Sweet v. . Henry , 175 N.Y. 268 ( 1903 )

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[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The plaintiff, as the owner of certain premises, brought this action to restrain by injunction the removal of a building therefrom. A temporary injunction was granted, and afterwards modified by consent of parties so as to permit the defendants to remove the building on giving a bond for damages.

The single point is presented whether the plaintiff was chargeable with constructive notice of the alleged right of the defendants to remove the building in question.

This opinion is preceded by a statement of the facts showing in detail the chronology of the case and the disclosures in the chain of title under which the plaintiff received his deed.

The referee found, in substance, that the plaintiff was chargeable with constructive notice of the right of the defendant Henry to remove the structure known as the "skating rink" from the premises. He, therefore, dismissed the complaint on the merits with costs.

The learned Appellate Division, with a divided court, reversed the judgment entered upon the report of the referee. This reversal was upon the law only.

The material facts may be briefly stated as follows: Van Dresser, the owner of certain real estate, leased a strip thereof to Baker and Sweet, for a period of fifteen years, the instrument providing that the second parties agree "that they will during said term maintain on said premises a skating rink or public hall, for which purpose alone the premises are leased, which building and fixtures thereto belonging second parties may remove at the end of their term." This lease was not recorded. Thereupon the skating rink was erected. Later there were a series of conveyances, each one of which was recorded and contained the following reservation and exception: "Also excepting and reserving the use of the lands on which a skating rink now stands for the use of said rink for the term of fifteen years from the year 1884."

At the time that Van Dresser, the original owner of the premises, and who gave the lease, conveyed to one Crandall in May, 1885, he took back a mortgage for the unpaid purchase money, which contained the same reservation and exception. This mortgage was foreclosed many years thereafter, the judgment of foreclosure not having been entered until the year 1898. In this foreclosure suit the complaint, the judgment and the notice of sale by the referee all contained the same reservation and exception.

John Dunn died owning this mortgage, and his executrix, Nellie Dunn, foreclosed the same and took title at the sale; on the 28th day of April, 1898, she conveyed by a quitclaim deed to one Howden, which deed contained the same reservation and exception as to the use of the lands for the purpose of the skating rink. Howden conveyed by quitclaim to the plaintiff, omitting the exception and reservation which had theretofore appeared in the chain of title.

The rule of law is well settled that a recital in a deed forming a link in the chain of title of any facts which should put a subsequent grantee or mortgagee upon inquiry and to cause him to examine other matters by which a defect in the title would be disclosed, is constructive notice of such defect.

Where a purchaser of land has knowledge of any facts sufficient to put him on inquiry as to the existence of some right or some title in conflict with that which he is about to acquire, he is presumed either to have made the inquiry and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered as a bonafide purchaser. (Acer v. Westcott, 46 N.Y. 384; Williamson v. Brown, 15 N.Y. 354; McPherson v. Rollins, 107 N.Y. 316;Anderson v. Blood, 152 N.Y. 285.)

The plaintiff's chain of title extends back through the foreclosure sale, the mortgage on which it is based and the mesne conveyances leading up to Van Dresser, the lessor and owner of the fee. The fact that Howden omitted from his quitclaim deed to plaintiff any reference to the exception and reservation mentioned in the prior conveyances is of no importance, as under the rule, to which reference has been made, the plaintiff is presumed to have examined the conveyances in his chain of title and to have investigated all facts therein disclosed in any way affecting his rights under the conveyance he was about to accept. If he failed to make such an investigation, but relied on quitclaim deed, he is chargeable with negligence and is estopped from availing himself of any benefit he might have derived by reason of due inquiry.

Assuming that the plaintiff had carefully investigated his chain of title, what would have been disclosed to him? He would have found in all the deeds and the mortgage, through the foreclosure of which his title is derived, the exception reserving the use of the land upon which a certain skating rink building stood for the use of said rink for the term of fifteen years from the year 1884.

It is true that the lease conferring the right upon the owner of the skating rink building to remove it at the end of the term was not recorded, but we here have a distinct reference to the existence of such a right which should lead any purchaser, possessing ordinary caution, to investigate its origin and the written instrument, if any, upon which it rested.

At the time the plaintiff took title, or at the date of his contract which afterwards resulted in a conveyance, the defendant Augustus W. Henry was in the occupancy of the building known as the skating rink, and the slightest inquiry of him by plaintiff would have revealed the true situation, to wit, the existence of the unrecorded lease for fifteen years from the year 1884, with the right in the lessees to remove the building at the end of the term. There were other parties, whose names were disclosed in the chain of title, of which inquiry could have been made.

The fact that Augustus W. Henry, one of the defendants, appeared as a grantee of the fee of these premises is of no special importance, as his conveyance contained the exception and reservation common to all the deeds in the chain of title. Furthermore, if the plaintiff had examined this deed from Crandall to Augustus W. Henry given in May, 1886, he would have discovered that it contained in addition to the exception and reservation already referred to, the following: "This conveyance is subject to a mortgage made by C. Sherman Crandall to Charles D. Van Dresser on the first day of May, 1885, on which there is now due $1,974.50, and which mortgage is now held by John Dunn of Genesee Falls, N.Y. That when said uses relating to the skating rink, lock up and water trough shall have lapsed by expiration of time, the fee absolute of the lands upon which the same stand shall become vested and pass by this conveyance as if such had never been created. The said premises being the same real estate referred to in said deed of Van Dresser to C. Sherman Crandall, except as shall relate differently to said Meaches' land." Following the covenant of warranty in this deed were these words: "Except as against the exception and reservation and against the mortgage above mentioned."

Here the plaintiff would have received, if he had examined this conveyance, the additional and impressive notice that there were existing rights as to the skating rink and other matters that would lapse by expiration of time, and their precise nature and origin would have been disclosed by inquiry made of Augustus W. Henry on the premises in question.

The referee decided as a conclusion of law: "That when the defendant Henry took to himself a conveyance of a term for years from Baker and Sweet, such term was merged and extinguished in the fee then vesting in him, but that such building as between the original lessor and lessees was personal property and was not converted into real estate by such merger, and that the title to such building was not merged or sunk in the fee of the land by the acquisition of the term of the lease by the said Henry."

Undoubtedly, Henry, on becoming vested with the fee of the premises in question, took the place of the original lessor, with the ultimate right to the full enjoyment and ownership of the premises at the expiration of the lease. To this extent only there was a merger. As to the skating rink building, however, it constituted no part of the real estate, as by the terms of the lease it was declared in legal effect to be personal property, subject to the right of removal at the expiration of the term.

The rights of the owners of the skating rink building do not rest upon the law of merger, but on the terms of the lease, as already pointed out.

It is the rule that merger is always a question of intention when two estates vest in one and the same person, and if the grantee manifests no intention on the subject, then in equity he could elect that which was most beneficial to him. (Asche v.Asche, 113 N.Y. 232; James v. Morey, 2 Cow. 285; Champney v. Coope, 32 N.Y. 543; Smith v. Roberts, 91 N.Y. 476;Curtis v. Moore, 152 N.Y. 159, 165.)

Chief Judge RUGER said (Asche v. Asche, supra, at pages 235-6) that "In equity the union of legal and equitable estates in the same person does not effect a merger unless such was the intention of the parties and justice and equity require it."

The referee has expressly found as a fact, "That it was not the intention of the said Augustus W. Henry, when he purchased the said skating rink, or at any time thereafter, that the title to said building should merge in the fee of the land, or that the same should come under and be subjected to the lien of the said Dunn mortgage, and it was for his interest and more beneficial to him that such merger should not occur."

If the law of merger were applicable to this situation, we have here the distinct finding that it was not the intention of the defendant Augustus W. Henry that merger should take place as to the building, resting upon sufficient evidence. This finding, if material, is binding upon this court.

It further appears from the findings of fact that the defendant Augustus W. Henry occupied the adjacent hotel property for many years, and that the existence and maintenance of the skating rink building was beneficial to him, as it increased the patronage of the hotel by reason of its close proximity.

There are a variety of facts disclosed by the findings and discussed in the briefs which we deem it unimportant to examine, as the situation disclosed in the chain of title, and with which the plaintiff is chargeable by reason of constructive notice, sustains the conclusions of law made by the referee and required a dismissal of the complaint.

No error of law is disclosed in this record justifying the reversal of the judgment by the Appellate Division, entered upon the report of the referee, unless the objections and exceptions taken by the plaintiff to the admission of evidence present such error.

It appears from the findings that about two years before the commencement of this action Augustus W. Henry transferred to his mother, Rosetta Henry, the skating rink building and the personal property that it contained, delivering to her the keys thereof.

It is in evidence, but not found as a fact by the referee, that Rosetta Henry afterwards transferred the property to Hettie Henry, a defendant, the wife of Augustus. This last transfer is a fact that we cannot take cognizance of, not being found by the referee. This court is confined to the findings of fact and is not permitted to look into the record for additional facts.

It appears that the defendant's counsel offered in evidence the judgment roll in an action wherein Hettie Henry was plaintiff and the sheriff of Allegany county and others were defendants, such action being replevin, to recover certain property, including the building in question, taken on an execution against Augustus W. Henry.

It further appears from the judgment roll that the judgment was entered upon an offer made by the sheriff and accepted by the plaintiff. This offer allowed judgment to be taken against the sheriff and other defendants for the recovery of the possession of the chattels described in plaintiff's complaint, but without damages for the detention thereof and without costs of the action.

This judgment roll was doubtless immaterial, but as it had no bearing upon the issue as to an existing right to remove the building, its admission did not constitute prejudicial and reversible error. Whether the lease was owned by the original lessees or by their assigns did not concern the plaintiff.

The plaintiff was asked on cross examination, "Did you try to buy this building?" This was objected to as not material and made for the purpose of settlement. The plaintiff replied "I did in a way; I told him that I would give $300 rather than go any further with it." It was in evidence that the building was worth a far greater sum.

This evidence was doubtless incompetent and immaterial, but as there was no jury it worked no such prejudice to the plaintiff as to present reversible error.

The order appealed from should be reversed, with costs, and the judgment entered upon the report of the referee affirmed.

PARKER, Ch. J., GRAY, O'BRIEN, VANN, CULLEN and WERNER, JJ., concur.

Order reversed, etc.