Opinion
March Term, 1865
George T. Spencer, for the appellant.
Bradley Kendall, for the respondent.
The plaintiff purchased the premises from Mrs. Lombard, who held the legal title by a fraud, pending an action to enforce the claim of the defendant, Brown, a judgment creditor of Rowley, the equitable owner thereof. Rowley was in possession under a contract to purchase, and had paid all the purchase-money but $200, when in June, 1858, with intent to defraud his creditors, and prevent the collection of the Brown judgment, he procured the legal title to be placed in Mrs. Lombard's hands. The consideration for the transfer to the plaintiff, on the 11th April, 1859, and some seven months after the commencement of this action to subject the premises to the payment of Brown's judgment, was $700, of which amount $100 was paid when he took the conveyance, and the remainder ($600) he obligated himself to pay "whenever the premises should be discharged from all claims and incumbrances to the satisfaction of the attorneys who drew the papers between the parties, or whenever he (Patterson) should be fully secured and indemnified to the satisfaction of such attorneys." These were the plaintiff's attorneys, and at the time the conveyance was made and this extraordinary obligation executed, they were defending the receiver's suit for Mrs. Lombard, his grantor. He had no actual knowledge of the pendency of the action by the receiver at the time of the execution of the papers. He did know, however, of the judgment against Rowley, and that the defendant Brown was claiming to have a lien upon or interest in, the premises founded upon such judgment, and he had sufficient notice of the nature and character of the claim to put him upon inquiry in regard to it. Intermediate the commencement of the receiver's suit and the purchase by the plaintiff, the dwelling house on the premises had been destroyed by fire, and it is averred in the complaint but denied in the answer, and there is no finding on the subject, that at the time of the purchase, the premises were worth but the sum of $700 (the price agreed to be paid therefor), and was never at any time afterward, worth any further or greater sum, independent of the improvements put thereon by the plaintiff. Immediately after his purchase the plaintiff commenced improving the premises, but before he had expended any considerable amount in that way, the defendant Brown went to him, in good faith, for the purpose of giving him notice of his claim, and upon speaking to him upon the subject, was informed by him that he knew all about the claim, and had protected himself against it in his purchase. He continued improving the premises, although the defendants were guilty of no fraud or concealment on the subject of their claim and did nothing to mislead or induce him to go on with his improvements. Whilst the improvements were in progress, and several months before the trial of the receiver's action, he became aware of the proceedings in the action, and was fully advised of the nature and character of the same; yet after such knowledge, and before the trial and decree, he continued making them, and expended in that time an amount on the premises far greater than the whole amount of the defendant's claim.
In May, 1860, the receiver obtained judgment, declaring that the transfer of the premises from Rowley to Mrs. Lombard was fraudulent and void, as against the defendant Brown, the judgment creditor; that Mrs. Lombard and her assigns held the premises in trust for the benefit of the plaintiff, as receiver of the debts, property, equitable interests and things in action of Rowley, and that the judgment of the defendant Brown, against Rowley for $529.06, recovered in December, 1857, is a lien and charge upon the premises. The premises were ordered to be sold, and the proceeds (after payment of the fees and expenses of the sale), to be applied as follows: $200, with interest, from 24th July, 1858, to Mrs. Lombard, that being the amount of the purchase-money of the premises remaining unpaid by Rowley at the time of the transfer to her. 2d. To the payment to the plaintiff (the receiver), or his attorney, the amount due on the Brown judgment, being $501.53, with interest, from March, 1858. 3d. To the payment of the plaintiff's costs in the action, adjusted at $159.92, also the sum of $25 for the costs and charges in the proceeding, supplementary to execution, and $38.52 for the fees, commissions and charges of the receiver, or so much as the purchase-money of the premises will pay of the same.
After this decree had been perfected, and the premises, in pursuance thereof, advertised for sale, and recognizing its legality and force as against him, the plaintiff comes into a court of equity, and asks that the premises be discharged from the lien and operation of such decree, upon his payment of the amount of the unpaid purchase-money, which he agreed to pay to Mrs. Lombard, less the sum of $200, awarded to her out of the proceeds of the premises. Conceding that the premises, at the time of his purchase from Mrs. Lombard, were worth no more than the price which he agreed to pay therefor (which fact is not found), the relief asked, in substance, is that the meliorations and improvements of the plaintiff to the premises, after he acquired the legal title, be protected from the operation of the decree. Coming in subordinately to such decree, which gave the defendants the right to sell the premises to make the amount of their claim, unless the same should be paid, instead of making such payment, which the plaintiff was at liberty to do, and relieve the premises from that charge, under pretense of protection to his improvements, made at his peril, it is sought to compel the defendants to take a specific sum less than their claim, and deprive them of the full benefit of their decree. I am at a loss to conceive of any ground on which a court of equity should interpose and grant the relief prayed for.
The judgment of the court, charged the premises with the payment of Brown's judgment and the receiver's costs, amounting in the whole to over eight hundred dollars, The proposition is, that the premises be discharged by paying $550 of this amount, leaving the judgment creditor deficient the balance, and this upon the pretext that the premises are worth no greater sum, after deducting the $200 to be paid to Mrs. Lombard, independent of the improvements made thereon. Chargeable with notice of the pendency and object of the action in which the judgment was recovered, the plaintiff purchased the premises for the nominal sum of $700, although, in fact, paying but $100, nor agreeing to pay any more until they were discharged from all claims and incumbrances to the satisfaction of his attorney, who was then defending the receiver's action for his grantor. No one can wink so hard as not to see that it was the defendant's claim, that he was then prosecuting, that was in the contemplation of the parties by this arrangement. Stopping here, the plaintiff could not be regarded as a bona fide purchaser for a valuable consideration, and entitled, as such, to be protected by a court of equity. Had he stopped at this point, the theory on which this action is claimed to be maintainable, viz., that he is bound to no greater extent than the purchase-money unpaid by him to his grantor, or the value of the premises without his improvements — would have no basis. Nor would he have lost anything, except the $100, by making the defendant's judgment a lien and charge on the premises. He did not, however, stop upon taking his conveyance. Entering immediately into possession he began improving the premises. Then the defendant Brown went to him in good faith to notify him of his claim, when he assured him that he knew all about it, and had protected himself against it in his purchase. From this time surely he acted with his eyes open. Still he went on with his improvements, continuing or permitting to continue the litigation in respect to the claim of Brown, until the accumulation of costs increased the sum to which the defendant was entitled beyond the amount of purchase-money withheld by him, and which was sufficient at the time of his purchase to have fully discharged such claim. In view of these facts, what equitable right has the plaintiff to have the premises in question discharged from the lien of the judgment by paying a portion thereof, or an amount equivalent to the purchase-money unpaid by him, or even the value of the premises at the time of his purchase, and before they were improved? None whatever. If he is compelled now, for the purpose of discharging the premises from the lien of the defendant's judgment, to pay more than they were really worth at the time of his purchase, he voluntarily and knowingly placed himself in the position, and their enhanced value comes from his own improvidence and folly. A party having notice of the pendency of an action to reach the equitable interest of a judgment debtor in lands, may not purchase them from a person fraudulently holding the legal title, enter upon and improve them, and when the lands are subjected to the claim of the judgment debtor, and his judgment and the costs of the action specifically charged upon them, discharge the lien by payment of a sum of money equal to the price that he agreed to give his grantor, or discharge it by the payment of a sum equal to the value of the lands, without the improvements that he, not innocently or ignorantly, but improvidently and at his peril, put upon them.
This is the exact position the plaintiff occupies. He was a volunteer throughout. He knew, or was chargeable with notice of the pendency of the action when he purchased, and if not then, most certainly before he had done anything to increase the value of the estate. Courts of equity have never gone the length, even in favor of a bona fide possessor of land, whose title is defective, of decreeing compensation for the improvements made by him upon the land in good faith against the true owner, who asserts his title to it. But here, in a direct suit, the mala fide purchaser of land in possession, in effect, asks to be recompensed for improvements which have enhanced the value of the estate, made by him in bad faith, and in defiance of, and regardless of the defendant's rights. I say this is essentially the relief prayed for. In asking to redeem the premises and discharge them from the lien and operation of the defendant's judgment, by paying the value of them at the time of his purchase, the prayer in effect is, to have his improvements exempted; and the judge, at Special Term, was right in the conclusion that it was simply a question of the right to compensation for improvements upon lands to which another has a superior claim, differing only in point of form.
I am clearly of the opinion that the case was properly disposed of in the court below. Barring the question of jurisdiction of a court of equity in the premises, the case was not one equitably entitling the plaintiff to redress. No injury will happen to him by enforcing the defendant's judgment, that he did not voluntarily bring upon himself. With full knowledge of the defendant's rights and in disregard of them, he went on expending his money in the improvement of premises, at length charged with the payment of the defendant's judgment. Courts of equity do not relieve a party from the consequences of risks that he thus voluntarily assumes.
The judgment of the Supreme Court should be affirmed.
Judgment affirmed.