Graves v. Coutant

1. If a person purchases land of a vendee, with notice of the vend- or’s equitable lien for purchase-money, such purchaser will be charged with the same trust as the vendee. 2. The defence of a bona fide purchaser must be clearly and unequivocally set up in the answer, with the particulars of the purchase, and must be distinctly proved. 3. The claim of a vendor’s lien for purchase-money, is one of peculiar equitable cognizance, and a vendor having no judgment or execution which binds the land, does not stand in the position of a creditor at large without remedy against the land in equity. 4. The recovery of a judgment at law for the unpaid purchase-money, will not merge or affect the vendor’s lien. 5. The limitation of actions, if it be a defence against a vendor’s lien, will not run while an action is pending in another state for the recovery of the debt, and the time of limitation must date from the judgment. 6. Where, by the law of a state, a vendor’s lien for purchase-money is recognized, a discharge in bankruptcy of the vendee or his purchaser with notice, will not discharge the land. Note.—Whether the statute of limitations applies to a contract implied by law, see Jordan v. Robinson, 16 Me. 167; Wickersbam v. Lee, 88 Pa. St. 1¡,33 ; Gowers's Case, 8 Mont. & A. 173; Townsend v. Townsend, 1 Bro. O. O. 661; Sheet v. Lindsay, L. R. (3 Lx. Liv.) 8U¡.. Whether it ’applies to a suit for specific performance of a contract for the sale of lands, see Washburn v. Washburn, 4 IretL Eq. 806; Smith v. Smith, 1 McMull. Eq. 126; Hemming v. Zimmerschitte, 4 Tex. 169; Yeary v. Cummins, 28 Tex. 91; Collard v. Tuttle, 4 Yt. 1ft 1; Brennan v. Ford, 1ft Cal. 7; Emoell v. Kier, 60 Cal. 646; Peters v. JDelaplaine, 1ft N. Y. 862; Evans v. Yongue, 8 Rich. 118; Wright v. Leclaire, 8 Iowa 221; Gregorie v. Bulow, Rich. Eq. Cas. 285; Moore v. Blake, 1 Ball & B. 69; Phillipson v. Gibbon, L. R. (6 Ch.) 428. ' In the following cases the statute has been held applicable to suits to enforce vendor’s liens : Moore v. Anders, 14 Ark. 628; IAnthicum v. Tapscott, 28 Id. 267; Cooper v. Lowery, 54 Ga. 198; Ti-ustees v. Wright, 11 III. 608, 12 Id. Ift2; Trotter v. E>-win, 27 Miss. 772; Littlejohn v. Gordon, 32 Miss. 285; Avent v. McCorkle, 1ft Miss. 221; Borst v. Corey, 15 N. Y. 505; Fullerton v. Spring, 3 Wis. 667; Sheratz v. Nicodemus, 7 Yerg. 9; Ray v. Goodman, 1 Sneed 586; Gudger v. Barnes, 4 HeisJc. 570; Gibbs v. Holmes, 10 Rich. 484; Toft v. Stephenson, 7 Hare 1, 5 DeG. M. & G. 785. In the following cases the statute has been held not to be applicable to a suit to enforce a vendor’s lien: Driver v. Hudspeth, 16 Ala. 848; Relfe v. Relfe, 84 Ala. 500; Moretón v. Harrison, 1 Bland 491; Leinhart v. Forringer, 1 Pa. 492; Evans v. See, 28 Pa. St. 88; Magruder v. Peter, 11 Gill & Johns. 217; Hopkins v. Cockerell, 2 Gratt. 88; Hanna v. Wilson, .3 Gratt. 243. See Belknap v. Gleason, 11 Conn. 159. Query, Would an acknowledgment of the existence of a vendor’s lien extend or revive it? See Toft v. Stevenson, 5 DeG. M. & G. 735; JAngan v. Henderson, 1 Bland 286; Wheeler v. Smith, 2 Jones Eq. 4O8.— Hep.

On appeal from a decree advised by the master, Henry C. Pitney, esq., who stated orally the following reasons for the decree: This is a bill filed by Eburn H. Coutant against Eliza Annette Graves, seeking to charge certain lands of the defendant, in the county of Hudson, and also all proceeds of those lands—such of them as have been sold—in the hands of the defendant, for the purpose of paying a judgment recovered by Mr. Coutant, in the supreme court of the state of Hew York, against Rosewell Graves the husband of Eliza Annette Graves. The facts upon which the complainant founds his equity for the relief prayed for in this court, are driefly as follows : In 1853, Mr. Coutant conveyed to Mr. Graves, the husband of the defendant, by two deeds, each comprising the equal undivided one-half part of the premises in question, and therefore amounting in substance to one deed, certain lands in Bergen Heck, in the county of Hudson, of considerable value. The consideration money expressed, if I recollect, is $50,000. Shortly afterward some dispute arose between Coutant and Graves with regard to the value of certain parts of the property, and with regard to the payment of the purchase-money. The particulars of that dispute I have not gone into very carefully, but the result was that, shortly after the conveyance, an action was brought by Graves against Coutant, in the supreme court of the state of New York. To that suit Coutant filed a counter-claim, or set-off, setting up, among other things, that Graves was indebted to him for a part of the purchase-money on the sale of the Hudson county property. That suit went on to trial and was heard before Judge Brown of the supreme court, and, some time previous to the 1st of March, 1860, Judge Brown made a finding of facts, which is found on pages 16 and 17 of the judgment roll of the supreme court offered in evidence, which is in the nature of a special verdict, by which he found that the Hudson county land had not been paid for, and stated the amount of money due on it. There was no judgment entered at that time, because Judge Brown ordered a re-argument on some other minor matters. Subsequently counsel were heard on those matters, and on the 5th of March, 1860, judgment was rendered in favor of Coutant, against Graves, for $6,844.10 besides costs. At or about the time of the rendering of that judgment, Graves conveyed the property in Hudson county, to Jacob R. "Wortendyke, who conveyed it back to his wife, the defendant, the nominal consideration in both deeds being $1,000. An appeal was taken from the judgment in New York, to the general term of the supreme court, which affirmed the judgment, some time in 1863. A re-argument was ordered, and the judgment was again affirmed. It was twice heard in the supreme court, and both times the judgment was affirmed. The last affirmance was in 1865. An appeal was then taken by Graves to the court of appeals of New York. Pending that appeal, in 1868, Graves, who had previously been a man of means, became a voluntary bankrupt. In 1871 he was discharged from his debts as a bankrupt, and in 1873 died. In 1875, the case in the court of appeals, of Graves, appellant, and Coutant, appellee, was reached, and the appeal dismissed, and that judgment of dismissal was made the judgment of the general term, as appears by the judgment record. Shortly after the rendering of that judgment, the complainant filed his bill herein, in this court, setting out these facts, and claiming a decree in the form stated, and relying particularly on two grounds. I will consider those two grounds separately. First, he says, he is a general judgment creditor, not a judgment creditor in this state, but a general creditor by a debt which has been absolutely fixed by the judgment of a sister state, and that, as such judgment creditor, under the peculiar circumstances of this case, he has a right to come into the court of chancery, and take this property, of which he alleges Mrs. Graves is not a bona fide purchaser, but which was conveyed in fraud of this very debt, and appropriate it to the payment of his debt. A very ingenious argument was addressed to me, on the part of the complainant, in support of this contention, and authority has been cited from sister states, and. the case has been stated to be an exception to the rule laid down by Chancellor Runyon, in the case cited of Davis v. Dean, 11 C. D. Gr. 436, where it was held that a man must have a judgment and execution in this state before he can reach lands in New Jersey. I am unwilling to follow the argument of the counsel for the complainant on that point. I think it is founded on a misapprehension of the law. I think this case is an exception to the case just referred to, in that here the judgment debtor is dead, and, under its peculiar circumstances, there can be no other remedy. The creditor may be said to have exhausted his remedy at law, and, unless this court can relieve him, he is without remedy. But the difficulty is, that I do not know of any equity in New Jersey by which the court of chancery can be called upon to appropriate land for the payment of a debt of a decedent. .Judgment liens upon land in New Jersey are acquired by virtue of the statute which requires judgment and execution. And where they are sold to pay the debts of a decedent, they are sold by virtue of the statute. And, although there are abundant authorities from sister states in favor of complainant’s contention, I do not think they apply here, whatever may be their soundness in the states where they were .made. I will state to counsel, further, that I have an impression—which I have not followed very far—that the court of chancery of this state did at one time assume the jurisdiction of applying the lands of decedents to the payment of their debts, in the course of the administration of their estates. In 1743, the colonial legislature passed an act, found in Allinson 189, by which, for the first time, I believe, in the state of New Jersey, land could be subjected to the payment of debts or judgments, and the first section of that act declares,, in round terms, that land shall be an asset for the payment of debts, in all respects, the same as personal property. In 1784 the orphans court act was passed, and the eleventh and twelfth sections of that act provided for the sale of lands to' pay debts of decedents, where one of the heirs or devisees was a minor. In 1786 an act was passed which included all lands, whether of minors or not. In the meantime, the act of 1743 remained in force, until 1799, when it was repealed, and substituted for it was Judge Paterson’s act, which provides for the sale of land by sheriffs &c.—substantially our act, as it remained in force many years. But I happen to know that just about that time the court of chancery did assume jurisdiction to apply lands of a decedent to the payment of his debts, by a bill filed for that purpose. I have a case in my mind which arose in Morris county, the case of John Jacob Eaesch, but whether the bill was filed just before .or just after the act of 1799, repealing the act of 1743, I do not know. I have an impression that possibly the court of chancery, under the very wide jurisdiction it assumed under the colonial authority, and by virtue of the first section of the act of 1743, may have assumed that sort of jurisdiction, but I am not aware that is has ever been exercised since. In fact, I think the settled rule now is, that where a man dies, leaving an estate of land, you can only get at that to pay debts, if you have not a judgment and execution, through the orphans court. However, I do not pretend to have followed the subject out; I do not know that I am fitted for it; I am not an historical expert of Hew Jersey law. I decline to advise a decree on the first ground. On the second ground, however, I think quite differently. The second ground on which the complainant asks a decree is, that the debt evidenced by the judgment in Hew York, was for a part of the purchase-money on the sale'of the Hudson county land by Coutant to Graves, and that a lien —vendor’s lien—resulted, which he is still in a position to enforce. And first, now, whether or not there is proof that this debt, on which the complainant founds his equity in this case, was a debt resulting from the sale of that land—and I think that must be held as conclusively proved in this case —the finding of Judge Brown in the Hew York suit, which is in the nature of a special verdict, so finds. He particularly states and finds that Graves did not pay for that land, by any of the transactions between the parties. The pleadings clearly raise the issue, and it is so found by Judge Brown. Independent of the parol evidence in this case, I think there is sufficient to show the debt is a debt for consideration money unpaid. Then we have, in addition to the record of the Hew York judgment, the evidence of the complainant in this suit. The evidence of the complainant has been criticised in this respect—that it is very loose and unsatisfactory. It may be open to that criticism, but I do not know that that helps the defendant at all. The complainant is not called upon to retry the case in Hew York. It was a very complicated case, and it proved to be a very difficult thing to determine how the purchase-money was settled between the parties at the time; and the complainant, probably, never understood it himself, and certainly could not be expected to explain it without a refreshment of his memory, when put upon the stand in this case, after so long a time; and what he does swear to in substance is, that the judgment there recovered, was for the purchase-money of this property, and that, in point of fact, it was not paid; he cannot tell how, or explain how, but I think I must find in that way. If, then, this is a debt for purchase-money, it follows, I think, that the complainant is entitled to relief, unless some of the defences set up prevail, and I will consider them in detail. The first defence set up is that of “ bona fide purchaser for a valuable consideration.” I believe my friend, Mr. Emery, did not press that very strongly. I think it must fail. The complainant, in his bill, makes out a clear prima facie case of vendor’s lien, and then he calls on the defendant; he charges the defendant with not being a “ bona fide purchaser,” and calls upon her, in his bill, to set out what she did pay, and how she paid it. That easts the duty on the defendant to set out in her answer, fully and in detail, how and what she paid. That, I think, she fails to do. She does, indeed, pretend to say that she paid $1,000, but that is no consideration for the property. I think she stated herself, out of court, so to speak, on this point: “And this defendant, further answering, says that she did pay to the said Jacob R. "Wortendyke, through her agent, the consideration in said deed expressed; that she had money of her own, in her own right, at the time of her marriage with the said Rosewell Graves, ánd that afterwards, and during her marriage, she derived from her father’s estate a large sum of money, which was entrusted to her husband, and out of which her husband, the said Rosewell Graves, was to, and did, pay for said property; and the funds so used to pay for said property, were the funds of this defendant, as her own separate estate.” Now, as I understand that, it is an allegation that Graves bought the property for her, and paid complainant for it, so far as he did pay, with her money. If she did not pay for it in full, she was really the grantee. She cannot be in the position of a “ bona fide purchaser,” as against the very person from whom she purchased, who claims the vendor’s lien. That allegation in the answer would be a good answer to a general judgment creditor, if it be the truth, but not on the question of vendor’s lien. Then there is a variety of other evidence, which it is not necessary for me to refer to in detail on the subject, and no satisfactory explanation is given to show why the conveyance was made just after Judge Brown had announced his decision, giving it substantially in favor of the defendant Coutant, the complainant in this case. And the whole circumstances show it was done through her husband, who knew about these matters, and was her agent. I think that defence fails. The next defence set up is the discharge in bankruptcy. It is not pretended that a mortgage existing at the time of the discharge in bankruptcy, or any actual existing lien, would be destroyed.by the proceedings in bankruptcy, or by the discharge of the debt as a debt; but the defendant put herself on the ground that a vendor’s lien is not of that character, that it is not a lien “ ex proprio vigore,” but is a lien created by the court of chancery after bill filed for that purpose. And counsel quotes, in support of that view, an extract from Judge Story’s opinion in Gilman v. Brown, 1 Mason 191,221: “ The vendor’s lien is a mere creature of a court of equity. It is, in short, a right'which has no existence until it is established by a decree of the court in a •particular case, &c.” Now, it may be very presumptuous for an obscure individual like myself to dissent from Judge Story in anything that he says, but I must do it. I think that opinion of Judge Story undoubtedly wrong, and founded on a misapprehension of equity. What is an equity ? A right arising out of certain facts. A naan sends his agent with money to buy an estate; the agent takes the deed in his own name instead of the name of his principal; an equity at once arises out of' those facts in favor of the principal to have the title conveyed to the principal by the agent, of that land of which, in equity, the principal is the owner all the time; he is the owner from the first. A man contracts in writing with another to purchase an estate; on the day named he pays the money, and for some reason or other the deed is not made; then an equity arises out of the facts that he shall have the deed; it arises at once out of the facts. An equity is never created by the court; it exists independent of the court. All the court of chancery ■does is to recognize and enforce it. It is a solecism to say the court of chancery creates an equity. Then a lien for purchase-money—what is a lien for purchase-money? It is not a lien in the strict sense of the word; at law' a lien ■cannot exist without actual possession. It is a right the pledgee has in the thing pledged, to .keep possession until some duty is performed. An equitable lien is a right which a person out of possession may have to the thing, and it is •simply a right to come into the court of chancery, and have that right enforced, applied, and to take the fruits of it, which he cannot have without the aid of the court of chan•cery; and it arises out of the facts and circumstances of the case. Now, where a man delivers a deed for property, .and does not get the consideration money, an equitable lien arises at once in his favor, according to my view of it, of exactly the same nature, as far as the court of chancery is ■concerned, as if he had taken a mortgage in writing, sealed and delivered, and it is so held by Chancellor Zabriskie, in Armstrong v. Boss, 5 G. M Or. 109. There, as you no doubt recollect, the chancellor held that a void mortgage given by a married female for purchase-money, was good and enforeible in equity as a vendor’s lien, and had existed, of course, jrom the time it was given. In such cases the court says that it is contrary, to equity and natural justice for the vendee to keep the land without paying the purchase-money, and it seizes upon the land in his hands, and applies it to the payment of the purchase-money. This right to come into this court, and ask such aid from the court, is called a vendor’s lien. Therefore, without enlarging further on this point, I would say that I think the lien existed as soon as ever the deed was given, and the money was not paid. I may say, here, that while this equitable right of vendor’s lien has been differently treated and recognized in different states of the Union, there is no state in the Union where it has been put on higher grounds, and treated as a greater favorite, than by the courts of the state of New Jersey, and it has always been treated as a substantial right. I refer to Van Doren v. Todd, 2 Gr. Ch. 897, a case somewhat in point; Brinkerhoff v. Van Sciven, 8 Gr. Ch. 251; Corlies v Howland, 11 G. B. Gr. 811; Dudley v. Dixon, 1 Me Cart. 252. I think, therefore, that the right of lien sought to be enforced in this case, was an equitable right in the land, which existed at the time the discharge in bankruptcy was granted, and that the lien was not discharged, or the right defeated, by the discharge in bankruptcy. The next defence set up is, lapse of time in analogy of the statute of limitations; and that, I think, must fail, also; I do not see how it can apply. It is true the time when the lien arose was more than twenty years ago, but the judgment was not twenty years old when the bill was filed here, and the statute of limitations could not even be applied to the judgment. I think I ought to have mentioned, on the other point, the case of Ocean Bank v. Olcott, 1¡,6 N. Y. 12, cited by defendant. I do not think it applies at all; the circumstances of that case were entirely different. It was not a case of vendor’s lien, but of a statutory right given to a judgment creditor to come into court and impeach a certain class of conveyances, and the court held that jurisdiction was based on the statute which requires an actual existing debt in personam. But there is another case in New York which was not cited, which bears closely upon the question of the statute of limitations. You will find it cited in Jones on Mort. § 1809. It is an earlier case than the case in JJ N. T. It is Borst v. Carey, 15 N. T. 505. That is a case where the statute of limitations was set up against a vendor’s lien, because the deed was more than six years old. If that case was in point, I would not follow it. But I do not think it is in point, because here the debt itself is not outlawed. I refer, on this part of the case, to Lingan v. Henderson, 1 Bland 878, and Moretón v. Harrison, 1 Bland 501. Then, I think the statute of limitations does not apply. Then it is said there is a defect of parties, viz., the assignee in bankruptcy and personal representatives ; but I can not see any defect of parties. I can not see who can be said to be interested in this property, who has not been made a party. The case shows, if it shows anything, that the deed impeached in favor of complainant, is good between Graves and his wife, and none of his heirs at law can touch it. They have no interest in it. Then the administrators, if any there be, have no interest in it, and there is no party in the world, except possibly the assignee, who has a particle of interest, because the deed, by the well-settled rules of law, was good between the parties. And 'then there is no right of recovery over by the defendant against the personal estate in this case, if there was any personal estate to recover against. And it does not appear that the assignee in bankruptcy has made any claim against this property, nor that he had any interest in it, or could sustain any claim. And if he could, the defendant can not complain that he has not been brought in. That point—want of parties—was not taken in the answer, and the court would be very reluctant, at this stage of the case, to listen to such an objection. Therefore, I am prepared to advise a decree in favor of the complainant. Some things I have not fully considered, whether or not there ought to be (I have partly considered this] an inquiry as to what defendant has received from the sale and the mortgage of the lands. I am inclined to think there should be such an inquiry, unless counsel can show some reason to the contrary, as to what money she has received. As to the extent and exact form of that inquiry, I have not considered, nor have I considered whether or not there is anything in the case to warrant an inquiry as to whether or not all the judgment in Rew York was for unpaid purchase-money. My impression is, the case shows it was. I did not examine it carefully. If counsel can show it was not all for unpaid purchase-money—from the record, of course, they can not go outside of the record for that—that question may be left open, and I will hear both counsel, if they wish.