Graves v. Coutant , 31 N.J. Eq. 763 ( 1879 )

The opinion of the court was delivered by

Soudder, J.

The complainant’s bill was filed to enforce a vendor’s lien for part of the purchase-money of lands at Bergen Neck, in the county of Bergen (now in the city of Bayonne, in the county of Hudson) and state of New Jersey. By two several deeds, dated January 10th, 1853, and January 13th, 1853, respectively, the complainant conveyed these lands to Roswell Graves, the husband of the defendant. Judgment for a balance of the purchase-money was obtained by Eburn H. Coutant, the complainant, against Roswell Graves, in the supreme court of the state of New York. The suit was commenced by Graves against Coutant, July 7th, 1854; a counter-claim for the purchase-money was set up, and, after a long litigation, an appeal taken from the judgment of the supreme court was dismissed October .27th, 1875, and the judgment of that court, dated May 24th, 1860, was affirmed for $6,433.66, with interest from May 24th, 1860, and for $223.59, costs of increase, with interest from July 6th, 1864. While this suit was pending, to wit, on March 1st, 1860, Roswell Graves conveyed to Jacob R. Wortendyke, in consideration of $1,000, as stated in the deed, all that part of the premises conveyed to him by this complainant, which had not been sold by him up to that date. On March 5th, 1860, only five days later, Wortendyke conveyed the same property to this defendant, Eliza A. Graves, wife of Roswell Graves, for the consideration therein expressed, of $1,000, by deed, without covenants for title. After the above deed to her, Mrs. Graves made conveyances and mortgages of portions of the premises conveyed to her.

On January 21st, 1871, Roswell Graves was discharged in voluntary bankruptcy, this claim not having been proved against him in said proceedings. He died July 29th, 1873. The bill of complaint in this case was filed in March, 1876. It is, in effect, to establish and enforce, by the decree of the ■court of chancery, the complainant’s alleged lien for unpaid purchase-money, the amount of which had been settled by the judgment in the state of Hew York, upon so much of these lands as may still remain unsold in the name of said Eliza A. Graves, and an account from her for lands sold, charging that she is not a bona fide purchaser.

Upon this last point, I agree with the master in his opinion, that her uncertain statement of the consideration paid by her for this conveyance, and the small sum of $1,000 in money, which she says she has paid, are insufficient evidence of a fair purchase for a good consideration of the large and valuable property described in the deed to her. As to this complainant, she stands in no more favorable position than her husband would do if he were living. She must be charged with notice of this claim when the conveyance was made to her, and there is also sufficient evidence that she had actual notice of an unsettled claim for purchase-money, which was opposed by her husband’s allegation that he was deceived by a misrepresentation that there was no encumbrance on the property at Bergen Heck, when he bought of Coutant. This was the matter adjusted in the litigation in Hew York, and she knew of this controversy and suit resulting in the judgment which is produced here as evidence of the amount due and unpaid.

She further bases her title upon her husband’s agency, in acting for her, and using her money in purchasing the property, thereby assuming all the knowledge and notice that he had. If she had paid a valuable consideration, with notice of the equitable rights of the complainant, she would hold the property subject to such equitable interests; and, if she did not pay such consideration, a fortiori, she will be charged with the same trust, in respect to the property, as her husband, from whom, or through whose agency, she has purchased. Le Neve v. Le Neve, Amb. 436 ; 2 Lead. Cas. in Eq. 231; 1 Perry on Trusts § 217 and note (4).

It is not only necessary that a defendant setting up a defence of a bona fide purchaser should clearly and unequivocally state in the answer that the purchase was for value, without notice, but he must also set forth all the particulars of the purchase, and must distinctly prove them. There has been a failure in this particularity, both in the answer and in the proof, in this case. We must therefore consider it upon its merits between the original parties.

And first, it is said that the complainant occupies the position of a creditor at large, having no judgment in this state, or execution, which binds these lands in controversy, citing Bigelow Blue Stone Co. v. Magee, 12 C. Gr. 392; Davis v. Dean, 11 C. E. Gr. 436, and other eases. But this rule is not applicable, for here the lien is an equitable one; the. remedy at law is inadequate, and practically exhausted. The case is, therefore, exceptional. See Haston v. Castner, 2 Stew. 536 ; Shurts v. Howell, 3 Stew. 418, and the same cases on appeal.

The claim of a vendor’s lien for purchase-money is one of peculiar equitable cognizance, and is only maintainable in a court of equity. There is a constructive trust when lands are conveyed and no security is taken for the purchase-money, that the purchaser shall be a trustee of the land for the vendor, until the purchase-money is paid. An equitable lien is given on the land for this unpaid purchase-money, not only against the vendee, but against all subsequent purchasers who take mala fide, or with notice that the purchase-money remains unpaid. This is the established law of our state, where our court of equity has followed the leading case of Mackreth v. Symmons, 15 Ves. 329; S. C., 1 Lead. Cas. in Eq. 336 &c.; Van Doren v. Todd, 2 Gr. Ch. 397; Brinkerhoff v. Van Sciven, 2 Gr. Ch. 251; Herbert v. Scofield, 1 Stock. 492 ; Dudley v. Dickson, 1 McCart. 252; Armstrong v. Boss, 5 C. E. Gr. 109 ; Corlies v. Howland, 11 C. E. Gr. 311.

In some of the states this doctrine is rejected. In Gilman v. Brown, 1 Mason 191, Justice Story says that “Massachusetts has no court of chancery to recognize and enforce such a lien, and the peculiar principles and doctrines of courts of equity have never been adopted into its jurisprudence.” This has been recently affirmed in that state in Ahrend v. Odiorne, 118 Mass. 261 (1875), where the court says that no such lien exists in that commonwealth, in any case, without agreement in writing. The opinion of Chief-Justice Gray, in that case, is an able defence of the law as there maintained. An elaborate note, collecting the cases and different holdings of the courts in all the states, will be found in 1 Perry on Trusts § 232, note 2.

Chancellor Green states the law, as held in our state, in Dudley v. Dickson, thus: “The well-settled rule of equity, that the vendor of real estate has a lien upon the land sold for the purchase-money, is recognized and adopted in this state. The taking of the note or bond of the purchaser for the unpaid purchase-money will not impair the lien.”

It is settled, also, that the recovery of a judgment on such note or bond, or for the purchase-money where no note or bond is taken, will not affect the vendor’s lien as a merger, for until there is payment, or some legal equivalent or bar to the recovery, the lien and the equitable right to have the purchase-money, remain.

If this lien exists by the operation of a constructive trust, then I think it must also be concurrent with it, and attach at the time the vendor obtains his right in the property, and it will continue so long as the trust remains, or, as some of the cases say, so long as an action can be maintained for its collection. 1 Perry on Trusts § 234.

It is held in Borst v. Corey, 15 N. Y. 505, and in Trotter v. Erwin, 27 Miss. 772, that the vendor’s lien will be barred by the statute of limitations, while, in other cases (Moreton v. Harrison, 1 Bland 491; Lingan v. Henderson, 1 Bland 236; Relfe v. Relfe, 34 Ala. 500) it is said, that it is of the nature of a direct or express trust, and cannot be barred by the statute. A strong argument may be made for the former holding, from the importance of clearing title to lands.

But it is not material to determine this disputed question here, for in this case there is no bar by the statute of limitations of the debt for unpaid purchase-money. Although the sale of land was made in 1858, the action for the recovery and adjustment of this money was begun in 1854: and continued until 1875, when it was finally determined. The statute would not 'run against the debt during the pendency of the suit. In this state, the bill of complaint was filed in 1876. I think,- therefore, that this vendor’s lien is in a shape to be enforced, notwithstanding the time which has elapsed since it first attached.

The further defence that the claim was barred by the discharge of Roswell Graves in bankruptcy, in 1871, is also untenable. 'Upon this point Lewis v. Hawkins, 23 Wall. 119, is conclusive. It holds, in substance, that where, by the law of any state, a vendor’s lien for purchase-money is recognized, a discharge of the vendee, or his purchaser with notice, will not discharge the lien of the vendor. It also covers the other point of the case, that the statute of limitations will not affect such lien, because the vendee, or the purchaser from him with notice, stands in the relation of a trustee or mortgagor for the unpaid purchase-money.

Other cases may be cited to maintain the construction that the vendor’s lien for unpaid purchase-money is not discharged by bankruptcy, and will prevail against the assignee of the bankrupt. Tichenor v. Allen, 13 Gratt. 15; Rugely v. Robinson, 19 Ala. 404; Phelps v. Curts, 80 Ill. 109 ; In re Perdue, 2 N. B. R. 67.

There is no charge, however, in this case, that the assignee in bankruptcy ever claimed or asserted any right in this real estate in controversy, under the assignment.

The proviso in the second section of the bankrupt law, passed by the congress of the United States August 19th, 1842, “ that nothing in this act contained shall be construed to annul, destroy or impair any liens, mortgages or other securities on property, real or personal, which may be valid by the laws of the states respectively, and which are not inconsistent with the second and fifth sections of that act,” has been interpreted in our supreme court (Vreeland v. Bruen, 1 Zab. 214) mean that, in letter and spirit, it embraced any liens valid by the laws of the state, whether legal or equitable, arising under contract or otherwise, or, whether perfected by judgment, or only inchoate, but valid until perfected by judgment. That case only settled the validity of a creditor’s attachment under the law of this state, but the statement of the proper construction of the proviso would cover the ease of a vendor’s lien in equity, which is so clearly and strongly established by the law of our state. And such is the policy of the subsequent bankrupt laws, and the rule in construing them. A lien which is saved under these laws, is such an one as is recognized by the law of the state where it is claimed to be binding and effective.

It only confuses the question to refer to decisions of courts in other states where a vendor’s lien in equity is not regarded as it is under the law of our state; and it is too late to discuss the policy of the law which has been so long settled by the rulings of our highest courts.

It does not appear by the pleadings or the evidence, that any other parties are interested in this controversy, except ■those who are now before the court as complainant and defendant; or, that there is any defect of parties; the case has, therefore, been considered and decided with reference to them; and the defendant, both as to the lands conveyed to her which remain unsold, and the proceeds of the sales of such portions as have been .conveyed by her, should be charged -with the vendor’s lien for purchase-money unpaid by her husband, and claimed in this action.

The decree is affirmed.

Decree unanimously affirmed.