12 Conn. 195 | Conn. | 1837
This case embraces such a variety of persons, dates and conveyances, that it appears somewhat complicated. It is believed, however, that a careful examination and distinct understanding of these particulars, will render the precise question to be decided, extremely clear.
As no relief is sought by the plaintiffs, or by Carr, against Benham & Brown, and Isbell, Terrell & Tomlinson, the conveyances to them, in that view, may be laid out of the case. They are not made parties to these proceedings; and consequently, no decree can now pass against them. Independent, however, of the fact that they are not before the court, it is apparent., if they were, no decree ought to be passed against them; for it is found, the sales were made to them, by Goodyear, pursuant to the authority given him by the bank, and the avails, being the full value of the parcels sold to them, have been applied towards the payment of the indebtedness secured by the mortgages to the bank.
The court are clearly of opinion, that Osborn should be protected in the title which he has acquired to the property in Waterbury, sold to him, by Goodyear, in May, 1831. Carr has no equitable right to redeem this property ; for it is not included in the mortgage to him, and was sold previous to the date of his mortgage. Nor has he any just claim to the application of the proceeds of the sale, to the extinguishment of the mortgage debt to the bank. Osborn paid his money, on a bona fide contract for the purchase, made and executed before Carr had acquired any interest in the property: and although this contract was by parol, it was executed. The purchase moneys were paid pursuant to the agreement; possession was taken of the premises, by Osborn ; and has ever since been continued. His equity is certainly equal to that of Carr ; and
We are also of opinion, that a similar protection is to be given to Hallock. His purchase was made bona fide, without actual notice of Carr's mortgage. The property was sold by those who had the title, and at a time when Carr had no interest in it. The cross-bill, as to Hallock, must, therefore, be dismissed.
The principal question presented by the record, and in regard to which the parties before the court, entertain directly opposite views, relates to the application of the moneys arising from the sale of the property situated in New-Haven. Carr, by his mortgage, acquired no specific interest in or lien upon this property : nor did De Forest & Co., by their mortgage, obtain any such interest, or lien in the property in Waterbury mortgaged to Carr. Each party, however, by his bill and cross-bill, seeks to throw the burden of the debt originally due to the bank, and now held by the plaintiffs by assignment, primarily upon the property not specifically mortgaged to the other. The plaintiffs, representing the bank, claim to foreclose the property in Waterbury mortgaged to Carr, unless the whole debt secured by it, and now due from Goodyear, is paid. Carr, on the contrary, insists, that he has a right to redeem the mortgages prior to his own; and that if he redeems, he is entitled to the entire pledge given for the debt;— and as the plaintiffs, or those whom they represent, have disabled themselves from giving him the entire security, in consequence of a conveyance of a part to bona fide purchasers, who (as we have decided) are entitled to hold it, they must, in order to give him the benefit of the whole pledge, deduct the value of the part so conveyed, from the amount of the mortgage debt. The object, therefore, of Carr's cross-bill, is, to compel the plaintiffs to deduct from their debt, which they hold by assignment, the value of the property in New-Haven which was sold, and to foreclose for the balance only, and to obtain a decree for redemption, upon payment of that balance. In support of his claim, he relies upon two general principles well settled in equity : 1. That a subsequent mortgagee has a right to redeem a prior|one, and to stand in his place: 2. That where a mortgagee has a lien on two different estates, and a
These principles, in their application to ordinary cases, are not denied. It is not, however, admitted, that they are applicable to cases where the just rights of third persons will be impaired ; and the court are of an opinion, that neither party is entitled to the aid of the court, to the extent claimed by each, respectively.
The bank, (and the plaintiffs, who represent them, assumed their responsibilities) had duties to perform to each of the mortgagees subsequent to them, viz. Carr and De Forest & Co. They held separate mortgages of two different estates of the mortgagor, on one of which, Carr had subsequently acquired a lien by mortgage, and on the other, De Forest & Co. had obtained a similar lien. So far as relates to a redemption of the mortgages to the bank, Carr and DeForest 6p Co. may be considered as the debtors of the bank, who could not justly impair their rights as against each other. In the case of Stevens v. Cooper, 1 Johns. Ch. Rep. 425., the Chancellor says: “ The court will likewise compel the creditor to aid the right of contribution, by assigning his bonds and securities to the debt- or, or surety, or owner of the land, whom he charges with his whole demand; and they will not permit him, voluntarily, to defeat this right. He owes a duty to his debtors not to impair their rights, as against each other.” He adds, with, reference to the case before him: “ Here, the mortgagee has deprived the owners of two lots, of this recourse, by previously discharging the other lots; and he ought not, then, in equity, to charge them with a greater burden than they would have been subject to, upon the principle of contribution, if no such discharge had taken place.”
1. Has Carr any such priority or equity over DeForest & Co., as to the property in New-Haven ?
Certainly not, on account of the nature of his debt. The debt of each was bona fide :
Nor from any knowledge in fact, on the part of De Forest & Co., that Carr had a mortgage on the property in Water-bnry ; for they had no actual notice of that lien :
Nor from constructive notice, by the record of Carr's deed, when they received their mortgage ; for such notice is limited, in its effects, to the specific incumbrance recorded. It is notice only to persons claiming a right subsequently, in the very property described in the recorded deed. It is so fa,r notice, be
Nor can Carr claim any superior equity, as to the lands in New-Haven, because his deed was prior in time : for his specific lien was only upon the property in Waterbury; and DeForest &■ Co.'s mortgage of the property in New-Haven, and the equity growing out of it, were as much prior in time to Carr's, as was Carr's prior in time as to the property in Waterbury. If each had taken a mortgage on the same day, or De Forest & Co. on the next succeeding day, would priority in time impair the equality of the equity ?
Nor was there any neglect or default on the part of DeForest & Co. (if any at all) which is not equally chargeable to Carr. De Forest & Co were under no greater obligation to enquire into the state of the Phoenix Bank title, as connected with the mortgage to Carr, than was Carr to enquire of them regarding it, when he took his mortgage. If it was the duty of De Forest & Co. to have enquired, when they took their mortgage, whether Carr had not a mortgage of a part of the lands in Waterbury, it was equally the duty of Carr, to have enquired whether the bank did not hold a
Nor was there any fact known by De Forest & Co., to put them on enquiry, which they neglected to improve, and which impairs their equity. They had not notice of any fact, which could give Carr a superior claim to themselves, to property in which he had not acquired the remotest interest. It is true, they had constructive notice of Carr's mortgage; and we are asked to extend the doctrine of such notice, to other lands lying in other towns. So to extend it, would be unjust and inexpedient. We are satisfied with the rule, which gives full effect to this kind of notice, in its application to the same lands; at least, we are not disposed to depart from it. But we can readily foresee the injurious results which would follow a further extension of it. If Carr had taken a mortgage of the lands in New-Haven, and neglected to record it, would he have gained priority, by reason of the constructive notice of the mortgage to him, of the lands in Waterbury 7 Would he be permitted to avail himself of such notice, to protect his unrecorded deed, at the expense of a subsequent bona fide purchaser, without actual notice ?
2. De Forest & Co. have no superior claim in equity, to have the debt thrown wholly on the property in Waterbury :
Either, because their mortgage is specifically on the property in Neio-Haven, and Carr's is not; for Carr may properly reply to such a claim, “ my mortgage of the lands in Waterbury is specific, and yours is not specific upon that property; and if merely because one is specific, and the other is not, a priority is gained as to the fund, by which the incumbrance, common to both, is to be raised, I am as much entitled to it as you are
Or because the mortgage of the property in New-Haven, is subsidiary; for in point of fact, it was additional, and is so found by the court. Both mortgages to the bank, were, so far as it regards this controversy, primary :
Or because Carr, prior to the mortgage to De Forest & Co., and the sale to Coley & Smith, and the assignments by the bank, had brought no bill to redeem, or to have the bank resort first to the property in New-Haven; for Carr had no actual knowledge of the mortgage to De Forest & Co., until after the assignment by the bank, and the sale to Coley &
Nor have De Forest &■ Co. obtained a prior right to have their debt paid out of the property in New-Haven, at the expense of the property in Waterbury, by reason of their having acquired the legal title to the whole, through the assignment
There are other reasons than those which we have suggested, which, independent of decided cases in our own courts, would constrain us to reject the English doctrine of tacking. It is unjust and inequitable, and is supported there, only by the weight of authority. Chancellor Kent calls it “ harsh and unreasonable.” He says : “ There is no natural equity in tacking ; and when it supersedes a prior incumbrance, it works manifest injustice. By acquiring a still more antecedent in-cumbrance, the junior party acquires, by substitution, the rights of the first incumbrancer over the purchased security ; and he justly acquires nothing more. The doctrine of tacking, is founded on the assumption of a principle which is not true in point of fact; for, as between A, whose deed is honestly acquired and recorded to-day, and B, whose deed is with equal honesty acquired and recorded to-morrow, the equities upon the estate are not equal. He who has been fairly prior in point of time, has the better equity ; for he is prior in point of right.” 4 Kent’s Com. 178., 179. In the case of Brace v. Dutchess of Marlborough, 2 P. Wms. 491., the master of the rolls remarks : “ It seems reasonable, that each mortgagee should be paid according to his priority, and hard to have a second mortgagee without remedy, who might know, when he lent his money, that the land was of sufficient value to pay the first mortgage, and also his own : to be defeated of a just debt, by a matter inter alios acta, a contrivance betwixt the first mortgagee and the third, is great severity : but this has been settled upon solemn debate, in a case in 2 Vent. 339., Marsh v. Lee.” This case was decided by the chancellor, with the assistance of Sir Matthew Hale, (then Chief Baron) and was, perhaps, the first case in which the English doctrine of tacking, was fully established. It was a precedent subsequently followed with evident reluctance, and which the courts in Westminister-Hall did not feel at liberty to overrule. It may
If the foregoing views are correct, neither Carr nor Re Forest Sp Co., upon the facts found by the court, can claim any superior equity or priority, the one over the other, as to their several mortgages. Each tract should, therefore, contribute to remove the incumbrance of the debt secured to the bank, so far as it is common to both, according to the respective value of each tract. The fund arising from the sale of the property in New-Raven, is not to be subjected in the hands of Re Forest cj* Co., to any claim to which it was not before subject. The rule in equity is merely, that the election of one claimant, shall not prejudice the claims of the other. 1 Pow. Mort. 344. Each party ought to contribute, in proportion to the benefit which he will receive, by the removal of the incum-brance ; or, in the words of the rule heretofore stated, where land is charged with a burden, the charge ought to be equal, and one part ought not to bear more than its due proportion ; and equity will preserve this equality, by compelling the owner of each part, toa just contribution.
To apply these principles to the case before us, the following advice is to be given the superior court.
Let a decree of foreclosure pass against Goodyear, Bate-man, and Sperry c}' Perkins, to take effect, unless they pay the whole amount found due to the plaintiffs from Goodyear Sf Sons, secured by the mortgages to the bank ; and let them be foreclosed, respectively, in the order mentioned above.
Let the superior court ascertain the amount due the plaintiffs on the debt to the bank secured by the mortgage of the property in New-Haven. The value of the lands in Water bury, mortgaged to Carr, is already found — 6360 dollars; and also of those set off upon execution to Sperry Sp Perkins — 1500 dollars. The value of the lands in Neio-Raven, is found to be 6500 dollars ; from which is to be deducted the debt due to the corporation of Yale-College ; and the remainder is to be taken as their value, for the purposes of the case before us. Then, as the united values of the three tracts, is to the amount
Let the cross-bill be dismissed as to Hallock, without costs.