Court Opinion

ID: 8507318
Source: CourtListenerOpinion
Date Created: 2022-11-23 08:07:31.37486+00
Date Added: 2024-06-11T16:50:56.811568
License: Public Domain

Taft, J.
The first question we 'shall consider is, whether the Gibsons are entitled to the benefit of the occupying claimant law. The decision and judgment at Special Term was in favor of the claim, and this part of the ease comes up on the petition jn error. It is claimed that this ruling ought to be reversed, because at the time of the purchase and improvements made by the Gibsons, the suit was pending under which the liabilities were ascertained that made the sale of this property necessary to satisfy the liens against it. We are all satisfied, as the judge at Special Term was, that the Gibsons took the title of Mrs. Holenshade in good faith, supposing that it was clear and unincumbered except by the mortgages already mentioned, which the Gibsons paid, and that all the litigation then pending ended with the confirmation of their purchase, and that they supposed they became by the purchase the owners of the property. They were in quiet possession under the decree of the court and their deed.
The claims on which this property has now been subjected to sale and taken away from the Gibsons, were expressly charged u¡Don the other property, or were ordered by the court to be paid out of the proceeds of the sales of other property, and the equitable liability by which this property has now been sold was not apparent, and not such as to make the Gibsons, as purchasers, occupy the position of purchasers pendente lite.
The improvements which they put on the property were necessary and judicious, and made in good faith, and the evidence shows that they added to the value of the property an amount equal to their cost.
The paper title, under which Mrs. Holenshade held possession, was under the decree of court, and the title of the Gibsons under her, was regular and by deed of warranty.'.
The ruling at the Special Term took nothing from these parties who dispute the claim. It left them the proper proceeds of the sale of the property, as it was before the *87purchase by the Gibsons. It only gave the Gibsons the benefit of what they had in good faith added. This, we think, is in accordance with the decisions of the Supreme Court of this State.
The sale of the property on an adverse proceeding, we consider equivalent to an eviction. It is in fact an eviction. But if it were not so, we think that under the circumstances of this case, we could not, as a court of equity, allow these claimants, who stood by and suffered the Gibsons, without notice, to expend their money in improving this property, after the improvements were made, to spring this contingent claim upon them, and take away not only the property for which they had paid a full and fair price, but the value of their improvements also.
The next question to be considered is, whether the Gibsons, by paying off the mortgages to protect their title, have precluded themselves from claiming the benefit of these mortgages in the distribution of the proceeds of sale, by allowing them to be entered as satisfied. If the - Gibsons, when they paid off these mortgages, had taken an assignment of them, instead of canceling them, they could have stood upon them as a plank with which to escape from the wreck. "We think that, in the eye of equity, their relation to junior incumbrancers is not affected by the ceremony of canceling the mortgages. By paying them, under the circumstances of this case, they became substituted to the position of the mortgagees, so far as ■ such a substitution was necessary to protect them from the injustice of having a junior incumbrancer force them to pay for their property more than once.
A court of equity will not countenance a speculation of this kind upon the money of an innocent purchaser; and in determining the question whether the purchaser in such a case had notice, we inquire as to his actual and not his mere constructive knowledge of the junior incumbrancer’s claim.
The effect of the claim for these junior claimants would *88be to postpone those prior mortgages to these junior judgments, which the Gibsons were not compelled, to do, and never could have intended to do, and never would have done with actual knowledge of the junior claims. 'What equity then, or what reason is there, to justify us in interpreting their conduct in a manner inconsistent with what we are morally certain was their purpose?
The property sold at sheriff’s sale, under the claims of these junior incumbrancers, on the 18th June, 1870, for $16,666.67.
The amount of the incumbrances paid by the Gibsons, as we have seen, was, at the time of their purchase, $14,766.16, and the value of the improvements put on the premises, as proven, $5,500, making a total of $20,266.16, besides interest for more than a year and the costs of these proceedings, a sum largely exceeding the proceeds of the sheriff’s sale.
The result is to leave nothing of the proceeds of sale to be appropriated on the claims of the plaintiffs and other junior incumbrancers.