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Real estate record and builders' guide: [v. 101, no. 2609: Articles]: March 16, 1918

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REAL ESTATE AND (Copyright, 1918, by The Record and Guide Co.) NEW YORK, MARCH 16, 1918 THE TORRENS LAW AND PROPOSED AMENDMENTS Legislation Pending at Albany Relating to the Assurance Fund—Some Objections Noted By CYRIL H. BURDETT. Vice-Pres.. New York Title 8b Mortgage Co. AT the present time there is consider¬ able agitation relative to the Tor¬ rens System of Land Registration, and amendments have been introduced in Albany. The present Torrens Law con¬ tains the following: Sec. 426. Assurance Fund : Upon the original registration of real property there shall be paid to the registrar one-tenth of one per centum of the value thereof, which value shall be deter¬ mined by the registrar, but shall not be less than the amount of the last assessment for local taxation. All moneys received by the registrar under the provisions of this section shall bo paid to the treasurer of the county (in New York City to the City Chamberlain) as an assurance fund for land registered in his county and shall be treated In the same manner as are other funds received for local taxation or for the reduction of the county or city debt. • • • Sec. 421. Compensation from Assurance Fund: Any person who, without negligence on his part, sustains loss or damage or is deprived of real property, or of any estate, right or interest therein because of the registration of another person as owner of such property, or of any estate, right or interest therein, through fraud, or in consequence of any error, omission, mis¬ take or misdescription in any certificate of title or in any entry or memorial in the title book, shall have a cause of action against the County Treasurer (in New York City the City Cham¬ berlain) to recover compensation for such loss or damage. Section 428 provides that any allowed claim shall be paid in the same manner as other claims against the county ; in the City of New York, a claim to be passed upon and approved by the registrar and the corporation counsel before payment Is allowed. If the amount credited to the assurance fund is insufficient to pay the claim, then no payment sliall be made until there is enough money in the fund to cover the aniomit necessary. The Burlingame bill (Senate Tnt. No. 151, Pr. No. 937) and the Youker bill (Assembly Int. No. 9. Pr. No. 1065) strike out from Section 428 the clause with reference to the limitation of the amount remaining to the credit of the assurance fund, thus making the county abso¬ lutely liable to the full extent of the claitn. While, by some, the indemnity fund is considered one of the essential re¬ quirements of the Torrens System, in this country its constitutionality has been vigorously attacked, and in Ohio it has actually been held to be uncon¬ stitutional. Hardly any two jurisdictions, however, have the same provision with reference to those persons who can recover on claims Jicrainst it. It will be noticed that the present law of this State limits recovery to a person •who is deprived of any estate, right or interest, through fraud or an error, omission, mistake or misdescription in the certificate. Some Slates, to be sitre, have a much broader provision, giving I right of recovery to any person de- I prived of an interest under a proceeding '. of which he had no notice, and this is j the provision as set forth in the Ameri- ; can Uniform Land Registration Act. I The bill as now pending in the Judiciary [ Committee of the Senate and reported I by the Committee on General Laws of I the Assembly has amended Section 427 to read as follows: "Any person who had no actual notice of any registration under this chapter by which he may be deprived of any estate or Interest in land, and who is without remedy hereunder, shall have a cause of action against the County Treasurer (in New York City the City Cham- ' berlain) to recover compensation for any loss or damage to which he may be entitled by j reason of such deprivation." I . This is much more liberal even than the provision in the Uniform Act, for it limits such right of recovery to two years, whereas it will be noted that in the proposed amendment there is no time limit fixed for the bringing of the action. It does not appear why any one over whom the court has obtained jurisdic¬ tion in a Torrens registration suit should have rights, either against the subject-matter of the suit, or against the assurance fund, any more than a person who has been cut ofT as owner of the fee or an interest in the fee. in a foreclosure or a partition suit, should have any such riglit. No one would think of giving a defeated litigant, in either case, when the court had ob¬ tained jurisdiction over Iiim as a de¬ fendant, the right to sue the State. Why then should the right be given him in the case of a Torrens suit? Serious Character Manifest. The serious character of this amend¬ ment is only too manifest when we examine the method by which the court is to obtain jurisdiction over the parties in the Torrens proceeding. All the safe¬ guards thrown around the present ad¬ ministration of the law are ruthlessly set aside. Under the present law, notice of the pendency of the suit must be posted upon the land forty days before the return d^y of the summons. Under the amendment, this period is reduced to fourteen days. Under the present law, publication must be made once a week for four weeks in one newspaper. althouRh in all other actions publication against un¬ known defendants must be made once a week in two newspapers for six weeks. The amendment would reduce even this short period to one publica¬ tion in one newspaper. Service by Registered Letter. But the most serious objection of all is the following: Under the present law notice must be served upon all parties known to the plaintiff by some person who knows the person so served and knows him to be the person described in the complaint. Under the proposed amendment this service can be made by registered letter, calling for a signed receipt, and no proof is required that the person who signs such receipt is the person de- sc'bed in the proceeding. With this slipshod and haphazard method of making service, there is no assurance that the court will obtain jurisdiction over all the necessary par¬ ties to the proceeding, and all persons who do not actually receive such notice are given the right, not to set aside the suit, but to sue the State for the re¬ covery of damages. It would seem a wise policy, if the State is going to give access to the assurance fund on the part of persons who have received no notice, that nt lea^^t those safeguards the neces¬ sity for which has been demonstrated by actual experience in the administra¬ tion of the law should be retained, but the arlvocates of this bill apparently are determined to pursue exactly the op¬ posite course. They abolish the safe¬ guards with reference to service and parties and then mulct the taxpayers hy making the county responsible for these methods which they allege sim¬ plify the Torrens Law and make it more workable. Is the Legislature justified in acceding to their demands and there¬ by imposing a potential burden upon the counties composing the City of New. York, the ultimate cost of which no one can predict? By shortening the time, and radically changing the method of service in a Torrens proceeding, as provided in the proposed amendments, it would be fur¬ nishing an easy opportunity for the perpetration of all kinds of fraud and actually would be placing a premium upon carelessness and incompetency in the conduct of the suit. It is within the experience of every¬ one that registered mail is not always received by the person to whom it is addressed. Many people, as well as cor¬ porations, have given authority to cer¬ tain individuals to sign such receipts for them. Addresses are frequently faulty, and registered mail is delivered to the wrong person. There is nothing to show, when a receipt is returned, that the person to whom it was addressed actually placed his signature upon the receipt, so that a person may be de¬ prived of his interest in the land with¬ out any knowledge of the suit. In such a case the proposed amendments give him recourse to the assurance fund. The inadequate publication against unknown defendants does not conduce to the publicity of the pendency of the suit, to say nothing of the shortness of time required for posting the notice on the land, and it may well happen that, whereas now the time of service, if re¬ tained, might give a party to a proceed¬ ing notice of the pendency thereof, the cutting down of this time in the manner contemplated in the amendment would prevent such notice coming to his at¬ tention. If the advocates of this bill had definitely in mind the idea of making easy the cutting off of interests in the land, for the purpose of devising a claim against the county, they could have re¬ sorted to no more successful method. Our present law goes sufficiently far, even if not too far, for a person de¬ prived of an interest through fraud can have access to the assurance fund where there is any balance in the treasury. Reference to the Law Reports in other jurisdictions will show where such re¬ course has been had, and also will show cases where attempts have actually been made to steal land from the real owners, under the guise of Torrens Title Regis¬ tration, but where the courts have held that, the title still being in the hands of the perpetrators of the fraud, the proceedings were null and void. In New Zealand the owner of a piece of land died intestate. One of his sons, representing himself as the sole owner, fraudulently brought the land under the provisions of the Torrens Act. He mort¬ gaged the title and failed to make his payments under the mortgage. The land was thereupon sold under foreclosure. All these transactions were without notice of the fraud. Subsequently, some four years after the death of her hus¬ band, the widow of the original owner- took out letters of administration and brought suit against the assurance fund- (Continued on page 322) -,,.^ RECORD AND GUIDE IS IX ITS FIXTTIETH YEAR OF CQNTINVOUS PUBLICATIOX.