Cornell v. Andrews

The Chancellor. This suit is brought to enforce specific performance of a con — 8 — tract for the salé of land in Hudson county. The price agreed to be paid is $6 5,000. The defendant, resists on the ground that the title is not such as he ought to be compelled to take; that it is at least a doubtful one. The complainants insist, on the other hand, that their title is good, and free from all reasonable doubt. The objection made to the title is that it is derived under a mortgage given to “ Joseph D. Beers, president of the North American Trust and Banking Company,” which contained no words of inheritance, but conveyed the property to him, his successors and assigns. The defendant therefore apprehends, and — 9 — is advised that the estate mortgaged was but a life estate. The bill states that the North American Trust and Banking Company was, when the mortgage was given, a corporation of the state of New York, duly created by virtue of and pursuant to a statute of that state passed April 18th, 1838, and entitled, “.an act to authorize the business of banking,” and that Beers was then its president, and that by virtue of the twenty-fourth section of that act, he, as president, was a corporation sole of the state of New York, and therefore took an estate in fee under the mortgage, notwithstanding the absence of words of inheritance. — 10 — On the hearing, it was further urged that if Beers should not be held to be such corporation sole, it should be held that the • words “Joseph D. Beers, president of the North American Trust and Banking Company,” were one of the names of the corporation; and that, in either case, the title in fee passed by the mortgage. In support of these propositions are adduced adjudications of the courts of New York that associations under that act were corporations in fact, and that conveyances to the president were conveyances to the corporation, and also dieta of more or less weight, to the effect that those corporations were bi — 11 — nominous, one of their names being the one assumed, and the other that of the president (or other officer designated to hold and convey its land), as such. By the provisions of that act, mortgages or other conveyances of real estate to the association were not to be made to it, but to the president, or such other officer as should be indicated for the purpose in the articles of association; and it was further provided that the president, or such other officer and his successors, from time to time, might sell, assign and convey the same, free from any claim thereon against any of the shareholders or any person claiming under — 12 — them. It is insisted, on behalf of the complainants, that it is incumbent on this court to pass upon and decide, for the purposes of this litigation, the question raised in defence — whether the mortgage, which is the foundation of the title, conveyed an estate in fee or only for life. If such decision would have the force and effect of an adj udication in a direct proceeding for the purpose, and be an end of controversy on the subject, and establish the title, the court might well proceed to the determination of the question; but this suit is a proceeding in personam merely, and will bind those only who are parties to it. “ It is a — 13 — great, though perhaps a common mistake,” said the court, in Pratt v. Eby, 67 Pa. St. 396, “ to suppose that a doubtful title can be made marketable by an opinion of a court in a case stated between vendor and vendee.” The real question to be decided in this case is whether the title which the complainant offers is a marketable one. If it is such a- title as would be questionable, the court ought not to force it on the unwilling purchaser, even though, in its opinion, it would, on litigation, be sustained. Obviously, for the considerations before presented, the decision of the question in this suit would be — 14 — but the opinion of this court on the subject, which would still be open to litigation by parties claiming adversely to the title. It is conceded that on its face, and in the absence of the construction contended for by the complainants, the mortgage, for the want of words of inheritance, conveyed only a life estate. The answer admits that the North American Trust and Banking Company was a corporation under the before-mentioned statute, and that Beers'was its president, but it denies that a greater estate than a life estate passed by the mortgage. The title to real estate can only be acquired, passed and lost according to the — 15 — lex rei sitce, and a party must have a capacity to take according to the law of the situs, otherwise he will be excluded from all ownership. Story’s Confl. of L. §§ 428, 430. The question whether the mortgage was in fact given to a corporation, whether aggregate or sole, or to a natural person, is one to be determined by our courts, and until it shall have been so decided in a direct proceeding, the title will be subject to an objection materially affecting its marketable value. The exercise of'equity jurisprudence respecting the specific performance of contracts is not a matter of right in either party, but of sound and reasonable dis — 16 — cretion in the court. Story’s Eq. Jur. § 742. And the court, in the exercise of that discretion, will not compel a party to take •a title which may expose him to litigation, even though it may believe the title to be good. Pyrke v. Waddington, 10 Hare 1; Dobbs v. Norcross, 9 C. E. Gr. 327 ; Fry on Spec. Perf. § 573; Waterman on Spec. Perf. § 412, and cases cited. Said the court, in Tillotson v. Gesner, 6 Stew. Eq. 313: “ The true rule is stated in 3 Pars. on Con. (6th ed.) *380, that if the character of the title be doubtful, although the court were able to come to the conclusion that on the whole a title — 17 — could be made that would not probably be overthrown, this would not be good enough, for the court have no right to say that their conclusion or their opinion would bind the whole world, and prevent an assault on the title. The purchaser should have a title which shall enable him not only to hold his land, but to hold it in peace, and if he wishes to sell it, to be reasonably sure that no flaw or doubt will come up to disturb its marketable value. The court cannot satisfactorily or conclusively — 18 — settle a title in the absence of parties who are not before them in the suit to assert their estate or interest in the land.” It is quite clear that if this court were to compel the defendant to take the title in question, it would have no judicial certainty that he would not be subject hereafter to litigation to test before other tribunals, in direct proceedings, the very question which it would have decided in this suit. Much less could it be certain that he would not be embarrassed in disposing of the property to purchasers by the apparent defect of estate which he now urges in his defence. Under such- circumstances, a decree of specific performance should be denied.