Zarkowski v. Schroeder

Hirschberg, J.:

When this case was before the court the first time the submission was dismissed because there was no statement or agreement upon certain facts deemed material, and because there was no agreement for the rendition of judgment in case the controversy was determined in favor of the defendant. (See Zarkowski v. Schroeder, 60 App. Div. 457.) The defects then pointed out have since been remedied, and the case has again been submitted.

The controversy turns upon the sufficiency of the defendant’s title to certain real estate in Queens county on J une 4, 1897, on which date she conveyed it to the plaintiff by warranty deed. The deed was duly recorded in that county on July second following. Since that time, but at what date does not appear, the plaintiff attempted to sell the property, and a contract for that purpose was duly executed, but the purchaser or purchasers refused to take the title upon the ground that the same was “ defective, unmarketable and worthless.” The parties seek by this submission to obtain an adjudication upon the validity of the title.

It is admitted that on August 7,1869, the title to the property in question was vested in John H. Van Mater and wife, who then conveyed it by full covenant warranty deed to John Frederick, and took back from him a purchase-money mortgage for $441, due August 7, 1872, and recorded August 18, 1869. The mortgage was subsequently assigned by various mesne transfers, the last being for full value to Andrew J. Smith, on November 22, 1890. Frederick died in 1892, and on December first of that year Theodore Huhn, claiming to be his executor with power to convey real estate, conveyed the property in question to the said Andrew J. Smith, by deed dated that day, and recorded December 5, 1893. Smith conveyed the property to the defendant by full covenant warranty deed, dated May 7, 1894, and recorded July 13, 1894. In 1896 Smith instituted an action in the Supreme Court for the foreclosure of the purchase-money mortgage, and a decree of foreclosure and sale was entered on December 18, 1896, upder which the defendant purchased the property, receiving a sheriff’s deed dated April 1, 1897, and recorded April 18, 1897. In such action service of the summons was directed by publication upon affidavits showing that Frederick died unmarried and, so far as known, without heirs at law or next of kin, and service was duly made according to the terms of the order upon Huhn and upon the unknown defendants, viz., “the widow, heirs at law and devisees' of John Frederick, deceased, if any there be.” The People of the State of Hew York were also made a party defendant.

It is conceded by both parties to this controversy that the deed to Smith from- Huhn, as alleged executor of Frederick, conveyed no title, and under the circumstances the plaintiff cannot be permitted to now assert as against the defendant that the purchase-money mortgage in Smith’s liands merged in the defective title, so that it was extinguished by the subsequent conveyance by Smith to the defendant. Whether a worthless title will ever be held to absorb a valid mortgage by operation of merger need not be determined. Smith by foreclosing and the defendant by purchasing at the foreclosure sale have both treated the mortgage as valid and outstanding. As a matter of fact the mortgage was neither canceled nor assigned, and it is well settled 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. (Sheldon v. Edwards, 35 N. Y. 279; Smith v. Roberts, 91 id. 470; Asche v. Asche, 113 id. 232.)

The only remaining question necessary to Consider relates to the effect of the foreclosure sale. The defendant was not a party to that suit, the theory of the proceedings being apparently that her deed was invalid and that the title to the real estate vested on Frederick’s death in his heirs or devisees, if any. By virtue of the provisions of section 445 of the Code of Civil Procedure his representatives (the service having been made by publication) must be allowed to defend at any time within seven years after the filing of the judgment roll. But this section contains the' further provision that the title to property sold' to a purchaser in good faith shall not be affected thereby. There is no statement in the record indicating that the defendant was a purchaser in bad faith-, or- that she purchased with knowledge of any fact in reference to the title or to the foreclosure proceedings which was not known to every one constructively. There is no suggestion of fraud or collusion, or that she knew of the existence of heirs or devisees, or indeed that any do exist. She may have purchased in aid of her defective title, and doubtless, did, but that fact would not of itself render her a purchaser in bad faith. The burden is on the. plaintiff to prove that she was not a purchaser in good faith. The action is to be regarded as one for damages for a breach of the covenant of seizin and not an equity action for rescission, and the burden is now on the plaintiff to prove such breach affirmatively. Under the common-law rules of pleading the plaintiff could assign the breach generally by merely negativing the words of the covenant; the defendant could plead that he was seized, and issue would be joined by a replication reiterating the denial of seizin without specifying defects of title or averring a title paramount. The affirmative of the issue was then with the defendant, who was bound to prove performance of the covenant, or, in other words, to explain his title, and if no evidence was introduced the plaintiff was entitled to judgment. The plaintiff was presumed to be ignorant of the real state of the title, while the grantor retained in his possession the evidences of it. (Abbott v. Allen, 14 Johns. 248.) The rule was in harmony with a system of conveyancing under which land titles were not matters of public record, but each landowner had in his own hands the muniments of his title accessible only to the owner of the estate. Since the passage of .the recording acts resulting in the preservation of a public record of all matters of title, a different rule has prevailed,-and the affirmative of the issue is with the plaintiff, by whom the specific breach must be both alleged and proved. (Woolley v. Newcombe, 87 N. Y. 605.)

The record presents other irregularities to which our attention is called by the briefs, but nothing tending to prove that the title is in fact defective. On the main question presented, aside from the protection afforded by section 445 of the Code (supra), it is quite obvious that the danger to be apprehended from possible but undisclosed heirs or devisees of Frederick is more apparent than real, and, as was said in Wilson v. Parshall (129 N. Y. 223, 227): “ There may be an apparent cloud upon the title to real estate conveyed by a full covenant deed, and the circumstances may be such that a court of equity would not compel a purchaser under an executory contract to take a deed; yet if he takes the deed and then sues for a breach of the covenants, the suit is well defended by proof satisfactory to the court upon all the evidence submitted that the title was. in fact not defective. Evidence which will defend an action for specific performance is not always sufficient to maintain an action for breach of covenants. The one action may concern apparent defects in the title, and the other must concern real defects.”

We think that under the circumstances, upon the facts contained rathe submission, the defendant is entitled to judgment, without costs.

All concurred, except Goodrich, P. J., who read for judgment in favor of the plaintiff.