91 N.Y. 470 | NY | 1883
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *472 This action was brought for the forcelosure of a mortgage to secure $3,000 executed by defendant Benjamin to plaintiff's testator. The mortgage was produced and proved, as was also the death of Smith, the mortgagee; and the issue of letters testamentary to the plaintiff; with which proof she rested her case. The defendant has pleaded three defenses, as to which the burden of proof was upon him. The first two of these were payment and an extinguishment of the mortgage by merger. The proof adduced consisted of a series of transactions between Benjamin and Smith, and the inferences sought to be derived from their contracts and conveyances. Benjamin was originally the owner of the whole tract, which consisted of fifty-two lots, and in October, 1863, mortgaged the entire property to the testator for $6,500. The next month a contract was entered into by the parties, which gave to Smith the right at his option to become the purchaser of an undivided half at any time within three years at the same price as the principal of the mortgage, upon condition of his also refunding the interest which should be paid on that security. In June, 1865, Benjamin and his wife conveyed to Smith, by an absolute deed, an undivided fourth part of such premises. This appears to have been a separate transaction, unconnected with the optional contract, and not a part performance of its terms, since it recites that the interest conveyed was incumbered by the mortgage on the whole premises, and was subject to the contract of sale. The consideration for this purchase was $3,500, which the grantor acknowledges to have received. There is no evidence to the contrary. There is only the argument that Smith would not be likely to pay the full consideration, and leave his one-fourth subject to the lien of his mortgage. But if the sole practical effect was to release the lien upon the one-fourth, and leave it operative upon the three-fourths remaining in the ownership of Benjamin, which we shall presently see must have been the case, the argument loses its force, and no ground for an inference which contradicts the acknowledgment in the deed remains. On the same day of the execution of this deed, Benjamin executed a second mortgage to Smith for $3,000, *474 upon the undivided three quarters remaining in the former's ownership, and which is the mortgage now sought to be foreclosed. There is no room for rational doubt that this mortgage, though made on the same day with the deed, was executed and delivered after that instrument, for it covers the three-fourths remaining, and the deed which recites the existence of the other incumbrances makes no mention of this, but on the contrary warrants that there are no others. In February, 1867, Smith exercised his option to become the purchaser of the undivided half, and that arrangement was carried out. Benjamin conveyed for an expressed consideration of $7,865 which Smith paid by canceling the mortgage of $6,500, and refunding or crediting the accrued interest of $1,365. This consideration the appellant seeks to account for in a different way. He charges Benjamin's three-fourths with only three-fourths of the mortgage, assuming, what is not at all proved, that the other fourth of the mortgage was deducted from the $3,500 paid for one-fourth of the land. That would leave a sum of $4,875, to which, adding the mortgage of $3,000, we have a sum of $7,875, or only $10 more than the consideration named in the deed. There is here almost a coincidence of figures, and yet a difference which it will hardly do to solve by some imaginary expense, or unproved error in the computation of interest. And we are required to assume without proof, and against the written evidence, that one-fourth of the large mortgage was in fact deducted from the consideration of one-fourth of the land. We say against the written evidence, because Benjamin's deed of an undivided one-quarter carefully recites that "it is understood that the whole of the above-mentioned premises are covered by a mortgage for $6,500," etc., and carefully describes the incumbrance. Such a statement amounts to an acknowledgment of a subsisting lien for that full amount, and is inconsistent with the theory that one-fourth of that mortgage was in fact at such date extinguished. If that had been true, the recital would have declared that an undivided three-quarters of the premises described as a whole were covered by a mortgage for $4,875. There was, therefore, no evidence of payment of the mortgage for $3,000, *475 and no fact established which even tended to prove such payment. The burden resting upon the defendant was not borne, and we may disregard on this issue the letters of Benjamin introduced in evidence, and his schedules in bankruptcy, which were received under objection, since without them the result was necessary and certain, and could not have been different. We are entirely satisfied with the conclusion that the mortgage was not in fact paid.
The second defense was founded upon the doctrine of merger. It is claimed that when the mortgagee of the undivided three-quarters took the title to the undivided half his lesser estate was drowned in the greater, and his mortgage extinguished at least pro tanto. But while a merger at law follows inevitably upon the union of a greater and lesser estate in the same ownership it does not so follow in equity. There the doctrine is not favored, and the estates will be kept separate where such is the intention of the parties, and justice requires it, and that intention will be gathered not only from the acts and declarations of the party, but from a view of the situation as affecting his interest, at least prior to the presence of some third person's right. (Moffatt v. Hammond, 18 Vesey, 385;Gardner v. Astor, 3 Johns. Ch. 53; James v. Morey, 2 Cow. 246; Starr v. Ellis, 6 Johns. Ch. 393, Champney v. Coope,
We need not consider the admissibility of Benjamin's schedule in bankruptcy. Granting it to have been inadmissible, the evidence without it admitted of no other conclusion than that a merger had not taken place, and made a contrary conclusion impossible. Its admission, therefore, did no harm.
There was thus neither a payment nor a merger of the mortgage in suit. The effect of the conveyance by Benjamin to Smith of the undivided half was necessarily, therefore, simply that of a release of lien. In Clift v. White (
The defendant took his subsequent mortgage upon the same quarter after all these transactions, and has suffered no wrong. The record gave him notice of the existence of this prior mortgage, and he took subject to its lien. (Clift v. White,supra.)
But a third defense is pleaded. The defendant commenced an action to foreclose his mortgage, and made Smith a party defendant. In his complaint he did not set out the prior mortgage, or allude to it at all. The only allegation affecting Smith was the usual and ordinary one that certain of the defendants had or claimed an interest in the mortgaged premises, but their rights accrued subsequent to the mortgage sought to be foreclosed. That action proceeded to judgment and sale, and the property was bid in by the defendant. It is found that by the terms of sale the premises were sold free and clear of all liens and incumbrances, and that Smith knew of the judgment and made no effort to have the same modified or set aside. It is not found and does not appear that he was present at the sale, or cognizant of the manner in which it was made. It is now said that this judgment constitutes a bar. We have held the contrary. (EmigrantSav. Bank v. Goldman,
We have examined the other objections pointed out on the argument without finding any ground for a reversal.
The judgment should be affirmed, with costs.
All concur.
Judgment affirmed.