Case ID: barb_60/html/0409-01.html
Source: Caselaw Access Project
Author: {"author": "\n      By the Court, INGRAHAM, P. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cook vs. Kraft and others.
    An equitable claim on land, which existed prior to the recovery of a judgment, is given a preference over judgments docketed afterwards; but in no case is that preference given where the equitable right did not exist prior to the recovery of the judgment.
    There is no principle of equity by which a purchaser of real estate, or of a lease which, at the time of the purchase, is subject to the lien of a judgment, can claim that improvements subsequently made by him, although without knowledge of the judgment, are exempt from the lien.
    If, when such lien exists, a party voluntarily expends money on the premises, the same becomes subject to the lien.
    The principle upon which equitable liens are allowed to have priorty is, that the contract was made before the docketing of the judgment. After that date, the property, with any subsequent improvements, is subject to the lien.
    APPEAL, by the defendants, from a judgment rendered at a, special term.
    On the 3d of February, 1863, the defendant Banker recovered a judgment against Martin Kraft, also a defendant, for $442.21, which was, on the same day, docketed in the office of the clerk of the city and county of Kew York. On the 18th of June, 1863, the defendant Reeve also recovered a judgment against said Kraft, for $305.06, which was docketed in the same office. On the 1st of May, 1867, Kraft took a lease of certain premises from J. L. Phelps, for the term of nineteen years, which was recorded the same day. This lease was subsequently assigned to the plaintiff. On the 8th of July, 1867, Kraft executed a mortgage upon the premises to one Klauber, for $2000. On the 15th of August, 1867, a mortgage thereon for $1800, was executed to one Herdtfelder, for an indebtedness then due to the latter, without any equity. And on the 23d of January, 1868, a mortgage thereon, for $1000, was executed to one Kreuder.
    Each of said mortgages had been paid, and the lien thereof discharged. The plaintiff' had assumed to pay them, as a part of the consideration for the transfer of the lease to her.
    This action was brought by the plaintiff to recover back moneys expended by her in improvements upon the premises after she became the assignee of the lease, and in saving the same from forfeiture; and to have it decreed that she had a superior lien, as to those amounts, over every other person. By the judgment appealed from, the premises were directed to be sold, and out of the proceeds the plaintiff was to be first paid, and the surplus was to be paid to the defendants Banker and Beeves, the judgment creditors.
    
      D. M. Porter, for the appellants.
    
      Peter Cook and Thomas Darlington, for the respondent.
   By the Court, INGRAHAM, P. J.

The case of Tallman v. Parley, (1 Barb. 280,) is not a case similar to the present. In that case, the deed of the lots was left in escrow, under an agreement that the purchaser should go on and erect buildings thereon, and when money sufficient had "been expended on the buildings to secure the consideration money for the land, and the amount of money advanced by the seller, the deed was to be delivered and a mortgage executed for the whole. The judgment in the case was recovered prior to delivering the deed, and the judgment creditor sought to be preferred over the mortgage, and the court held that the mortgage constituted an equitable lien entitled to preference over the judgment. It was there said, that the judgment creditors are entitled to all that the debtor has in the property, at the time of the recovery of the judgment. They can take all that belonged to the debtor, and no more. Part of the consideration of the mortgage in that case, was the consideration money for the land, which is always entitled to priority over a prior judgment. The correct rule is given by the chancellor, in Kiersted v. Avery, (4 Paige, 9,) where he says: “A judgment, being a general lien on the land of the debtor, is subject to every equity which existed against the land in the hands of the judgment debtor at the time of the docketing of the judgment.” So in the Matter of Howe, (1 Paige, 125,) it was held, that judgment creditors had no preference over prior equitable claims, but were limited to the estate as it existed at the time of recovering the judgment. An equitable mortgage not recorded, was given priority over judgments docketed subsequent to the agreement for the mortgage. So where a defective mortgage was perfected after judgment recovered prior thereto, the court decreed a perpetual injunction against the judgment, unless the creditor would redeem the mortgage. (See also Burn v. Burn, 3 Vesey Jr. 576; Finch v. Earl of Winchelsea, 1 P. Wms. Rep. 282 ; Foster v. Fouat, 2 Serg. & Bawle, 11; Burchard v. Phillips, 11 Paige, 66.)

In all the cases, I find the principle is the same, viz : that the equitable claim on land, which existed prior to the recovery of the judgment, is given a preference over judgments docketed afterwards; but in no case is that preference given where the equitable right did not exist prior to the recovery of the judgment.

I know of no principle of equity by which a purchaser of real estate, or of a lease, which, at the time of the purchase, is subject to the lien of a judgment, can claim improvements subsequently made by him, although without knowledge of the judgment, to be exempt from the lien.. The law supposes the party purchasing to know of the lien, and charges on him all the consequences of such knowledge. If, when such lien exists, he voluntarily spends money on the premises, the same becomes subject to the lien. Any other rule would virtually destroy the lien of a judgment on real estate. The principle upon which equitable liens are allowed to have priority is, that the contract was made before the docketing of the judgment. After that date, the property, with any subsequent improvements, is subject to the lien.

[First Department, General Term, at New York,

June 5, 1871.

Where something has been done by the assignee of a lease to prevent the lease from forfeiture,-it may be that equity would enforce a priority for the payment of such claim over a prior judgment. But such claim must be for some other cause than the ordinary rent and taxes of the premises. It must be something which the lessee was not bound by the lease to pay, and which has had the effect to preserve the security for the benefit of a judgment creditor. Such a claim would be the payment of an assessment which the lessor was bound to pay and did not, the payment of which prevented the termination of the lease by a sale.

The learned justice erred in holding that the moneys expended after the recovery of the judgment by the plaintiff were exempt from the lien of the judgment recovered prior thereto, and should be paid before such judgment.

Judgment should be reversed, and a new trial granted, costs to abide the event.

Ingraham,, F. J., and Geo. G. Barnard and Sutherland, Justices.]