Opinion
Argued March 25, 1889
Decided April 23, 1889
J.A. Stull for appellant. W.H. Whiting for respondent.
A few days before the rendition of the Garrett judgment, upon which this action by the receiver is based, Joel Wilder conveyed his farm to Alanson Wilder. At that time Joel was indebted to Alanson in a sum exceeding $700 and interest. The consideration for the transfer agreed upon was that Alanson should cancel and discharge his own debts and claims against Joel; pay and discharge all claims which the plaintiff, as receiver, then had against Joel; pay and discharge the debt of Joel to Louisa Wilder of $400 and interest, and pay and discharge Joel's debt to Willard Wilder, amounting to $260 and interest. The grantee paid the amount due upon the Arnold judgment, which the receiver then represented, together with his claims for costs and expenses. Subsequently an order was duly made extending the receivership of the plaintiff over the property of Joel Wilder so as to represent the Garrett judgment. Thereafter the plaintiff commenced this action, in which he seeks to have the deed from Joel to Alanson declared fraudulent as to the creditors of Joel Wilder, and that the defendants Alanson Wilder and Louisa, his wife, be decreed to convey the same to the plaintiff, as receiver.
The trial court found, as a matter of fact, "that such sale and conveyance was made upon full and adequate consideration, and was not made or accepted by said Alanson Wilder for the purpose or with intent to hinder, delay or defraud the judgment-creditors represented by the plaintiff as receiver;" and, as a conclusion of law, "that the conveyance of the interest of said defendant Joel Wilder was valid and effectual, and vested in said Alanson Wilder all the interest of said Joel Wilder thereto, on the 29th day of August, 1885," and rendered judgment in favor of the defendant dismissing the case upon the merits.
The General Term, not questioning the findings of fact made by the trial court, reversed the judgment of the Special Term solely upon the ground that the defendant had notice of the claim represented by the receiver before payment made to Louisa and Willard Wilder. Holding that because of such notice before full payment the case comes within the familiar rule "that the party relying upon the defense that he is a bona fide purchaser, entitled to hold, notwithstanding a prior equity, must show actual payment or performance before notice." From the findings of fact made by the court below, and the undisputed testimony, it appears that the defendant acted in good faith and without knowledge even of the Garrett claim; that he agreed to pay full and adequate consideration for the property; that he was a creditor of Joel Wilder; that he accepted the conveyance on the agreement that the indebtedness due to him from Joel should form a part of the consideration; that he agreed to pay the balance of the consideration as provided in the deed, to wit: "As a part of the consideration hereinbefore mentioned the said Alanson Wilder assumes and agrees to pay, according to the terms thereof, two certain promissory notes, executed by said Joel Wilder about three years ago, one for $300 and interest thereon, and the other for $100 and interest thereon; also one certain promissory note given by said Joel Wilder to one Willard Wilder about one year ago, for $100 and interest thereon;" and that Louisa and Willard Wilder consented to the agreement by which Alanson was to assume and pay their claims, as provided in the deed.
Upon the making of the agreement and subsequent delivery and acceptance of the deed, with the adoption of the promise, on the part of the grantee, by Louisa and Willard Wilder, the defendant, Alanson Wilder, became the principal debtor, and the grantor his surety for the payment of the debts. ( Lawrence v. Fox, 20 N.Y. 268; Burr v. Beers, 24 id. 178; Ayers v. Dixon, 78 id. 318.) The defendant paid the receiver according to the requirement of the deed and was liable as principal to pay the amount due to Louisa and Willard Wilder, but had not actually done so when he learned of the existence of the judgment which the plaintiff, as receiver, represents. The question presented, therefore, is whether or not a creditor who purchases property of his debtor in good faith, for the purpose of securing his debts, but has not actually paid the balance of the purchase-price, although legally bound and financially able to do so, when he learns that there are other creditors of his debtor, is in a position to assert title as against such creditors in an action brought to declare the conveyance fraudulent.
The court below held that he was not, and cited, as authority for such holding, Sargent v. Eureka Bung Apparatus Company (11 N.Y. State Rep. 68). In that case the plaintiff had an agreement with an inventor named Warren, which gave to the plaintiffs certain rights in a patent which were violated by an assignment of the patent from Warren to Bigelow, and by the latter to the defendant, and it appearing that the defendant had notice of plaintiff's equity before payment, the court held that a purchaser of patent-rights does not stand in the position of a bona fide purchaser as against a prior assignee of the vendor, unless he has made full payment before notice of the assignment; and in the course of a well-considered opinion the court says: "That when a purchaser is advised of a prior claim of another, which denies to the seller, as against him, the right to make the sale, he should desist from proceeding further to complete his purchase; or if he thereafter proceeds, in performance of his contract, to do so, subject to the equities of such party in whom rests the prior right."
The doctrine of that case is not applicable to this. This plaintiff did not have a prior claim to the defendant at the time of the conveyance. They were both general creditors of the debtor. As such their equities were equal, and the defendant having obtained title to the property, in good faith and for a valuable consideration, while his equity was the same as the judgment-creditor, represented by the receiver, is entitled to the benefit of the universal rule that when the equities are equal the legal title must prevail. ( Seymour v. Wilson, 19 N.Y. 417.)
The motion to dismiss the appeal must be denied. The action is brought to set aside a deed and to compel a conveyance, and is, therefore, an action "affecting the title to real property, or an interest therein." ( Nichols v. Voorhis, 74 N.Y. 28.)
The order appealed from should be reversed, and the judgment of the Special Term affirmed, without costs.
All concur, except BRADLEY and HAIGHT, JJ., not sitting.
Order reversed.