Case ID: ny-super-ct_55/html/0116-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MAURICE MOORE, Respondent, v. PERRY P. WILLIAMS, Impleaded, &c., Appellant.
    
      Partnership deed to an individual member, on consideration flowing from the firm, when no resulting trust in favor of the firm as against judgment creditors of the individual member—Insolvent assignment by individual member before judgment recovered, and conveyance by assignee, when the foregoing result not affected by—Insufficiency of proof of record corrected at General Term.
    
    A deed of real estate situate in Kings county was made to William II. Guión, a member of the firm of Williams & Guión (composed of William H. Guión, John S. Williams and Stephen B. Guión), conveying to-him individually the fee. The consideration was furnished by the firm. The deed was made in manner and form desired by the firm. At the time it was made, Mr. Williams, one of the members of the firm, was deceased, and Ms representatives knew how the deed was made, and consented to its being so made. On February 2, 1884, subsequent to-the maMng of tMs deed, a judgment was obtained against William II. Gmon for an individual indebtedness. At-some time prior to August 1, 1884, the firm of Williams & Guión went into liquidation, and the firm in liquidation was composed of William II. Guión and Stephen B. Gmon. On August 1, 1884, William II. Guión conveyed the property with others to the defendants, in trust to sell and convey the samo, and out of the proceeds to pay to the legal representatives of John S. Williams (the deceased partner) a debt due to him by the firm of Williams & Guión in liquidation, and to pay the overplus, and to pay and transfer such of the property as might remain unsold to the firm of Williams & Guión in liquidation. TMs deed was recorded September 26, 1884. On the 18th day of January, 1884, William II. Guión assigned all his1 property real and personal to one Brown, in trust for the payment of' Ms debts, with power to sell his real estate. On August 1,1884, Brown, by deed, reciting the indebtedness of Williams & Guión to John S. Williams, deceased, a deed by the firm in liquidation to defendants of certain, real and personal property for the purpose of securing that debt, and also reciting that William II. Guión was on August 1, 1884, seised of the lands and premises in question in his own name, but in the right and for the use and benefit of the firm of Williams & Guión, and being-so seised thereof, did by two several deeds bearing date August 4, 1884, grant and convey the same to defendants in trust for the payment, of said debt—did in consideration of one dollar and the premises recited,. convey to defendants all right, title and interest which William H. Guión had on the 18th day of January, 1884, or which he, said Brown, by virtue of the assignment to him ever had in and to the properly in question to the defendants. In December, 1884, defendants made the contract referred to in the opinion to sell to plaintiff the Kings county property. On the trial it appeared that the creditors of William H. Guión had not been paid in full. On the trial the only proof of the judgment against William II. Guión was a transcript thereof, but a certified copy of the judgment roll was produced on the argument of the appeal. This action was brought to recover the deposit made at the time of the. signing of the contract, and the expenses of examining the title, and resulted in a judgment for plaintiff. „
    
      .Held, (1) That there was no resulting trust as against the judgment creditor in favor of the firm of Williams & Guión; that as to such creditor the fee was vested absolutely in William II. Guión, and the judgment against him was a valid lien on the premises, which rendered the title bad, and absolved plaintiff from taking the title. (2) That the assignment to Brown, and his conveyance to defendants could not, considering all the attendant and surrounding circumstances, vary the above result. (3) That the insufficiency of the proof of the Barnes judgment was cured by the production on the argument at General Term of the certified copy of the judgment roll.
    Before Sedgwick, Cli. J., Freedman" and Truax, JJ.
    
      Decided June 23, 1887.
    Appeal from judgment entered upon the verdict of •a jury rendered by direction of the court, and from •order denying motion for new trial.
    The facts sufficiently appear from the head note, and the opinions.
    On denying the motion for a new trial the trial judge wrote as follows:
    “ O’Gorman", J. :—In December, 1884, the defendants executed an agreement in writing for the sale to the plaintiff of certain real property in Brooklyn, which was ■.then subject to a mortgage for $22,500. In that agreement they bound themselves to execute and deliver to-the plaintiff, on receipt of certain payments to be made by him, a proper deed of ‘ bargain and sale for the conveying and assuring to him the fee simple of the premises, subject to the incumbrance aforesaid ’ (the mortgage-above referred to). The plaintiff, on examination of' the title, discovered that a judgment for $4,035 had been duly entered, at the suit of Demás Barnes against-William H. Guión, and that this judgment had been duly docketed in Brooklyn, in February, 1884, while said Guión was owner in fee of the property, by an absolute deed to him, duly recorded. Barnes, the judgment-creditor, on being addressed on the subject, refused to-satisfy the judgment or release the property of any lien, because of the judgment.
    “ The plaintiff has brought this action for the purpose-of recovering the money ($250) paid by him, as part of the consideration for the sale, and for expenses of examining title, on the ground that the defendants failed to give him such title as he was bound under their agreement to accept. Such an action is proper, on the authority of Bruner v. Meigs, 64 N. Y. 515.
    “The defense is, that at the time the judgment was-docketed and while William H. Guión was owner of the-property, by deed vesting in him the fee simple-absolute, and then duly recorded, he was nevertheless, at that time, only trustee for the firm of Williams & Guión, of which, he himself was the surviving partner; that the consideration for the deed to him in fee simple was furnished by the firm, and that the property held by him under the deed, formed, in equity, part of the assets of that firm ~ that the judgment against him was for non-payment by him of a loan, made to him individually by the judgment creditor; and that it never attached as a lien to the property in question.
    “ There is sufficient evidence that the deed in fee-simple absolute, under which William H. Guión took title, was executed to him in the manner and form. desired by the firm of Williams & Guión; that the representatives of the deceased partner were well aware that such deed had been so made to him, and consented to its being so made. The authority of William H. Guión, and the only other surviving partner, was enough to bind the firm of Williams & Guion as to the propriety of the transaction. Tarbell v. West, 86 N. Y. 286.
    . “ It also appears that he conveyed the property to the defendants, after the docketing of the judgment and for the benefit of that firm.
    “ Until the recording of that conveyance, on September 25, 1884, there was nothing on record showing any conveyance by Guión, or by any one else, to that firm, or any lien on the land, in favor of that firm.
    “ There is, in this case, therefore, no element of concealment on the part of Mr. Guión as to the nature of the deed under which he held, and no suspicion of any unfair or questionable dealing in the transaction on his part.
    “In this form of action the burden is on the plaintiff to prove affirmatively that the agreement to convey to him has been violated by the defendants, and that the title which they were able to give him was not such as he was bound to receive. Bruner v. Meigs (supra). There are cases which seems to go further, and to require that in actions of this kind the plaintiff should prove affirmatively that the title offered him was a bad title. Bayliss v. Stimson, 53 Super. Ct. 225 ; Methodist Church v. Thompson, 52 Super. Ct. 328 ; Page v. McDonnell, 55. N. Y. 299; Lawrence v. Miller, 86 Ib. 131. Whether the views entertained in these cases have not been or may not be questioned or limited in their full effect, need not now be questioned. Assuming them to be of full binding authority, the question in the case at bar is, whether or no, on the evidence, the title offered to the plaintiff is a bad title, and it would be a bad title if the judgment could have been and could now be put in force against the land. Delavan v. Duncan, 49 N. Y. 
      487; Cockcroft v. N. Y. & H. R. R., 69 Ib. 206; Ocean Nat. Bank v. Olcott, 46 Ib. 16, et seq.; Sturtevant v. Sturtevant, 20 Ib. 40.
    “ If there were, at the time of commencing the action, a valid lien or incumbrance on the land to the amount of $4,035, which lien and incumbrance might, at the option of the judgment creditor, be put in force and collected out of the land, then the title was bad. The agreement called for only one incumbrance, that is, the mortgage of $22,500. The existence of any other valid incumbrance, so far invalidated the title the defendants were bound to (rive.
    “It is contended by the defendant that it could not be so put in force, because W. H. Guión was not, during the life of the judgment, owner of the land. The language of the section of the Code (1251), is that the judgment shall be a charge for ten years after filing the judgment roll on the real property and chattels real, which the judgment creditor has at the time, etc. That he was the apparent owner—that for all that was disclosed on record, the title in fee simple absolute was vested in him, was beyond question. That there was nothing on record from which the judgment creditor could have had notice or even cause to suspect that any equitable claim on the part of the firm of Williams & Guión existed, is beyond question. That William H. Guión had, at the time the judgment was docketed, the right and power to sell the property to whom he pleased, or for such price , as he pleased, and give to his vendee a good title in fee simple absolute, is beyond question.
    “ The defendant’s contention is that, notwithstanding all that, there existed all the time that Guión held the property a secret, equitable title in the firm of Williams & Guión, which rendered the judgment ineffectual as a lien on the land. The plaintiff depends on section 51, Statute of Uses and Trusts, 1 R. 8., which forbids the creation of a trust in favor of a person supplying the consideration for the purchase of land, when the title is in another. By section 53, this prohibition is made not to apply to cases where the title is taken in favor of another than the person supplying the consideration, without the knowledge or consent of the latter. The facts in the case at bar are not such as bring it within the influence of the latter section, and it will be found, 1 think, that the cases, cited by the learned counsel for the defense, have in them some element of fraud or concealment, from which it appeared directly0 in evidence, or was properl)' inferred that the person paving the consideration was ignorant of the fact that the title to the land was taken in the name of another, and for that reason an equitable lien on, or an equitable title to the land existed by implication, in the person paying the consideration. This feature of secrecy and fraud against which protection is afforded in section 53 above mentioned, existed and was prominent and controlling in Lounsbury v. Purdy, 11 Barb. 493; Siemon v. Schurck, 29 N. Y. 598, 612, 615. In Delmonico v. Guillaume, 2 Sandf. Ch. 368, the contention was wholly between partners, and no question as to any outside lien was raised. In Tarbel v. West, supra, the contention was as to the rights of a mortgagee of property, known to him to be partnership property. It was there held that where the legal title to partnership lands is vested in one partner, his bona fide grantee or mortgagee takes his title free from equities of the other partners or of copartnership creditors. But if he have notice that the land is partnership assets, he takes subject to the equities (Ib. 287). Staats v. Bristow, 73 N. Y. 264, is not in point. There a purchaser at a sheriff’s sale of the property of the judgment debtor, was held to have bought, not certain special property belonging to a firm of which the judgment debtor was a partner, but only his interest in the partnership surplus. Van Brunt v. Applegate, 44 N. Y. 544, concerned only the effect of a conveyance by a partner of his undivided half in real ■estate, belonging to the firm, and throws no light on the question in contention in the case at bar. The other-cases cited by the learned counsel for the defendant do-not seem to be in point or controlling.
    “It is, I think, clear on the authorities, that the-defendants’ agreement entitled the plaintiff to a deed that would vest in him a title to the premises free of all incumbrance but the mortgage, and could only be per- ■ formed by giving a deed conveying such title. Delavan v. Duncan, supra. Such a title has not been offered to the plaintiff by the defendants, and because of their failure and default, plaintiff is entitled to damages against them, which damages are only the return of the deposit paid by plaintiff on account, and his expenses in examining the title.
    “ I see no reason to doubt that the judgment became' under section 1251 of the Code, a valid charge and lien on the land when docketed, and is still a lien and can be put in force by the judgment creditor, and will continue’ to be a lien for ten years thereafter, unless satisfied or released.
    “The defendants’ motion for a new trial is denied,, with ten dollars costs.”
    
      Stephen G. Williams, attorney, and G. Zabriskie, of counsel for appellant, on the questions considered in the-opinion, argued:
    I. Guion’s title as trustee was a bare legal title, and was not subject to the liens of judgments on his individual debts. Judgments against the trustee are not liens upon a mere legal title where the equitable title is in others. Ells v. Tousley, 1 Paige, 280; Averill v.. Loucks, 6 Barb. 19, 26; Lounsbury v. Purdy, 11 Barb. 490 ; Siemon v. Schurck, 29 N. Y. 598.
    II. The interests of the partners in the land are not real but personal property. The only legal estate or title was that held in trust. Delmonico v. Guillaume,. 2 Sandf. Ch. 366; Van Brunt v. Applegate, 44 N. Y. 544.
    
      III. The only interest that Mr. Guión had in the premises which could be subjected to the payment of his debts was his equitable interest as partner in all the assets of the firm, and his creditors could reach that, interest only by an action to wind up the concern, sell the partnership property, pay the debts out of the proceeds, and take his share in what should be left. Menagh v. Whitwell, 52 N. Y. 146; Tarbell v. West, 86 Ib. 280; Staats v. Bristow, 73 Ib. 264.
    IV. In the meantime he, as partner, had power to sell and dispose of any of the assets of the firm, including real estate,' for partnership purposes and for the payment of partnership debts. The proceeds of such sales would be personal property of the partnership, as the land itself had been, and would be subject to pursuit by creditors, but the, land would not. Shanks v. Klein, 104 U. S. 18; Van Brunt v. Applegate, supra; Delmonico v. Guillaume, supra.
    
    V. It follows that judgments against the partners on account of firm indebtedness take precedence of prior mortgages or judgments against the several partners on their individual debts. Martin v. Wagener, 1 T. & C. 509 ; Page v. Thomas, 43 Ohio St. 38.
    VI. The surviving partners of a firm severally have the right to sell or dispose of the partnership assets for the payment of partnership debts or other partnership purposes, and the purchaser of real estate so conveyed takes title superior to the title of a purchaser under judgments against the partners for their individual debts, and superior to all prior claims of individual creditors. Meily v. Wood, 71 Pa. St. 488; Robbins v. Fuller, 24 N. Y. 570; Van Doren v. Horton, 19 Hun, 7.
    VII. Barnes, as a judgment creditor of Guión, has no greater rights as against partnership real estate than those which he would get under a conveyance by Guión of such real estate as security for Guión’s individual indebtedness, with full notice of all legal and equitable rights belonging to third persons. Brown v. Pierce,. 7 Wall. 205; Averill v. Loucks, 6 Barb. 27; Matter of Howe, 1 Paige, 124.
    VIII. Whatever individual interest Mr. Guión acquired by the conveyance from the executrix of his deceased partner, he assigned to Brown prior to the recovery of the Barnes judgment, and Brown has released to the defendants.
    IX. The learned court below erred in supposing, as apparently the court did suppose • that, under the circumstances disclosed by the evidence, no trust was established in Mr. Guion for the firm of Williams & Guion; and the opinion of the learned court, apparently, is based upon that provision of the statute (1 R. S. 728, § 51) which abolishes trusts resulting from the payment of the consideration by one person where the title is taken by another; and reference is made in the opinion to cases arising under that statute, which have been excepted by § 53, where the alienee named in the conveyance shall have taken it as an absolute conveyance in his own name without the consent or knowledge of the person paying the consideration,/ or in violation of some trust shall have purchased the lands so conveyed with moneys belonging to another person. Such, however, is not the case here. 1. The statute in question relates to trusts in real property; whereas, this is a trust of personal property, and not within the statute. 2. The statute excepts from its application creditors of the parties who pay the consideration; and the evidence in this case shows that the estate of John S. Williams was a creditor of the firm of Williams & Guión, and that the consideration paid for the conveyance of this property to Guión by Moore was the Staten Island farm which belonged to the firm of Williams & Guión. 3. The case of a firm taking a conveyance of real estate in the name of one of their members is not within the statute; for the consideration is not paid by one and the title taken in the name of another, but the consideration is paid by all, including him who takes the title. 4. It has long been the rule in this state that parol evidence-is competent to show that real estate, held upon an apparently absolute title in the name of one partner, is in reality partnership property. It would be a startling innovation upon this doctrine and upon the universal practice of business men if this rule should now be thought open to question. Fairchild v. Fairchild, 64 N. Y. 471; Buchan v. Sumner, 2 Barb. Ch. 165; Collumb v. Read, 24 N. Y. 505; Rank v. Grote, 50 Super. Ct. 275. 5. Barnes, as a judgment creditor of Guion, cannot claim any benefit of the statute, because, as a judgment creditor, he is not a purchaser for value. 1 R. S. 728, § 94; Ib. 756, § 1; Thomas v. Kelsey, 30 Barb. 268, 275; Cary v. White, 52 N. Y 138.
    X. The court erred in admitting in evidence, as proof of the Barnes judgment, the transcript from the clerk’s docket. The proper way to prove a judgment is try the production of the record or a verified copy thereof. Archer v. Furniss, 4 Redf. 88; Lansing v. Russell, 3 Barb. Ch. 325; Baker v. Kingsland, 10 Paige, 366 ; Handy v. Greene, 15 Barb. 601.
    Davis, Cohen & Mc William, attorneys, and Maurice S. Cohen, of counsel for respondent, on the questions considered in the opinion, argued:
    I. The defendants endeavored to maleé a resulting trust in favor of Williams & Guion. But this they may not do. The argument of the defendants is that the consideration for the conveyance of this property to William H. Guion from Anson B. Moore and George E. Apsley, was paid by Williams & Guión, and that William H. Guión, therefore, held the title in trust for Williams & Guión. Even though we concede the premises, the law forbids any such conclusion. 1 R. S. 728, § 51. Even under § 52 no trust could result in favor of Williams & Guión, who, defendants’ counsel claim, paid the consideration. Garfield v. Hatmaker, 15 N. Y. 483. And the defendants cannot claim the benefit of this section. The Ocean Nat. Bank v. Olcott, 46 N. Y. 12, 17.
    II. The insufficiency in the proof of the Barnes judgment is now cured by the present production of a certified copy of the judgment roll. Williams v. Wood, 14 Wend. 126 ; Carter v. Beckwith, 82 N. Y. 83 ; Jarvis v. Sewell, 40 Barb. 455; Ritchie v. Putnam, 13 Wend. 524; Robert v. Good, 36 N. Y. 408.
   Per Curiam.

The opinion rendered by the. learned judge below, on denying the motion of the defendants for a new trial, is substantially correct. The assignment to Brown, and the release by Brown to the defendants, cannot vary the result when all the attending and surrounding circumstances are considered. The insufficiency in the proof of the judgment recovered by Barnes, has been cured by the production of a certified copy of the judgment roll.

The judgment and order should be affirmed, with costs.