Case ID: ad_13/html/0214-01.html
Source: Caselaw Access Project
Author: {"author": "Hatch, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Loretto Dugan and Others, Appellants, v. Margaret L. Denyse and Annie Schoenfeld, Respondents.
    
      Ejectment —purchase at a foreclosure sale by a guardian ad litem of infant owners — before 1877 the remedy was in equity, not at law.
    
    A purchase-money mortgage, given by a woman who thereafter died seized of the mortgaged premises, leaving a husband and children surviving her, was subsequently foreclosed, the husband being appointed In the suit guardian ad litem of his infant children, and appearing and filing the usual answer on their behalf. At the sale, which took place before 1877, the property was purchased by the husband, who subsequently sold it and thereafter died.
    In an action of ejectment brought by the children .against the party acquiring title through the purchaser from the husband, it was
    
      Held, that the common-law doctrine prohibiting a purchase under such circumstances by one occupying a fiduciary position was only enforcible in equity;
    That there was no statutory prohibition applicable to the case prior to 1877;
    That, consequently, in this case, the remedy of the children was in equity and not . at law.
    Appeal by the plaintiffs, Loretto Dugan and others, from. an order óf the Supreme Court, made at the Kings County Trial Term and entered in the office of the clerk of the county ■ of Kings on the jth day of July, 1896, setting aside a verdict in favor of the plaintiffs rendered by direction of the court after a trial at.a Trial Term of the Supreme Court held in and for the county of Kings and granting a new trial.
    
      
      George Bliss, for the appellants.
    
      Charles M. Earle, for the respondents.
   Hatch, J.:

The action is ejectment. The plaintiffs are the surviving children of Ellen and Philip A. Dugan. Ellen Dugan died intestate on the 8th day of May, 1863, seized and possessed of the premises which are the subject of this suit. She obtained the premises by purchase in 1859 and gave back a purchase-money mortgage for $500, which mortgage remained a lien upon the premises at the time of her death. On September 2,1863, suit was brought to foreclose this mortgage by George Vassar, the assignee of the mortgage, and the same passed to judgment and sale, and the premises were bid in upon such sale by Philip A.. Dugan, who subsequently received the sheriff’s deed thereunder. Prior to judgment in the foreclosure suit the said Philip A. Dugan was appointed guardian ad litem of his children, who had been made defendants in the foreclosure action, and he appeared by attorney and filed the usual answer of a guardian ad litem. Dugan conveyed a part of the premises to Henry T. Yan Pelt by deed, dated August 12, 1864, and Yan Pelt conveyed the same premises to William H. Denyse, who subsequently died, and by his last will and testament devised the premises to the defendant Margaret L. Denyse, who is at present in the possession and enjoyment of the premises.

It does not appear from anything in the record that the defendant Annie Schoenfeld had or claimed any interest in the premises. So far as appears, she was an entire stranger to the subject-matter of the suit, and as to her, defendant’s motion to dismiss, made at the close of the plaintiff’s case, should have been granted. The claim, as presented by the appellants, is that Philip A. Dugan could not purchase the fee of the property and thereby secure title to himself for his own benefit, but that such purchase inured to the benefit of his cestuis que trust. That at the most he could only purchase to protect his life estate as tenant by the curtesy. Dugan died subsequent to the conveyance which he made to Yan Pelt, and the claim is how made that the whole title is vested in the plaintiffs and that Dugan’s conveyance was absolutely void.

This is an action at law, and, as the plaintiffs are out of possession, they, are required to show title in themselves in order to succeed. Unless, therefore, the deed by Dugan to Van Pelt be void no cause of action is made out. Prior to 1877 there does not appear to have .been any statutory prohibition preventing any person from becoming a purchaser of the property upon a foreclosure sale. The only statutory prohibition respecting purchasers at a sale of real property under the judgment of the court related to actions in partition. ' In such case the guardian of an infant. could not become a purchaser or be interested in a purchase upon a partition sale, and a violation of the provision rendered the sale void. (3 R. S. [6th ed.] 593, § 71.) This section was repealed (Chap. 245 of the Laws of 1880), and the subject-matter thereof has been made to embrace sales upon the foreclosure of mortgages, and is embodied in section 1679, Code of Civil Procedure., Although there was no statutory prohibition covering the question, it does not follow that the law authorized a j>erson occupying a fiduciary relation to become a purchaser at a foreclosure sale where the rights of the cestui que trust were involved and obtain the beneficial interest thereunder. On the contrary, it was the settled comm.on-law doctrine, always enforced by a court of equity, that such purchase inured to the benefit of the cestui qxie trust. (Gardner v. Ogden, 22 N. Y. 327.) There is, however, this distinction, which becomes of controlling importance in this case, that whereas the statutory prohibition rendered the sale absolutely void, the common-law principle, •enforced as an equitable rule, made such sale voidable only, at the instance of the cestui que trust. (Forbes v. Halsey, 26 N. Y. 53-65; Barr v. N. Y., L. E. & W. R. R. Co., 125 id. 263-277; Harrington v. Erie Co. Savings Bank, 101 id. 257.)

We have recently held that a purchase made at a foreclosure sale by a mother who was the guardian in socage of her infant children, and, therefore, chargeable with a duty to “ safely, keep the inherit anee of her ward,” was not void, but. voidable only, and that she acquired the title subject to its being charged with a trust in her hands. (O'Brien v. General Synod of Reformed Church, 10 App. Div. 605.) The plaintiffs could by no possibility escape the payment of the purchase-money mortgage, which was a lien upon the premises at the time of the death of Ellen Dugan.if the property had descended to them in the usual course. They are, therefore, now equitably chargeable with its amount. But if the present action can be maintained, they become entitled to recover the property freed of all liens, including this, and thus they would occupy a better position than it would have been possible for them to have occupied if they had taken the property upon the death of their mother. A case is, therefore, presented which is peculiarly the subject of equitable cognizance.

It follows that, within the doctrine of the cases cited, this action cannot be maintained, and that the order granting a new trial was, therefore, right, and should be affirmed.

All concurred.

Order granting new trial affirmed, with costs.