Lyon v. Morgan

Hardin, P. J. Appellant claims to be the owner of an undivided one-fourth part of the parcel of land known as about 16 acres, described in the complaint. He holds a deed from the sheriff, which was recorded in Broome county on the 28th day of January, 1890, having purchased the interest alleged to be in Silas N. Carman on the 16th day of June, 1888, on which latter date a judgment in favor of the First National Bank of Binghamton was docketed against Silas N. Carman for $668.58 damages and $24.03 costs. According to the evidence and to the findings of fact made on the 16th day of June. 1888, when the judgment was docketed,' Silas N. Carman held the record title to the one undivided fourth part of the premises described in the complaint. The proceedings for the sale of that interest upon the judgment, the purchase by the plaintiff, the certificate delivered to him, and the deed received by him, seem to be regular in form, and sufficient to pass the formal, le gal title to the plaintiff. Plaintiff’s bid at the sale was $762.95, and he seems to have paid $57.61 expenses of the sale. However, the respondents claim to defeat the title of the plaintiff by reason of an alleged estoppel. It appears that on the 23d of November, 1883, Joseph Carman, the father of Silas, desired to make a loan of $10,000 upon certain other lands adjacent to the 16 acres, and that, in the negotiations and applications for the loan, Silas joined his father, and, upon being questioned as to his interest in the 16 acres, “denied having any such interest or claim; and, acting and relying upon this information, and not knowing anything to the contrary, the loan was consummated, and a mortgage taken on the 16 acres as well as others, to secure the $10,000 loan.” The mortgage was recorded. After the docketing of the judgment already mentioned an action to foreclose the mortgage was commenced on the 1st of December, 1888, and the proceedings were had in the action usual in such cases, resulting in a judgment in foreclosure, and upon such judgment a sale was made on the 11th day of February, 1890. Silas N. Carman was not made a party to that foreclosure; nor was the bank, the judgment creditor, nor the plaintiff in this action. At the mortgage foreclosure sale on the 11th of February, 1890, the defendant William A. Morgan bid off the premises, and received a deed from the referee conducting the sale, which was recorded February 20, 1890. If he had, at the time of making his bid, made a diligent search of the record, he would have discovered the record title to have been in Silas N. Carman at the time the bank recovered the judgment against him on the 16th day of June, 1888, and that the premises had been sold, sheriff’s certificate given, and that no redemption had taken place, and that a sheriff’s [204] deed had been delivered and recorded carrying the formal, legal title to the plaintiif. The trial judge has found that “there is no evidence that said William A. Morgan was informed of the representations made by said Silas H. Carman at the time of the loan of the said $10,000, .or that he bid off said mortgaged premises on the mortgage sale relying upon any representations made by said Silas jST. Carman.” He has also found that at the time the loan was made upon the mortgage inquiry was made of Silas N. Carman if he had any interest in the 16 acres, and that he “ replied that he had not any such interest. Joseph Carman also at that time stated that he owned the whole of said premises, which statement said Silas H. Carman did not contradict in any way.” He also found: “Said loan was made and mortgage taken and accepted by said Taylor on behalf of said guardian, relying upon the aforesaid statement of Silas IST. Carman, and he acted and depended on said statement in sodoing.” As a conclusion of law the special term found “that Silas ÍT. Carman and his privies and successors in interest, including the plaintiif herein, are held and estopped by his acts set forth in the fifth finding of facts, and by the matters set forth in the sixth and seventh findings of fact, from claiming any interest in said sixteen acres as against said mortgagee, his privies, successors in interest, including the defendant Morgan and defendant Waterman;” and thereupon he ordered the complaint dismissed, with costs. Seasonable exceptions were taken to the findings and to the refusals to find. If the parties taking the mortgage had been vigilant in searching the record for the title or any incumbrance upon the 16 acres, they would have learned that the title of one undivided fourth was in Silas N. Carman. So, too, if the party foreclosing the mortgage had, at the commencement of such suit, to wit, the 1st of December, 1888, after learning of the title of. one undivided fourth being in Silas N. Carman, they would have discovered a judgment against him, as the bank judgment was recovered on the 16th day of June, 1888. So that it may be observed that diligence at the time of the loan, diligence at the time of the commencement of the action, diligence pending the foreclosure action and prior to the sale, which was in February, 1890, in the mortgage suit, would have disclosed the record title, and the facts and circumstances now relied upon by the plaintiff. However, it is insisted in behalf of the respondents that the estoppel is efficient, and precludes the plaintiff from asserting legal title to the undivided fourth of the 16 acres. We think otherwise. In Thompson v. Simpson, 128 N. Y. 270, 28 N. E. Rep. 627, the doctrine of estoppel, as applicable to real estate, is very extensively considered, and its effect upon transactions in respect to the real estate. It is there said: “The doctrine of equitable estoppel, when invoked to bar the legal title to land, should be cautiously applied, and only when the grounds for its application are clearly and satisfactorily established.” In Banking Co. v. Duncan, 86 N. Y. 230, it was said: “The party setting up the estoppel must be free from the'imputation of loches in acting upon the belief of ownership by one who has no right.” When the representations were made by Silas ET. Carman the parties were negotiating for a loan, to be secured by a lien upon real estate; they were not negotiating for the title. A mortgage was executed which simply gave a lien upon the real estate covered by Joseph Carman, and it was then assumed by the lender, and such assumption was justified by the representation made by Silas, that Joseph was capable of creating a lien upon the whole 16 acres. Giving full force and effect to the representation, and binding Silas Carman, by reason thereof, to the full force and effect of the mortgage lien, it may be said that only a mortgage lien was created. Joseph did not undertake to convey the title to the 16 acres, and the effect of the representation made by Silas simply induced the lender to take a lien upon the premises. If it be assumed that the full force of the representation is to be given to the mortgagee and those holding under him, still the mortgagee and those holding under him only acquired, in virtue of the representations, a lien upon the premises. If [205] Silas FT. had joined in the mortgage, certainly he would have been a necessary party to the foreclosure. He would have had a right of redemption; and, if full force is given to his representation, it only secures to the mortgagee and those claiming under him the right to enforce a lien upon the undivided fourth of the 16 acres. Silas FT. Carman, as before observed, was not made a party to the foreclosure suit, nor was his judgment creditor made a party, nor was the purchaser at the execution sale upon the judgment against him made a party, and, so far as the equity of redemption which remained in Silas was concerned, it never has been cut off. Silas, notwithstanding the representation made by him which induced the party to take a lien, was entitled to redeem the mortgage. His judgment creditor was entitled to redeem, and the purchaser at the execution sale was entitled to redeem. Hence it follows that the plaintiff has never been divested of the legal title which he acquired per force of the judgment, execution, sheriff’s certificate, and sheriff’s deed. It seems that the doctrine of estoppel was carried too far when the conclusion was reached at the special term that the plaintiff had no standing to maintain partition. In Ackley v. Dygert, 33 Barb. 176, it was said: “A person cannot be divested of his property by being ignored. He has a right to a day in court, before that power can be rightfully exerted. The extent of estoppel depends upon equitable considerations, (see 2 Pom. Eq. Jur, § 813; Campbell v. Nichols, 33 N. J. Law, 81;) and therefore each case is governed largely by its own particular circumstances. It cannot be successfully asserted that the mortgagee, in parting with his money upon the representation that was made to him, which is now insisted upon by way of estoppel, acquired any more than a lien upon the premises. For the purpose of acquiring a lien the mortgagee may be said to have relied upon the representation. If he is considered as the holder of a lien upon the property, lie is allowed all that equitably he can claim he acquired by reason of the representation that was made at the time of the loan. It seems reasonable that before such a lien should ripen a party succeeding to the legal title of Silas through the instrumentality of the bank judgment, the execution thereon, the sale, certificate of sale, failure to redeem, the deed given in pursuance of the sale, should be given an opportunity to protect his right by requiring the mortgagee to resort to the other property embraced in the mortgage first, and only resorting to the property acquired by the plaintiff for the purpose of recovering any sum necessary to liquidate in full the lien thus acquired. It does not seem appropriate at this time to fully consider and determine all the equities the defendant may be entitled to assert, inasmucli as the evidence upon a new trial may differ from that before us in the present ease. We forbear further comment, having reached the conclusion that the technical legal title of Silas FT. Carman did not pass from him by virtue of the mortgage, but remained in him, and was acquired by the plaintiff in virtue of the deed which he placed upon record before the foreclosure sale and the deed given thereafter, which was subsequently recorded. If these views are correct, the judgment of the special ;erm should be reversed, and a new trial ordered, with costs to abide the event. Judgment reversed, and a new trial ordéred, with costs to abide the event Merwin, J., concurs. Martin, J., not voting.