60 Barb. 617 | N.Y. Sup. Ct. | 1871
This is an action in equity to remove a cloud upon the title to land belonging to the plaintiff Bissell, which cloud consists of a mortgage executed in 1858, by the plaintiff Adams, and alleged to be usurious. One Lampson held a mortgage upon other property of the plaintiff Adams, for the nominal amount of $4000, but in fact executed as an indemnity for indorsements, or liability on the notes of Adams. There was actually but about $3000 due to Lampson on the mortgage when the transaction between the plaintiff Adams and the defendant Kellogg occurred. That transaction was, in substance, as follows : Kellogg agreed to advance the $3000 to Lampson, and take an assignment of the $4000 mortgage, and to advance to Adams the further sum of $1000, and hold the mortgage for the whole $4000, giving time for its payment, upon the condition that Adams should purchase a house and lot in Le Roy, then owned by Kellogg, at the price of $2050, when the same was in fact worth not to exceed $1200. Adams was to secure the payment of the $2050 by his bond accompanied by a mortgage on the property conveyed. The transaction was consummated, and the assignment of the $4000 mortgage, the deed of the house and lot, and the bond and mortgage for $2050,
The authorities cited, however, by the learned referee show, and his own statement of their effect is, that the mortgage was valid for the larger sum only in case no rights of third persons have intervened. The circumstance that Samuel Jackson, one of the defendants in that suit, and who appeared and defended for his own interest, was a Iona fide mortgagee, intervening between the execution of the mortgage to Lampson and its assignment to Kellogg, seems to have entirely escaped the notice of the referee. The propositions stated by the referee, and the
The counsel for the appellant is doubtless correct in claiming that the fact of res adjudicata is not to be made out by inferences, like those which governed the referee. An estoppel requires strict proof. A fact cannot be held to have been adjudicated in a former suit, unless it so expressly appears by the record, or, at least, it is clearly shown by evidence aliunde,. that it was determined. But the record in this case contains a statement to which the referee has not alluded, and which may have escaped his attention, as well as that of the counsel, but which we think fully authorizes the ruling of the referee, that the usurious nature of the arrangement was res adjudicata in the former suit. The case settled in the former suit is embodied in the record which was produced in evidence before the referee, and that expressly states that the agreement, whereby Kellogg agreed to take the mortgage for §4000, and Adams agreed to take the house and lot and give back his bond and mortgage for $2050, was usurious. Where there is a trial by the court, the judge who tried the cause, in settling the case, is required to specify the facts found by him, and his conclusions of law. (Code, § 268.) The facts thus specified are conclusive upon the parties in that case, if founded on sufficient evidence, and there is no apparent reason why they are not to be considered as res adjudicata for all purposes, the same as though contained in the original findings of the judge. It therefore does appear, by the record of the former recovery, that the question whether the mortgage for §2050 was executed upon a usurious contract, was in issue in that case, and the fact of usury was found by the judge. Kellogg was the plaintiff, and Adams was a party defendant in the former suit. Bissell is privy in estate with
The complaint in this case is for the sole purpose of removing the $2050 mortgage as a cloud upon Bissell’s- title to" the land covered by it. The only interest in that-.question, which is claimed by the plaintiff Adams, grows out of the fact that in case Bissell’s title should be cut off by virtue of the mortgage,' he, Adams, would be liable for $100, with interest, on the covenant of warranty contained in his deed to Jackson,' one of the predecessors in title, of Bissell, made in 1859. It is clear that th^ parties plaintiff have no joint interest in the subject matter of this litigation. Adams is not in a position to institute this suit. He has no title to, or interest in, the land from which the cloud is sought to be removed. The interest in the question which he claims, is altogether remote and conjectural. It can only arise in case the land should be sold on the mortgage, and the purchaser on the sale acquire a paramount title. This, either he or Bissell can, prevent without a resort to this action. If a suit in court is commenced to foreclose the mortgage, Bissell can defend against it, and if he neglects to do so, he must give Adams notice of the suit and permit him. to defend it; otherwise a judgment establishing the mortgage would not conclude Adams, or prevent him from showing, in an action on his covenant of warranty, that the mortgage was usurious, and so the title acquired under it not in fact a paramount title. If the mortgage is foreclosed by advertisement, it will not operate to convey a good title, except to a bona fide purchaser at the advertised sale. And this can be prevented by either Adams or Bissell, by giving notice of the usurious character of the mortgage at the time of the sale. In the ease of Hyland v. Stafford, (10 Barb. 558,) it was held
It is, moreover, at least doubtful if any recovery can be had against Adams on the covenant of warranty, even if the property should be struck off to a bona fide purchaser at the sale. The mortgage, being void, is not a paramount title, and of itself would not operate to convey a good title, but could so operate only by virtue of the sale to a bona fide purchaser, which Bissell, as before stated, has the power to prevent, and which, if permitted, would be through his own neglect, he knowing all the facts. (Kelly v. The Dutch Church, &c., 2 Hill, 105. Rindskopf v. The Farmers’ Loan and Trust Co., 58 Barb. 36.)
We have been referred to no authority, and have discovered none, giving countenance to the idea that a party can maintain a suit to remove a cloud upon the title to land in which he has no interest, and upon the sole ground that he has warranted the title. And we do not think such an action can be maintained. Equity interferes to remove clouds upon title because they embarrass the owner of the property clouded, and tend to impede his free sale and disposition of it. (Byne v. Vivian, 5 Vesey, 604. Ward v. Dewey, 16 N. Y. 519, 531.) A cloud upon title is a title, or incumbrance, apparently valid, but in fact invalid. A party whose only interest is that he has given a covenant of warranty, cannot be embarrassed or inconvenienced by the existence of the cloud. He can only be called upon on his covenant of warranty where
The existence of the record evidence that the mortgage in question is void for usury, would probably be an obstacle to the maintenance of the suit by either plaintiff to remove the cloud on the title, except for the circumstance that the purchaser on a statute foreclosure would require a title presumptively good, and which could only be defeated by parol evidence impeaching the good faith of the purchaser, by showing notice to the purchaser, of the invalidity of the mortgage. The complaint, therefore, as to the plaintiff Adams, should have been dismissed for want of a cause of action in his behalf.
As to the plaintiff Bissell, relief should be granted, on terms. The rule of courts of equity prior to the statute of 1837, requiring the complainant who sought relief in that court against a usurious contract, obligation or security, to repay the money actually loaned, with interest, as a condition of granting the relief, was clear and undoubted. (Story’s Eq. Jur. § 301.) The statute of 1837 abrogated this rule■ only in behalf of the borrower; and under that statute it is well settled that the rule is not abrogated by it as to the grantee of the borrower; but that when a grantee, as such, commences a suit for relief, the rule requiring him to do equity, as a condition of relief, still applies. (Post v. Bank of Utica, 7 Hill, 391. Schermerhorn v. Talman, 14 N. Y. 93.)
The judgment, therefore, as to Bissell,.should be modified so as to give him the relief he seeks against the mortgage, upon terms of doing equity. This can be nothing less, certainly, than requiring him to pay the value of the house and lot w’hich was the consideration of the mortgage, with interest from the date of the mortgage, to which the use of the property is presumptively equivalent. We understand it to be conceded that no payment of principal and interest has ever been made on the $2050 mort
It was understood to be claimed, on the argument, by the counsel for the respondents, that the judgment in the former suit operated as a judgment to discharge the mortgage in question; and that this suit is an action to have the benefit of that judgment as a judgment. If that were so, there would be no ground for maintaining this action. It would be an anomalous and wholly unnecessary proceeding. If a mortgage is declared void and discharged by the decree of a competent court, the power of 'sale is extinguished, and no title could be acquired under it, and such decree itself removes the cloud. But, as we have seen, the position of the counsel is erroneous in fact. The judgmént in the former action does not even declare the transction to be usurious, much less does it purportfto discharge this mortgage. The record of the former suit is simply available as evidence of the usurious character of the transaction out of which this mortgage grows, because that was put in issue, and was determined as matter of fact, in the suit on the other mortgage.
The judgment in this case must therefore be modified, in accordance with the views herein expressed, by die-
Mullin, P. J., and Johnson and Talcott, Justices.]