
    Lyon v. Morgan et al.
    
    
      (Supreme Court, General Term, Fourth Department.
    
    April, 1892.)
    Estoppel—Declarations as to Title—Execution Purchaser.
    0., in negotiating a mortgage loan on the land in controversy, claimed that he owned the entire fee, and his son, who was present, disclaimed any interest therein, whereupon the lender was induced to accept a mortgage thereon by C. At the same time the record title showed that the son held an undivided fourth thereof, which plaintiff subsequently bought at execution sale on a judgment against the son, without knowledge of the false representations made at the time of the execution of the mortgage, and duly recorded his sheriff’s deed. Thereafter, defendant, without any knowledge of the son’s representations, bid off the premises at the mortgage foreclosure sale, neither plaintiff nor his son nor the latter’s judgment creditor being a party in the foreclosure proceedings. Held, that plaintiff was not estopped to assert title to his undivided fourth.
    Appeal from special term, Broome county.
    Action by Addison J. Lyon against Van Y. Morgan and others for partition. From a judgment entered on a decision of the special term dismissing the complaint on the merits, plaintiff appeals.
    Reversed.
    Plaintiff alleges he is the “owner in fee simple, and is the holder and is in possession, of the equal undivided one fourth of all that tract or parcel of land situate in the town of Binghamton, county of Broome and state of New York, containing about sixteen acres of land.” The answer denies the ownership, and alleges the fee to be, and right of possession, in William A. Morgan, and also alleges that “November 23, 1883, one Joseph Carman, being in possession of and claiming to be the actual owner in fee of premises described in the complaint, executed and delivered to one Albert Smith, as guardian of the property of Frank Albert Smith, his bond to secure the payment of the sum of $10,000, and, as collateral security to the payment thereof, at the same time he and his wife duly executed, acknowledged, and delivered to said Smith a mortgage upon said premises and other lands;” and that the mortgage was taken “ upon the faith and belief of said Smith that said Joseph Carman was the sole owner of the lands described in the complaint, and the other lands described in said mortgage, and that his title was not incumbered or subject to any lien, and the said Joseph Carman at the time affirming that he was the owner of said lands in fee, and that they were not incumbered, which said Smith believed to be true, and knew nothing to the contrary.” The answer also alleges “that Silas N. Carman, the person through and under whom plaintiff claims to have received title, and whom the plaintiff alleged was the actual owner of the premises described in the complaint, at the time said loan was lent and said bond and mortgage were executed and delivered, was present, arid knew of said loan of money, and'heard the affirmation of said Joseph Carman that he was owner in fee of said lands, and knew that said money was lent and advanced on the belief that he was such owner, and he, said Silas N. Carman, at that time asserted no title or interest in said premises, or claim thereto, but, on the contrary, expressly stated that he neither had nor claimed to have any right, title, or interest in and to said premises, and consented and requested that said Smith, as such guardian, loan said $10,000, taking as security said bond and mortgage, wherefore defendant alleges that plaintiff and his predecessor in title, said Silas N. Carman, are estopped and barred from asserting any title or interest in said premises as against answering defendants, and this defendant’s •title is superior and paramount to that of plaintiff or his predecessor.” The answer alleges the foreclosure of the mortgage, and that William A. Morgan became the purchaser of the premises for $6,800, and became the owner in fee of the said premises, and every part thereof. The trial court found that “Joseph Carman became the owner of an undivided three fourths of said sixteen acres, * * * and was such owner on the 23d day of November, 1883.” Also found: “Silas N. Carman became the owner of the remaining undivided one fourth of said 16 acres, * * * and was such on the 23d day of November, 1883.” Also found that “on the 23d day of November, 1883, the said Joseph Carman applied to one Albert' E. Smith, as general guardian of Frank Albert Smith, a minor, through the latter’s agent, William E. Taylor, for a loan of ten thousand dollars ($10,000,) to be secured by a mortgage on said 16 acres, with other lands. Said application was made by Joseph Carman in person, and he was accompanied at the time by said Silas N. Carman. At the time of the making of said application said Taylor, acting as agent as aforesaid, inquired of said Silas N. Carman if he had any interest in the said lands, including the said 16 acres, and Silas 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 N. Carman did not contradict in any way. Said William E. Taylor, as agent for said guardian aforesaid, upon the date last mentioned loaned to said Joseph Carman the sum aforesaid, and said Joseph Carman, to secure the same, on that day ex-' ecuted, acknowledged, and delivered to the said Taylor, acting for said guardian, a mortgage, in and whereby he granted to said guardian, his successors and assigns, said 16 acres, with other lands, which grant was given as security for the payment of the sum aforesaid, and interest thereon. Said loan was made and mortgage taken and accepted by said Taylor on behalf of said guardian, relying upon the aforesaid statement of Silas N. Carman, and he acted and depended on said statement in so doing.”
    From the evidence it appears that a foreclosure of the mortgage was commenced about December 1,1888, and a judgment of foreclosure was entered in December, 1889, and a sale thereunder was made by the referee February 11, 1890, and William A. Morgan became the purehasér upon a bid of $6,800, and took the usual referee’s deed. William A. Morgan gave back a mortgage to the defendant Waterman, as guardian of Frank Albert Smith, (he having become such guardian,) in the sum of $5,000. Silas N. Carman was not made a party to the foreclosure action; nor was Addison J. Lyon j the plaintiff, made a party to the foreclosure action. The First National Bank of Binghamton, on the 16th day of June, 1888, recovered a judgment against Silas N. Carman upon a promissory note made by him for $650, and against Wilson Culver, Charles H. Culver, and Addison J. Lyon, (the plaintiff here,) who were indorsers upon such note. An execution was issued upon that judgment on the 16th day of June, 1888, to the sheriff of Broome county, who, having received the full amount of the execution October, 1888, returned the same satisfied October 24, 1888. By the sheriff’s certificate of sale it appears that on the 24th day of October, under the execution, he sold to Addison J. Lyon, for $762.95, all the interest, right, and title of Silas N. Carman in and to the undivided one fourth part of said 16 acres. The certificate was recorded January 3,1889, and on the 25th day of January, 1890, the sheriff executed to Addison J. Lyon, a conveyance of the equal undivided one fourth part of the 16 acres of land, which was recorded January-26, 1890. The special term found as conclusions of law “(1) that Silas N. Carman and his privies and successors in interest, including the plaintiff 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 16 acres as against said mortgagee, his privies, successors in interest, including the defendant Morgan and the defendant Waterman; (2) that the defendants, Morgan and Waterman, are entitled to a judgment dismissing the complaint upon the merits, with two bills of costs.” The court also found that Silas N. Carman, after the death of Abram Bavier, which occurred in January, 1871, “entered into possession of said premises, with the other joint owners, and so continued in possession until possession was taken by Addison J. Lyon, the plaintiff in this case, as hereinbefore stated.” It was also found “There is no evidence that said Lyon, prior to his taking said deed from the sheriff, ever had any notice that said Silas N. Carman had stated to said Albert E. Smith, guardian, or to said Waterman, or to any person, that Joseph Carman owned the whole title,or that he,said Silas, had no part of the title.” It was also found: “There is no evidence that said William A. Morgan was informed of the representations made by said Silas N. Carman at the time of the loan of the said $10,000, or that he bid off said premises on the mortgage sale, relying upon any representations made by said Silas N. Carman.” The court declined to find “that Addison J. Lyon, the plaintiff, is the owner in fee of the equal undivided one fourth of said premises.” Exceptions were taken to the findings of fact and to the refusals to find.
    Argued before Hardin, P. J., and Martin and Merwin, JJ.
    
      Edward K. Clark, for appellant. George Bowen, for respondent Morgan. B. S. Richards, for respondent Waterman.
   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 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 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.  