Newman v. Gaul

• Decision Date: 22 April 1925
• Citation: 102 Conn. 425,129 A. 221
• Court: Connecticut Supreme Court
• Parties: NEWMAN ET AL. v. GAUL.

129 A. 221

102 Conn. 425

NEWMAN ET AL. v. GAUL.

Supreme Court of Errors of Connecticut.

April 22, 1925

Rehearing Denied June 1, 1925.

Appeal from Superior Court, Fairfield County; John W. Banks, Judge.

Action in equity brought to the superior court in the county of Fairfield, by Hartwig D. Newman, the owner of a claimed equity of redemption in certain real estate in the town of Wilton in said county, and Baker, his lessee, against Francis J. Gaul, who claimed to own the land with right of possession, by reason of foreclosure proceedings in the common pleas court in said county. Judgment was for the defendant, and the plaintiffs appeal to this court for the revision of errors, which they claim to have occurred in the trial. Error in part.

Horace M. Gray, of New York City, for appellants.

Raymond E. Hackett, of Stamford, for appellee.

HAINES, J.

The essential facts as disclosed by the record are that the plaintiff Newman owned the real estate in question, with dwelling thereon, on the 3d day of May, 1920. There was then a mortgage upon the property for $10,000 held by the Norwalk Savings Society. On that day Newman leased the premises to the plaintiff Baker for one year to May 1, 1921 with right of renewal for two further periods of one year each to May 1, 1923, and with an option to purchase the property during the term of the original lease or either of the renewals thereof. The original lease was renewed for one year to May 1, 1922, and again renewed to May, 1923. None of these leases were recorded on the land records of the town of Wilton. On September 17, 1921, Newman put a second mortgage upon the property for $1,000 in favor of one Wellnitz, and after this mortgage was recorded, three attachments were placed upon the property by the following parties in the order named, who claimed to be creditors of Newman, viz Jacob Von Heiningen, Norwalk Hardware Company, and George E. Taylor. The lessee, Baker, was in possession of the property under his lease from Newman, but neither Wellnitz nor the attachment creditors knew of the lease. On June 25, 1922, Wellnitz brought foreclosure proceedings in the common pleas court for the county of Fairfield, making Newman and Von Heiningen defendants. The other attachment creditors, the Norwalk Hardware Company and George E. Taylor, were later made parties defendant, and each appeared by counsel in the foreclosure proceeding. On May 5, 1922, a foreclosure judgment was entered in favor of Wellnitz, by stipulation of all the parties to the action, for $1,333.50 and costs, and the law days for the respective defendants were fixed as follows, viz.: for Newman, May 22, 1922, for Taylor, May 23, 1922, for the Norwalk Hardware Company, May 24, 1922, and for Von Heiningen May 25, 1922. The judgment provided further that the defendant Newman deliver up to the plaintiff or redeeming incumbrancer the possession of said mortgaged premises, with stay of execution until May 26, 1922.

After the beginning of this foreclosure action, and about February 1, 1922, Newman and Baker together left for the Pacific Coast, and did not return till about June 22, 1922. Before leaving, Newman retained counsel to appear for him and look out for his interests in the foreclosure suit. However, he did not furnish his counsel with money to redeem the property, upon the law day assigned him, May 22, 1922, and though his counsel called his attention to the need of it, by letters and telegrams, none was received by them for that purpose. They then explained the situation to Wellnitz, and told him that Newman was absent from the state and not likely to return before the said law day. Wellnitz thereupon promised that if the title to the property should come into his (Wellnitz') name, by reason of the foreclosure proceedings, he would later convey it to Newman or his counsel, upon the payment by Newman of the amount which the latter owed him. No provision was made in this agreement for the payment of the claims of the attachment creditors, and they were not consulted and were not aware of the agreement, nor did Gaul, the present defendant, or his counsel, learn of the agreement before redeeming the property. On May 19, 1922, the defendant Gaul, through his counsel, purchased all the rights and interests of the three attachment creditors, including their attachments and rights of redemption in the foreclosure judgment, and took written assignments thereof.

These assignments were recorded May 29, 1922, in the land records of the town of Wilton. In addition to these written assignments, Taylor and the Norwalk Hardware Company, each indorsed to Gaul, the notes respectively held by them upon which the actions against Newman had been brought. Gaul, by his counsel, paid the full amount of the claim of Von Heiningen, $120.72, of Taylor, $335, and of the Norwalk Hardware Company, $196.04. None of these attachment suits had gone to judgment at the time of the assignments to Gaul, and whether judgments were afterward taken out does not appear. In making these purchases of the interests of the attachment creditors, Gaul by his counsel, represented to them that the purchases were made in the interests of Gaul, and no representation was made that it was being done in the interest of Newman or in Newman's behalf, and no fraud was practiced by Gaul or his counsel. After the execution and delivery of these assignments, counsel for Gaul notified counsel for Wellnitz, and the latter notified counsel for Newman, before the latter's law day had passed, that it was the intention of Gaul, as the assignee of some one of the attachment creditors, to redeem the premises in question in the event that Newman failed to do so. Newman did fail to redeem the premises on his law day, May 22, 1922, and on the law day of Taylor, May 23, 1922, no one offered to redeem, but on May 24, 1922, the law day limited to the Norwalk Hardware Company, Gaul by his counsel, claiming as assignee of the right of redemption of that company, paid Wellnitz the sum of $1,333.59 with interest and costs, being the amount due Wellnitz under his foreclosure judgment, and an attorney fee in addition.

Wellnitz accepted this sum and indorsed the following on the back of his mortgage note and delivered the note to counsel for Gaul: " The within note has this day been paid in full by Cummings & Lockwood, attorneys for Francis J. Gaul as assignee of the Norwalk Hardware Company, the mortgage securing said mortgage note having been redeemed on behalf of said Gaul and said Norwalk Hardware Company." Wellnitz was not influenced or misled in any way by Gaul, or the counsel for Gaul, but knew that Gaul was acting for and in his own interest and not in the interest of Newman, and Wellnitz acted in this matter, on the advice of counsel. It does not appear whether Newman or his counsel intended to redeem the property on his law day, May 22, 1922, nor does it appear that anything which was said or done by Gaul or his counsel, in any way influenced Newman or his counsel, to let Newman's law day pass without redeeming. On May 26, 1922, counsel for Gaul prepared a certificate of foreclosure which was filed May 29, 1922. On June 16, 1922, counsel for Gaul, as assignee of the Norwalk Hardware Company, obtained an execution for the possession of the premises in question, in favor of the Norwalk Hardware Company, as redeeming incumbrancer, from the court of common pleas wherein the foreclosure action was adjudicated.

This directed that " Newman, defendant, and all persons claiming from or under him," be put " out of possession thereof" and that the " said Norwalk Hardware Company, the redeeming defendant incumbrancer, or any person under it," be put " into quiet and peacable possession thereof." This execution was served on June 16, 1922, at which time neither Newman nor Baker had returned to the state. Friends and servants of Baker, who were in actual possession, were put out of possession and a padlock put upon the house, but no personal property was removed. One of the servants of Baker was then put in possession as a caretaker, and given the key to hold the premises for Gaul. Upon the return of Baker, about June 22, 1922, he demanded and obtained the key from Gaul's caretaker, and at once entered again into possession and has since so remained, and now claims a right of possession against Gaul. On July 6, 1922, counsel in behalf of Newman and Baker brought the present action, asking for damages; that the defendant Gaul be restrained by injunction from serving the execution putting the plaintiffs out of possession; to ascertain the amount equitably due to Gaul; that Gaul be enjoined from incumbering or disposing of the property; and that he be required to deed it to the plaintiffs, Newman and Baker, or either of them, upon payment of such sum as is found to be equitably due to Gaul.

Before the foreclosure suit was brought by Wellnitz, he knew that Baker was in possession of the premises and paying rent therefor, and that he owned personal property on the premises, but he did not know of any lease held by Baker, or the terms upon which Baker was holding. While occupying the premises, Baker paid about $14,000 for improvements upon the property under a verbal agreement with Newman that, if his option of purchase was not exercised, Newman would reimburse him for this expenditure. The value of the premises is in excess of all the incumbrances thereon, above referred to. After a demurrer to the special defense and counterclaim was overruled (Marvin, J.), the issues of fact were closed, and by stipulation the case was referred to a state referee for a finding.

The report of the state referee was filed June 7, 1924. The plaintiffs filed a remonstrance to the acceptance of the report,...