Court Opinion

ID: 5462506
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:40:47.675946+00
Date Added: 2024-06-11T08:32:57.365523
License: Public Domain

By the Court, Mullin, J.
The important question in this case is, whether the defendant has a better right to retain the title of the premises in question until he is paid liis advances made in pursuance of the agreement of the 12th of March,'1857, than the plaintiff to a deed of said premises on paying the unpaid purchase money only. The agreement that such advances should be a lien on the property, was made over two years before the plaintiff acquired any interest whatever in the contract or premises. Folsom was left in possession of the contract and sold the same, for a valuable consideration, to the plaintiff, who did not then know of the arrangement that future advances should be a lien on the contract or the title. The plaintiff went into possession after his purchase, paid interest on the contract, and the defendant knew that the plaintiff was going to assist Folsom pecuniarily, and that he (Folsom) wanted the extension for that purpose: In other words, the defendant was informed, on the 1st of March, 1859, that the contract of the 2d of March, 1857, or the premises covered by it, were to be used in some way to secure the plaintiff for advances about to be made to Folsom. The defendant is entirely silent in regard to any claims he has beyond the amount specified in the contract, suffers the plaintiff to go into possession, and pay interest for some eighteen months, and now insists that his is a superior equity to the plaintiff’s, by which he can hold the title until his advances are paid. It is probable that all the advances claimed by the plaintiff were made before any equity of the defendant attached. If so, then the latter is only chargeable with keeping silence when, by speaking, he could, have prevented the plaintiff from being led into the purchase of'the contract. But before *128entering on these investigations of these equities, it is important to ascertain whether the plaintiff was a hona fide purchaser for value paid. If he was not, that puts an end to any equity he may have to relief. There is no evidence that the plaintiff purchased with any fraudulent design. I have already remarked that he had no notice of any lien of the defendant, beyond the purchase money. And the knowledge that he had made advances to Folsom after the 2d of March, 1857, cannot, it seems to me, be construed into notice of the lien, or of the agreement that he (the defendant) should have a lien for such advances.
It only remains to inquire whether he was a purchaser for value paid. The referee found that he was not, having taken the contract in payment of a precedent liability. The contract was to be paid for “ by applying,” as the referee found, “ the same toioards the payment of certain notes of said Folsom which had been indorsed by said Beeves.” By this language, I understand the referee to mean that the plaintiff assumed to pay certain notes which had been previously made by Folsom and indorsed by the plaintiff, in payment of the purchase price of the land contract. If such are the facts, it follows that, before the purchase of the contract, the plaintiff was the surety" of Folsom for an amount equal to the purchase price of the contract. He was indorser, contingently liable if the paper had not matured, absolutely liable to the holder if the proper steps had been taken to charge him. In either case, Folsom was liable over to him if he paid the notes. By the agreement of purchase he ceased to be a surety ; he became the principal debtor, as between him and Folsom, and absolutely bound to pay the notes, whether he was or was not charged as indorser. There was no precedent debt due from the plaintiff'to Folsom. If he had been charged as indorser he did owe the holder, but it was not his own debt he paid when he paid the note, so far as Folsom was concerned. I see no way in which the transaction can be *129treated as the payment of a precedent debt or liability, in that sense which deprives him of the character of a purchaser for value.. It seems to me he was most clearly a bona fide purchaser, and that his agreement to assume the payment of the notes was parting with value, so as to make him a bona fide holder for value paid.
The next most important question is, is the defendant’s equity superior to that of the plaintiff, because it is the oldest in time; and is such equity so far superior to that of the plaintiff as to override the rights and equities of the. plaintiff, being a bona fide purchaser, for value ? The case of Bush v. Lathrop (22 N. Y. 535) xvould seem to be decisive of the question. In that case the law is declared to be that the equities existing between assignor and assignee of a chose in action, not negotiable, attend the title transferred to a subsequent assignee for value and without notice. The latter takes the exact position of his vendor. The parties do not stand in the relation stated in the proposition ; but the reasoning of the learned judge who gave the opinion in the case, cited by him to sustain himself, shows that the principle was 'intended to reach and apply to parties occupying the relation of the plaintiff and defendant in this case.
While the law undoubtedly is as stated by Judge Denio in the case cited, I must nevertheless say that it does not commend itself to my sense of right and justice. When a vendor of land agrees to make advances to the vendee, which, by an independent arrangement, are to be a lien on the land, and leaves the contract in the vendee’s hands, and the same is sold to a bona fide purchaser for value paid, without notice, the equities of the latter are, it seems to me, with the most profound respect for the learned judge who has put forth the converse of the proposition as the law, superior to those of the vendor, and should be upheld. If I am right in supposing the principle sug*130gested applies to this case it is decisive of it, and the judgment must be affirmed.
[Oswego General Term,
July 14, 1863.
There is no estoppel in the case. The defendant was not bound to find the plaintiff and notify him of his rights. Folsom knew all about his rights, and it was his duty to disclose the facts to the plaintiff. Had the plaintiff balled on the defendant before the purchase of the contract and communicated to the defendant that he was about to purchase the contract, it would have been the defendant’s ■duty to speak, and his silence would have- estopped him. I am- of opinion the judgment is right and should be affirmed.
Judgment affirmed.
Mullin, Morgan and Bacon, Justices.]