54 N.J. Eq. 387 | N.J. | 1896
The opinion of the court was delivered by
This is a suit in equity by Green, a mortgagee, against Stone, a purchaser from the mortgagor of a portion of the mortgaged premises, praying a decree that the defendant pay the balance of the mortgage debt remaining unpaid after applying thereto the amount realized from the foreclosure and sale of the mortgaged
One George S. Beckett was the owner of two tracts of land situate in the county of Gloucester; the one situate in Logan township, containing four hundred and thirty-eight and eighty-one hundredths acres, known as the Middleton farm; the other situate in the township of Harrison. In December, 1885, Beckett gave the complainant a mortgage for $15,000 on both tracts, together with a bond for the payment of the mortgage debt. By a deed of conveyance, dated January 25th, 1893, Beckett conveyed the farm above mentionéd to the defendant. The consideration named in the deed was $16,000, and at the end of the description of the premises and estate conveyed, the deed contained the following clause:
“Subject to the payment of a certain mortgage debt of fifteen thousand dollars, with interest thereon at five per centum per annum, made by said George S. Beckett to George G. Green, covering the property hereby conveyed inter alia, which the said Edward B. Stone hereby assumes and agrees to pay as a part of the consideration hereof.”
The deed was prepared by George H. Barker, a real estate agent and conveyancer, at the request of Beckett, in pursuance of instructions given by him. It was delivered by Beckett to Stone, on the 3d of February, 1893, at the office of Martin "V. Bergen, who was the counsel of Stone, and was placed upon record the same day.
Subsequently, in April, 1894, the complainant filed a bill to foreclose his mortgage. Beckett and wife and Stone were made defendants in the foreclosure suit. A decree of foreclosure and for the sale of the mortgaged premises, including both tracts, was obtained in July, 1894, and the premises were sold by the sheriff, on the 24th of September, 1894, at public auction, by virtue of an execution issued upon the decree, the complainant being the purchaser for a sum which left unpaid a considerable portion of the mortgage debt. This bill was filed to enforce the payment by Stone of such part of the mortgage debt as remained unsatisfied, in compliance with the agreement to assume and pay the mortgage debt contained in his deed.
the obligation of the grantee to pay the mortgage debt is in existence undischarged, his remedy against the grantee is complete. Klapworth v. Dressler, 2 Beas. 62; Crowell v. Hospital of St. Barnabas, 12 C. E. Gr. 650 ; Youngs v. Trustees of Public Schools, 4 Stew. Eq. 290 ; Vreeland v. Van Blarcom, 8 Stew. Eq. 530; Sparkman v. Gove, 15 Vr. 252; Keller v. Ashford, 133 U. S. 610, 622, 623; 1 Jones Mort. § 755. All the cases agree that the language contained in this deed creates an obligation on the part of the grantee which the mortgagee may enforce in equity. This remedy of the mortgagee is not affected by the acts of 1880 and 1881. The first section of the act of 1880 regulates simply the form of proceeding in foreclosure suits, and
Beckett died in August, 1894, and after the sale of the mortgaged premises under the foreclosure, Stone filed a bill in equity against Beckett’s representatives for the reformation of the deed by eliminating therefrom the covenant of assumption, on the ground that the same was inserted in the deed without his knowledge and by mistake, and that it was not the intention of either of the parties to said deed to have it in the deed. The case was heard by an advisory master on bill, answer and depositions, and the master denied the relief prayed for and advised that the complainant’s bill be dismissed. Upon his advisory opinion a decree was made accordingly. This decree was affirmed by this court. Stone v. Beckett (March Term, 1896). By force of this decree it was adjudged as a finality that the contract of the grantee with the grantor to pay the mortgage debt was a valid and subsisting obligation. Inasmuch as the right of the complainant in this case results from the contract between Stone and Beckett, it would follow as a legal conclusion that the decree in the former suit, if put in evidence, would determine the rights of these parties, unless some independent equity, extraneous of the conduct of the immediate parties to the deed, be made to appear. The record does not disclose that the decree in the former suit was put in evidence in this case. The ease will therefore be examined de novo upon the pleadings and evidence.
The defendant, in his answer, admits that by the deed of January 25th, 1893, Beckett conveyed to him the premises described in the deed. He denies that he accepted the said deed pursuant to any bargain and sale between him and Beckett. He also denies that the said agreement to assume and pay the
The facts connected with this transaction, as stated by the vice-chancellor in his opinion, are briefly these: “ Edward B. Stone, the defendant, was the owner of four houses and lots in Camden which were subject to mortgages, the equity in the four being considered equal to $2,000. One McClung was desirous of becoming the owner of said farm, and not having the cash with which to make the purchase, and knowing that Beckett wanted to sell his farm, and "that Stone was willing to dispose of his houses and lots, adopted the following scheme, with the view of ultimately securing the title in himself, and in so doing to limit the number of conveyances as much as possible. He procured the consent of Stone to make conveyance of his said four lots directly to.Beckett in consideration of Beckett conveying the farm to Stone, instead of having the Stone conveyance first made to himself and then conveying to Beckett, with the express agreement that the $2,000, at which the equity of redemption in the Stone lots was valued, should be paid to Stone by McClung, and that Stone should hold as security therefor the title to the said farm.”
The negotiations which resulted in the exchange of the Camden lots for the Beckett farm were conducted entirely by McClung. The parties met at the office of Martin "V. Bergen February 3d, for the purpose of the delivery of the deeds by the parties, respectively. The persons present on that occasion were Beckett, Stone, McClung and Mr. Bergen, who had been the counsel and adviser of Stone for. many years. Beckett had the
“after Beckett brought his deed there and he delivered that deed to Stone and McClung, both were there, and Stone had his deed there, and both lay on the table, and I chucked one to one and one to the other, and then I drew an agreement.”
He also testified that he did not examine the deed — only looked to see if it was acknowledged. The agreement referred to is the agreement between Stone and McClung:
“Agreement entered into this 3d day of February, 1893, between Edward B, Stone, of the city of Camden, N. X, of the first part, and Thomas JE. McClung.' of the second part. (1) It is agreed that the.said party of the first part, for and in consideration of the sum of §2,000, is to convey to the said party of the second part the property conveyed to the said party of the first part by George S. Beckett, by deed dated January 25th, 1892, situated in Logan township, Gloucester county, New Jersey, containing about 438.08 acres. (2) The said agreement is to be carried out within sixty days from the date hereof. (3) The property is to be conveyed subject to the encumbrance thereon, over and above said -§2,000. (4) The conveyance or transfer of said property is to be made to said party of the second part or to such person as he may designate, and for such consideration as he may name. In witness whereof the said parties have hereunto set their hands and seal, the 3d day of February, 1893. Signed and sealed in the presence of Martin Y. Bergen. Edward B. Stone Thomas K. McClung.”
The deed was left with Bergen to be recorded, and was recorded the same day. In virtue of the title conveyed by the deed, possession of the farm was taken immediately, and was held until the foreclosure sale. The property has meanwhile been under the control of McClung exclusively, but his possession and control have been with the acquiescence and consent of Stone, and under the title Stone obtained under the deed. The vice-chancellor, in his opinion, says that, “ so far as Stone was concerned, he was simply an instrument used by McClung to procure the passage of the title to the farm to himself ultimately.” It is not necessary to consider whether McClung practiced any fraud or deception to induce Stone to consent to the arrangement made between them. The problem for judicial decision is how
“ Mr. McClung introduced me to Mr. Beckett, and Mi-. McClung says, ‘ Ed., Mi-. Beckett will take those properties; ’ and he said, ‘ Will you have the deeds made in this fashion?’ He says, ‘You bring me that deed and I will have the deeds drawn.’ All right; I brought him down the deeds, and they left, and Mr. Beckett asked me how much there was against the property, and I told him. He asked me about the tax, if that is paid, and I told him they were, and that is about all that was said as far as I can recall.”
Nothing was done at that interview tending in the slightest degree to influence Stone to make the indiscreet arrangement he made with McClung. Nor is there any proof that Beckett had knowledge of the personal transactions between McClung and Stone. The only evidence touching that subject is the fact that Beckett was present at Bergen’s office when the agreement between McClung and Stone was prepared and read, and it does not appear that he gave such attention to the paper, which did not concern him, as to become informed of its contents. All that Bergen testified to. was that “ Beckett was there while I fixed the matter up, and they signed the agreement, and they all went out together. That is all I know about it.” Nor was there anything in the paper that would excite suspicion of wrong. The agreement was simply for an option to McClung to purchase the property within a limited time for the sum of $2,000, subject to the encumbrances. On this evidence the vice-chancellor
There is no proof to sustain an allegation of fraud. It is conceded that the mortgage debt upon both tracts was comprised in the consideration for the conveyance. Stone testified that McClung told him that he was paying $21,900 for the property. To make up that sum the whole mortgage debt was required to be included. The covenant to assume and pay the entire mortgage debt is full and specific, more so than is usual, and is contained in that part of the deed in which such covenants are usually placed. Beckett gave the deed into the hands of Mr. Bergen, who was an experienced lawyer, and had been the counsel and adviser of Stone for many years. Both McClung and Stone knew of the mortgage on the farm and the amount of it, and that the mortgage debt was part of the consideration of the conveyance. If either Bergen or Stone or McClung had exercised ordinary care, the presence of the covenant in the deed would have been discovered.
Nor is there such proof in the case as would justify the reformation of the deed on the ground of mistake. Courts of equity may grant relief on the ground of mistake, by rescinding the entire contract or reforming it, but such relief will not be granted in case of a deed, unless upon proof that is entirely satisfactory and convincing. In granting relief on the ground of mistake, there is a distinction between the rescission and the reformation
Under the circumstances, the only relief that can be considered is by way of reformation, by expunging the contract of assumption on the ground that it was inserted in the deed by the mistake of the parties mutually. The vice-chancellor disposes of this aspect of the case on the authority of Bull v. Titsworth, 2 Stew. Eq. 73. The other cases cited in the opinion under this head are not relevant to this precise subject. In Bull v. Titsworth the chancellor found as a fact that the assumption of the mortgage was not part of the agreement made on the purchase of the property, and that the defendant, when he accepted the deed, was not aware that it. contained the clause. The assumption clause was not in that part of the deed in -which such an agreement was usually written — at the end of the description
The doctrine that a contract or deed will not be reformed for mistake, in the absence of fraud or imposition, unless the mistake was mutual, that is, reciprocal and common to both parties, where each alike was under the same misconception as to the terms of the written instrument, is the settled doctrine of courts of equity. This doctrine is accurately stated by Mr. Kerr in this language:
“ There can be no rectification if the mistake be not mutual or common to all parties to tbe instrument, or if one of the parties knew of the mistake at the time he executed the deed. Where one party only has been under a mistake, while the other, without fraud, knew what the character of the deed was, and intended that it should be, the court cannot interfere, for otherwise it would be forcing on the latter a contract he never entered into, or depriving him of a benefit he had bona fide acquired by an executed deed. Rectification can only be had where both parties have executed an instrument under a common mistake and have done what neither of them intended. A mistake on one side may be a ground for rescinding but not for correcting or rectifying an agreement.” JBTerr Fr. (2d ed.) 498.
The doctrine is stated by Chief-Justice Spencer in this language: “ It is-not enough in cases of this kind to show-the sense and intention of one of the parties to the contract; it must
Equally explicit is the language of Chief-Justice Ames, in Diman v. Providence R. R. Co., 5 R. I. 130, 135, where he said: “ If the court were to reform the writing to make it accord with the intent of one party only to the agreement, who avers and proves that he signed it as it was written by mistake, when it accurately expressed the agreement as understood by the other party, the writing, when so altered, would be just as far from expressing the agreement as it was before, and the court would be engaged in the singular office of doing right to one party at the cost of a precisely equal wrong to the other.”
The cases to the same effect are numerous. Many of them will be found in the following citations: 2 Lead. Cas. Eq. (4th ed.) 979, 980, 981; American note to Worlam v. Hearn, 15 Am. & Eng. Encycl. L. 639 tit. “Mistake;” 1 Sugd. V. & P. (14th ed.) 243, and note; Fowler v. Fowler, 4 De G. & J. 250, 264, and note; Paulison v. Van Iderstine, 1 Stew. Eq. 306, 310; Morris v. Penrose, 11 Stew. Eq. 629, 630; Henderson v. Stokes, 15 Stew. Eq. 586, 589.
The negotiations for the. exchange of the two properties were
The rule of evidence, with respect to the character and degree
In Vreeland v. Van Blarcom, 8 Stew. Eq. 530, 531, cited in the opinion below, the defendant for many years had been mentally an imbecile. One Geroe had charge of his affairs as agent and qwas'i'-guardian. As such he negotiated an exchange of properties, and caused to be inserted in the deed to the defendant an agreement to assume a mortgage which Geroe himself held. This agreement was placed in the deed without the knowledge or authority of the defendant and without its being required by the grantor. This court vacated the agreement to assume, on the ground that Geroe could not insert such a stipulation in the deed for his personal benefit without the authority of his principal. ■ That decision would be controlling as between McClung and Stone. The facts in the case disclose its inapplicability to this controversy as between the parties to this suit. McClung was not owner of the mortgage now in question, nor was he in this transaction the agent of the mortgagee. He derived no benefit to himself personally by the assumption of the payment of the mortgage by Stone.
The decree should be reversed, and a decree entered in conformity with the prayer of the bill.
The defence was made by answer only. It should have been mads by way of a cross-bill. Miller v. Gregory, 1 C. E. Gr. 274; French v. Griffen, 3 C. E. Gr. 279; Graham v. Berryman, 4 C. E. Gr. 29; Rosenkrans v. Snover, 4 C. E. Gr. 420; O’Brien v. Hulfish, 7 C. E. Gr. 471, 475; Allen v. Roll, 10 C. E. Gr. 164, 165. And all persons who were interested should have been made parties to the cross-bill. When the object of a cross-
For reversal — The Chief-Justice, Depue, Dixon, Garrison, Gujimere, Lippincott, Ludlow, Magie, Van Syckel, Barkalow, Bogart, Nixon — 12.
For affirmance — None.