60 N.J. Eq. 454 | N.J. | 1900
The opinion of the court was delivered by
The Weehawken Ferry Company became the owner of the mortgaged premises by deed from Delacroix and wife, dated December 31st, 1870. This deed conveyed the mortgaged premises subject to the mortgage now in question, and to the Corn-stock mortgage, with the following clause of assumption:
“The payment of which two mortgages with the interest thereon from this date is hereby assumed by the party of the second part, making together $23,500, which is part of the consideration money expressed in this conveyance.”
The defendants in their answer set up as the substantial defence in this case:
“That the said complainant’s alleged cause of action, being on a sealed instrument, for the payment of money only, did not accrue within sixteen years next before the commencement of this suit; and they further say that the said action was not commenced within twenty years after default on said alleged mortgage, and therefore the said complainant is barred of and from any action on his alleged bond and mortgage.”
The defence thus brought forward presents the question whether the statute of limitations applies to a suit in a court of equity to enforce a mortgage by foreclosing the equity of redemption, and the construction of the statute in a court of law where title in the mortgagor arising from his possession is set up to defeat an action of ejectment by the owner of the mortgage.
In Shields v. Lozear, 5 Vr. 496, 501, it was held that “by the common -law a mortgage in fee created an immediate estate in fee-simple in the mortgagee, subject to be defeated by the payment of the mortgage money on the day named in the condition, and the mortgagee might enter immediately on the mortgaged premises and hold the estate until the condition was performed. In this state it was held by this court that the right to enter was postponed, and the possession was in the mortgagor, until the condition was broken by default in the payment of the mortgage money. Sanderson v. Den, ex. dem. Price, 1 Zab. 646, note.
A mortgagee has a double security for the payment of his debt, viz., the bond, which is a contract by the obligor to pay, and the mortgage, which is a conveyance of an estate in the mortgaged premises. The bond accompanying the mortgage was executed by Dole. The legal remedy against him on the bond was barred by the statute of limitations, unless saved by his residence out of the state, and he was- discharged from hid liability thereon by a discharge in bankruptcy, January 7th, 1868.
Neither the statute of limitations, which bars the obligee’s right to maintain an action on the bond, nor the discharge of the obligor in bankruptcy, is an extinguishment of the debt. In both instances the remedy is taken away, but the debt remaining would be a valid consideration for a subsequent express promise to pay. Briggs & Ely v. Sutton, Spenc. 581; Whyte v. McGovern, 22 Vr. 356. Notwithstanding the mortgagee has lost his action at law on the bond, his remedy under the mortgage still remains. Busw. Lim. § 140 p. 201; 2 Jones Mort. § 1204; Wagoner v. Watts, 15 Vr. 126, 129 (per Van Syckel, J.) It was so decided in Blue v. Everett, 11 Dick. Ch. Rep. 455. It was there held that in order to deprive the holder of a bond and mortgage of his bill in chancery to collect the debt by the sale of the mortgaged premises, the legal right of entry upon the lands mortgaged, as well as the legal right of action on the bond, must be barred.
The statutes of limitations do not apply to courts of equity, for the reason that the words of the statutes apply only to particular legal .remedies; but proceedings in equity to enforce a legal right are within the spirit and meaning of the statutes, and have always been so considered. The question has been
In an action of ejectment by the mortgagee against the mortgagor or his grantee in possession, the statute of limitations would be a defence. It would be equally available in a court of equity on a bill to foreclose, and upon the same construction that the statute would receive in a court of law. Section 16 of the statute of limitations provides:
“That no person who now hath, or hereafter may have, any right or title of entry into lands, tenements or hereditaments, shall make any entry therein, but within twenty years next after such right or title shall accrue; and such person shall be barred from any entry afterwards
In Kirk v. Smith, Chief-Justice Marshall said: “One of the rules which apply to acts of limitation generally, which has been recognized in the courts of England, and in all others where the rules established in those courts have been adopted, is that possession, to give title, must be adverse. The word is not, indeed, to be found in the statutes, but the plainest dictates of common justice require that it should be implied. It would shock the sense of right which must be felt equally by legislatures and by judges, if a possession which was permissive and entirely consistent with the title of another, should silently bar that title.” 2 Wheat. 241, 288; Wood Lim. p. 623. In Heath v. Pugh, which was an action of ejectment, and the defence was the statute of limitations (3 & 4 Wm. IV. c. 27), Lord Selborne, speaking of the statute of limitations (21 Jac. 1, c. 16), said: “The possession of the mortgaged land by the mortgagor, during the subsistence of the security, and while the mortgagee did not choose to take possession, was held, at law as well as in equity, to be ‘at the will,’ or by the ‘sufferance,’ or ‘permission’ of the mortgagee, under a ‘tacit agreement’ which the mortgagee might determine at his pleasure. It was of the nature of the transaction that the mortgagor should continue in possession. His possession was rightful and not by wrong. He was entitled to the rents and profits as long as he remained in possession; mesne profits accrued due and received prior to action or demand could not be recovered from him by the mortgagee. The former statute
A tenant in possession, recognizing the title of his landlord by the payment of rent, does not acquire title by adverse possession, no matter how long his possession may continue. By a parity of reasoning, a mortgagor who is in possession of mortgaged premises by sufferance or by the acquiescence of the mortgagee, paying interest on a mortgage, is not in under a possession which is'adverse. The principle that underlies the whole of this subject is that the payment of rent by the tenant, in one case, and the payment of interest by the mortgagor in the other case, is a recognition of the rights of the landlord or mortgagee. The possession of the mortgagor by the sufferance or forbearance of the mortgagee, making payments on account of the mortgage debt, does not become adverse to the title of the mortgagee until the mortgagor has ceased to recognize the mortgagee’s title by the non-payment of interest.
In Blue v. Everett the mortgage in question was made July 19th, 1872, securing the payment of a bond of the same date for $1,500, payable in one year. As was decided in the court of chancery, the last payment of interest by the mortgagor was more than twenty years before bill Sled. A subsequent payment of interest claimed by the mortgagee was disallowed for want of proof, and the decision of the vice-chancellor on that question was not set aside in this court. There being no recognized payment of interest within twenty years, the bar of the statute arising from the lapse of time after the right of entry accrued was not removed.
The decision in that case established the doctrine that the statute of limitations was available in a suit in equity for the foreclosure of a mortgage, as well as in an action of ejectment, and that the right to a foreclosure ceased when the legal right of entry upon the lands’, mortgaged was barred. In delivering
The bond which accompanied the mortgage was made by Dole. The payments made in 1876 were made by the Weehawken Eerry Companj', which was then the owner of the mortgaged premises.
The payment of interest by the Weehawken Ferry Company, the grantee in possession of the mortgaged premises, made on the 22d of December, 1876, is plenary evidence that up to that date the possession of the ferry company was not adverse to the mortgagee. When this payment was made the company was not holding adversely, and the twenty years, the period of adverse'holding necessary to give title or to constitute a defence, either in an action of ejectment or in a foreclosure suit, had not elapsed when this bill was filed.
The question involved in this case is one of the utmost importance in this community. The moneyed institutions, controlling large amounts of capital, seek investments permanent as far as practicable. Such investments on mortgages are largely made in expectation that the money loaned will be neither paid
The decree sustaining the complainant’s right to a foreclosure should be affirmed.
The appeal by Colton presents the question of the rate of interest to be allowed. When the mortgage was given the legal rate of interest was six per cent. In 1866 the legal rate of interest was fixed at seven per cent., and that rate continued until 1878. On January 3d, 1871, Dole, who was then president of the ferry company, made an endorsement on the bond as follows;
“In consideration of the extension of time of the payment of this bond it is understood and agreed that the rate of interest from this date shall be seven per cent. 1
“Nathaniel Dole. [Seal.]”
This endorsement by the president of the' company does not appear to have been made in a manner which would bind the company. The vice-chancellor allowed interest at the rate of six per cent., disregarding the above agreement.
I shall vote to affirm the decree in both cases.
For affirmance■ — -The Chancellor, ' Chiee-Justice, Van Syckel, G-ummere, Ludlow, Collins, Bogert, Hendrickson, Adams, Yredenburgh, Yoorhebs — 11.
For reversal — None.