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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.