Court Opinion

ID: 3622443
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:03:57.882286+00
Date Added: 2024-06-11T14:19:08.286114
License: Public Domain

This action was brought, vendor against vendee, to compel the specific performance of a contract for the purchase of real property in the city of New York. The appellant defended on the ground that the plaintiff's title was unmarketable. The objection to the title is based on the following facts: Anna Maria Kullman, the wife of the plaintiff, *Page 416 
at the time of her death, which occurred April 22d 1885, was seized in fee of the premises subject to a mortgage executed by herself and her husband to one Adolph G. Hupfel to secure the payment of $3,600 on January 1st, 1889, with interest payable semi-annually on the 29th days of June and December, which mortgage contained a provision that in case of thirty days' default in the payment of the interest the mortgagee might elect that the whole principal sum should become due. Mrs. Kullman died intestate, leaving her surviving the plaintiff and four children, her only heirs at law. At the time of their mother's death these children were infants, the oldest having been born in 1866 and the youngest in 1875. The plaintiff has remained in continuous occupation of the premises from his wife's death to the trial of the action. The semi-annual interest falling due on June 29th, 1885, was not paid. On September 17th, 1885, the mortgagee instituted an action to foreclose the mortgage, alleging the default in the June interest and electing that the whole principal sum should become due. Judgment was entered in the action on December 19th, 1885. Under that judgment the property was sold for the sum of $4,000 on January 22d 1886, to the mortgagee, who subsequently received a deed therefor from the referee. The property was then conveyed by the mortgagee to the plaintiff by deed dated February 1st, 1886. These two deeds were recorded on the same day in the registrar's office. On his purchase the plaintiff executed a new mortgage to Mr. Hupfel for $3,800. The appellant claims that on these facts the plaintiff's children have an equitable claim to the premises subject to the life estate of their father. On the trial, both the plaintiff and the mortgagee testified as witnesses. The trial court found that the plaintiff was unable to pay the interest which accrued on June 29th, 1885, and that the foreclosure was prosecuted and the sale had in good faith without any collusion between the plaintiff and the mortgagee. Judgment was entered that the defendant specifically performed his contract. This judgment has been affirmed on appeal by a divided court. *Page 417 
The defendant was entitled under the contract to a marketable title free from doubtful questions of fact or law. (Brokaw v.Duffy, 165 N.Y. 391.) In that case it was held that testimony taken on an inquisition tending to show that a grantor through whom the vendor traced title was at the time of his grant of unsound mind, was sufficient to render the title unmarketable, though no proof of the insanity of that grantor was produced on the trial of the action and the proceedings on the inquisition had been set aside. The learned trial court has found that there was no collusion between the plaintiff and the mortgagee, and that finding is conclusive upon us. This is not sufficient, however, under the case cited, for if the circumstances were such that the defendant's title might hereafter be impeached or defeated by a contrary determination of the question of fact presented by those circumstances, then the title offered was not marketable. The trial court committed a fatal error in the admission of evidence on which its finding of facts was based. The plaintiff was allowed to testify over the defendant's objection and exception that the property was in reality his; that he paid the consideration on its original purchase and had the conveyance made to his wife. The statute is explicit that in such cases there is no title, legal or equitable, in the person who pays the consideration. (1 R.S. p. 78, § 51.) The fact did not in any way diminish or vary the plaintiff's duty to his infant children who inherited the remainder subject to his life estate. There is this further to be said: In any action that might hereafter be brought by the children against the appellant, if he should take title, the plaintiff would not be a competent witness to testify as to personal transactions with his deceased wife.
The record presents a still more serious objection to the title offered, a question of law, to say the least, of very doubtful determination and one which should not be decided except in an action to which the remaindermen are parties. "A tenant for life is a quasi or implied trustee for the remainderman and is accountable for the highest good faith." (Perry *Page 418 
on Trusts, §§ 540, 549.) As tenant for life the plaintiff was bound to keep down and pay the interest. (Story's Equity, § 488;Moseley v. Marshall, 22 N.Y. 201.) The interest for which the mortgage was foreclosed became due over two months subsequent to the wife's death, and there is, therefore, no question of accumulated arrears of interest, the liability for which as between life tenant and remainderman has been the subject of conflicting decisions in England. The plaintiff having accepted the inheritance and having enjoyed the possession of the premises was bound to pay this interest. The trial court found that he was unable to pay it. This may relieve him from the imputation of moral fault, but it in no way affects the fact that the mortgage was foreclosed and the mortgaged property sold solely by default of the plaintiff in the performance of his legal obligation. If the foreclosure and sale were without collusion, doubtless the mortgagee acquired a perfect title by the deed given to him on the sale. But the question is whether, when the plaintiff purchased from the mortgagee and repossessed himself of the title, such title did not instantly inure to the benefit of the remaindermen. Of course, the general rule is that where a trustee has properly sold property to a third person in good faith and without collusion, he is not precluded from subsequently buying the property from the purchaser. To make that rule applicable, the original sale of the property must have been without fault on the part of the trustee. "Wherever a trustee is guilty of a breach of trust by the sale of the trust property to a bonafide purchaser, for a valuable consideration without notice, the trust in the property is extinguished. But if afterwards he should repurchase or otherwise become entitled to the same property, the trust would revive and reattach to it in his hands; for it will not be tolerated in equity that a party shall, by his own wrongful act, acquire an absolute title to that which he is in conscience bound to preserve for another. In equity, even more strongly than at law, the maxim prevails, that no man shall take advantage of his own wrong." (Story's Equity, § 1264; Bovey v.Smith, 1 Vern. *Page 419 
84.) In acquiring the property from the mortgagee, the plaintiff put a new incumbrance upon it greater in amount by two hundred dollars than that to which it had been previously subject. There, therefore, arose no claim upon his part for contribution from the remainderman. It is also to be observed that the defendant was guardian in socage of his infant children, and thus he occupied a double relation of trust and confidence to them. It is unnecessary, however, to pursue the discussion further. It is sufficient to say that the plaintiff's title presents a question of law, the resolution of which in favor of the plaintiff is by no means certain.
The judgment appealed from should be reversed and a new trial granted, costs to abide the event.