Flanders v. Jones

| Superior Court of New Hampshire | Jul 15, 1855

Woods, C. J.

In Tweddell v. Tweddell, 2 Bro. C. Rep. 152, one who had bought of a mortgager his equity of redemption, had given him at the same time a covenant of indemnity against the mortgage debt. In discussing a question that arose upon the effect of this covenant, Lord Thurloiu remarked, “ This appears to be the common case where a man buys an equity of redemption. The question is, whether he becomes personally liable to the mortgagee. The buyer takes it subject to the charge, but the debt, as to him, is a real, not a personal debt. His contract with the mortgager is only that the debt shall not fall upon him; it is a mere contract of indemnity, and he would, be bound without any specific contract to indemnify him, as long as he can pay the money.”

In Waring v. Ward, 7 Vesey 332, in which a like question was in discussion, Lord Eldon held the following language ; “ The same principle applies to the purchase of an equity of redemption; for the party means, at the time of the contract, to buy the estate subject to that mortgage; in relation to which mortgage the personal contract was entered into; and that was not his. If he enters into no obligation with the party from whom he purchases, neither by bond nor covenant of indemnity to save him harmless from the mortgage, yet this court, if he receives possession and has profits, would, independent of contract, raise upon his conscience an objection to indemnify the vendor against the personal obligation to pay the money due upon the vendor’s transaction of mortgage; for being become owner of the estate, he must be supposed to intend to indemnify the vendor against the mortgage.”

The principle of these cases is, that he who purchases of the mortgager an equity of redemption, takes it cum onere, and shall not be a gainer by any proceedings that may be had for enforcing the payment of the debt against the mortgager personally.

The strong equity of the doctrine thus enunciated in those cases is apparent from the nature of the transaction, in which the purchaser pays for the land a sum less than its value by the amount of the incumbrance upon it, and it would be most unreasonable that he should, either by colluding with the mortgagee or otherwise, have the property disencumbered at the expense of the mortgager.

It would, therefore, seem to be but the fair result of an equitable principle, that one who has purchased from the owner himself the equity of redemption, and thus, in some sense, become a party to the charge, and entitled to the entire estate disencumbered upon the payment of its mere value should not be permitted to avoid or dispute the debt upon the ground of the want or inadequacy of consideration, or other grounds, between the original parties, and he may well be considered as standing much in the position of an accepter of a bill having funds of the drawer. He is a stranger to the consideration, and his obligation to pay is wholly independent of the purposes which the drawer may have in removing his funds to the hands of the payee. Fuller v. Horn, 6 N.H. 511" court="None" date_filed="1834-07-15" href="https://app.midpage.ai/document/horn-v-fuller-8503959?utm_source=webapp" opinion_id="8503959">6 N. H. Rep. 511.

If the purchaser, at the sheriff’s sale, may be regarded as having purchased from the owner of the equity, or as standing as such purchaser would, it would seem from numerous authorities that he would be estopped from contesting the mortgages of the defendant, the fact of their existence being distinctly recited, both in the officer’s return and in the deed of the equity of redemption to the demandant. Toney v. Bank of Orleans, 9 Paige Ch. 649" court="None" date_filed="1842-10-04" href="https://app.midpage.ai/document/torrey-v-bank-of-orleans-5548676?utm_source=webapp" opinion_id="5548676">9 Paige 649, and cases cited. Also Sinclair v. Jackson, 9 Cowen 586, where it is said “ a man who admits a fact or deed in general terms, either by reciting it in an instrument executed by him, or by acting under it, shall not be received to deny its existence.” See, also, Carver v. Jackson, 4 Peters 83. But we need not rest the decision on this ground.

The plaintiff, in this case, purchased the estate subject to the mortgages to Jones and to the mortgage to Greely and Rowe; in terms and in legal effect, the right which McKenzie had to redeem the land from these incumbrances. That was what the officer, by the creditor’s direction, exposed to sale, was all that by law he was authorized to sell, and was all that the plaintiff bought. Upon what ground, either in law or equity, can he now claim more ? It is certain that if he gets more, he gets more than he bargained or paid for. There is certainly, then, no equity in his claim of more.

Nor is the law of the case more favorable. The creditor had the right to treat the mortgages to Jones as valid-They were not void for the cause of fraud alleged, but voidable at the election of McKenzie’s creditors. The purchaser was not a creditor of McKenzie, and so could make no election in that matter. But Emery, the creditor in the execution, elected to treat, and did, in fact, treat the mortgages as valid and subsisting. And it is said in Russell v. Dudley, 3 Met. 147, a case involving a question like the present, that “ the creditor, by treating it as a subsisting mortgage, is afterwards estopped to deny the existence of such mortgage; and the demandant, purchasing for the use of the creditor, and taking with a knowledge of all the facts, is likewise estopped. And it was there held that the purchaser could not avoid the mortgage on the ground of fraud. The chief justice, in delivering the judgment of the court, further remarked : “ The purchase money must be understood to be the value of the estate over and above the sum for which it was mortgaged. If he could afterwards avoid that mortgage and hold the whole estate, he might get it for a very inadequate consideration; he would get what the officer never intended to sell, to the manifest injury of the debtor, and perhaps of the creditor. It would be injurious to the debtor, by taking the whole of the estate by force of a legal proceeding, intended to convey the balance of the value of the estate, after paying the mortgage debt, leaving the debtor still liable for that debt. It would be injurious to the creditor, if the actual proceeds of the 'sale should prove insufficient to pay the whole amount of the execution.”

This language of the learned chief justice appears to us to convey a just doctrine, and to be conclusive upon the point that the plaintiff, in taking his title to the equity of redemption from a sale by legal process, does not stand in a different position, or with a better‘right to question the mortgage, than the creditor who has made his election, and that both are bound by it.

It will be seen, too, that according to the view of the court in that case, the purchaser of the equity, sold for the benefit of a creditor, does not represent the creditor’s right to inquire into the consideration of the mortgage debt, or to impeach it upon any grounds not open to the debtor mortgager himself, and that he gains no advantage whatever from the fact that the sale was by a sheriff, on execution, for the satisfaction of a debt. The thing sold was described by the official act' of sale, and by the officer’s deed, in the case cited, as the “ right in equity,” which the tenant had to redeem, &e. A more precise and unequivocal description, in the case before us, places the recognition of the mortgages beyond all controversy, and according to the doctrine declared, limits the purchase, most clearly, to the interest of the debtor in the land, over and above the sums named in mortgages.

A question substantially like the present was raised and decided in Brewer v. Hyndman, Grafton county, 1846. The plaintiff had bought, at a sale in bankruptcy, the bankrupt’s title to certain real estate, scheduled as being subject to a mortgage to the defendant for a certain sum. The plaintiff, upon a petition to redeem, endeavored to avoid the incumbrance upon the ground that it was fraudulent against creditors. There were other points in the case; but upon the one stated, the court held that the petitioner stood in the place of the mortgager himself, and had not a creditor’s right to question the transaction between the original parties; that he had bought an equity of redemption, and by the act he recognized the mortgage, and was, in law, estopped to avoid or to impeach it, upon grounds not open to the bankrupt mortgager himself.

The case does not require that we should point out the course by which the mortgages to Jones might have been tested, in reference to their validity against creditors. In reference to that question, the following suggestions were made by the chief justice, in delivering the judgment of the court in Russell v. Dudley. “ Perhaps, by special notice at the sale, by the terms of sale recited in the officer’s deed, or by special reservations and descriptions in the deed itself, the estate, subject to the uncontested valid mortgage, and, of course, an equity of redemption, might be sold in such form as to give the purchaser a right to contest the second mortgage and set it aside, if in fact fraudulent against creditors, and redeem and hold the estate by paying the first mortgage only.” The question was there stated to be new, and was expressly reserved for future determination, and we intend expressing no opinion on the point.

In conclusion, we are of opinion that the ruling of the court was correct, in the particular in which the exception was taken, and there must be

Judgment on the verdict.