Case ID: ad_35/html/0582-01.html
Source: Caselaw Access Project
Author: {"author": "Barrett, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Daniel J. Carroll, Appellant, v. Alice McKaharay and Others, Defendants, Impleaded with William J. Browne, Respondent.
    
      Conveyance by a husband to Ms wife for one dollar — title of a purchaser on the foreclosure of a mortgage given by the wife to which judgment creditors of the husband are not parties — the record governs in the determination who arc proper parties.
    
    Where, after a conveyance by a husband to his wife, recited to be in consideration of one dollar and other good and valuable considerations, judgments are recovered against him and subsequently the wife mortgages the property to a bona fide mortgagee for value, a purchaser at a sale had in an action to foreclose the mortgage will not be relieved of his purchase because of the fact that only those judgment creditors of the husband who had commenced creditors’ actions to set aside the deed from the husband to the wife had been made parties and that the other judgment creditors of the husband who had not commenced such suits had not been made parties ; the title acquired by the purchaser on such a sale is marketable and the possibility that he will ever be disturbed is so slight and trivial that it should not relieve him from his purchase.
    
      Semble, that in foreclosing a mortgage the attorney for the plaintiff should be permitted to proceed in reliance upon the record.
    Appeal by the plaintiff, Daniel J. Carroll, from an order of the Supreme Court, made at the Rew York Special Term and entered in the office of the clerk of the county of Rew York on the 6th day of December, 1898, relieving William J. Browne from his purchase at the sale had under the judgment of foreclosure entered in the action.
    Upon the 12th of March, 1891, Edward McKaharay conveyed the property in question to Alice, liis wife. The deed recites the consideration of one dollar and other good and valuable consideration. Upon the 15th of Rovember,-1897, Alice executed the mortgage which was foreclosed by the plaintiff, who paid her the full amount thereof, $2,000. Between the twelfth of March and the fifteenth of Rovember judgments were docketed against Edward. The plaintiffs, in three of these judgments, subsequently commenced creditors’ actions to set aside Edward’s deed to Alice. The plaintiff' herein made these three judgment creditors parties defendant in his foreclosure action, but he did not make those other judgment creditors, who had not commenced such suits, parties. For that reason the purchaser objected to the title, and the objection was sustained below.
    
      James F. Higgins, for the appellant.
    
      William H. Stockwell, for the respondent.
   Barrett, J.:

The judgments docketed against Edward McKaharay, after he conveyed the property in question to his wife, Alice, were not liens of record upon the land. The conveyance was good inter partes, and the fee consequently vested in Alice. If, however, the conveyance from Edward to Alice was made with intent to hinder, delay or defraud the plaintiffs in these judgments, the latter, at their option, could claim a lien in avoidance of the record title. As to them the deed was voidable. The question is: Should the plaintiff (Alice’s mortgagee), in foreclosing his mortgage, have made these judgment creditors of Edward parties defendant? It is clear that, so far as the record spoke, they were not necessary parties. They had apparently no lien upon or interest in the premises.

It is said, however, that they may at any time assert such lien ; that, in fact, if the deed from Edward to Alice was made with intent to hinder, delay or defraud them, they actually had such a lien when the foreclosure suit was commenced (Smith v. Reid, 134 N. Y. 577), and, consequently, that they have not been cut off. The postulate here is a bare possibility. It did not suffice to make them necessary parties. The plaintiff, in foreclosing his mortgage, was not bound to go behind the record, or to inquire as to the existence of judgments against his mortgagor’s grantor, docketed after the latter was divested of title. ETor was he bound, even if apprised of the existence of these judgments, at his peril to inquire into questions, upon the solution of which the judgment creditors’ right to a lien depended. The present action was commenced in June, 1898. Prior thereto three of these judgment creditors had instituted actions to set aside the deed from Edward to Alice as against themselves; and they were very properly made parties defendant herein. By the commencement of these actions and the filing of a Us pendens therein, these judgment creditors exercised their option to avoid the deed from Edward to Alice, and placed upon record a direct claim that their judgments were liens upon the land. The other judgment creditors, however, remained entirely passive. They neither commenced actions to set aside the deed in question nor did they attempt to sell Edward’s right, title and interest in the land under their executions. It does not appear that any of the judgment creditors’ actions to set aside the deed had been tried prior to the commencement of the present action. There is affirmative evidence that two of them had not, while as to the third we simply have a statement that judgment was rendered therein'—• date not given — vacating the deed as to these particular creditors. Thus the contention necessarily is that the plaintiff, upon notice that some of Edward’s judgment creditors claimed that the deed to Alice was fraudulent as to them, should not only have made these claimants parties defendant, but should also have made parties defendant those other judgment creditors who had made no such claim. The inquiry- is natural at this point, why should the latter have been made parties defendant? The respondent in effect answers, upon the assumption that they might at some time make a similar claim, and, if they did, and were successful in sustaining it, would have a lien upon the land. These assumptions arid possibilities were altogether too slight and too remote to require the plaintiff to extend his search against Edward beyond the ordinary area and to discover and bring in these subsequent judgment creditors.

We may add that, even if there had been something more than notice of a claim, even if it had clearly appeared that the three judgment creditors’ actions had ripened into judgment, the conclusion would have been the same. Each creditor’s bill stood upon its own basis. The deed might be voidable as to one and not as to another. ¡¡Notice that it had been set aside as to one was no evidence that it was void as to another. One judgment creditor’s debt may have accrued prior to the making of the questioned deed ; another may have come into existence subsequently. Tlie facts and proofs in one case may be different from those in another. It would be a dangerous rule, one that would lead to great uncertainty, which would require an attorney employed to foreclose a mortgage to go outside of the record, and, at his client’s peril, correctly weigh such possibilities. The alternatives before him would be most embarrassing. If he brings the parties in they may ask to be dismissed with costs, protesting that they made no claim and should not have been vexed by a summons. If he fails to bring them in, a purchaser, as here, may ask to be relieved. The better rule is to permit the attorney to proceed in reliance upon the record. Then there can be no uncertainty, and no one, creditor or purchaser, can be prejudiced. When the attorney finds liens upon the record, he must make the lienors parties. When one who has no record lien makes a direct claim of lien upon facts dehors the record, and supports that claim by the filing of a lis pendens, he also must be made a party. So, too, when such a creditor issues his execution and sells the right, title and interest of the fraudulent grantor, he and the purchaser at that sheriff’s sale should be made parties. But where the judgment creditor has taken no step, made no claim and asserted no right, the mere existence of his judgment, though the plaintiff mortgagee have notice that other creditors have charged fraud, does not make him a necessary party defendant.

We fully recognize the rule that a purchaser at a judicial sale is entitled to a marketable title— one free from reasonable doubt. He should have a title that will, as Martin, J., said in McPherson v. Schade (149 N. Y. 16), “ enable him to hold his land free from probable claim by another, and one that if he wishes to sell would be reasonably free from any doubt which would interfere with its market value.”

W e think the purchaser here will get just such a marketable title. That he will ever be disturbed is a mere possibility — a very improbable and remote contingency — one so slight and trivial that it ought not to relieve him from his purchase. (Cambrelling v. Purton, 125 N. Y. 610.)

We think, therefore, that the order appealed from should be reversed, with ten dollars costs and disbursements, and the purchaser’s motion denied, with ten dollars costs.

Van Brunt, P. J., Rumsey, O’Brien and McLaughlin, JJ., concurred.

Order' reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.