Zeiser v. Cohn

• Decision Date: 25 February 1913
• Citation: 101 N.E. 184,207 N.Y. 407
• Parties: ZEISER v. COHN et al.
• Court: New York Court of Appeals Court of Appeals

207 N.Y. 407

101 N.E. 184

ZEISER

v.COHN et al.

Court of Appeals of New York.

Feb. 25, 1913.

Appeal from Supreme Court, Appellate Division, Third Department.

Action by John Zeiser against Sara Oppenheim Cohn, individually and as executrix of and testamentary trustee under last will and testament of Mark Cohn, deceased, and others. From a judgment of the Appellate Division, 144 App. Div. 825,129 N. Y. Supp. 625, affirming a judgment for plaintiff, defendant named and another appeal. Affirmed.

Andrew J. Nellis, of Albany, for appellants.

Danforth E. Ainsworth, of Albany, for respondent.

WERNER, J.

This is a suit in equity to establish and enforce a vendor's lien upon land sold by Jacob Cohn to his mother, Theresa Cohn, under an agreement by which the grantee promised to pay the claims of certain creditors of the grantor, and among them the claim of the plaintiff. The land against which the plaintiff's lien has thus far been upheld by the courts has been sold under mortgage foreclosure, but, by stipulation, the surplus which arose upon the sale is held in its place. The complaint, in its original form, proceeded upon dual and inconsistent theories of relief, which gave rise to many troublesome questions of practice and dilatory motions that cannot now be considered in detail without losing sight of the main issue. Only a few of these incidental matters are of present interest and these we shall touch upon most briefly; the rest have been resolved in plaintiff's favor and may be dismissed without further mention. As the case stands, stripped of all nonessential questions, the plaintiff is in court solely upon his claim of right to a vendor's lien. The facts pertinent to that claim can be very briefly stated.

In June, 1902, the defendant Jacob Cohn was indebted to the plaintiff in the sum of over $5,000. On june 2d of that year Jacob executed two instruments of transfer, by which he conveyed to his mother, Theresa Cohn, deceased, all his real and personal property, which was of considerable value. Simultaneously with the execution by Jacob of those two instruments, Theresa executed another instrument reciting that in consideration of Jacob's transfer to her she exonerated him from certain indebtedness owing by him to her, and agreed to save him harmless from, and to pay, the debts owing by him to his creditors; and it also contained a list of these creditors with a statement of the amounts owing to some of them.

[1] At the trial it was a disputed question whether the name of plaintiff was in the list of Jacob's creditors, contained in this instrument. The paper then produced by the defendants did not contain his name, but the court, upon sufficient evidence, found that the plaintiff's name was among the creditors set forth in the original instrument executed by Theresa. This finding has been unanimously affirmed by the Appellate Division, and upon this appeal we must, therefore, assume that the name of the plaintiff was in the instrument, and that he was one of the persons for whose benefit the transfer to Theresa was made.

The evidence and the findings disclose that at or about the time of these transactions between Jacob and Theresa the plaintiff had some hearsay information thereof, but that he never saw the contract signed by Theresa, and never had an opportunity to see it until after five years of litigation with Jacob. In the supplementary proceedings instituted upon the judgment which the plaintiff recovered against Jacob in that litigation it finally transpired that this agreement was in the possession of Mark Cohn, a brother of Jacob, who then produced it, but without the name of the plaintiff as one of the creditors of Jacob whom Theresa had agreed to pay. This suit was then commenced. We have already referred to the difficulties which arose under the original complaint. At the first trial the complaint was dismissed upon the ground that the cause of action alleged, to set aside the transfer from Jacob to Theresa on the ground of fraud, had not been proved, and that the cause of action attempted to be proved to establish a vendor's lien had not been alleged. Upon appeal the Appellate Division reversed this decision and granted a new trial. Then the plaintiff moved at Special Term for leave to amend his complaint so as to make the action one solely to enforce a vendor's lien, and the amendment was allowed by the court upon condition that full costs be paid. The order permitting this amendment was affirmed by the Appellate Division, and no appeal was taken from that affirmance. As the case now stands, therefore, the suit is one to establish an equitable vendor's lien.

The first question to consider is whether a suit to enforce a vendor's lien will lie under the circumstances here disclosed. The material part of the instrument upon which the plaintiff relies provides that, in consideration of the conveyance by Jacob to Theresa, she promises and agrees ‘to save harmless the said party of the second part (Jacob) of and from the following debts and liabilities of the said party of the second part, and to pay the same as follows.’ This is supplemented by a list of creditors, which, we must assume, includes the name of the plaintiff. Thus the plaintiff's claim against Jacob entered into and formed a part of the consideration for the promise made by Theresa to pay. It can hardly be doubted that a court of equity would have granted Jacob's prayer to have this property impressed with a lien for Theresa's failure to pay the consideration, and we do not perceive why the plaintiff is not entitled to the same relief. To the extent of his claim he stands in the shoes of his debtor, who is the vendor, and to that extent he is for all practical purposes equitably subrogated to the rights of the vendor. Pardee v. Treat, 82 N. Y. 385, 387. The learned trial court has not found that there was an intention to create a lien; and such a finding was not necessary.

[3] A vendor's lien may, of course, be reserved by express contract, but it is usually implied from circumstances. It is a pure invention of equity to protect those who have parted with real estate without security. In this state the equitable principle has been extended so far as to imply a lien in favor of a grantee who has paid his purchase money without securing the property he bargained for, although until quite recently it was thought doubtful whether in this jurisdiction there is such a thing as a vendee's lien. Elterman v. Hyman, 192 N. Y. 113, 84 N. E. 937,127 Am. St. Rep. 862,15 Ann. Cas. 819.

We shall not attempt to discuss the theory upon which the vendor's lien is based, for that is a problem which no amount of learning or discussion seems to have been able thus far to solve . It may well be doubted whether any subject in our American law is involved in more hopeless dispute concerning its origin and the principles of its application. It is difficult to suggest any one principle upon which it securely rests, and impossible to assign any positive reason for its transplantation from the civil to the common law, except that it is a device admirably adapted to the equitable amelioration of inflexible regal rules. Although it has many apparent analogies in the law, it is yet strictly sui generis. Whatever its derivation may be, it is too firmly established in the jurisprudence of this state to need any justification in this day and generation. If there have been occasional indications of judicial reluctance to its enforcement, they seem to have sprung more from the difficulty of applying it to particular facts than from any sound reason against its use as a recognized agency of remedial justice. It is a remedy which must, of course, be applied with caution and discrimination, for in many cases the lien is the creature of secrecy and implication, and from its very nature calculated to work injustice to innocent third parties. No such dnager exists in this case, for the answers of the defendants admit that the debts of Theresa have all been paid, and thus it is plain that the rights of no other creditors are involved. The case, in short, stripped of all extraneous considerations, presents the naked question whether the equitable remedy will lie in favor of a creditor in payment of whose debt a conveyance of property is made, where no intervening rights of other creditors are involved.

In Hallock v. Smith, 3 Barb. 267, the owner of real estate, being indebted to plaintiff, assigned his property to the defendant to pay certain debts due to the plaintiff. Among the assets transferred to the defendant was a note made to the assignor by one of the defendants for the purchase price of certain real property formerly owned by the assignor, who, as in this case, was plaintiff's debtor. In that action a lien was enforced in favor of plaintiff on the real estate the debtor had conveyed. It was there contended, as it is in the case at bar, that the lien can only be asserted by the vendor; but the court distinctly held that, as the purchase-money note was assigned to secure debts owing to the plaintiff by the vendor, he was entitled to enforce the lien. This case has remained the unchallenged law of this state for over half a century, and has been many times cited with approval in this court and in the courts below. The precise question has also arisen in other cases, and the lien has been sustained in favor of a third person whose debt was made a part of the consideration of the conveyance. McWhorter v. Stewart, 39 App. Div. 212,57 N. Y. Supp. 137;Binghamton Savings Bank v. Binghamton Trust Co., 85 Hun, 75, 32 N. Y. Supp. 657.

In Bach v. Kidansky, 186 N. Y. 368, 78 N. E. 1088, the vendors had conveyed real property subject to certain mortgages, one of which covered other lands. For the purpose of releasing these other lands from the mortgage, the vendors paid $1,000 upon it, thus reducing to that extent the incumbrance on the property conveyed. The...