LOCKMAN v. REILLEY

LOCKMAN v. REILLEY. N. Y. Supreme Court, First District; Special Term, June, 1881. Vendor and Purchaser.—Defect in Title.—Foreclosure against Purchasing Trustee.—Parties. Tie rule that the court will not pass upon the question of title, on a mere motion, where all the parties in interest are not before the court (77 N. T. 518; 20 Hun, 282), does not apply to an action between vendor and purchaser, where the latter claims that there is a defective title. The holder of a second mortgage, by his will gave all his estate, both real and personal, to his executrix in trust, with power and directions to convert the same into money and to invest the proceeds, &c. The executrix foreclosed and, upon the sale, purchased the property. A suit was subsequently commenced to foreclose the first mortgage, and the executrix was made a defendant. Held, that, grandchildren of testator, who were entitled to a remainder in such proceeds after the termination of certain life estates, were not necessary parties defendant. The executrix held such property as personal estate, and could convey and transfer it as such ; but if regarded as realty, the legal estate was in the executrix as trustee. Jacob K. Lockman, as executor of the last will and testament of Richard C. Sage, brought this action against Thomas J. Reilley to compel the defendant to specifically perform a contract made by him, to purchase certain lots of land in the city of New York. Defendant refused to perform on the ground that the plaintiffs title was defective. The plaintiff was the owner of the first mortgage on the premises in question. William H. Raynor had a second mortgage thereon, and died possessed of the same, He made a will appointing his wife, Sarah E. Raynor (now Mrs. Cornish), executrix, and others executors, but Mrs. Raynor alone qualified as executrix. She brought an action to foreclose the second mortgage, and,on the sale under the judgment therein,bought in the property for a sum less than the mortgage, and took the title in her own name as executrix and trustee under the will of Raynor. She paid no money on the sale, but bid in the property to protect the estate, and obtained judgment for the deficiency. Wm. H. Raynor by his will made certain specific bequests, and then devised and bequeathed to his executors in trust all the residue and remainder of his estate as follows-: “I give, devise and bequeath all the rest, residue and remainder of my estate, real and personal, unto my executrix and executors hereinafter named, and the survivors and survivor of them in trust, with power to receive the rents and profits of the same, and to sell, dispose of, and convey the same at such time or times and in such manner as to them shall seem proper and best for the interest of my estate ; and to invest and keep invested such rents and profits, and the proceeds of such sale or sales, in bonds of the United States of America or of the city or State of New York, or in first bonds and mortgages upon good and sufficient real estate, and to divide and apply the same and the income thereof, as hereinafter directed.” The testator then gave and bequeathed, and authorized and directed his executors to apply, the income of two sixth parts of said residue and remainder of his estate semi-annually to the use of his wife Sarah E., for her life, and after her death he gave and bequeathed the said two sixth parts of said residue and remainder of his estate unto any children living at the time of her decease and unto the lawful issue of any deceased child or children, to be divided equally, share and share alike, per stirpes and not per capita among such children and issue, the issue of any deceased child to have the share the parent would have been entitled to if living. And in like manner he gave and bequeathed, and directed his executors to apply the income of one sixth part of the said residue and remainder, to each oE his sons and daughters for life (naming and making a separate bequest to each separately) and on the death of each son or daughter he gave and devised said one-sixth part of said residue and remainder of his estate, or so much as then remained thereof, unto the children of such son or daughter living at the time of his or her decease and unto the lawful issue of any deceased child or children, to be divided equally, share and share alike, per stirpes and not per capita, among such children and issue, the issue of any deceased child to take the share the parent would have been entitled to if living. The will also authorized the executors in their discretion to make advances of the principal to his children to a limited amount. After Mrs. Cornish, as executrix, had foreclosed the second mortgage and had bought in and taken title to the property as before stated, the plaintiff brought an action to foreclose the first mortgage in which there was judgment of foreclosure and for sale, and on the sale he bought in the property and took the title thereto in his name as executor of the will of Richard C. Sage, to whose estate the mortgage belonged. In this action Mrs. Cornish, as executrix and trustee, was made a party defendant, as were also all the other persons named as executors and trustees under the will, and all of the children of Wm. H. Raynor, deceased, but none of his grandchildren were made parties defendant, although there were then several of them living. Further facts sufficiently appear from the opinion. Charles Jones, for plaintiff. I. At the time of the foreclosure of the plaintiff’s mortgage, the legal title to the property was in Mrs. Cornish as executrix and trustee, and she, as owner of the equity of redemption, was the only necessary party defendant in the foreclosure action (Clark v. Clark, 8 Paige, 152; Valentine v. Belden, 20 Hun, 537). II. But if this were not so under the will, the title to all the testator’s estate was vested in the executors as trustees. An express trust was created, and the whole estate is devised to'the trustees. If the land is to be regarded as an investment under the will, the legal title is still in the executor who qualified as trustee, or, if it be in all of the trustees, they were all made parties defendant. There is a power of sale given by the will, and it contemplates a sale and division and a holding of the proceeds in trust separately for the several beneficiaries (Morse v. Morse, 23 Alb. L. J. 473; 12 Weekly Dig. 259, and cases cited). Edmund Coffin, Jr., for defendant. The plaintiff did not acquire a good title by virtue of the sale under the judgment in his foreclosure action, as the grandchildren of Wm. H. Raynor had a contingent interest in the land in question, and were necessary parties to the action (Argall v. Raynor, 20 Hun, 267; Embury v. Sheldon, 2 Abb. N. C. 404; S. C., 68 N. Y. 227, 234; Stevenson v. Leslie, 70 Id. 512; Monarque v. Monarque, 8 Abb. N. C. 102; S. C., 80 N. Y. 320). [MAJORITY — Potter, J.] Potter, J. This action is brought to recover the balance of the stipulated purchase-price of certain real estate situated in the city of New York, under a written contract to sell, to purchase, and to pay for at a specified time. The complaint alleges that the plaintiff was the owner in fee and possessed of the premises, and that he entered into a contract to convey the same to the defendant for the sum of $18,500, and the defendant agreed to purchase and pay said sum at a time and place specified; and that defendant paid $1,000 thereon, and that plaintiff tendered a deed at said time and place, and demanded payment of the balance of the purchase-price pursuant to the contract; and that the defendant refused to accept the deed and to pay the price. All these allegations, except that plaintiff was the owner in fee, are admitted by answer, and the answer denies plaintiff’s title. The only question therefore is : “ Had the plaintiff good title to the premises at the time of the tender ?” The only objection to the title is, that it was derived by the plaintiff under a decree of foreclosure of a first mortgage held by plaintiff, and sale under the decree and purchase by the plaintiff, and that the grandchildren of Wm. H. Raynor were not made parties to the foreclosure action. It is contended on the part of the plaintiff that they were not necessary or proper parties to cut off the equity of redemption. Their relation to the title rests upon these facts, to wit : Wm. H. Raynor held a second mortgage on these premises. He made his will, by which he gave the residue of his estate, after making several specific legacies, to his widow as executrix and William R. Stewart, John H. Morris and Jonathan Edgar, as executors, in trust, with power to receive the rents and profits of the same and to sell, dispose of, and convey the same at such times and in such manner as to them shall seem proper and best for my estate, and to invest and keep invested thfe proceeds of such sale in United States bonds or bonds of the State of Hew York, or of the city of Hew York, or in first bonds and mortgages. He gave and bequeathed, and directed his executors to apply, two sixth parts of said residue to the use of his wife during her natural life, and after her death he gave said two sixth parts of said residue of his estate to any of his children then living, and to the children of those of his children who shall have 'died. He then gave to each of his four children, and directed his executrix and executors to apply to the use of each of his said children,the income of one sixth part of said residue during his or her natural life, and after his or her decease he gave said one sixth part of said residuary estate to the child or children- of his deceased child and their issue, with a devise of the share given to each child, upon failure of issue, to his surviving children, or their children surviving. The mortgage so held by the testator was foreclosed after his death in the name of his widow as executrix, the other persons named not having qualified, and was bid off by her in her name as executrix and trustee. In the action to foreclose the first mortgage, and sale under the decree, the widow and others named in the will as executors, were made defendants as trustees, but none of the children or grandchildren of Wm. H. Raynor were made parties to the foreclosure action. Were they necessary parties in order to cut off the equity of redemption? The bond and mortgage held by the testator was clearly personal property. His executrix foreclosed the mortgage and purchased the mortgaged premises at the foreclosure sale, and took the referee’s deed therefor in her name as executrix of the testator’s estate. These premises were held by- her as executrix and as personal estate ; and she could convey and transfer the same as personal property (Valentine v. Belden, 20 Hun, 537, and authorities there cited). In Valentine v. Belden an administrator had bid off in his individual name, premises covered by a mortgage which he held and foreclosed as such administrator. He contracted to sell the same, and it was held that he could convey a perfect title as administrator, and the vendee should be adjudged to pay the purchase-money and accept the deed. The view thus far taken of the question arises upon the simple fact of the purchase by the éxecutrix uncle a foreclosure of a mortgage held by the testator, but there is another view which may be taken of the question arising under the will. Assume that these premises were at the time of the. death of the testator real estate belonging to Mm. By the terms of the will all the testator’s estate, both real and personal, were given to the widow and the others in trust, with power and directions to'converl the same into money and to invest the same into specified securities and to receive and apply the income thereof. There was no qualification .or restriction upon the exercise of this power of sale. It was to be done at all events. Here there was the creation of a valid trust, and the legal estate was in the trustee. By the terms of the will, at the death of the testator, all the real estate of the testator was converted into personalty, and there was no equity of redemption in the grandchildren of the testator (Fisher v. Banta, 66 N. Y. 468; Morse v. Morse, 23 Alb. L. J. 473; 12 Weeldy Dig. 259; Kinnier v. Rogers, 42 N. Y. 531). I am referred to the case of Argall v. Raynor (20 Hun, 267), by the defendant. That was a motion to compel the purchaser at foreclosure sale to pay the bid and complete the purchase. In that case a foreclosure sale had been made under a mortgage covering the premises owned in part by this same testator, and his grandchildren had not been made parties to the foreclosure action. The court did not in that case hold that there was an equity of redemption or any legal estate in the grandchildren. The court, following the opinion of the court of appeals in Jordan v. Poillon, 77 N. Y. 518, simply declined to pass upon the question of title on a mere motion, when all the parties, who might at some future time raise the question, were not before the court, and of course dot bound by the decision. But I apprehend that when the question is raised in an action between the vendor and vendee at a private and voluntary sale, the court cannot pass by or avoid deciding the question. The parties have made a contract: the one to give a title in fee, and the other to pay a stipulated price for it. The plaintiff claims he has tendered what the defendant agreed to purchase of him, viz. : a title in fee to the subject of the contract, and the court must and should decide whether the allegation is true. The plaintiff is entitled to have the judgment of the court, that what the plaintiff agreed to convey he is able to convey, and that the defendant must pay what he agreed to pay. Plaintiff should have judgment for the purchase-price, interest and costs.