As the case is made up, it is very questionable, whether it is in a form to be passed upon by this court. At the close of the plaintiff's evidence, it is stated, that the counsel for defendant moved to dismiss the complaint, on the ground, that there was no order sufficiently authorizing the assignee to sell, and that the defendant was in possession hostile to the rights of the plaintiff during the two years allowed him to set up his right of title, and he did not do it, so that it is too late for him now to commence this action. Instead of granting or denying this motion upon either of the grounds stated, the case recites, that, by consent of counsel, a verdict was taken for defendant, subject to the opinion of the court at General Term.
When the case came into the General Term, a statement of facts was drawn up, and two conclusions of law appended thereto, as the judgment of the court. In these, no notice is taken of the objection, that the assignee had no sufficient authority to sell. In respect to the other objection, touching the defendant's possession, nothing is found in regard to the alleged hostile character of that possession, nor as to the time of its commencement, except that it was 14 or 15 years prior to the commencement of the suit, and that it consisted of his moving on to the premises, and building a house, which he subsequently sold, and was gone from the premises for two years, when the house was burned; that two years after the house was burned, he came again into possession of the premises under a lease to his wife, and was in possession when the action was commenced. There is nothing in all this indicating any possession either under a claim of title, or in hostility to that of the true owner. The plaintiff howed a perfect paper title in himself, and was not obliged to prove possession, — certainly not against a mere squatter, which is all the possession the facts as found tend to prove in the defendant originally. Who the lessor of his wife was, is not stated, nor does it anywhere appear in the evidence *Page 308 on the trial. For ought that is shown, it may have been the plaintiff or his grantor.
The conclusions of law which the court found were, First, that the cause of action, if any, was perfected at the date of the decree in bankruptcy, viz., on the 19th of December, 1842. Second, that, more than two years having elapsed since the cause of action was perfected, and before the commencement of the action, the plaintiff cannot recover.
Waiving the point whether there has not been a mis-trial, it is entirely clear to my mind, that these conclusions are erroneous. What is the bar the statute creates, and to what parties is it applicable? The bar relied upon is the one established by the eighth section of the bankrupt law of 1841, which provides, that no suit at law or in equity shall be maintainable by or against the assignee in bankruptcy, or by or against any person claiming an adverse interest, touching the property and rights of property of the bankrupt, unless the same shall be brought within two years after the declaration and decree of bankruptcy, or after the cause of action shall first have accrued. The findings of the court are, that the cause of action in this case accrued in December, 1842. If this case is within the statutes, then the limitation expired in December, 1844, and within that period Waddell, the assignee, should have brought his action, or he and his grantees would be forever barred.
But by or against whom must the action be brought? The statute says, "by or against any person claiming an adverse interest," touching the property of the bankrupt. Now, in 1844, the defendant was not in possession of these premises, nor was any one else, so far as any testimony discloses, and no such claim is made by the defendant's counsel. He only insists in his points, that the defendant was in possession adversely to Waddell Co., plaintiffs, for sixteen or eighteen years. In this he is manifestly mistaken. The defendant swears he was in possession sixteen or seventeen years before the trial, which took place in February, 1863, and the statement of facts is, that he moved on to the premises fourteen or fifteen years before the commencement of the suit, *Page 309 which was in June, 1861. So that, at the utmost, he only went on to the premises in 1846, two years after the period of limitation prescribed by the statute. There was consequently no person claiming an adverse interest against whom any action could possibly be brought by the assignee within the time prescribed. The plaintiff in this suit only obtained his title in June, 1861, and brought the suit immediately thereafter, so that no bar whatever can be claimed against him.
But, in my judgment, the statute in question has no application whatever to a case of this kind. In the words of Judge NELSON, in a case where he was called to interpret the eighth section: "It is obvious that the limitation only applies to suits growing out of disputes in respect to property and rights of property of the bankrupt, which came to the hands of the assignee, and to which adverse claims existed while in the hands of the bankrupt, and before the assignment. These disputes affected the assets of the bankrupt, and an adjustment of them, either by compromise or suit, was indispensable to a settlement of distribution of the assets among the creditors." This is a very just construction of the statute, and gives effect and meaning to this provision. The case of this defendant is not at all within its terms or intent. At the time of the assignment he set up no claim to the property involved in this suit; he had none, and pretended to none against the bankrupt, prior to the assignment; and the bar of the statute has, therefore, no application to this case. Nothing to the contrary of this was held in the case of Cleveland v. Boerum (24 N.Y. 613), but the opinions of the judges, given in that case, harmonize with the view of Judge NELSON, as above stated, because it distinctly appeared in that case, that the interest of the mortgagee, which was adverse to that of the assignee of the bankrupt, was not only in existence at the time of the assignment, but the mortgage was due, and was in process of foreclosure, and the assignee had actual notice of the pendency of that proceeding at the time of the vesting of the property of the bankrupt in the assignee. *Page 310
The counsel for the defendant makes the point that the sale by Waddell to the plaintiff was void, for the reason that the defendant, at the time of the conveyance, was in possession of the premises, holding adversely to Waddell. There are three sufficient answers to this. The point was not taken on the trial, nor passed upon by the court in any stage of the case; it is very questionable whether the defendant was holding adversely at that time; at any rate the fact is neither proved or found; and the rule that forbids the sale of real estate out of the possession of the grantor, and in that of a party holding adversely under a claim or pretense of title, does not apply to judicial sales, as was the one by Waddell in this case. (Truax v. Thomas, 2 Barb. [S.C.] 156; Hoyt v. Thompson, 2 Seld. 320.)
The judgment should be reversed, and judgment absolute ordered for the plaintiff, with costs.