De Ruyter v. Trustees of St. Peter's Church , 1848 N.Y. LEXIS 182 ( 1848 )

The Chancellor.

The equitable interest of the appellant, m the property sold under the decree in this cause, if she had any, was prior to the execution of the complainant’s mort gage. And as her petition states that she was in possession of the premises at that time, under her agreement with the trustees of the corporation, and down to the time of the sale by the master, the complainant and the purchaser at the master’s sale were bound to take notice of her equitable rights, if any such existed; such possession being constructive notice to them. (Chesterman v. Gardner, 5 John. Ch. Rep. 29. Grimstone v. Carter, 3 Paige's Rep. 421. Gouverneur v. Lynch, 2 Idem, 300. Brown v. Anderson, 1 Monro's Rep. 201. Tuttle v. Jackson, 6 Wend. Rep. 226, and cases there cited.) Her equitable claim upon the property, therefore, was not cut off by the foreclosure and sale, unless she was made a party to the foreclosure suit; and she may still enforce it against the house and lot, in the hands of the purchaser, who bought the same at the master’s sale with constructive notice of all the equitable rights which her advance of the $3750, and the taking possession of the premises under the alleged agreement with the trustees of the corporation, gave her. It does not appear by the petition, or otherwise, that the appellant was a party to the foreclosure suit. The purchaser, therefore, must be presumed to have bid upon the property with reference to her claim to an equitable interest therein prior to the giving of the mortgage, and at the time of the sale, and that the amount of the proceeds of the sale was diminished pro tanto. For this reason she has no claim upon these surplus moneys; which have not been produced by the sale of her equitable interest in the premises. It is not necessary, therefore, to inquire whether a parol agreement with the trustees, and the advancement of her money and taking possession pursuant to such agreement, could give her an equitable interest in the permanent use and possession of real estate, without rent, where the trustees with whom she dealt could not themselves sell their interest in the estate without a previous order of the chancellor. (Laws of 1817, p. 241, § 1.)

Again; if the complainant had any equitable lien upon the surplus moneys in this case, which I think she had not, her proper course, under the rule of this court, was to deliver the notice of her claim to the master who made the sale, or to file it with the clerk in whose office the surplus moneys were deposited by the master. Or, in case an order of reference had been entered, upon the application of some other claimant, before she was aware of her rights, she still was authorized to go before the master, upon the reference, and to present and establish her claim there. (Hulbert v. McKay, 8 Paige’s Rep. 654.) That course was still open to her when the petition in this cause was sworn to; and no reason is staled in her petition for subjecting the other claimants to the expense of coming hereto oppose her application for the surplus moneys, upon affidavits. The vice chancellor, therefore, upon being satisfied that the petitioner had no equitable lien upon the surplus moneys, might very properly have charged her with those expenses.

The order appealed from must be affirmed, with costs.