Merritt v. Lambert

7 Paige Ch. 344 | New York Court of Chancery | 1838

The Chancellor.

If the complainants have a perfect title to the Buffalo lots, so that they can give a title to the defendant discharged of any legal or equitable claim thereon in favor of Edwards, then there is no doubt that the order appealed from is right and ought to be affirmed. The situation of the property in New-York is such that a receiver is necessary, to collect the rents and profits, pay up the ground rents, and keep down the interest of the large mortgage thereon, and thereby to save the property from being lost pending this litigation. I shall therefore proceed to examine the only real questions in the case.

For the purpose of this suit I shall take it for granted that Tibbits actually held the legal title, under the master’s deed, for the benefit of the corporation, as a resulting trust, in consequence of his taking the deed in his own name and paying the purchase money out of the funds of the company. For this purpose it is necessary to presume he took the conveyance in his own name without the consent or knowledge of the company, to whom the purchase money belonged, or in violation of his trust as an officer of the corporation; so as to bring the case within the provisions of the sixty-third section of the article of the revised statutes relative to uses and trusts. (1 R. S. 728.) For if the conveyance was taken to himself with the knowledge and by the authority of the directors of the corporation, the fifty-first section of that article gives the property to him absolutely, for his own benfit. And the corporation in that case would only have a personal claim on him, for the purchase money, to the extent of his bid, or the amount of its funds which had been applied towards the purchase.

Even if the legal title to these premises had been in the corporation, for its own benefit, at the time of the tender by Edwards, I do not think a mere tender of the money, without actual payment, could have the effect to divest the legal title; so as to enable him to maintain an ejectment suit, without filing a bill to redeem, under this provision in the act of incorporation of the company. I am aware that in the case of Jackson v. Craft, (18 John. Rep. 110,) the supreme court decided that a tender of the mortgage money forever discharged the lien on the land, and left the mortgagee to his mere personal remedy against the original mortgagor. But that case I believe has been doubted by the profession ever since the report of the decision appeared; so far as relates to an absolute discharge of a mortgage by the mere tender of an amount which turns out to have been sufficient; and where the condition of the mortgage had been broken by the non-payment of the money at the day of payment prescribed in the instrument. And I am not aware that the decision upon that point has been followed in any subsequent case. The mistake of Mr. Justice Woodworth who delivered the opinion of the court, arose from the misapplication of a correct principle ; but which is imperfectly stated in Bacon’s Abridgment, to which he refers. It is there said “ If A. borrow one hundred pounds of B. and mortgage land to B. with condition for payment thereof, in this case if A. tender the money and B. refuse to accept thereof, the land is discharged; but the debt which existed before the mortgage remains, and may be recovered in an action.” (Bac. Air. tit. Tender, F.) He also refers to Coke upon Littleton where the same principle is laid down in Lord Coke’s note in nearly the same words. Indeed the language of the 338th section of Littleton himself, to which that note is attached, is calculated to carry the impression that a tender of the mortgage money and interest at any time, was sufficient to defeat the lien of the mortgage and revest the legal estate in the mortgagor. But by a reference to the previous sections it will be seen that both Littleton and Coke were speaking, in this subsequent section, of a tender at the day; so as to revest the legal estate by a literal compliance with the condition of the mortgage, so far as it was possible to do so when the mortgagee would not recieve his money although tendered at the day. (See Coventry’s Readable edition of Coke upon Littleton, § 334, 335, 336, 337, and notes.) The correct principle, as intended to be laid down by Littleton and Coke, is that if there is a tender of the mortgage money at the time and in the manner prescribed in the condition of the mortgage, and the mortgagee refuses to receive it, the condition is complied with; and the estate reverts back to the mortgagor by the express terms of the instrument. So that if the mortgagee is so unwise as to refuse his money when it is tendered at the time and place and in the manner prescribed in the instrument itself, he necessarily must lose his security upon the land which was merely collateral to the debt; although the mortgagor may be still liable for the money, where there is an existing indebtedness. But if the money is not paid by the day, the condition upon which the land was to revert to the mortgagor has not been complied with ; and the interest of the mortgagor in the land is then reduced to a mere equity of redemption. And an actual payment, and not a mere tender or offer to pay then becomes necessary, to discharge the legal and equitable lien of the mortgagee upon the land. Indeed by the common law the actual payment of the mortgage money and interest, after the day, was not sufficient to revest the legal title in the mortgagor or his assigns ; but a reconveyance of the premises was necessary. And for these reasons it is that the mortgagee, or his assigns, or subsequent incumbrancers upon the mortgaged premises, are driven to a bill to redeem, where the mortgagee refuses to receive what is equitably due to him. But this could not be necessary in any case if a mere tender of the amount due, after the mortgage has become forfeited, would have the legal effect of discharging the mortgaged premises from the lien of the mortgage. This being the situation of the mortgaged premises before the foreclosure and sale but after the day of payment was past, the legislature probably did not intend to give the mortgagor any greater rights in relation to the redemption after such sale than he before possessed. The legal title is therefore unquestionably in the complainants, and they are at law entitled to retain the possession of the premises notwithstanding the tender.

If the mortgaged premises were held by Tibbits as the trustee of the corporation by virtue of a resulting trust, in equity the land belonged to the corporation ; and upon the equity of the statute the corporation was the purchaser of the premises under the decree of foreclosure, so as to give the mortgagor the right to redeem so long as the property remained in the hands of the corporation unsold. I am satisfied, however, that, upon a true construction of this provision in the act of incorporation, a valid and bona fide sale of the premises in equity, and especially where the purchasers had paid one third of the consideration before there was any attempt to redeem, was sufficient to deprive the mortgagor of the right to redeem the premises from the master’s sale. The moment the contract for sale was executed with a bona fide intent to carry that contract into effect according to the terms thereof, accompanied as it was to be by an immediate delivery of the possession to the purchasers, the complainants in this suit had a right to insist upon a specific performance of the contract. And the premises no longer remained in the hands of the corporation unsold, within the intent and meaning of this provision in the act of incorporation. The right of the mortgagee to redeem was therefore gone, although the legal title still remained in the heirs of Tibbits, or in the corporation, at the time of the tender in the summer of 1835. And a notice to the complainants of a claim of a right to redeem, when no such right in fact existed, could not prevent them from afterwards clothing their equitable estate in the premises with the legal title, by taking a conveyance under the decree for a specific performance of the contract of purchase. They have therefore a perfect title to the Buffalo lots, free from any legal or equitable claims thereon, so far as appears upon the papers now before me. And if so, the complainants will in the end obtain a decree for a specific performance of the contract with the defendants. The fact that an ejectment suit has been brought by a third person who has no legal or equitable claim to the premises, certainly forms no valid defence to present suit; although the defendant had not heard of that ejectment suit at the time he agreed to purchaser

The order appealed from is therefore affirmed with costs.