79 N.J. Eq. 501 | New York Court of Chancery | 1912
The question was raised in limine that the defendant Jones was not in a position to assert any right whatever, for the reason that he could not be subrogated to Condit’s rights.' I think, however, that it is quite clear that Jones by virtue of the doctrine of subrogation is entitled to stand in the shoes of Condit and to assert any claim which Condit might have asserted, and to litigate the same. He was a surety for the vendee, and having paid the vendee’s debt, he is entitled to the place which the vendee had. This is justice, and it is supported by the cases. Meux v. Smith, 11 Sim. 410; Nottingham Building Society v. Thurstan (1903), A. C. 6; Sheld. Subr. § 97.
The doctrines concerning vendors’ liens are firmly established in our jurisprudence. They give to the grantor or vendor who has parted with the title to his property an equitable lien on the property conveyed to secure the payment of the purchase-money. It is not a right which necessarily arises out of contract; it-is rather an equity raised out of the circumstances on the ground of a constructive trust to protect the vendor, to such extent as may be necessary; and it is difficult to see how as between the parties the force or effect of the lien could be enhanced by a mere agreement that a vendor’s lien should be reserved. Graves v. Coutant.
The situation, however, in this case is complicated by the fact that the vendor’s lien and the lien of the mortgage, hostile to each other as they are, arise simultaneously and out of the same transaction. It is the deed from the Cobb estate to the Carteret company which gives rise to the vendor’s lien and which also places the property within the purview of the mortgages. There thus appears to be at the outset a conflict of liens each of which is struggling for priority. The situation, however, is not singular. Similar circumstances have been dealt with by our courts in important cases. The first case that I have been able to find in this state which concerns conflicting liens of the character of those in this suit is Williamson v. New Jersey Southern Railway Co. (1877), 28 N. J. Eq. (1 Stew.) 277. The proceeding in that case was for the foreclosure of a mortgage on the New Jersey Southern railway, which mortgage contained a provision that it should cover future-acquired property. One of the controversies related to the priority between the mortgage and certain mechanics’ lien claims. The mortgage was made and recorded long before the work and materials were done and provided; the property liable for the mechanics’ liens was conveyed to the company before the mechanics’ Jiens were actually filed and so came within reach of the mortgage provision, a situation very similar to the one at bar. Chancellor Runyon held that a mortgage which was intended to cover after-acquired property only attached to such property in the condition in which it came to the mortgagor’s hands; that if it was already subject to mortgages or other liens the general mortgage would not displace them, although they might be junior in point of time. The authority cited for this proposition is New Orleans, &c., Railroad v. Mellen, 12 Wall.
Chancellor Runyon held the same rule in United New Jersey Railroad and Canal Companies v. Long Dock Co. (1887), 42 N. J. Eq. (15 Stew.) 547; and it was dealt with again by the court of errors and appeals in Campbell v. Roddy (1888), 44 N. J. Eq. (17 Stew.) 244, and there applied to the case Avhere an engine and boiler were made subject to a chattel mortgage which was never registered. The chattels were annexed to the real estate upon which the mortgagor had previously given a mortgage. It was held that the lien of the chattel mortgage should be protected so far as it would not diminish the security which the real estate mortgage would have had if the annexation had not been made. The same subject was dealt with by Vice-Chancellor Pitney in Daly v. New York and Greenwood Lake Railroad Co. (1897), 55 N. J. Eq. (10 Dick.) 595; affirmed, 57 N. J. Eq. (12 Dick.) 347. There the controversy was between an unrecorded purchase-money mortgage and a previously executed railroad mortgage which purported to cover after-acquired property. The vice-chancellor says: “'The general rule seems to be that the holder of a mortgage who claims by its terms that it is a lien upon after-acquired property takes such property subject to liens upon it between the parties. This was distinctly decided by the supreme court of the United States in the case of United States v. New Orleans Railroad. Co. (New Orleans, &c., Railroad Co. v. Mellen), 12 Wall. 362,” from Judge Bradley’s opinion, in which he quotes extensively; and he further says: “It is familiar learning found in all the cases that a mortgage upon after-acquired property cannot rise higher than a contract to convey the title to that property when acquired, and a suit for its enforcement is in effect a suit for the specific performance of a contract.” Citing Holroyd v.
The court of chancery had the same question up in General Electric Co. v. Transit Equipment Co. (1898), 57 N. J. Eq. (12 Dick.) 460. There the controversy was between a mortgage covering after-acquired property and chattels which had been delivered to the mortgagor under a conditional contract of sale. It was held upon the principles above stated and upon the authority of the cases that the right of the conditional vendor must prevail upon the principle laid down by Mr. Justice Bradley in the New Orleans Railroad Case, that a mortgage intended to cover after-acquired property can only attach itself to such property in the condition in which it comes into the mortgagor’s hands, and that if that property is already subject to mortgages or other liens the general mortgage does not displace them, though they may be junior to it in point of time; it only attaches to such interest as the mortgagor acquires.
While in this case the transfer of the property by deed from Oondit to the Carteret company may create simultaneous liens, it must yet be considered that however instantaneously the liens may arise there must be in our contemplation of the transaction a time when the title leaves the vendor and vests in the vendee; as it leaves the vendor the vendor’s lien attaches; as it reaches the vendee the lien of the mortgage attaches. It may be better described perhaps as a sequence of events rather than a sequence of time.
The doctrine is thoroughly established by these cases in New Jersey and by the decisions in the federal jurisdiction. Fosdick v. Schall, 99 U. S. 235; Irrigation Company v. Garland, 164 U. S. 16. The leading case in England is Mackreth v. Symmons (1808), 15 Ves. 329; 1 W. & T. L. C. 447. In that case Lord Elden held that where there was a contest between a vendor’s lien for unpaid purchase-money and the right of a person who had subsequently obtained from the purchasers a mere contract for a mortgage and nothing more that the vendor’s lien had priority.
It was argued on behalf of the complainant that if the court found that the vendor had ever by any method acquired a vendor’s lien, he is not now entitled to the benefit of it because he has either waived his right or has bound himself by an estoppel not to assert it. It will be remembered that when the conveyance was made by Condit to the Carteret company he took from the company its bond for the purchase-money guaranteed by the defendant J ones, and also sixty-two of the bonds which were secured by the second mortgage upon the Copperas mine tract, a one-half interest in which passed at the same instant to the company; and it was insisted that this fact showed that Condit did not rely upon his vendor’s lien, but relied rather upon the personal responsibility of Jones as guarantor of the company’s bond, and further upon such lien as he might acquire upon the property which he had conveyed, by reason of his holding sixty-two of the bonds issued under- the second mortgage. There can be no doubt but that a vendor having a right to assert a vendor’s lien may waive or avoid the same by parol, or even orally, or by acts manifesting an intention to discharge the same.
“Although somewhat disputed, yet upon examining the cases it is now settled, and upon good authority, I think, that the taking-of a mere note or bond of the vendee will not avoid the lien. If the party looks to the vendee alone for his money, without taking-any other or further security, the land is liable.” This seems to be the earliest case in New Jersey on the subject. It is based upon Meckreth v. Symmons, 15 Ves. 328; Fish v. Howland, 1 Paige 20, and Bayley v. Greenleaf, 7 Wheat. 46.
In Dudley v. Dickson (1862), 14 N. J. Eq. (1 McCart.) 252, Chancellor Green held that the taking of a distinct security either in the shape of real or personal property from the vendee, or taking the responsibility of a third person, is an implied waiver of the lien, and that any act which indicated that it was not the-intention of the parties that the purchase-money should continue a lien upon the land conveyed, is a waiver of such lien, citing Gillman v. Brown, 1 Mas. 191; S. C. on appeal, 4 Wheat. 255; Nairn v. Prowse, 6 Ves. 752, and Capper v. Spottiswoode, Taml. 21. In that case the vendee gave his note to the vendor payable-at thirty days. This was subsequently renewed for ten days by the vendee by a note endorsed by Gray. Later, the grantee executed a declaration of trust whereby she stated that she held one-third of the said land or the proceeds of the sale thereof for the indemnification of Gray against the payment of the note which he-had endorsed, and that whenever the note should be paid to Dudley, the complainant, the obligation should cease. It was held that the complainant was not entitled to an equitable lien by way of vendor’s lien upon the whole of the premises conveyed, but that he must be restricted to the security afforded by the declaration of trust.
In Armstrong v. Ross (1869), 20 N. J. Eq. (5 C. E. Gr.) 121,
In Corlies v. Howland (1875), 26 N. J. Eq. (11 C. E. Gr.) 311, it was again declared by Vice-Chancellor Van Fleet, on the authority of Chancellor Nent, that the taking of a note, bill or bond, with distinct security, or taking distinct security exclusively by itself, either in the shape of real or personal property from tire vendee, or taking the responsibility of a third person, is evidence that the seller did not repose upon the lien, but upon independent security, and it discharges the lien. 4 Kent Com. 151. In that case Henry Howland purchased land from the complainant which, at his request, was conveyed by the complainant to Henry W. Howland. The vendor gave his promissory note for the whole purchase-money, and it was held that the vendor’s lien attached, notwithstanding the acceptance of the father’s note, for the reason that the son had notice on the delivery of the deed that the purchase-money was unsecured and unpaid.
In Acton v. Waddington (1889), 46 N. J. Eq. (1 Dick.) 16, Chancellor McGill cited Vice-Chancellor Van Fleet’s opinion in Corlies v. Howland, supra, on the point of waiver, although the question of waiver does not appear to have been litigated before him. The subject is discussed by Vice-Chancellor Reed in Harter v. Capital City Brewing Co., 64 N. J. Eq. (19 Dick.) 155, where the vendor had agreed to take stock of the defendant corporation in payment of the purchase-money. He says that it is not to be conceded that the law is settled that if the contract was such as to permit the corporation to pay in shares of stock the vendor’s lien for such portion of the consideration was thereby lost. He further says that the court of appeals of New York in Fisk v. Potter, 2 Keyes 34, held apparently without much consideration that if the price for 1'and is payable in some commodity other than money, the vendor’s lien is lost, that the rule, as settled by the great weight of authority, was that where the consideration
The law so clearly declared in New Jersey is in accord with the current of decisions in the other American jurisdictions. Hare & Wallace, in their American notes to the case of Mackreth v. Symmons, 1 White & T. Lead. Cas. 447, after indicating the conditions under which a vendor’s lien is created, says:
“On the other hand the lien will be considered as waived whenever any distinct and independent security is taken, whether by mortgage on other land or pledges of goods or responsibility of a third person, and also when a security is taken upon the land either for the whole or a part of the unpaid purchase money, unless there is an express agreement that the implied lien shall be retained. The taking of the vendee’s obligation does not affect the lien, but the taking of a mortgage on other property, or a bond or note of the vendee with surety, or a negotiable note drawn by the vendee and endorsed by a third person, or drawn by a third person and endorsed by the vendee, or a draft on a third person and accepted by the drawee, will repel the lien presumptively.”
See extended note to Royal Con. Mining Co. v. Royal Con. Mines, 157 Cal. 737; 110 Pac. Rep. 123, re-reported in 137 Am. St. Rep. 165, where all the cases are collected.
I think that the American rule may be considered as so established. The English rule, however, appears to be more liberal toward the vendor and to incline toward the idea that it is a question of the vendor’s intention to be gathered from all the circumstances.
Hnder the authority of these cases it must be quite clear that the vendor’s lien which Mr. Condit might have insisted upon was either waived by him or was so acted upon by him as to create an estoppel against its assertion at the present time. I do not think it at all probable that Mr. Condit ever bargained for a vendor’s
1, therefore, hold that while the situation is one in which Mr. Condit might at one time have insisted, upon a vendor’s lien, the evidence shows either that he waived his right or that he is es-topped from now asserting it, and that upon this point the master’s report should be confirmed. The other exceptions, relating principally to the standing of individual bondholders, were not argued, and I suppose were waived.
I will advise an order overruling all the exceptions and confirming the report of the master.