Denham v. . Cornell , 1876 N.Y. LEXIS 436 ( 1876 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] As matter of fact, the real estate of which Mrs. Cornell was once the owner, has been converted into personal property. This was done in her lifetime. It was done with her assent, and it was done with the sanction of the court; as a consequence legally flowing from the acts of her husband, by which acts she was bound, as far as Stewart, the purchaser, was concerned. Doubtless she had the same right to follow those moneys, which she would have had to pursue the land had it not been sold to Stewart. And so far, the moneys are to be regarded as impressed with the character of real estate, so that her equitable right to them may be sustained. But it is a different question, what would have been their character, had she succeeded in her action, and in her lifetime reduced them to possession. In such case, they would have been moneys in her hands, personal property. And so it is a different question, she dying her action undetermined, whether her heir at law or her administrator may follow them. Mrs. Cornell was in reality, in the first instance, the owner only of the equity of redemption in the lands, they having been mortgaged to one Todd. His mortgage had been foreclosed. If the sale in that foreclosure suit had been regular and without fraud towards her, all that Mrs. Cornell could have done would have been to obtain the surplus moneys, if any. She would have been entitled to these, as owner of the equity of redemption; but they were personal property, and would have been such in her hands when recovered. (Wright v. Rose, 2 Sim. Stu., 323.) Had she died before the sale, the heir at law becoming the owner of the equity of redemption, would likewise have been entitled to them; but when obtained by him, they would have been personal property in his hands. If she had died after the sale, after the equity of redemption had by operation of law been converted in fact into moneys, the administrator would have been entitled to them. (Graham v. Dickinson, 3 Barb. Ch., 169.) For neither she nor the heir at law would obtain them as in fact real estate; but as a personal fund, to which there was a right of resort, as a remuneration for the loss of the equity of redemption. (Id.)

Now in essence, the situation of the case is not different from that above supposed. There was a sale in the Todd foreclosure. It was fraudulent against Mrs. Cornell, so far as the purchaser, at that sale, was concerned. She could not, however, have disturbed the mortgage to Purdy, given thereon. All that she could have done, would have been to have maintained her right to the lands, subject to the Purdy mortgage. And so of the subsequent transactions, down to the contract of sale to Stewart; she being bound as to innocent third parties, by the acts of her husband, whom she had clothed with seeming authority, they were in effect but a continuation of the same right. She then became the rightful owner of all the unpaid purchase-money; not as real estate, but as a personal fund, to which she had an equitable right to resort, to remunerate her for the loss of her right of redemption from the mortgages. Her quit-claim deed and the order of the court were, in conjunction with the prior facts, and the legal results therefrom, as the operation of law, changing in her lifetime, her interest in the lands into personal estate, with such an equitable impress thereon, as enabled her to follow it (though it had become personalty), for her remuneration. As it became personalty in her lifetime, it must follow the course of that kind of estate, and go to her administrator. These are the rules which govern this transaction. Where real estate is, by virtue of a devise or grant, sold for a particular purpose, he who would at the time of the sale be entitled to the land if it were not sold, is entitled to the money for which it is sold. But if the one who is so entitled to the money, dies after he has received it, or after he has attained the right to receive it, the money is personal estate and goes to the administrator and not to the heir at law. (Cruse v. Barley, 3 Peere Wms., 19; *22 and note 1, where many authorities are collected.) For the purpose of seeing it more clearly, the proposition may be differently stated. When the interest of the decedent has been in the land, and he has died before conversion, then his interest in the avails of the conversion goes to his heir at law. Where the conversion has taken effect before the death of the decedent, then his interest in the avails goes to the administrator. (Leigh Dalzell on Eq. Conv.,* 96 [Law Lib., vol. 5, p. 47].) The cases illustrate those propositions. If one recover a judgment against the owner of an equity of redemption, before a sale on foreclosure of the mortgage, the judgment is a lien upon surplus moneys arising upon the sale. If the judgment be got after the sale, though before distribution of the surplus, there is no lien upon them. (Sweet v. Jacocks, 6 Paige, 355;Douglass v. Houston, 6 Ohio [Hammond], 182.) If real estate of a bankrupt be sold, during his lifetime, by the commissioners in bankruptcy, the surplus moneys in their hands, after the payment of the debts of the bankrupt, go to his administrators. If the sale had been after his death they would have gone to his heirs at law. (Banks v. Scott, 5 Madd., 493.) So it is in the case of estates of lunatics. (Oxenden v. Lord Compton, 2 Ves., Jr., 69.) So where property is sold by a decree of a court of equity in some cases and the executor is a party, the real and personal representatives of the testator must take the property as they find it. (Flanagan v. Flanagan, cited in Fletcher v. Ashburner, 1 Bro. C.C., 497-500, and approved in Walker v.Denne, 2 Ves., Jr., 170-176.) The maxim of equity, fieri nondebet sed factum valet, applies even in the case of the real estate of an infant where the law most jealously preserves the prime character of the property. If there has been a sale of lands for a specific purpose and a surplus has arisen, it is at first given to the heir at law rather than to the next of kin. Yet after it has once vested in the person thus entitled, it is ever after to be treated as money, and on his death it passes as personal estate. (Pennell's Appeal, 20 Penn. St. [8 Harris], 515; approved in Sayers' Appeal, 79 id., 428.)

It is plain that in the lifetime of Mrs. Cornell she was entitled to these moneys. By the force of those rules above given those moneys were part of her personal estate, and on her death transmitted by the law to her administrator and not to her heirs at law.

Hence the plaintiffs, who are her heirs at law living, or representative of an heir at law dead, have no interest which will further maintain this action.

The judgment should be affirmed.

All concur.

Judgment affirmed.