Willets v. Van Alst

Scrugham J. One of the questions on this motion is as to the application of the money which was paid to the referee on the first "sale of the mortgaged premises made pursuant to the judgment in this action. The counsel for those who now represent the bidders claim that the sum deposited on the sale should be returned to them on the ground that the sale was void, because no contract in writing, or note, or memorandum thereof expressing the consideration was signed by the referee. This brings up the question whether a sale by a referee under and in pursuance of a judgment of the court, rendered in an action for the foreclosure of a mortgage is within the statute of frauds. It is doubtless within that section of the statute which provides that no estate or interest in lands other than leases for a term not exceeding one year shall be granted unless by act or operation of law, or by deed or conveyance in writing subscribed by the party granting the same or by his lawful agent, thereunto authorized by writing; and the title to the land will not vest in the purchaser at such sale until such a conveyance by the referee has been executed and delivered. The authorities cited in support of the proposition that judicial sales are within the statute only go to this extent. Simonds agt. Catlin, 2 Caines, 61, and Jackson agt. Catlin, 2 Johns. 248, Were both acts of ejectment; in the first of which the plaintiff claimed as purchaser at a sheriff’s sale — 342 — under execution, and was defeated because he did not produce any deed or note in writing signed by the sheriff, and passing the estate; and,' in the second, the defendant claimed as purchaser in a similar case, and produced the execution and return of a deed executed by the sheriff to him and left by the sheriff with a third person as an escrow to be delivered to the purchaser on payment of the purchase money; and it was held that the estate did not pass by the deed for want of delivery, nor by the return for want of sufficient certainty as to the lands sold and the purchaser. The counsel in referring to this case say that the sale failed because “ the sheriff’s return did not contain all the statutory requirements to constitute a contract, and this too although the sheriff had executed a deed and left it as an escrow;” but I do not so understand the decision. The sufficiency of the contract of sale was not questioned in either of these cases, but only the necessity of its consummation by conveyance to pass the estate to which it referred; and the learned judge who delivered the opinion of the court in both cases distinctly indicates that section of the statute of frauds which is thereby held to be applicable to such sales by saying in the first case: “It appears to us that sheriffs’ sales must be within the statute of frauds which declares that -no estates of freehold or term of years shall be granted but by deed or note in writing, or by act or operation of law.” The reasons upon which this conclusion is rested are _ drawn from the manifest public inconvenience and great uncertainty as to titles which would result from allowing the sale itself and the return endorsed on the execution to constitute sufficient evidence of title; and they will not sustain a conclusion that the contract of sale is void because the sheriff omits to subscribe a memorandum of it, as none of these evils could result from such an omission. The transaction between a referee, executing the — 343 — judgment of the court by a sale in an action of foreclosure and the successful bidder, cannot strictly be regarded as a contract. The referee, acting only as the minister of the court, assumes for himself no obligation to complete the sale, and can impose none upon the court which he . represents. It is always within the power and often becomes the duty of the court to set aside these sales, and this is entirely inconsistent with the idea that they are contracts of the court, for a contract is an act which contains a perfect obligation which cannot be annulled at the pleasure of the party bound by it. Moreover, a court has no such legal entity as capacitates it to make a contract, for it is neither a person nor a corporation—can neither sue nor be sued. It has just been held in this district that an action cannot be maintained against the purchaser at a foreclosure sale, on the memorandum subscribed by him at the foot of the conditions of sale, stating that he had purchased at a certain price, and that he agreed to comply with the conditions ; and the learned justice who delivers the opinion of the court says of the agreement of the purchaser: “ If it is to be called a contract at all, it is a contract with the court. The-sale is made by the order of the court, and is under its control, and not that of any party to perform or to rescind. In truth, however, the word contract is somewhat inartificially used when it is applied, as it has been, by judges to such papers. The memorandum signed by the defendant was only a quasi contract; it was in reality a submission to the jurisdiction of the court in the foreclosure suit as a purchaser under the judgment. It is easy to see that it lacked the most essential elements of a contract, not only parties, but mutuality and. consideration. It contained, or was intended to contain, an express consent to the exercise of the powers which we have seen courts of equity assert ex proprio vigore over purchasers, and it is doubtful if it added anything to the jurisdiction — 344 — or authority of the court in this particular. There can certainly be no suit maintained upon it as an express stipulation with any person whatever.” (Miller agt. Colyer, decided 1st Monday of March, 1862 ; MS. opinion of Emott, J.) The sale by the referee is a proceeding in the action, and the purchaser, by becoming such, submits himself to the jurisdiction of the court as to all matters connected with the sale or relating to him in the character of purchaser. (Requa agt. Rea, 2 Paige, 339.) His rights and liabilities do not grow out of a contract, but arise from this proceeding and submission; and as the referee makes no contract, the provision of the statute of frauds, requiring contracts for the sale of lands to be in writing and subscribed by the party by whom the sale is to be made, is not aplicable. The failure of the purchasers on the first sale to complete their purchase, rendered a new sale necessary, and as the sum for which the mortaged premises were sold at the last sale is greatly less than that at which they were struck off to them, the percentage which they paid into court on their bid must be applied, as far as' it will go, to the payment of that deficiency. The order of December 31st, 1858, and the report of the referee upon which it was founded, determined that all rights under the first bid then belonged to John B. Thursby, Robert G. Thursby, James S. 0. Thursby, and Samuel J. Thursby, and it appears that John B. Thursby was then the owner of the judgment in this action and of the mortgage foreclosed by it. All of these persons afterwards became insolvent, and made a general assignment of all their property to Charles H. Trask, including not only all the rights they possessed under the bid, but also, by the assignment of John B. Thursby, the judgment and mortgage. , The holder of the third mortgage upon the premises, — 345 — who became the purchaser at the second sale, alleges that the purchase money will be insufficient to pay the amounts required to be paid by the judgment in this action, the mortgage held by Mrs. Van Alst, as executrix, and his mortgage; and that as the only parties liable for the deficiency arising on the resale are insolvent, he will lose the whole amount due him, unless it be paid out of the purchase money before the amount due on the mortgage to foreclose which the action was commenced; and he claims that in equity such direction should be made, as the loss will be occasioned by the failure of the owner of the judgment and mortgage to comply with the obligations he assumed as assignee of the bid. The judgment in an action for the foreclosure of a mortgage determines the amount due to the plaintiff, and his right to its payment out of the proceeds of the sale of mortgaged premises, and if regularly obtained, I do not think that the court at special term can change it in these important particulars. The payments of interest on the mortgage held by Mrs. Van Alst, as executrix, were voluntary, and it is difficult to understand why they were made, if not to prevent proceedings being taken to enforce her claim upon the premises. They were made by the owners of the bid, whose failure to comply with the conditions of the sale caused so large an amount of interest to accrue, and they extinguished the lien of the mortgage to their amount. It would not be equitable to revive it in favor of the defaulting bidders or their assigns, to the prejudice of the holder of the last mortgage. An order must be entered directing that the moneys in the hands of the referee, arising on the first sale, together with all of the proceeds of the second sale, be applied in the first place to the payment of the various sums directed by the judgment in this action to be paid and allowed out — 346 — of the proceeds of the sale of the mortgaged premises; in the next place to the payment of the amount due on the mortgage to Elizabeth Van Alst, as executrix, &c., and in the next place to the payment of the amount due on the mortgage to' Hezekiah D. Hull, and that if any surplus remain after such payments, it be brought into court. That the purchaser at the second sale, viz : the defendant, Hezekiah D. Hull, shall (if Elizabeth Van Alst, executrix, &c., shall consent to receive the mortgage hereinafter mentioned,) be relieved from the payment in cash of any greater sum than that which shall be sufficient to pay such surplus, if any, and, with the moneys now in the hands of the referee, the various sums directed to be paid and allowed by the judgment. And that on such payment, the referee be authorized to deliver to him his deed of the mortgaged premises, upon receiving his 'bond and mortgage to Elizabeth Van Alst, executrix, &c., for the moneys payable by the referee to her, to be a first lien upon the mortgaged premises, and his receipt for the moneys payable by the referee to him.