Opinion
12-11-1899
RUTHERFORD LAND & IMPROVEMENT CO. v. SANNTROCK.
Albert I. Drayton and Joseph F. Randolph, for complainant. John I. Weller, for defendant.
Bill by the Rutherford Land & Improvement Company against Frederick Sanntrockfor specific performance of a contract to convey land. On final hearing. Judgment for complainant.
Albert I. Drayton and Joseph F. Randolph, for complainant.
John I. Weller, for defendant.
PITNEY, V. C. (orally). I think I will dispose of this case at once. It is an important case. It is an important question to both parties, and its decision may affect other titles; but, if I am in error about it, the parties have their remedy by going to the court of errors and appeals. Now, I think it may be said to be perfectly well settled that so far as concerns a question of general law, or the construction of a document, which is a question of law, this court will decide the one, and construe the other, on a bill for specific performance, for the reason that whatever it settles as a matter of law it settles against all the world, whether all the parties having an interest in the question are here or not; and, if this court cannot settle it the court of appeals can.
Now, let us see what this case is. It is a bill for the specific performance of a contract for the sale of land by the Rutherford Land & Improvement Company, vendor, against Frederick Sanntrock, vendee. The making of the contract itself, and its binding effect as between the parties, is admitted. The sole defense set up is that the title of the Rutherford Land & Improvement Company in the property in question is of such a doubtful character as to make it unmarketable. It is quite difficult to define a marketable title. I had occasion during the course of the argument to call attention to the fact that, in the sense of being beyond the reach of serious attack, such a thing as a perfect title is quite rare; that one that is apparently on its face the very best might be attacked, and successfully attacked,—as, for instance, the case of an insane grantor, or of a forged deed, with a forged acknowledgment. A party might be in possession for years under a deed, and yet afterwards an infant might come forward and attack that deed on the ground of insanity of the grantor, or forgery, and prove the insanity or forgery. There are other supposable cases, which I will not take up the time of counsel to state,"but they suggest themselves to the mind of every lawyer who has anything to do with handling titles to land. There are, however, two classes of titles which I will mention, one of which depends entirely upon matters of record, or documents which, so to speak, prove themselves; and the other upon matters in pais. There is title by descent. which is almost always a matter in pais. The laws of our state do not provide, upon the demise of a party and the descent of his land to his heirs at law, for any judicial action determining who those heirs at law are, and declaring that the title vests in them. In California I happen to know that such judicial action takes place in every case. There the heirs at law prove their case, so to speak, before a court corresponding to our orphans' court, and get a new title,—a declaration by that court, which is binding on all the world, that they are the heirs at law of the decedent, and that the title vests in them. Such a thing does not occur here. So that title by descent is almost always, in this country, a matter in pais. Then, in contrast with this class, there are titles of record, supported by documentary evidence which is generally recorded, perfectly good on their face, and unexceptionable, that are nevertheless liable to be disturbed by matters in pais,—by proof of matters in pais. All of us hold our titles subject to that kind of attack. All titles are held subject to attack by matters in pais that we may know nothing about. Then there is a class of titles which can only be sustained at any time when attacked within, say, 10 or 20 or 30 years, by proving a matter in pais, like a matter of descent. I hare already referred to that; but I have just now in mind more particularly other matters which are not within the knowledge of many persons, such as the proof of the execution of a writing—of a deed or a will—which is a part of a title. Thus, a title may be held under a deed that never has been acknowledged, which is perfectly good, just as good as if it had been acknowledged, if executed in the presence of a witness—if the grantor is not a married woman; just as good, as far as intrinsic merits go, as one that has been acknowledged and recorded; and the possession of the unrecorded deed itself, if it be witnessed by some gentleman whose signature is well known (if it can be preserved), is probably a better title than a certified copy of the record of a deed with the original gone. Now, for present purposes, I will define, without attempting to do so as I would if I were writing an opinion,—I will define a title that is not marketable as, in the first place, one where the written title contains on its face some notice of something outside which may lead to some fact that may disturb the title; where the deeds, wills, or decrees, give on their face some indication of some existing outstanding fact which will affect the title. Then another one is where the title depends necessarily upon matter in pais, which is in itself a doubtful fact, and never can be determined or established except by bringing every party interested into court,—certainly others besides the immediate party to the suit for specific performance. An instance of this is a will without a proper attestation clause, —properly executed in fact, but not so appearing on its face, and never offered for probate.
Now, let us see whether there is anything in this case which comes within either of the two categories that I have attempted roughly to state. Is there anything on the face of the written record title which the complainant produces in this case to indicate that thereare facts and circumstances which, if sifted, may disturb the title? Or is there any proof brought before the court to show a reasonable probability that a person not bound by these proceedings may prove something hereafter which will disturb this title? Now, at one time the title was vested in Arnold Mohn, who died in 1887, testate of a will. Now, that will is proven to be the will of Arnold Mohn; but it may hereafter be proven, perhaps, if the seven-years statute does not apply to it, that it was a forgery. But it is admitted by the defendant, for present purposes, that he left a will. By that will, by the fourth clause, he gave the rest and residue of his property, both real and personal, to his children, to be divided share and share alike. Then, by the fifth section, he said: "I appoint and nominate my friend John Zulauf executor of this, my last will and testament, and my said beloved wife, Rosette, executrix, to act in conjunction with my said executor." That was an appointment of those persons as executors. There is some peculiar language which I will refer to hereafter. "Sixth. My real estate, wherever found, I give to my executor and executrix in trust for my estate; giving them full power and authority to dispose of the same at any time, if deemed by them for the benefit of my estate." Now, there are questions raised as to the construction of that will; and I hold here, now, that, as I understand the latest authorities, it is competent for the court to decide these questions here in this cause, and when it has decided them, and the court of errors and appeals has affirmed, it will bind everybody, just as any other question of decided law will bind. The construction of a deed or a will is a question of law; and, when decided by the court, no matter whether the parties interested in it are all before the court, it decides it once for all.
Now I hold that, notwithstanding the devise in the fourth clause to his children, the devise in the sixth clause of the real estate to his executor and executrix vested the title in the executor and executrix as trustees; that the doctrine of a fee simple to A., and then a devise over in fee simple to B., does not apply. Not only does the last devise here vest the title in the executors, but it is the intention of the testator that they should be the first to take. It is, so to speak, first in order of time in vesting, although last in the will. Therefore I hold that the title vested in these two executors.
The next question is as to the effect of the death of John Zulauf,—I mean, on the face of this will. Under the statute and at the common law, when John Zulauf died, as the devise was in trust, the devise survived to the other executor, Mrs. Mohn. Therefore she was seised as trustee of the title to that property.
Then we come to the power of sale. The power of sale, or the permission to sell, is given to both, and it is given to them as executors. They are not mentioned as individuals in that sixth section. They are mentioned there as executor and executrix. And I hold that it makes no difference that this sixth clause succeeds the clause in which they are named as executors. The will is to be construed precisely as if the power to the executors, as such, to sell, had been given in the will prior to the naming of the executors. Therefore, in my judgment, under the statute, besides the effect of the survivorship at the common law, the wife had the power to sell, —the power of disposition, whatever it is. I will come to that in a moment. And the only question that remains is whether the case comes within the exception in the statute giving the right to a surviving executor to convey, which exception is, "unless it shall be otherwise expressed in said will." Revision, p. 397, § 10. Power is given to the surviving executor "unless it is otherwise expressed in said will." Now, it is argued by counsel for defendant, with great force (as, indeed, the entire argument of counsel was made with great force, but this part of the argument particularly struck me), that where it is plain that a discretion is vested in two persons, and it is so declared, then it is to be exercised by two persons, and the case is brought within the exception in the statute, "unless there is a contrary expression in the will." The testator says,—so counsel argues,—In effect, "I don't wish either one of my executors alone to exercise this discretion, but I wish them both to exercise it jointly." Now, tor the purposes of this case, I will hold, as the true construction of that will, and as a proposition of law, that upon the death of the executor the power of disposition there given survived to Mrs. Mohn.
Now the next point in the chain of title is this: Having determined that Mrs. Mohn had the power of disposition given by that will, what disposition could she make under it? It appears that there were several conveyances made by these executors in a peculiar manner, which has been referred to, and I think very properly referred to, by the counsel. In the first place, in March, 1889, the two executors joined in a deed to a man named Erxmeyer. Then Erxmeyer reconveyed to Rosetta Mohn, as an individual, on the same day. Well, that was on its face a fraud, and Rosetta Mohn's position was not altered by it at all. That is the way I construe those two deeds. I suppose the complainant's counsel does not complain of that construction. I have not heard him on that. Then, on April 17, 1889, a month later, Rosetta Mohn conveyed to her son, William A. Mohn. The consideration in each of these deeds is $1, I believe. Then, on April 17, 1889, the two executors conveyed to William A. Mohn, in consideration of $8,500. Then, on April 2, 1890, nearly a year later, Erxmeyer and William A. Mohn conveyed back to Rosetta Mohn, as executrix, the other executor being then dead. The result of that whole transaction I hold,in law and in equity, was to leave the title in Rosetta Mohn, executrix, as if there had been no deeds made at all. It is not necessary for me to give my reasons for that. They had been trifling, under bad advice, with the title, and they came in contact with somebody who knew something, and got out of the hands of mere bunglers and mischief makers,—unintentional mischief makers, but men that think they know something, when they do not know anything; and that somebody advised them that they had better have a reconveyance to Rosetta Mohn as executrix. Now, I hold that the result of that was that she stood just as if no conveyances had been made. She survived the executor, and she had a right to exercise the power. Next, on the 15th of October, 1890, Rosetta Mohn, as executrix, conveyed to a man by the name of Anderson; and on the same day Anderson mortgaged the premises to the Mutual Life Insurance Company of New York. Now, the Mutual Life Insurance Company advanced $14,000 in cash on that mortgage. So far as bona fides goes, it is enough to say that it advanced its money. It advanced it on what we call a "perfect record title." The abstract offered in evidence shows that Mr. Burnham examined the title carefully, and procured affidavits covering a large part of the matter here set up, showing the utmost caution in examination. It appears by the evidence that there was an advertisement made for the sale of that property a short time before—a week or two before—by Mrs. Mohn. It was advertised for sale on October 13, 1890, and this deed to Anderson is dated October loth. It is true that Mrs. Mohn denied on the stand that she ever advertised it. I do not know that she knew anything about it. It is very plain that she was then in the hands of a gentleman named Crevier. That is proven here; that Mrs. Mohn desired to improve this property by erecting a building on it, which she thought, in perfectly good faith, in the exercise of her judgment, and acting in the interests of her children, was a good thing to do. She employed a man by the name of Crevier—and I believe Anderson, the grantee, was his clerk—to act for and advise her, and she also had an architect to draw plans for the building; and at about the same time the Mutual Life Insurance Company sent its appraiser to examine the property and appraise it, and, no doubt, he made an appraisement of it. I shall infer that that gentleman made the appraisement on the basis that there was to be a building on it of such and such size and cost, and he probably saw the architect's plans and specifications, and the contract, and all that. But that appraiser had nothing whatever to do with the title. He did not inquire at all, as we all know, as to the title, or as to who owned the property, or anything about that. All he is sent for is to find out what the land is worth. He reports that value to a certain department of the Mutual Life, and they say, "If the title is all right, we will loan so much money on it." Somebody who has charge of that department says, "We will loan so much on that property." Now, after the building was partly up, and, as appears by the evidence (I am taking now the utmost that has been proven by the defendant), the time came to get some money; and Mr. Crevier says to Mrs. Mohn (I will assume now that we may so infer): "I can't get the money for you on a mortgage. There is something wrong with your will. The parties are or may be unwilling to loan money on a mortgage made by you, because the will does not say, in so many words, that you may give a mortgage. You must make a conveyance to some person, and let that person give the mortgage." And in pursuance of that suggestion this deed was made to Anderson after the advertisement, and the consideration expressed was $6,000. Now, there is not a particle of evidence in this case that Mr. Crevier got that information, that there would probably be difficulty about getting the money on a mortgage made by Mrs. Mohn, from the Mutual Life Insurance Company, or anybody authorized to speak for it. There is not a particle of evidence here to that effect, as I understand it, is there?
Mr. Weller: No, sir; Mr. Crevier is dead.
The Court: The only appearance of evidence is that Mrs. Mohn swears that she went with Mr. Crevier to the office of the Mutual Life Insurance Company in Newark. Now we know there is no office of the Mutual Life Insurance Company in Newark. There is evidence to that effect. There is no recognized office of the Mutual Life Insurance Company in Newark, but Mr. Burnham, the counsel of that company (understood to be the standing counsel of the Mutual Life Insurance Company in New Jersey), has an office of his own in Newark, for the purpose, among other professional work, of passing titles to lands upon which the Mutual Life Insurance Company is about to take mortgages; and he has machinery for that purpose in his office, and, if its mortgages are in arrears, he forecloses them. The court can almost take judicial notice of that. In fact, I think Mr. Burnham stated it himself on the stand. And I will infer that Mrs. Mohn went to Mr. Burnham's office. She said she went up one flight of stairs. Mr. Burnham, I think, swears that his office was up two flights of stairs, or more. But I will assume that a jury might infer that she went to Mr. Burnham's office, and that she there saw somebody,—she did not, but Mr. Crevier saw somebody.—had an interview with somebody, some gentleman there, who was either Mr. Burnham or his assistant. Not one word of what passed between them was heard by Mrs. Mohn, except that, as Mr. Crevier stepped out of the inner office where the conversation was had, she heard them say, "Well, let them fight it out." I watched her evidence carefully, and she was examined carefully on that subject; and I think the counsel for the complainant is entitled to his position, whichreally was not controverted in argument by the defendant, that nothing in that interview could be held as notice to the Mutual Life Insurance Company that this shuffle of title to Anderson would be made or had been made simply for the purpose of making a mortgage. Now, Crevier is dead. Who is there alive to prove any kind of notice? That is the thing, and that is the very point. Where is the probability that the least evidence exists to show that the Mutual Life Insurance Company had notice that this conveyance to Anderson was made for the purpose of putting the title in somebody that could make a mortgage?
Mr. Weller: Well, Anderson is still living.
The Court: Anderson is living, it is said. But I cannot shut my eyes to the fact that the Mohns individually are here as witnesses. They are the only parties here attacking this title, and the presumption is, the thing being so fresh, that, if any evidence of that kind could have been produced, it would have been produced. It does not appear that Anderson knew why the title was conveyed to him. Therefore I think that, if the title rested there, the facts do not disclose any reasonable ground to believe that any notice could be brought to the Mutual Life Insurance Company of New York that Anderson was not the bona fide owner of that property. Why go through the farce, if it was a farce (and I, for present purposes, suppose it was), of advertising the property for sale, and putting a large price in the conveyance? It would never do to hold titles unmerchantable on anything of that kind,—on a mere suspicion that something might be proved. There must be a reasonable degree of probability that something may be proven to affect the title. But it does not stop there. The counsel for the complainant contends that the language used in the will, "to dispose of the same at any time, if deemed by them for the benefit of my estate," includes a disposition by mortgage. The word "dispose" has a very broad significance, and authorities are cited here—some in this state, and some in other states—showing that that word is broad enough to include the word "mortgage." And I hold, as a matter of law, for the purposes of this case, that, if that mortgage had been made directly by Mrs. Mohn to the Mutual Life Insurance Company, it would have been perfectly good. I can be reviewed on that ruling. I construe that language in that way, for the purposes of this case; and it is not necessary for me to give my reasons for it, because I can be reviewed. So that it matters not if the Mutual Life Insurance Company did have notice that Mrs. Mohn was the real party that was to have this money. It matters not even if their counsel suggested that the conveyance should be to a third party, so that it could have the bond of an individual in his own right, rather than that of a trustee, and so that, in case title should ever be made under the mortgage, counsel for future purchasers should not be puzzling over the force of the word "dispose" in the will forming part of the chain of title. There is no contention here that the money advanced by the Mutual Life Insurance Company did not go into that building, and that Mrs. Mohn did not get it. There is no dispute here that she did get it. Nor is there any dispute but that Mrs. Mohn is liable to her children for the whole of that $6,000 which is mentioned as the consideration in the deed to Anderson. She must be liable to them, unless they by their conduct have released her, or are willing to release her. She undertook, as trustee, to account to them for $6,000 by signing that deed in that way. But there is no contention, I repeat,—and I am glad to see Mr. Weller frank enough to assent to that,— that that money did not go just exactly for the benefit of the Mohn heirs, as if the mortgage had been made by Mrs. Mohn, and the money paid to her. It went into that building. That is where it went. It went on those premises. If by any means these Mohn children have suffered by the transaction, it has been by reason of the mistaken judgment of Mrs. Mohn in exercising her discretion as executrix to borrow that money and put up a building, in the hope that the rents of it would result in a benefit to these infants. We must recollect that it was done in the year 1890, just before the financial stringency of 1892 and 1893, when rents fell one-quarter, one-third, one-half. So that, I repeat, in my judgment the transaction is perfectly good; that the mortgage, if given by Mrs. Mohn, and the money paid to her or to her order, to go into this building, would have been good. Therefore I hold that the Mutual Life Insurance Company was a bona fide mortgagee for money paid, and had a lien on these premises against the devisees of Mohn.
Now, then, it is not necessary to go into the law to show that the Mutual Life Insurance Company, when it bought at sheriff's sale, did not lose any of its rights by force of notice of any facts received after it took its mortgage. It bought for a good deal less than the amount of the mortgage, but that is a mere matter of sheriff's fees. It was distinctly understood that it was ready to take the amount due on its mortgage, with costs, and convey to these heirs of Mohn, if they asked for it. I do not know that it appears here that the Mutual Life Insurance Company ever had notice that the heirs of Mohn had any interest in this; but I believe young Mr. Mohn did attend the sale, and try to redeem the property and get something out of it. The Mutual Life Insurance Company was therefore a bona fide purchaser, but its title goes back to the mortgage, and is not affected by any notice it received afterwards.
Now, without saying one word more, Mr. Eibe Cordts, who purchased from the Mutual Life Insurance Company, and conveyed the premises to the complainant, is entitled to stand in its shoes, even if he does not stand in any better position,—even if he had notice of facts which, if brought home to the MutualLife Insurance Company before it advanced its money, would have destroyed its title under its mortgage. This is upon the familiar principle that a person who has had notice may obtain a good title from a person who has not had notice. Now, where does he stand, independent of the standing of the Mutual Life Insurance Company,—independent of relying upon this mortgage, and supposing the title of the Mutual Life Insurance Company is assailable, where does he stand? He found this title vested in the Mutual Life Insurance Company by a regular chain of record title, and if there was nothing on the record to arrest his attention, and if he did not have notice of the supposed defects in the title, then he is a bona fide purchaser from it, and acquires a right which it did not have. Two matters are mentioned as sufficient to have put Mr. Cordts upon his inquiry. One is that neither Mrs. Mohn nor any of the Mohn children were made parties to the foreclosure suit. The complete answer to this is that the foreclosure proceedings were conducted to a decree strictly in accordance with the rules governing such a proceeding. Everybody who by the record appeared to have any interest in the premises was made a party. A judgment or two had been recovered against Anderson, the mortgagor, and apparent owner of the equity of redemption, and those judgment creditors were made parties. So that the fact that the Molms were not made parties does not affect the record title. The second matter is this: A petition was filed by Mrs. Crevier, as executrix of her husband, who was then dead, after the decree had been made and the execution issued, setting up that Mrs. Mohn was the equitable owner of the premises, that Anderson held them in trust for her, and that she (Mrs. Mohn) was indebted to Mr. Crevier in his lifetime for services in connection with this very matter, and praying that the apparent lien of the judgment creditor, the First National Bank of Jersey City, might be displaced in favor of her, Mrs. Crevier, who claimed a sort of an equitable lien upon the surplus money after payment of the mortgage, which was founded upon, services rendered by her husband to Mrs. Mohn, the equitable owner. That petition is not on file, and we can only infer its contents from the proceedings taken under it. There is no reason to believe that it attacked the mortgage at all, but that it dealt entirely with the surplus money. Mrs. Mohn was brought in, and a contest arose between her and the First National Bank of Jersey City, as a judgment creditor of Anderson, as to the disposition of the surplus money, and the court made some decree thereon, which appears to have recognized Mrs. Mohn's right to some sort of interest in the property, subject always to the mortgage. It is proper to say that those proceedings after the decree of foreclosure were all taken without any notice to the Mutual Life Insurance Company or its solicitor. Now, I hold that Mr. Cordts was not charged with notice of that proceeding, All that Mr. Cordts was called upon to examine was the bill, the subpoena, and the decree. He had no interest whatever in any contest over the surplus money, and he was not chargeable with any notice of it. He was chargeable only with notice of the contents of the bill to foreclose. That is the result of my opinion, I believe, in Geishaker v. Pancoast (N. J. Err. & App.) 43 Atl. 883, affirmed on appeal. It has been referred to in argument, but I have not looked at it. But I do not think that the question of is pendens comes in here. The party claims under the mortgage, but, independent of that, there was nothing on the papers on file that Mr. Cordts was bound to look into, except those I have mentioned. Then it is said that Mrs. Mohn came to Mr. Cordts, and had some conversation with him before he bought; that she asked him to buy it and hold it for her. Well, in that interview Mr. Cordts' attention was not called to anything wrong in the mortgage. There was nothing in what passed between them, on Mrs. Mohn's own story, to say nothing of Mr. Cordts' evidence; and I think Mr. Cordts' evidence is the more reliable, because it appears that Mrs. Mohn has denied that there was any advertisement of the property. She may not have known of it, yet Mr. Crevier did make an advertisement of it, and it would seem that she must have known of it. There was nothing in what passed between them to put Mr. Cordts on his inquiry. But all that Mr. Cordts had notice of was that Mrs. Mohn had some interest in the residue of the property after the mortgage was paid. I think I am right in that. All that he had notice of was that Mrs. Mohn was interested in the equity of redemption, and that her children had been cut off,—by what? By a good mortgage. That did not affect the validity of the mortgage at all,—for him to have notice of that. So that he bought from a purchaser at sheriff's sale under a foreclosure, who had a perfect record title, without any notice of any defect in the mortgage. So that he is, the second time, a bona fide purchaser, in my view.
Therefore I hold all these points in favor of the complainant all the way through,—all the questions of law; and all that is necessary more to hold is that the proofs here adduced, I repeat, do not show me that there is any reasonable probability, such as a prudent man would feel obliged to take notice of, that any proof can hereafter be made showing that the Mutual Life Insurance Company had notice that there was any shuffle in this title; and that is the only matter in pais outside. I think it would never do to say, "Why, you may prove so and so, and may prove so and so." I repeat, before you can make a title unmarketable, you must show the reasonable probability of proving such a thing. I therefore decide that the title is merchantable.