige, 180.) The Goshen Bank had two mortgages to secure'a note, which note was doubtless taken in part to secure an old indebtedness, but for the balance, if it had any consideration at all (and as to this the evidence is not very clear or satisfactory), it must have been upon some new consideration advanced or agreed to be advanced at the time. Fobes purchased with knowledge of the plaintiff’s judgment, but seems to have given his notes for the entire consideration money at the time, some of which he after-wards paid, and the residue of which he secured by mortgage upon a portion of the premises. James F. Bush, conveyed by warranty deed, in satisfaction of some notes given by him and held by Edwin Fobes and Ebenezer Bush, parcels Ho. 1 and 11, and as he is apparently insolvent they are interested in maintaining their title to that property. On the whole, perhaps, the naked equities of the plaintiff, disconnected from the legal aspect of the case, may be regarded as superior to those of some of the defendants, and. inferior to those of others. There is. therefore no such extraordinary preponderance in his favor in that respect, as should induce the court to override the other considerations which would seem to preclude him from asking the enforcement of his claim as an equitable lien. This ground of relief must therefore also be denied. There is another aspect of this case which deserves some consideration—although but slightly alluded to on the argu — 169 — ment. Before obtaining the judgment in question, the Bank had. three valid judgments against the Messrs. Bush, upon which there remained due about §3300. These judgments were can-, celled according to the stipulation of the parties at the time the new judgment was obtained. The implied, if not the express understanding was that the new judgment should be a good and available security. It turned out not to be so—and I think as against the judgment debtors this would entitle the judgment creditors to have the cancellation of those judgments vacated or removed from the record. (Mechanics’ Bank a. Minthorn, 19 Johns., 244; Bank of Newburgh a. Seymour, 14 Ib., 219.) And I do not see if the subsequent judgment creditors or purchasers knew of the original judgments, and impliedly or expressly of their fairness, and knew that they entered into the composition of the judgment in question, and that they had not been paid or satisfied otherwise than by the entry of what now turns out to be an invalid judgment, why the old judgments ought not to be reinstated as of their original date, just as any other judgment or lien would be, which had been satisfied or cancelled of record without payment or by mistake. But to accomplish this result, I think the subsequent creditors should have knowledge of all the foregoing particulars : and I am not satisfied that any such extent of knowledge is brought home to them by the evidence. The utmost I can discover they were apprised of, is the fact of the existence of the plaintiff’s judgment, and legal advice of its invalidity. I am not satisfied that they were apprised of the component parts of that judgment, and especially of the fact that there was no other reason or consideration for the cancelling of the old judgments, than the embracing of their amount in the new and imperfect judgment. I have had some hesitation upon this part of the case, but on the whole have concluded that even this limited relief ought not to be granted to the plaintiff. The complaint was not, I think, framed with this object—the litigation has not been conducted upon that basis—and perhaps the more appropriate mode of obtaining that relief, would be by a motion having that object directly in view. Nevertheless I think if the facts justified it, such relief would be attainable under the present complaint (Dunham a. Waterman, 17 N. Y. (3 Smith's R., 9); S. C., 6 Abbotts' Pr. R., 366 ; Kendall a. Hodkins, 7 Ib., 312), and — 170 — therefore I shall not do what I otherwise .would have been disposed to do—that is, to dismiss the plaintiff’s complaint without prejudice to a motion to the court to obtain the relief above suggested. The plaintiff has therefore failed on the merits as to the entire litigation, and has shown no sufficient reason for bringing these parties into court. He ought, therefore, I think to pay costs as to all the parties who resist the plaintiff’s claim. There must be a judgment dismissing the plaintiff’s complaint with costs as to all the defendants, except those who being served with process have not appeared or answered in the action, or who assent to the decree which the plaintiff asks.