GERMANIA SAVINGS BANK v. JUNG

GERMANIA SAVINGS BANK v. JUNG. Supreme Court, Special Term, Second District; February, 1892. 1. Husband and wife ; estate by the'entirety ; surplus moneys on foreclosure.] Surplus moneys arising out of a foreclosure sale of premises owned by husband and wife as tenants by the entirety, are constructively real estate, and the husband and wife remain tenants by the entirety as to the fund. 2. Same.] The common law rule giving a husband the possession and control of lands owned by him and his wife as tenants by the entirety, does not entitle the husband to the' possession and control of surplus moneys arising out of a sale under foreclosure of such an estate, for to place the moneys under his control would tend to defeat the wife’s right of survivor-ship. 3. Same ; linpounding fund to await survivorship.] Such surplus moneys should be deposited under the direction of the court to await the period of survivorship, then to be paid to the survivor, and the income meanwhile should be paid to the husband Motion to confirm referee’s report in surplus money-proceedings, Ferdinand Jung and Barbara Jung, his wife, were the owners of cer.tain premises as tenants by the entirety and made a mortgage thereon to the plaintiff, the Germania Savings Bank, which was foreclosed in the above entitled action. Claims were made to the surplus moneys arising from the sale under the foreclosure by the husband and wife and referred to a referee whose opinion was as follows: Samuel T. Maddox, Esq., Referee. These proceedings to reach the surplus moneys present but one question and that requiring careful study before determin ation. The premises sold pursuant to the judgments herein were conveyed to (the claimants) “Ferdinand Jung and Barbara Jung, his wife,” “and to their heirs and assigns ” and the mortgages foreclosed were executed by both Jung and his wife. The surplus resulting, amounting in all, as appears by the county treasurer’s certificates, to $5008.25 is claimed by said Ferdinand Jung, while his wife contends that the same should be invested for their joint benefit and a part of the income thereof be applied for her maintenance and support. By that conveyance Jung and his wife became seized of the premises as tenants by the entirety (Bertles v. Nunan, 92 N. Y. 152; Jooss v. Fey, 41 N. Y. St. Rep. 212 ; Stelz v. Schreck, 40 Id. 267 ; 6 Am. Ency. of Law, 894). And the conversion of the real estate into money by the foreclosure herein, did not change the character of the surplus as between Jung and his wife, but the fund still continues constructively, real estate (Dunning v. Ocean Nat. Bank, 61 N. Y. 497, 503); and belongs to those having estates or interests in the land sold which were cut off by the foreclosures (Clarkson v. Skidmore, 46 N. Y. 297, 301). Thus it follows that Jung and his wife, own said surplus moneys as tenants by the entirety, and the expression in the power of sale contained in the mortgages foreclosed, “ rendering the overplus o'f the purchase money (if any there shall be), unto the said parties of the first part, their heirs, etc.,”.in my opinion, emphasizes that conclusion. By the common law rule, in tenancies by the entirety, neither the husband nor the wife could sell the land so held without the consent of the other (Jooss v. Fey, supra; Zorntlein v. Bram, 100 N. Y. 12), the husband having the control, use and possession during their joint lives, but can make no disposition that would prejudice the right in his wif-\ in case she survive him (Bertles v. Nunan, supra); the sole object thus attained being the securing to the wife of her right, in case of her surviving: Hence to place the surplus moneys in the possession and under the control oí the husband would be to defeat that purpose, since all that now remains of their' said estate is represented, not by land, but by money, which can very readily be disposed of in such a manner as “would prejudice” “the right of the wife in case she survive her husband.”' I have read carefully the opinion in Farmers’, etc. Bank v. Gregory (49 Barb. 155), and I do not think that the decision in that case should govern or control this contro versy, as there the estate had been voluntarily converted into money, a result the wife could have prevented. I do not believe that a tenancy by the entirety should, or can, be ended, and the right in the surplus of the wife in the event of her surviving her husband, be lost by reason of the sale of the premises upon foreclosure of a mortgage containing the expression and language above quoted. The court of appeals in Stelz v. Schreck (supra), has recently held that in event of an absolute divorce of the parties to an estate by the entirety, that estate is converted into a tenancy in common, upon the theory of a severance of the marital relation, but here the marital relation is “still in force” as counsel have agreed in their statement of conceded facts, Exhibit B. The judgment put in evidence by Mr. Moffatt dismisses the complaint and does not disturb the marital relation. In my opinion the surplus moneys in these actions should be impounded by being deposited in such trust company as the court shall direct; to be by such trust company invested; the income and profits paid to Ferdinand Jung during the joint lives of himself and his wife, and the fund to be paid to the survivor upon the death of either of them. Motion was now made to confirm the report of the referee. Thomas E. Pearsall, Esq., for Barbara Jung, and the motion. The referee’s conclusions that this money was constructively real estate is amply sustained by authority. It has long been the rule that the sale of infant’s lands did not change the character of the infant’s interests therein and that proceeds of such sales must be deemed to be real estate (Forman v. Marsh, 11 N. Y. 544; Wells v. Seeley, 47 Hun, 109 ; 2 R. S. 195, 180). It is moreover settled doctrine that surplus moneys arising from the sale of mortgaged premises, sold after the death of the mortgagor, belong and go to the heirs or devisees and not to the executor or administrator (Dunning v. Ocean National Bank, 61 N. Y 497). “ Surplus moneys arising from judicial sales of real estate, stand in the place of the land for all purposes of distribution among persons having vested interests or liens on the land.” Macomber, J., in Delafield v. White (19 Abb. N. C. 104, 109). (Case holding that specifieddevisees of land sold were entitled to the surplus). It seems clear, therefore, that these moneys are justly real estate as between these parties. It may be added that because the land has been converted into money it does not follow that a tenancy by the entirety cannot exist as to the fund. The authorities in this State uphold the right of survivorship as between husband and wife even as to personal property. Thus as to a deposit of moneys in a savings bank in the name of husband and wife, it was held, that by reason of the unity of the parties, the survivor took the whole (Platt v. Grubb, 41 Hun, 447). And in Sanford v. Sanford (45 N. Y. 723), it was held that a note payable to husband and wife belonged to the wife as survivor ; and that this was so even though the whole consideration was paid by the husband. So also in the estate of Albrecht (18 State Rep. 1002, N. Y. Surrogate’s Court) it was held that where a bond and mortgage had been executed to a husband and wife; upon the death of the husband, the wife as the survivor became possessed of the bond and mortgage. There can be no question whatever but that the surplus moneys in the case at bar are owned by the defendants, Ferdinand Jung and Barbara Jung, his wife, as tenants by the entirety. They were such tenants as to the land. They remain such as to the moneys thus arising out of the land. Their interests' were such in the land that either could insist upon a complete fulfillment of all the obligations arising out of their peculiar holding, even to the extent of the right of survivorship. Either can now insist that his or her vested right to these moneys shall be respected and the fund continue to partake of the nature of land with the right of survivorship attached to the fund. Those conclusions seem amply established upon reason and authority. The learned referee in his opinion holds that to place the surplus moneys in the possession and under the control of the husband would defeat the right of survivorship o.f the wife, because the money can be readily disposed of so as to prejudice the wife’s right of survivorship. His reasoning, it séems, should commend itself to the court. It is true that at common law the husband had the possession and control of the lands during the joint lives, but as was said in Bertles v. Nunan (92 N. Y. 156) “he could not make any disposition of the lands that would prejudice the right of his wife in case she survived him.’’ The case of Farmers’, etc. Bank v. Gregory (49 Barb. 155) relied on by the husband, does not uphold his contention. There husband and wife voluntarily conveyed their land and the wife took the entire proceeds to the exclusion of existing creditors of the husband. The referee in the Gregory case held that upon the sale of this land, the interest of the husband and wife became severed and each took one-half of the avails. The court, however, did not agree with the referee and did not decide (although it seems unnecessarily so because the debt due the creditor was less that half of these proceeds) that when the estate thus held was “ voluntarily converted,” the money belonged to the husband in virtue of his marital rights. As proof, however, that the Gregory case does not determine the case at bar adversely to .the wife, we submit the following quotation from opinion of. the court in that case, viz.: “ It is not necessary in this case- to discuss or to determine the question, whether under all the circumstances of the case equity would, notwithstanding the strict rulé of law, protect from the creditors of the husband a moity of the avails of the sale, in view of the manifest intention to settle upon her an interest in his property, for her future use and benefit, because thé plaintiff’s demand will only consume a small portion of the other moity. And I feel very clear that no rule of equity will give the wife the entire amount as her separate property, to the exclusion of the rights of the husband and of his creditors. To do that would require a new arrangement entirely, and one never contemplated by the parties themselves, which no court has any power to make. Under the arrangement they did make and consummate, when the land was conveyed to both, the creditors of the husband had rights as against his alienable interest, and the court should not,-even if it had the arbitrary power now, deprive them of those rights.” It seems clear, therefore, that the Gregory case merely decided that where husband and wife voluntarily converted an estate by the entirety into money, that the husband’s moity was liable to his creditors, who could not be deprived of their rights by the wife possessing herself of the entire proceeds of the land. It must be conceded that the common law rights of husband and wife in lands owned by them jointly have been modified by recent decisions ; so it was. held that since the enabling acts of 1848 and 1849 husband and wife could take as joint tenants under a deed expressly conveying to them in that form, although at the common law such a deed would vest in them an estate by the entirety (Jooss v. Fey, 41 State Rep. 211). And in Stelz v. Schreck (40 State Rep. 267), it was held that the tenancy by the entirety became a tenancy in common where the parties became separated by an absolute divorce. “ It was said in some of the authorities cited that the statute had changed the common law rule, and that while husband and wife, in conveyance to them jointly, each took the entirety, yet that the land could not be sold for the husband’s debts or the use aqd profits thereof during their joint life be entirely appropriated by him.” See note in 24 Abb. N. C. 229, and Stelz v. Schreck, 128 N. Y. 263. [MAJORITY — Earl J.,] Earl J., in Bertles v. Nunan, (supra). If the enabling acts of 1848, etc., permita husband and wife to hold separate estates in the same lands; if an absolute divorce converts a tenancy by the entirety into a tenancy in common ; and if the common law rule has been so far modified as to prevent the husband’s creditors from applying his interest in the land to their debts and denying him the right of appropriating to himself the entire income of the land, it would seem to be fair argument to claim that equity could well modify the common law stringency as to survivorship and decree a division of this fund between the parties. At common law marriage was an absolute gift to the husband of the goods, chattels and personal estate of which the wife was actually or beneficially possessed at the time of the marriage and of all such as shall come to her during coverture. But such is not the law to-day and now the wife retains to herself all of her property as her sole and separate estate. At common law the husband acquired by the marriage the use of his wife’s real estate during their joint lives. To-day he has no such right in her lands. When we view these changes in the law, a reasoning which .stretches the common law rule of possession and control in the husband of a wife’s real estate, to the actual control and disposal of moneys arising out of land and not voluntarily converted, thus destroying the wife’s right of survivorship, should not meet with approval. Certainly no authority can be found to sustain that proposition and no reason why such should be the law seems to exist, for the wife of to-day is not the wife of the common law. If this fund was not an estate by the entirety but was owned by the husband and wife as joint tenants, he would unquestionably receive his proportionate share of the fund after the conversion. But in an estate by the entirety the right of survivorship exists; and if the court does not deem the recent decisions and the enabling acts as justifying a division of this fund between the parties, then the wife’s right of survivorship thereto should certainly not be imperiled, if not totally destroyed, by placing the surplus moneys in the possession and under the control of the husband. The referee’s decision that “ the fund should be impounded by being deposited in such Trust Company as the court shall direct to be by such Trust Company invested, the income and profits to be paid to Ferdinand Jung during the joint lives of himself and his wife and the fund to be paid to the survivor upon the death of either of them “ is as fair to the husband as he can ask.” If there had been no conversion and the estate was still land, and we were still back to the times of the common law, this is just as much as the husband could command, viz., the income and profits during the joint lives. At common law “ he could not make any disposition of the land that would prejudice the right of his wife in case she survived him ” (Bertles v. Nunan, supra), and to permit, therefore, the husband to have the absolute control of these moneys would violate every right of the wife in and to her estate. Moffatt & Kramer, Esqs., for Ferdinand Jung, opposed the confirmation upon the ground that at common law the husband was entitled to the exclusive possession and control of lands owned by husband and wife as tenants by the entirety, and therefore he should have the possession and control of these surplus moneys (Citing Farmers’, etc. Bank v. Gregory, 49 Barb. 15 5). CULLEN J., confirmed the report of the referee without opinion.