Ells v. Tousley , 1828 N.Y. LEXIS 362 ( 1828 )

The Chancellor :—From the testimony in this case, it is fully established that the property was bid in for the benefit of the complainant, on the loan office sale. Wattles testifies that he did not purchase the property for his own use; that he purchased it at the solicitation and request of Dimick, in trust for the sole benefit of the complainant; and upon *the assurance that he would refund the money in a few days, together with a compensation for his trouble in attending the sale. The amount bid was $200, but the amount paid was only $60 or $70, the residue being for the surplus moneys, for which a release was procured from the mortgagor. A short time after the sale, the money was refunded to Wattles by the complainant, and it was then agreed that no deed should be executed by the commissioners in pursuance of such sale. Dimick corroborates this statement, and also testifies, that shortly after the sale he told the defendant that Wattles bid off the land for the complainant, who had refunded the money to him since the sale. Munro, the other commissioner, also testifies, that after the sale commenced, Dimick requested it to be stayed a short time, until he could procure some person to bid; and shortly afterwards Wattles came in and bid off the property, and informed him at the time he paid the money on such bid, that he bid in the land as the agent of the complainant, and had no other interest in the purchase, Under these circumstances, if the deed had been executed by the commissioners at the time of sale, the title would have been in the complainant, as a resulting trust, and Wattles could only hold the deed as a security by way of mortgage for the money advanced by him. (Boyd v. McLean, 1 John. Ch. Rep. 582.) It is not material to inquire in this case, whether the defendant, at the time he executed the deed to Wattles, and put it on record, for the purpose of making his judgment a lien upon the land, had a full knowledge of the complainant’s rights. From what took place at the sale, he had sufficient to put him on inquiry, independent of the direct infprmation that he received from Dimick of the repayment of the money.

If, therefore, he made an agreement to discharge other lands of Wattles from the lien of his judgment, and substitute a lien on the 16 acres in lieu thereof, it was a fraud upon the complainant’s rights. But his judgment never could in equity, be a lien on this lot. The lien could not attach until the legal title was vested in Wattles by the execution of the deed by the commissioners. And long before any such conveyance was made, the equitable title to the land, at least, *was vested in the complainant, by the repayment of the money advanced, and by the agreement that no deed should be executed. I have lately had occasion to decide, that the lien of a judgment does not, in equity, attach upon the mere legal title to land in the defendant, when the equitable title is in a third person. And if a purchaser under the judgment has notice of the equitable title at any time before his purchase, and the actual payment of the money at the sheriff’s sale, he cannot protect himself as a bona fide purchaser.^[1]

The sale of the complainant’s lands under the judgment, and the purchase by the defendant, after being informed of all the circumstances of the case, cannot be sustained. And the defendant must be perpetually enjoined from taking a deed from the sheriff in pursuance of such sale. He must also release and quit claim to the complainant, all right, title and interest to the sixteen acre lot, and discharge the same from the lien of his judgment, by a proper conveyance or release, to be settled by a master; and he must also pay to the complainant his costs in this suit to be taxed.

[1] Actual possession under an unregistered deed is constructive notice to such a purchaser, and imposes on him the duty of inquiring as to the rights of the person in possession. Tuttle v. Jackson, 6 Wen. 313; see also Jackson v. Post, 15 id. 588; Hooker v. Pierce, 2 Hill, 650; Schutt v. Large, 6 Barb. 373; Embury v. Conner, 2 Sanf. S. C. R. 99. But an equitable lien to secure a prior indebtedness, is not entitled to preference over a judgment lien, where both attach on the land at the same time. Dwight v. Newell, 3 Const. 185.