16 Iowa 555 | Iowa | 1864
Lead Opinion
The validity of the judgment under which defendants claim, is not a subject of much,' if any, controversy in the present proceeding; and as that is substantially the sole question dn another ease now before us, between these parties, we need not at this time give it'atiy attention.
That Bergen'represented the land to be unincumbered at the time he conveyed the same to the plaintiff, Henry Van-nice, is very well established. Whether said purchaser had actual notice of defendant’s judgment at the time, is a question of more doubt.' The finding of the referee on this subject is not so clear and unequivocal, as -in the case which follows. True, he says, that the purchaser was told by Webb, one of the judgment creditors, of the existence and approximate amount-of defendant’s judgment, before the conveyance. But in another part of his finding, he admits there is conflict of testimony, as-the purchaser denied in- his testimony, in the -most positive terms, any such conversation.
This being an equitable proceeding, we hear the case de novo, and hence look to the testimony to ascertain the truth in the premises, and especially so, where the finding is to some extent equivocal, and counsel seek to go behind it. Looking then at all the testimony and circumstances, we unite in the conclusion that actual notice is not established. Webb swears to it, we admit. Plaintiff as positively denies it. This conflict may be reconciled upon the hypothesis, that plaintiff, who is shown to be somewhat deaf, did not hear all that was said. The other assump
The purchase was made then without actual knowledge of the existence of the judgment. Plaintiff was induced, by the misrepresentations of Bergen, to take the title, and relying thereon, he agreed to surrender his mortgage. And yet, by a contract thus made, as between them, he is not bound, but he may be heard in equity, to assert his lien, and will be allowed to revive or keep it in life, and recover thereon, as though the conveyance had not been made. As to this proposition we suppose there is no controversy.
The question still remains, however, whether plaintiffs have a right to treat their mortgage as unsatisfied, and to insist upon it as a lien paramount to that of defendant’s judgment. In considering this question,^ brief reference to some of the facts may afford us assistance.
It will be remembered that plaintiffs had the first lien upon this land. This lien never has been satisfied, in any other way than by the conveyance of the land from Bergen to them. Prior to this conveyance, and while the mortgage lien was in full force, defendants recovered their judgment. As far as material, it may also be stated that the debt forming the basis of the recovery, was contracted during the existence of said lien. After the conveyance, defendants levied upon and sold the land, but advanced no money,
Under such circumstances, we are unanimously of the opinion that plaintiffs’ mortgage is not extinguished, as against the said judgment creditor, so far as it covers the note of $1000, made to Henry Vanniee; while a majority of us entertain the same opinion as to the note payable to the son, Albert, and as a consequence that the court below erred in confirming the report of the referee, recommending the dismissal of the bill.
As between plaintiffs and Bergen, as we have already seen, there would be no question as to their equitable right to insist upon the mortgage. For, assuming that they received a deed for the property, with the understanding and upon the agreement that the mortgage debt was to be satisfied, yet this was based upon his representation as well as the assurance and covenants of his deed, that the property was unincumbered, and therefore if the controversy related to them alone, and it was necessary to the protection of plaintiffs’ rights that the mortgage should be kept in life, equity would so order, and would not give to the mortgagee the benefit of a satisfaction procured by his own fraud and misrepresentations, jsuch representations having been relied upon, and with apparent reason, by plaintiff Now, is there any good equitable grounds for placing the present appellees (the judgment creditors) in any better position.
, This being so, we are not aware of any case which applies a different rule to a mortgagee who purchases the equity of redemption.- Nor is there any reason for the application of a different rule.
Then advancing one step further, we say, that a party who has not advanced any money upon the strength of such supposed release or discharge, who is not placed in any worse position by reason of his reliance upon said supposed extinguishment, or who does not show that an equity arises in his favor by such advancement or reliance, or something of that character, stands in no better position, and is entitled to no greater protection. And here it must be remembered that such third party is not to be affected by the fraud or act of the immediate parties, of which he had no actual or constructive notice. Considered in this
Now, if, after such discharge, without notice of the fraud, and before the revival of the incumbrance, a third party should part with his money, upon the faith of such discharge, it would be manifestly wrong and inequitable to permit the revived lien to be asserted as against such intervening rights. Not so, however, when the rights did not thus intervene, or when the party has sustained no loss in consequence of relying upon the extinguishment of the lien.
But, leaving the general discussion and coming to the case before us in its actual facts, we find that the respondents were fully as able to collect their debt from Bergen, after this bill was filed, as before the conveyance was made to Yannioe. In other words, they parted with no liens or securities from their reliance upon the satisfaction of the mortgage by the vesting of the legal title in the mortgagee; there was no change of the debtor’s property to their prejudice, or otherwise; they made no new or further advancement ; their judgment was simply a lien before such merger, subject to the prior mortgage; it occupies no worse position now, if that satisfaction should be set aside. If the claimed merger had not taken place, respondents would have been compelled to pay the mortgage' debt before they could have obtained a good title to the land. Upon what principle is it, that they shall be in a better position, or that they have a more favorable standing in an equitable
And the foregoing views, if correct, when applied to the note payable to Henry Yannice, it seems to us are equally applicable to the other. It will be perceived at a glance, that the whole reasoning applies with equal force to each. The case is placed upon the ground, that in equity the mortgage should be kept in life as to Bergen, and that respondents are in no position to claim- any greater protection. The entry on the margin of the record, by Albert Y., does not change the case. It is shown, beyond all question, that he was not paid anything by Bergen, but that this was a method adopted to transfer or release his interest in the security to his father. If the conveyance to the father by Bergen, under the circumstances, shall not have the effect of giving priority to respondents’ judgment over the mortgage, we cannot see why this “ receipt on the margin of the record” can equitably aid' them. If, as to them, the mortgage was satisfied, and they can claim the
But it is claimed that defendants sold the land under their execution, bought it in, and thus satisfied their judgment before any steps were taken to revive this mortgage. And here it is not our purpose to enter upon the discussion of the question, whether at law defendants would stand in the attitude of innocent purchasers without notice.The point is one upon which the authorities differ, and some of which will be found referred to in Parker v. Pierce & Buell, ante. This is an equitable proceeding, and we hold that defendants are to be affected by the equities existing between plaintiffs and Bergen, under the peculiar-circumstances of the case, without discussing or determining whether a plaintiff purchasing at sheriff’s sale the property of his debtor, is, as a legal rule, to be treated like, any other purchaser. It must be remembered that they not only bid in the property themselves; that they paid no money, but that during the time that their judgment has been apparently satisfied, they have lost nothing, for their debtor has been in no condition to pay. They could have made nothing by execution. If he had been able to pay, and his property in the mean time was lost to them, a. very different question would arise. But if plaintiffs’ right to priority is recognized, defendants may have the entry of satisfaction on their judgment set aside, and the judgment will stand unaffected by any of the proceedings under the execution. All the costs made by said sale plaintiffs propose to, and should, pay with interest. . Under such circumstances, we do not believe any rule or principle is violated in reviving this mortgage. And it is certainly inequitable to give defendants a priority to which they have no pretense of right, save upon the technical ground,
The decree below will be reversed and the cause remanded, with instructions to set aside the conveyance from Bergen to Vanniee, in accordance with the prayer of the bill; to ascertain the amount due and unpaid on the mortgage debt; to enter a judgment for the amount thus found, with an order of foreclosure, and that respondents be required to pay the amount thus found to be due, within a day to be fixed after said decree, and in default thereof that execution issue, as provided by law, for the collection thereof. Defendants may, at their option, have an order setting aside the entry of satisfaction on their judgment, and reinstating it as fully as if no sale had been made under said execution. Plaintiffs are required, however, to pay to defendants, or the clerk of the court below, for their use, alLthe costs of said sale, including fees for execution, making the sheriff’s deed, and recording the same, with interest thereon at ten per cent (they so offering by their bill), before being entitled to the decree herein contemplated. And the Court will make such other and further orders, not inconsistent with this opinion, as may be necessary and proper under the case made to settle the rights of the respective parties.
Beversed.
Dissenting Opinion
dissenting. — I proceed to state, as briefly as may be, my views of the case, and the grounds of my partial non-concurrence in the result reached by the opinion which has just been pronounced.
The mortgage which the present petition seeks to revive and reinstate, secured two notes, one to Henry and one to Albert V. Vanniee. This mortgage was the first lien on the property. While Bergen, the mortgagor, was the owner of the property (subject, of course, to the lien of the mort
It is one thing to be entitled to this relief, as against Bergen, and another and quite a different thing to be entitled to it as against the defendants. Has the plaintiff made out a case, entitling him to relief as against Bergen ?
The contract which he and Bergen made is binding upon ■ them, and it is not properly within the power of a court of equity to set it aside, unless there was some fraud, accident ■■ or mistake.
Accordingly, the plaintiff bases his right to the relief > sought, upon the ground of fraud.
The evidence shows that, during the negotiation for the-conveyance of the premises, Bergen informed the plaintiff that there were no liens upon the premises. This was' false, because there was, at the time, an unsatisfied judgment in favor of one Webb, and also the judgment of-the defendants, and these were both liens. If the plaintiff, upon these false representations, was induced to take a-deed for the land, in satisfaction of his mortgage, it is plain,
It is true, that the referee also reports that he finds that Yannice had actual notice, at the time he made this contract with Bergen, of the defendant’s judgment. If this was the fact, it would destroy the very ground of the plaintiffs’ equity as against Bergen. But, upon the whole, I am inclined to agree with the majority, that a fair view of the entire evidence and all the circumstances, favor the conclusion, that the plaintiff did not have actual knowledge of the defendant’s judgment, and hence, the right to the relief, as against Bergen, is established.
I now proceed to discuss the plaintiff’s rights as against the defendants, Greene, Traer & Co.
It was after the plaintiff received his deed from Bergen; that the defendants issued execution on their judgment, and became the purchasers of the premises at sheriff’s sale. The defendants are not shown to have had any knowledge of any misrepresentation by Bergen to the plaintiff. They had. knowledge of just what the records showed. The records showed that Albert Y. Yannice (to whom one of the notes was made payable) had entered satisfaction on the record of his interest in the mortgage. The records did not show that Henry Yannice had ever been the owner of. the note of Albert, or that Albert had ever parted with the note. The cancellation of the mortgage of record, as to the note payable to Albert Y., was, as to third persons and as to the defendants, perfect and complete at the time the defendants purchased at the sheriff’s sale. The record did not show that Henry had ever satisfied his interest in the
With this brief statement of the facts, I will first discuss this branch of the case, on the fact found by the referee, that Bergen falsely represented to Henry that there were no liens on the premises, and on the assumption that the latter had no knowledge of the existence of the defendant’s judgment at the time he accepted the deed from Bergen. If these were the facts, the plaintiff would have been clearly and equitably entitled, as against the defendants, to the relief sought, at any time before the defendants became purchasers under their judgments.
If a mortgagee purchases the land, and as part of the consideration, cancels the debt, without knowledge of an outstanding judgment (in other words, acting under a mistake of fact), he is entitled to protection as against judgment creditors who became such after the execution of the mortgage thus canceled, and against the subsequent mortgagees without notice, if they became such anterior to the cancellation.
A judgment creditor is not a purchaser. Neither he nor the subsequent mortgagee, in the case just supposed, part with any value or alter their position in consequence of the cancellation. Cancellation is only prima facie evidence of the discharge of a mortgage, and it may be proved that it was made by accident, fraud or mistake. Neither of these parties has any equity or claim, under such circumstances, to resist the older and superior equity of the first mortgagee to a restoration to his original rights. As authority, for the foregoing principles, see Welton v. Tizzard, 15 Iowa, 495, and cases in this State and elsewhere, there cited, in relation to the rights of judgment creditors. Warner v. Blakeman, 36 Barb., 501; Hyde v. Tanner, 1 Barb., 75; Id., 392; Trenton Bank Co. v. Woodruff, 1 Greene Ch. R.,
The principle running through the whole of this class of cases is, that “ when the legal rights of the.parties have been changed by mistake” (or accident or fraud), “equity restores them to their former condition, when it can be done without interfering with any new rights acquired on the faith and strength of the altered condition of the legal rights, and without doing injustice to the rights of other persons.” Per Barculo, J., in Barnes v. Cornack, 1 Barb. S. C. R., 398. See, also, Star v. Ellis, 6 Johns. Ch., 392,.395, where Chancellor Kent says: “A court of equity will keep an incumbrance alive, or consider it extinguished, as will best serve the purposes of justice and the actual and just intention of the parties. It must, at all events, be an innocent purpose, and injurious to no one.'1’ See, also, James v. Johnson, 6 Id., 424; and S. C., 2 Cow., 246; Forbes v. Moffatt, 18 Ves., 384; Nevelle v. Demerett, 1 Green’s Ch. R., 321.
Such would be the rights of the plaintiff if he is to be treated as having had no knowledge of the defendant’s judgment at the time he accepted his deed from Bergen, and if he had applied for relief before the defendant’s position became changed from mere judgment creditors to that of purchasers.
I now proceed to consider the plaintiff’s rights, on the facts above supposed, he having delayed to apply for relief until after the defendants had (without notice of the plaintiff’s alleged equity or right to have his contract with Bergen canceled, and his mortgage revived), become the purchasers of the premises at sheriff’s sale.
'It will be remembered that at the- time of the sale by the sheriff, Albert had entered of record satisfaction of his interest in the mortgage. This prima facie canceled the mortgage as to one note. An ordinary purchaser
If an ordinary purchaser would be thus protected, the defendants, as the sheriff’s vendees, stand in my opinion upon ground equally high, and have rights equally large.
The law is, “that a purchaser at sheriff’s sale, will take the land, discharged of every claim or title, whether arising under an unregistered deed, or a mere equity of which he had no notice at the time of the purchase, and which would be invalid as against an ordinary purchaser.”
This is the doctrine deduced from the American cases, as laid down by Judge Hare in his note to Bassett v. Nasworthy, 2 Lead. Cas. in Eq., part 1, p. 76. And the rule applies equally where the judgment creditor is the purchaser, as where the purchase is made by a stranger. ( Waldo v. Russell, 5 Mo., 387; Ohio Life Ins. Co. v. Ledyard, 8 Ala., 866; Den v. Rickman, 1 Green N. J. (Law), 43, in all of which the judgment plaintiff was the purchaser. See, also, Orth v. Jennings, 8 Blackf., 420; Heister v. Fortner, 2 Binn., 40, 45; Mann's Appeal, 1 Barr., 24; Kaufflet v. Bower, 7 S. & R., 64, 82; Scribner v. Lockwood, 9 Ohio, 184; Jackson v. Post, 15 Wend., 588, reviewing and explaining former cases in 4 Cow., 599, and 9 Cow., 120; Jackson v. DuBois, 4 Johns., 216.)
In this last -case it was held that a mortgage not registered has priority over a judgment docketed subsequently, which is the doctrine in this State also. Norton v. Williams, 9 Iowa, 528; 10 Id., 353; 11 Id., 174; Welton v. Tizzard, supra. Spencer, J., remarks: “ The judgment being by act of law, does not destroy the lien acquired by the unregistered mortgage, nor gain a preference over it. Should the mortgagee permit a sale .to take place prior to the registry, then, in my opinion, the vendee of the sheriff would
In view of these authorities I cannot deem the majority opinion a true exposition of the law, so far as that; opinion holds that equities between Yannice and Bergen will follow the. land into the hands of the defendants, after they have become the purchasers of the land, without notice of those equities.
Such a rule tends to shake and unsettle the security which the law attaches to titles bona fide, derived by purchasers at sheriff’s sales. It is admitted that the defendants purchased bona fide, and without notice of the equities with which they are now sought to be charged. They are, in my opinion, entitled to the same protection, and stand as free from equities, of which they had no notice, as if they were ordinary purchasers. And their rights can no more be cut down by a court of equity, than by a court of law.
The equities of the plaintiffs, are not so strong as would be the equities in favor of a person who had an unrecorded deed, or who had fully paid for land without getting a deed ; and I can scarcely think that the equities of such a person should be allowed to prevail against the bona fide purchaser of the land at sheriff’s sale.
It follows that the defendants, as the sheriff’s purchasers (no notice of the plaintiff’s equities having been brought home to them prior to the sale by the sheriff), .are clearly entitled to hold the land, discharged of any lien of the mortgage, so far as it secured the note to Albert Y. Yannice, he having discharged his mortgage of record, prior to the sale by the sheriff.
But, under the view in which I am now considering, the case (viz., that the plaintiff had no knowledge of the defendant’s judgment, when he accepted his deed from-
No satisfaction of record was entered by him. His mortgage remained uncanceled, so far as the record disclosed to the defendant.
The record only showed that Bergen had conveyed his equity of redemption to Henry, It did not show whether Henry had taken this conveyance as additional security for his mortgage debt, or in satisfaction of it. As the mortgage was not satisfied of record by Henry, the inference would, perhaps, be, that he had taken the legal title with no intention to extinguish his mortgage.' See, as to merger, and effect thereof, Wickersham v. Reeves, 1 Iowa, 413; Wilhelmi v. Leonard, 13 Id., 330; White v. Hampton, Id., 259.
At all events, the mortgage remaining unsatisfied of record, as to Henry’s interest, would be notice to defendants of any rights or equities which Henry might be able to set up thereunder, as against the mortgagor. To this effect are the cases of Bolles v. Chaunsey, 8 Conn., 389; Hayden v. Burney, 7 Vermont, 493; and see Am. Law. Reg., Nov., 1862, p. 7, and cases; Brinckerhoff v. Lansing, 4 Johns. Ch., 65; Heard v. Evans, 1 Freem. Ch., 79; Packard v. Kingman, 11 Iowa, 219 ; Williamson v. Brown, 15 N. Y., 354, 359 (1857), containing latest New York doctrine as to notice.
Or, if it would not amount to notice, yet such a record remaining unsatisfied, would be sufficient to put defendants upon inquiry as to the interest or rights of Henry. If they did not wish to be affected by it, they ought to have made inquiry, and if they had made such inquiry, they would have become advised of his equities. Under the authorities above cited, defendants are not to be considered as purchasers, without notice as to the note payable to Henry, and as to which the mortgage had not been canceled of