Summary
In Joseph v. Donovan, 116 Conn. 160, 164 (1933) the Supreme Court quotes 1 Jones Mortgage (8th Ed.) 584, p. 796 as follows: "Where a purchaser receiving a deed to land simultaneously conveys it to another as security for a loan used in discharging the purchase price and the two conveyances are part of the same transaction, the title passes through the borrower unaffected by the lien of a judgment against the borrower, which would have attached had the title remained in him."
Summary of this case from Bank of Boston Conn. v. StandishOpinion
Where a purchaser receiving a deed to land, simultaneously conveys it to another as security for a loan used in discharging the purchase price, and the two conveyances are part of the same transaction, the title passes through the borrower, unaffected by the lien of a judgment against the borrower, which would have attached had the title remained in him. A purchase-money mortgage may be made to a third person who advances the purchase-money at the time the purchaser receives his conveyance, and such mortgage is entitled to the same preference over a prior judgment as it would have had if it had been executed to the vendor himself. In the present case, D gave a mortgage to the defendants M, intended to secure not only the balance of the purchase price of the property paid to the vendor by these defendants, but also money paid by them to a bank of which they were officers in payment of D's debt to it. At the time of these payments defendants M knew that the plaintiff's assignor had an attachment on D's interest in the property. This attachment was subsequently reduced to judgment. Held that to give to defendants' mortgage the priority of one for purchase-money, would effect a preference of D's debt to the bank over the attachment, and amount to a fraud upon the plaintiff's rights. In a suit brought against a person in his individual capacity, judgment cannot be entered against him as trustee.
Argued December 6th, 1932
Decided January 31st, 1933.
ACTION to foreclose a judgment lien, brought to the Superior Court in New Haven County and tried to the court, John Rufus Booth, J.; judgment for the plaintiff against certain defendants, and in favor of certain other defendants, from which the plaintiff and certain defendants appealed. Error on plaintiff's appeal, and on appeal of defendants Woodruff and Blakeslee, executors, Sanderson and Peck, as trustees.
The plaintiff filed a plea in abatement to the appeal which was dismissed.
PER CURIAM. The defendants as well as the plaintiff have appealed. The finding was filed August 31st, 1932. The plaintiff made a motion to correct it. This motion was improper. Under the new rules for appellate procedure a motion to correct the finding is no longer permitted. Apparently the trial court withdrew the finding, because it was refiled October 3d 1932. The defendants filed an assignment of errors November 9th, 1932. The plaintiff then pleaded in abatement to the defendants' appeal, upon the ground that the defendants' assignment of errors was not filed within ten days from the refiling of the finding. The defendants answered that they had had no notice that the finding had been refiled until November 8th, 1932, and to this answer the plaintiff demurred. Under the present rules an assignment of errors, where a finding is necessary, is to be filed within ten days from the filing of the finding. Rules for Appellate Procedure, § 4. If the trial court makes changes in the finding, additions to the assignment of errors may be filed, but only as amendments to the original assignment. Rules for Appellate Procedure, § 8; Practice Book, p. 318, § 40. In this instance, the trial court made no corrections in the finding. The defendants should have filed their assignment of errors within the first ten days of September, 1932. A failure to file an assignment of errors within the time provided by the rules is not, however, ground for a plea in abatement, which goes to the validity of the appeal, not to the failure properly to prosecute a valid appeal. State v. Duffy, 66 Conn. 551, 555, 34 A. 497. The only remedy in such a situation as the one before us is by a motion to erase the case from the docket. Ragali v. Holmes, 111 Conn. 663, 151 A. 190.
The plea in abatement is dismissed.
Charles A. Harrison, with whom, on the brief, was Milton G. Harrison, for the appellant-appellee (plaintiff).
Robert J. Woodruff and Daniel D. Morgan, for the appellants-appellees (defendants).
This case was before this court in a previous term on appeal by the plaintiff from a judgment of nonsuit; Joseph v. Donovan, 114 Conn. 79, 157 A. 638; and it is not necessary to repeat in full the facts there stated. We allude only to such as are necessary for the purpose of the present discussion.
December 28th, 1927, the defendant Walter A. Donovan and his wife, Effie Z. Donovan, were in possession of certain premises in New Haven, owned by Abraham Lander, by virtue of a lease from him with certain privileges, the details of which it is unnecessary to set forth. On that date, they entered into an agreement with Lander for the purchase of his equity in the property, which was already encumbered by two prior mortgages. At that time, Donovan paid $500 as part of the purchase price, which sum was furnished him by Robert J. Woodruff, and subsequently paid back to the latter by the defendants Watson S. Woodruff, Peck and Sanderson. Subsequently, on January 10th, 1928, Abraham Gingold brought an action against the Donovans and attached their interest in the Lander property. This attachment was reduced to judgment on October 30th, 1929, in the amount of $4834.24; and, on November 12th, 1929, a judgment lien for that amount was filed against the attached property. On the same day, Gingold assigned his interest in the judgment to the plaintiff, Etta Joseph. January 16th, 1928, Mrs. Donovan relinquished her interest in the property to her husband; and, on that day, the property was conveyed by Lander to him. At that time, Donovan was indebted to The West Haven Bank Trust Company in the amount of $3831.36, and to Robert L. Woodruff, for legal services, $2180. The balance of the purchase price due on the property was $12,247.50. The defendants Woodruff, Peck and Sanderson, who were also officers of The West Haven Bank Trust Company, with knowledge of Donovan's interest in the property and of the attachment by Gingold, the plaintiff's assignor, paid to Lander for Donovan the balance of the purchase price of the property, and also paid his indebtedness to The West Haven Bank Trust Company and to Robert J. Woodruff. To secure Watson S. Woodruff, Peck and Sanderson, for the payments made for him, Donovan executed a note to them for $18,793.75, secured by a third mortgage on the property. The payments for Donovan, the delivery of the deed of purchase by Lander, and the delivery of the mortgage deed and note were all part and parcel of one transaction, and were consummated at the same time. Donovan also executed a deed to a right of way over the premises to The West Haven Bank Trust Company; the reason for this conveyance did not appear. He also conveyed the property to Woodruff, Peck and Sanderson by warranty deed providing against a merger of interest with their mortgage. In addition, an agreement was entered into by him with them which provided that they were to hold and manage the property in trust for him, and also provided for a lease of a theater on the premises to him, or to such person as he should designate. Subsequently, Donovan occupied this theater as lessee of Woodruff, Peck and Sanderson, trustees. The agreement between Donovan and Woodruff, Peck and Sanderson, further provided that the premises might be conveyed to the defendant Keller to be held by him under the same terms and conditions. On January 28th, 1928, they executed a quitclaim deed of the premises to Keller, reserving their rights under their third mortgage. On the same day, Keller executed a quitclaim deed of the premises back to them. On December 21st, 1928, Woodruff, Peck and Sanderson secured a judgment in an action brought by them to foreclose their mortgage; and, on December 28th, 1928, a certificate of foreclosure reciting that the title to the premises had become absolute in them was recorded in the land records. Neither the plaintiff nor her assignor, Gingold, were made parties in this foreclosure suit.
On the previous occasion when this case was before us, we held that the plaintiff had a valid judgment lien which attached to the interest of Donovan in the premises at the time the attachment was made, and which was enforcible to the extent of the interest he had after he had acquired title from Lander. Joseph v. Donovan, supra, 84. The question involved in plaintiff's appeal is whether the trial court erred in giving priority to the third mortgage of Woodruff, Peck and Sanderson made subsequent to the attachment of Donovan's interest in the property by the plaintiff's assignor, the moneys having been advanced and the mortgage taken with knowledge on their part of Donovan's interest and the existence of the attachment. The theory upon which the trial court acted in rendering judgment for these defendants was that the mortgage in question was a purchase-money mortgage, and entitled to priority over a previous attachment of Donovan's interest. "Where a purchaser receiving a deed to land, simultaneously conveys it to another as security for a loan used in discharging the purchase-price, and the two conveyances are part of the same transaction, the title passes through the borrower unaffected by the lien of a judgment against the borrower, which would have attached had the title remained in him." 1 Jones, Mortgages (8th Ed.) § 584, p. 796; Wiser v. Clinton, 82 Conn. 148, 152, 72 A. 928. "A purchase-money mortgage may be made to a third person who advances the purchase-money at the time the purchaser receives his conveyance, and such mortgage is entitled to the same preference over a prior judgment as it would have had if it had been executed to the vendor himself." 1 Jones, Mortgages (8th Ed.) § 586; Middletown Savings Bank v. Fellowes, 42 Conn. 36, 49; Clark v. Munroe, 14 Mass. 350, 351; Weinstein v. Montowese Brick Co., 91 Conn. 165, 167, 99 A. 488; Hillhouse v. Pratt, 74 Conn. 113, 118, 49 A. 905; Seipold v. Gibbud, 110 Conn. 392, 396, 148 A. 328. The principle of a purchase-money mortgage is to protect a seller who takes a mortgage simultaneously with the sale of land to secure the purchase price, or to protect a third party who advances the amount necessary to pay the purchase price or the balance thereof. In the present instance, one note and one mortgage was given in the single amount of $18,793.75. This included and was intended to secure not only the balance of the purchase price of the property paid to Lander by Woodruff, Peck and Sanderson for Donovan, but also Donovan's debts to the bank and to Robert J. Woodruff. The payment of the debts owed by Donovan to the bank and to Robert J. Woodruff could not, under any definition, be held to be payments of the purchase price of the Lander property, and the payments were made by Woodruff, Peck and Sanderson with knowledge of the attachment of Donovan's interest. To give to their mortgage the priority of one for purchase-money, would effect a preference of Donovan's debts to the bank and to Robert J. Woodruff over the attachment, and amount to a fraud upon the plaintiff's rights. The term "purchase money" does not include money borrowed for any other purpose than to complete a purchase. Heuisler v. Nickum, 38 Md. 270, 279. "All persons understand the term `purchase money' to mean the price agreed to be paid for the land, or the debt created by the purchase. It is not understood to mean a debt due another person than the vendor." Eyster v. Hatheway, 50 Ill. 521, 525. "The money must have been loaned with the express purpose and intention that it must be used for paying the purchase price." Ely Savings Bank v. Graham, 201 Iowa 840, 844, 208 N.W. 312, 314; Ladd Tilton Bank v. Mitchell, 93 Or. 668, 675, 184 P. 282, 284. It follows that the trial court erred in ruling that the plaintiff's lien was not superior to the mortgage of the defendants Woodruff, Peck and Sanderson.
In regard to the defendants' appeal, Watson S. Woodruff having died during the pendency of the action, Henrietta Woodruff and M. Grant Blakeslee, as executors, were substituted as defendants in his place, and judgment was entered against them, Peck and Sanderson, as trustees for Donovan. This judgment was erroneous. These defendants were named in the writ in their individual capacities, and not as trustees. If it is desired to obtain judgment against them as trustees, it is necessary that they be made parties in that capacity. In a suit brought against a person in his individual capacity, judgment cannot be entered against him as trustee. Donalds v. Plum, 8 Conn. 447; Jackson v. Hubbard, 36 Conn. 10, 13.
The defendant Walter A. Donovan was made a party to the foreclosure suit brought by Woodruff, Peck and Sanderson to foreclose their third mortgage. As his rights were cut off by the judgment in that suit, he was not entitled to a law day in this case.