Case Name: Flora Jacobs, App'lt, v. David Morrison, Individually and as Trustee, Resp't
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1892-11-29
Citations: 49 N.Y. St. Rep. 83
Docket Number: 
Parties: Flora Jacobs, App’lt, v. David Morrison, Individually and as Trustee, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 49
Pages: 83–86

Head Matter:
Flora Jacobs, App’lt, v. David Morrison, Individually and as Trustee, Resp’t.
(Court of Appeals,
Filed November 29, 1892.)
1. Vendor and purchaser — Marketable title — Conveyance by TRUSTEE.
In an action to recover a deposit made on the purchase of premises offered at public auction by defendant and struck off to plaintiff, on the ground that the title came through an insolvent debtor, it appeared that the title was under a full covenant deed by one M., individually and as executor, to defendant, who on the same day had filed a declaration of trust that he accepted the conveyance for the purpose of selling the property, paying “ certain outstanding liabilities ” enumerated, and finally of depositing the balance to the credit of M.’s children. The proceeds of the sale were devoted to the creditors of the firm of which M. was a member. There was a firm creditor not included. M. was '• personally indebted to sundry persons,” he and his firm were “ financially embarrassed,” and he was an intemperate man, and being pressed by his creditors, had been induced to sign the deed to save something for his children. Held, that the convey-
anee was perfectly good and operative between the parties to convey the full title, and plaintiff utterly failed to show that any doubt existed in regard thereto.
2. Same—“ Financially embabbassed.”
The finding that the grantor was “financially embarrassed” did not affect his conveyance, and was not equivalent to a finding of insolvency.
Appeal from judgment of the New York superior court, general term, affirming judgment dismissing the complaint.
Ambrose G. Todd, for app’lt; J. George Flammer, for resp’t.
Affirming 47 St. Rep., 937.

Opinion:
Gray, J.
This action was at law, to recover back a deposit made on account of the purchase money for premises in New York city, which had been offered at public auction and were struck down to the plaintiff upon her bid.
By the terms of sale the purchaser was to receive a good title in fee simple, under a conveyance " by usual trustee's deed " and all liens and encumbrances were to be allowed out of the purchase money. Plaintiff refused to complete the purchase; objecting to the defendant's title as coming through the voluntary conveyance of an insolvent debtor; who was also, either at the time incompetent to make any conveyance, or was induced to> make it by fraud, or duress.
The case on appeal does not contain any of the evidence, and the general facts are given in certain findings of fact proposed by the plaintiff and allowed by the trial court If the facts found by ,the court and embodied in the findings warranted the conclusion of law that the plaintiff had failed to make out a case and that her complaint should be dismissed, that is an end of the case. Also, we may presume that there was sufficient evidence in the case to sustain the finding of fact that "the plaintiff failed to maintain or establish her objection to the title, etc; " if, when taken in connection with the other findings of specific facts, allowed upon the plaintiff's request, there shall appear to be no inconsistent finding of a material fact, of which the appellant may claim to be entitled to the advantage, as supporting her objection to the title. Considering the facts detailed in the findings, we discover that the deed to the defendant was by one McAnneny, executing both individually and as executor of another, and conveying the land and buildings thereon, by full covenant deed to the defendant, David Morrison; with no limitation, or other description of person. There was executed on the same day by Morrison a declaration of trust; to the effect that he accepted the conveyance for the purpose of selling the property; of paying out of the proceeds of the sale " certain outstanding liabilities," enumerated in a schedule annexed ; and finally, of depositing the balance, less the costs and expenses of administration, to the credit and for the benefit of McAnneny's, the grantor's, children.
It appears that at the time of the execution of these instruments McAnneny was a member of a firm, and it was the firm's creditors to whom the proceeds of the sale of the premises were in the first place devoted. Other facts found were that there was a firm creditor, whose claim was not included in the schedule; that McAnneny was "personally indebted to sundry persons;" that he and his firm were " financially embarrassed; " that he was a man suffering from habits of intemperance, and from certain resultant physical consequences, and that plaintiff was informed that McAnneny was wasting his property, and, being pressed by his creditors, had been induced to sign the deed in order to save something for his children.
I have stated all the facts which can be deemed to be at all material to the plaintiff's contention, and I find nothing which casts any doubt upon, or affects, the title tendered by defendant. This was not a general assignment of McAnneny's property. The deed to defendant and his declaration of trust, together, made out only a purpose, to transfer the particular property for .realization upon, and for paying thereout certain specified debts. The conveyance was perfectly good, and operative between the parties, to convey the full title. No rights of creditors intervened. There was no finding of fraud in the conveyance, or of insolvency in the grantor.
The finding that the grantor was " financially embarrassed " docs not affect his conveyance and certainly is not equivalent to a finding of insolvency. One may be "financially embarrassed" and yet be possessed of abundant property; out of the proceeds of which, when realized upon, his debts could be paid. We have the right to assume that the evidence showed, or that it was the fact, that McAnneny had other property applicable to the claims of creditors; either because the evidence given upon the trial is not here, or because of the absence of a finding to the contrary. If any creditors held claims which were liens upon the property, whether they were enumerated in the schedule attached to the trust declaration or not, they might have been discharged from the purchase moneys. As to creditors not having acquired liens upon the property, they could never attack the plaintiff's title; for she bought in good faith, at public sale, and, as we may assume, for a full consideration, and it does not appear that she had any knowledge of any facts invalidating the title.
None of the facts exhibited in the findings, and which came to the notice of the plaintiff before her rejection of the title, were of such a nature as to charge the plaintiff with knowledge of any fraud vitiating the title. She was a purchaser for a valuable consideration, and any notice of fraud to be effectual to impair, or avoid, the title must have been actual. R. S., 3d vol., 7th ed,, 2330, § 5. As well under the statute as at common law, circumstances to put the purchaser on inquiry, who pays full value, are insufficient to affect the title, unless they are equivalent to a notice of a fraudulent intent. Stearns v. Gage, 79 N. Y., 102.
In Sugden on Vendors, chap. 10, § 3, 13-21, it is remarked with reference to objections to title, that a purchaser will not be permitted to object on account of a bare possibility, and that a mere suspicion of fraud is not sufficient. The remarks cover this case. The proof rises no higher than the possibility that Mc-Anneny's habits and health were not such as to render him fit to manage his property. It displays at most an intention on his part, whether inspired by others or not is immaterial, to pay only certain creditors from this piece of property, and to reserve any balance for his children. That is neither proof carrying notice of any fraud nor proof furnishing any ground for an inference of fraudulent intent. Had every fact been known by the plaintiff at the time of the sale which is set forth in the findings, there would have been no reason for refusing to purchase upon grounds relating to the vendor's capacity to convey a good title.
There is no force in the objection that a proper deed was not tendered by defendant. The title stood in his name, and he executed a deed with the usual covenants against the grantor's acts. It does not appear from the record that any other conveyance was required.
We think that the plaintiff has utterly failed to show that, upon the facts found, any reasonable doubt existed about the title to the premises, or that it was in any way disputable; and her complaint was properly dismissed. For the trial court to allow the defendant to withdraw his demand for specific performance, upon waiving any rights to costs, was a matter lying within its discretion, and not reviewable here. Besides that, the question is not here, as I can discover, by any exception in the record.
The judgment should be affirmed, with costs.
All concur.