Wood v. Price

• Decision Date: 28 November 1911
• Citation: 81 A. 983,79 N.J.E. 620
• Parties: WOOD et al. v. PRICE.
• Court: New Jersey Supreme Court

81 A. 983

79 N.J.E. 620

WOOD et al.

v. PRICE.

Court of Errors and Appeals of New Jersey.

Nov. 28, 1911.

(Syllabus by the Court.)

Appeal from Court of Chancery.

Bill in equity by Caroline Wood, as guardian, to foreclose a mortgage against Robert A. Price and others. From a decree (81 Atl. 1093) denying the petition of Jacob C. Price to have surplus money paid to him as purchaser of the mortgaged lands from Robert A. Price, in preference to the claim of Alice C. Price, wife of Robert A. Price, based upon her inchoate right of dower, and also and especially upon sequestration proceedings taken by her in a suit for maintenance against Robert A. Price, the petitioner Jacob C. Price, appeals. Affirmed.

See, also, 81 Atl. 664.

Vreeland, King, Wilson & Lindabury, for appellant.

Charlton A. Reed, for respondent Alice Price.

VOORHEES, J. The opinion written for the Court of Chancery by the learned Chancellor has the approval of this court, and but for the stress in argument and in the briefs filed on appeal upon points which were not particularly treated in it, it would be quite unnecessary to add in any way to the careful exposition of the principles therein set forth. A restatement of the facts is, of course, uncalled for.

The argument is made that a suit for alimony is a personal action and results in a personal decree for the payment of money; therefore, to sustain it, service of process upon the defendant within the territorial limits of the state is requisite to give the courts of such state jurisdiction to render such judgment. Elmendorf v. Elmendorf, 58 N. J. Eq. 113, 44 Atl. 164; Hervey v. Hervey, 56 N. J. Eq. 424, 39 Atl. 762. It is also further contended that the employment of the writ of sequestration in order to compel an appearance, pursuant to section 26 of the divorce act (P. L. 1907, p. 482), at once ipso facto, renders the suit a proceeding in rem, or quasi in rem. This was the view entertained by the Court of Chancery.

The defendant, however, further argues from this premise that the suit, having thus become an action in rem, the land being the res which is proceeded against, the suit, from the time of issuing the writ of sequestration, was thereby transformed into a "suit relating to or affecting the possession of or title to lands or real estate," and so falls directly within the purview of "An act respecting notice of lis pendens (Revision of 1902)" (P. L. 1902, p. 477), which act provides that "neither the issuing of a * * * subpœna or other process or writ nor the filing of a * * * bill * * * nor any proceedings had or to be had thereon * * * shall be deemed or taken to be constructive notice to any bona fide purchaser * * * of any lands or real estate to be affected thereby until the complainant * * * shall have first filed * * * a written notice of the pendency of such suit."

Conceding, for argument's sake, the correctness of the reasoning, and that the action, by the employment of the writ of sequestration and the filing of the preliminary petition for it, has been transformed from an action in personam into one in rem, as distinguished from a personal action, commenced by subpœna, but wherein sequestration had been resorted to merely by way of mesne process, for some incidental purpose, the fallacy of the proposition lies in the misconception of the general doctrine of lis pendens, and of the distinction existing between that doctrine and the doctrine of notice. Our statute, above cited, while it uses the words hereinbefore quoted, as to "constructive notice," yet a consideration of the purposes for which it was enacted will demonstrate that it took origin in order to eradicate the injustice of the old law.

Although many judicial deliverances, as well as text-writers, have stated that the doctrine of lis pendens is referable to the doctrine of notice, that view has by the best authority been denied, and as stated by Prof. Pomeroy, in his Equity Jurisprudence, § 633, the rule is "during the pendency of an equitable suit, neither party to the litigation can alienate the property in dispute so as to affect the rights of his opponent." In this state, this view has been adopted. Vice Chancellor Pitney, in Turner v. Houpt, 53 N. J. Eq. 526, 33 Atl. 28, examined and collated many authorities on that subject, and recognizes the rule above set forth, and continuing refers to the reason which led to the adoption of the statutory notice of lis pendens in the following language: "The manifest hardship of applying this necessary maxim in cases of conveyances in good faith to parties without notice led to a statutory provision for the public registry of a notice." While this case was formally overruled (55 N. J. Eq. 593, 39 Atl. 1114), yet not upon this point, and the doctrines enunciated by the learned Vice Chancellor have not been by it at all repudiated. McMichael v. Webster, 57 N. J. Eq. 295, at page 300, 41 Atl. 714, 73 Am. St. Rep. 630, sets forth the reasons for the reversal. Indeed, this court, in White v. White, 61 N. J. Eq. 629, 47 Atl. 628, refers approvingly to the case. So that, what our statute really did, not only in effect, but in words, for it is limited in its scope to any bona fide purchaser or mortgagee, etc., was to abrogate the rule that parties to a litigation could not alienate the property in dispute as against the rights of the opposing parties to such suit.

It made the recording of such notice necessary in order to preserve the former effect of the litigation. So that the result of omitting to file and record the statutory notice under the act of 1902 left the parties free to deal with the subject-matter of the litigation untrammeled, and one acquiring an interest therein pendente lite is unaffected by it, provided his acquisition was made bona fide and without notice of equities.

It will thus be clear that the statute did not at all deal with the rights of persons who had notice, either actual or constructive, of equities which would bind or charge their rights. The old rules, under which the litigation itself was made to limit the rights of parties acquiring interests in the subject-matter were changed by the statute above cited, unless the statutory notice was recorded. Having now disposed of the effect of the lis pendens act, and shown that it does not apply to persons who do not acquire interests in the subject-matter bona fide, we must look to the situation of the parties and discover whether there was notice, either actual or constructive, to the purchaser of the property.

Jacob C. Price had purchased the premises at the foreclosure sale, on October 8, 1908. The equity of redemption had been conveyed to him by the mortgagor, his brother, in August previous, pending the foreclosure suit. Before that, the writ of sequestration had been issued and served. Now Dr. Price took the deed without the signature of the wife, whom he knew to be entitled to dower, subject to payment of the mortgage. He was, therefore, put upon inquiry as to the rights of the wife, at least, so far as her strict dower Interest was concerned. He was also put upon inquiry as to the lien of the writ of sequestration, by reason of the open, notorious and exclusive possession of the tenant of the property and it is conceded that so far as the tenant's rights were concerned, he was chargeable with notice of whatever rights the tenant had to remain in the property, and which the tenant could enforce against it. All authorities are agreed that the general rule is that possession of real estate which is actual, open and visible occupation, inconsistent with the title of the apparent owner by the record and not equivocal, occasional, or for a temporary or special purpose, is constructive notice to all the world of the rights of the party in possession.

This agreement of the authorities also extends to include those equities of one who occupies as tenant that are connected with the tenancy, as the contents of and the covenants contained in the lease, and as well to interests under collateral agreements, as a contract to convey the land, or to renew the lease, etc. Taylor v. Stibbert, 2 Ves. Jr. 437; Daniels v. Davison, 16 Ves. 249; Allen v. Anthony, 1 Mer. 282; Barnhart v. Greenshields, 9 Moore, P. C. C. 18; Le Neve v. Le Neve, 2 Leading Cases in Eq. 187.

In the Court of Chancery, Chancellor Runyon in Havens v. Bliss, 26 N. J. Eq. 363, says: "If a tenant has even changed his character by having agreed to purchase the estate, his possession amounts to notice of his equitable title as purchaser." Now, it is the duty of a purchaser to inquire of the person in possession of the premises and ascertain the rights under which he holds, and if this duty of inquiry be disregarded, the purchaser is chargeable with notice of such facts as the inquiry, if it had been in fact made, would have fevealed. 2 Leading Cases in Eq. p. 188; Holmes v. Stout, 10 N. J. Eq. 419, 426; Havens v. Bliss, supra; Essex County Nat. Bank v. Harrison, 57 N. J. Eq. 91, 40 Atl. 209.

Where the possession is that of a tenant, the authorities are conflicting as to the extent of the notice flowing from such occupancy. The English rule is that "the occupation of land by a tenant affects a purchaser of the land with constructive notice of all that tenant's rights, but not with notice of his lessor's title or rights." Hunt v. Luck, 1902, 1 Ch. 428, where the English cases are reviewed. Under this authority, a purchaser is charged with notice of those rights...