55 N.J. Eq. 674 | New York Court of Chancery | 1897
This case has been discussed upon these points:
First. Was there such a tender of the amount due the complainants that it was effectual to require the complainants to accept the money paid to the clerk, and thus stop the interest and costs ?
Second. Is the bond (one of those secured by the complainants’ mortgage) formerly held by Edward B. Searles, and now claimed to be held by Henry B. Miller, still a lawful and unsatisfied claim ?
Third. If a sale of the mortgaged premises shall be directed, what shall be the order of the sale and application of the several parcels to the payment of the complainants’ mortgage?
As to the tender. This bill has been filed in the name of Josephine Whittaker to foreclose the mortgage now in suit. Besides the complainant Whittaker, there were several other persons who held bonds secured to be paid by the mortgage, but the suit was' then in her name alone as sole complainant. The subpoenas had been issued and returned. Mr. Taylor, a lawyer, on the 13th day of January, 1896, called on Mr. Dahlke, the complainants’ solicitor, at his office, and stated to him that he represented Mr. Miller, John Morris and others; showed him $550, offered it to him, and asked him if he would assign the Josephine Whittaker bond to Mr. Morris. Nothing is proven to have been said to show what right Miller, Morris and others had to make a tender or to demand an assignment. Mr. Dahlke refused to accept the money or to assign the bond. Subsequently Mr. Taylor paid the money to the clerk of the court of chancery. The amount named was intended to be the total of the debt and also the costs of this suit up to that date. At the time
The date of the subsequent payment to the clerk of this court was not stated in the answer, nor was it definitely proven, but I am satisfied that the money was not actually paid to the clerk until after the additional complainants had been admitted and some time after the answer was filed.
When tender is made after suit has begun, and is set up as a defence, the money must be paid into court with the filing of the answer. Shields v. Lozear, 7 C. E. Gr. 452. To be effective, such a payment into court must precede or be coincident with the filing of the answer setting it up. The answer gives notice to the complainant that the money which the defendant contends satisfies her claim is awaiting her acceptance. If it is not in court when the answer is filed, the complainant is not required to take notice of a subsequent deposit which the defendant makes at such time as may suit his convenience. The deposit in court did, however, become forceful as against the complainant when she filed her petition asking to be allowed to take it out of court in satisfaction of her bond. This application was an acceptance of the tender, and was filed on the 23d day of March, 1896.
On February 4th, 1896, long before the date of the actual payment to the clerk, or the application of Josephine Whittaker (the original complainant) for the money, the other complainants, William II. Searles and Adam B. Searles, had been admitted as complainants in respect of their $1,700 bond also secured by complainants’ mortgage, and the cause was proceeding with them as complaiuants. No pretence of a tender of the amount due on their bond has been set up.
The second point argued is the question, Was the bond (secured by the complainants’ mortgage) which was formerly held by Edward B. Searles, and is now claimed to be held by the defendant Henry B. Miller, a lawful and unsatisfied claim ?
The defendant Henry B. Miller, in his answer, states that long before the bill in this case was filed, he furnished the money to take up this bond, and took an assignment of it and of Edward B. Searles’ interest in the complainants’ mortgage securing that bond.
The complainants’ claim is that the bond was paid by the Belvidere Roller Mill Company, under its covenant, in its deed for lot Ho. 1. On April 6th, 1895, Edward B. Searles assigned this bond to L. De Witt Taylor under .these circumstances: Taylor had procured a judgment against Searles for one of his clients, and au order for discovery &c. in aid of his execution. He heard that Searles had this bond, procured an order forbidding its payment, saw Searles, induced him to assign the bond to him (Taylor), and to allow the amount due on the judgment in part payment for the bond. Taylor paid the balance due on the bond in cash. Taylor swears that he was not then attorney for the Belvidere Roller Mill Company; that he did this with his own money, and that the bond became his individual property. Edward B. Searles intimates in his testimony that he supposed, in his dealings with Taylor, that he was receipting and discharging, and not transferring, the bond. But he does not deny that Taylor took the assignment as above stated, and that he understood Taylor was going to use it to get the money back. It is obvious that Taylor expected to collect the bond for the benefit of his client for whom he had judgment.
If Taylor had paid off and satisfied the bond, there would have been no reason for Edward B. Searles allowing the judgment to be credited as part payment for the bond, which both agree was done. I think at this stage of this transaction the
It is quite evident that, from April 17th, 1895, to June 21st of that year, the money of the Belvidere Roller Mill Company had been put up to satisfy a request made upon it to raise the amount due on this bond. That company had obligated itself, by its covenant in the Ott deed, to pay this bond and others, and had paid a number of them. The death of Frederick Searles had brought the bonds to be due. In response to a'request for the money due on this bond, that company’s check was used, it is claimed, not to pay, but to loan, the amount to the holder, and two months after, on Henry B. Miller’s check drawn to the company’s order, and on which by the endorsement it appears to have received the money, the bond was assigned by the holder to Mr. Miller. How it came about that the company should be paid by Miller for a bond it claims it did not.own, and that a
The impression I have received from the evidence as to this transaction is that Mr. Taylor secured the bond as he testified; that he wanted the money -on it; that he demanded it of the company which had covenanted to pay it; that it could not refuse payment, and that its treasurer adopted the subterfuge of a pretended loan of the company’s funds until an arrangement could be effected by which the bond could be assigned to some one else than the company, to create the appearance that it was still outstanding. The payment by Miller to the company, while he got the assignment from Taylor, satisfies me that the company, after its payment of the amount of the bond to Taylor, was the real owner of it, and the subsequent assignment by Taylor to Miller was made at the company’s instance to avoid the appearance of payment of the bond. The company which had agreed to pay this bond was, in this view, the real owner of it from April 17th to June 22d, 1895, and being by its covenant in the Ott deed, under the construction given to such a covenant (in the cases of Klapworth v. Dressler, 2 Beas. 62; Hoy v. Bramhall, 4 C. E. Gr. 570, and Stiger v. Mathone, 9 C. E. Gr. 430), the principal debtor, and bound to pay this debt, its action was in effect a performance of its agreement to make payment of the bond; and having thus satisfied its own debt, its subsequent procurement of the assignment to Miller was a nullity as against the other parties secured by the mortgage.
The third point discussed was as to the order of sale and application of the several lots mortgaged to secure the complainants’ debts. It is insisted with great vigor, for the defendant Philip M. Miller, that the undertaking of the Belvidere Roller Mill Company to pay the four mortgages as part of the consideration money of the conveyance of lot No. 1, by Levi Ott to that company, by deed of August 18th, 1890, was a personal covenant only, not attaching to lot No. 1 nor charging any equitable burden upon it to respond first to the payment of the four mortgages assumed to be paid by the company as part of the consideration of the conveyance.. It is further urged that the
The mortgage being foreclosed in this suit is subsequent to two of the mortgages named in the deed as assumed to be paid by the Belvidere Roller Mill Company, grantee. As to these two, the bill asks no relief and asserts no equity. There is no reason that the holders of these prior mortgages should be made parties. The sale will be subject to these prior liens. The other mortgage given by Searles to Morris and others on May 23d, 1890, has been foreclosed, and the defendant Philip M. Miller, by purchase at the sheriff’s sale, holds title under it.
The question involved is the superiority of the equities of the several contesting parties — the complainants, the defendant Philip M. Miller and the defendant Roderick B. Searles. To determine this it is necessary that their relations to each other, touching the four several tracts constituting the mortgaged premises, should be first ascertained. On and prior to May 22d, 1890, Adam B. Searles owned all of the tracts. The complainants are his creditors as holders of his bonds secured by complainants’ mortgage, which became a lien on all four tracts on May 22d, 1890. The defendants Henry B. Miller, John Morris and L. De Witt Taylor claim to occupy the same position. The defendant Philip M. Miller is the purchaser of lot No. 1 of the mortgaged premises, under the foreclosure of a mortgage made by Adam B. Searles to Robert E. Morris and others on May 23d, 1890, and is entitled to stand in the place and assert the equities of the Morris mortgage. All these parties are, therefore, creditors, or entitled to the equities of creditors, of Adam B. Searles, the complainants, and the defendants Henry B. Miller, John Morris and L. De Witt Taylor, claiming under the complainants’ mortgage as of the date of May 22d, 1890, and the defendant Philip M. Miller, under the Morris mortgage as of the date of May 23d, 1890.
Both Ott and Roderick B. Searles appear to have known that the purpose of these conveyances was to delay the creditors of Adam B. Searles. The* latter appears to have had the control of the property conveyed by both deeds quite as completely after as before the conveyances were made. Indeed, it is fully testR fied by Adam B. Searles himself that the deed to Roderick was made to avoid the judgment about to be entered in a suit pending in favor of the pursuing creditor, Mr. Hess, and he (Adam) has had the rents ever since. The deed to Ott was made at the same time and was parcel of the same transaction induced by the same purpose, and the same control was retained by Adam B. Searles over lot No. 1 conveyed by it. In my view, both these deeds were made to hinder and delay creditors, and were fraudulent and void under the statute of frauds.
They must, therefore, so far as they relate to the claims of these creditors, be treated as if they were ineffective and the title still remained in Adam B. Searles. When the mortgage of the complainants was made on May 22d, 1890, it became a lien on lots Nos. 1, 2, 3 and 4. When the mortgage to Morris and others was made on May 23d, 1890, on lot No. 1 only, the mortgagees, Morris and others, took with their mortgages an equity ehtitling them to require the complainants to resort in the
After the Morris mortgage had been given and recorded, the
Next comes the inquiry whether the deed made by Adam B. Searles to Levi Ott, on May 23d, 1890, conveying lot No. 1, in any way destroyed this equity of the Morris mortgagees. But the same criticism applies to this transaction. This conveyance of lot No. 1 was purely voluntary, for a nominal consideration and in fraud of Searles’ creditors. It contained a covenant of general warranty, and although it excepts the mortgages in question from the covenant against encumbrances, they are not excepted from the general warranty. If this deed had been for a full and valuable consideration paid, Ott would himself have
The next step iu the title came by the deed of August 18lh, 1890, from Ott to the Belvidere Roller Mill Company. By this bona fide deed, Ott imposed upon that company a covenant to pay off these two mortgages as part of the consideration money of the conveyance, and it is claimed that the defendant Philip M. Miller purchased from the Belvidere Roller Mill Company by sheriff’s sale, with notice of this covenant, and that he stands in the position of that company, and Engle v. Haines, 1 Halst. Ch. 186, is cited in support of (he position.
Since Finley v. Simpson, 2 Zab. 311, it has been uniformly held that such a covenant as that inserted in the deed to the Belvidere Roller Mill Company, is, if the deed is accepted by the grantee, binding on him, though the deed is signed by the grantor only. This obligation enures in equity to the benefit of the mortgagee, who has by the covenant assumed the payment of the mortgage debt. Klapworth v. Dressler, 2 Beas. 62; Hoy v. Bramhall, 4 C. E. Gr. 570. But there is no compulsion upon the mortgagee, whose debtor has thus provided an additional covenant for the payment of the mortgage debt, to accept the benefit of this covenant and resort to it at the sacrifice of other equities. The rights of the mortgagee against the purchaser are adjudged not because of any original equity in him, but to avoid circuity of action and to save the mortgagor from being harassed for payment of the debt, and, then being driven to seek relief from the purchaser upon whom the ultimate liability must fall. Crowell v. Hospital of St. Barnabas, 12 C. E. Gr. 656. The mortgagee, by the covenant, becomes entitled to be substituted in the place of the mortgagor, but he is under no obligation to enforce the covenant unless he chooses to do so. He may look only to his mortgage and to its equities, if he likes. Nor can the taking of such a covenant by the mortgagor, from the pur
The Belvidere Roller Mill Company is in no way harmfully affected by the marshaling of the securities. It has bound itselfj as purchaser of lot No. 1, to pay both the complainants’ and the Morris mortgage debts, and it cannot be injured if the equity of the Morris mortgagees to require the complainants to look first to lots Nos. 2, 3 and 4 is enforced. It does not resist its enforcement. The party unfavorably affected is Roderick B„ Searles, the owner of lots Nos. 2, 3 and 4. If he can compel the complainants to look first to lot No. 1 for their mortgage debt, he can retain lots Nos. 2, 3 and 4, in accordance with the original fraudulent plan, to avoid payment of Adam B. Searles’" debts, because there will probably be sufficient proceeds of lot No. 1 to pay the complainants’ debt, without calling on lots Nos. 2, 3 and 4, and the Morris mortgage is no lien on the latter three lots.
It-was held in Herbert v. Mechanics’ Building and Loan Association, supra, that the right of a second mortgagee to have the assets marshaled was superior to the right of «a judgment creditor of the mortgagor who had acquired a lien upon the assets included in the first mortgage, but not in the second,, and which were sought to be first charged. The principle propounded is that the equity of the second mortgagee is vested in him on the taking of his mortgage.' The mortgagor’s subsequent judgment creditors have no higher rights than the mortgagor; their equity is inferior. The equity is absolute as to the' debtor himself, is subject to the legal and equitable claims -of prior creditors, but cannot be impaired or in any way injuriously affected by the intervention of those of a later date, unless they be bona fide purchasers without notice, or holders'of some other
It is mistakenly assumed that Philip M. Miller, who purchased at the foreclosure sale under the Morris mortgage, occupies the position of a grantee from the Belvidere Roller Mill Company, and that he is bound by its covenant entered into by the acceptance of the deed from Ott, of which Miller had notice. The title acquired by Philip M. Miller, the purchaser at the foreclosure sale under the Morris mortgage, was not that of the Belvidere Roller Mill Company, charged with the equities incumbent upon that company. The purchase at a foreclosure sale relates back to the title passed by the mortgage foreclosed, and conveys to the purchaser the estate which the mortgagor had in the mortgaged premises on the day of the delivery and record -of that mortgage, freed from subsequent equities, unless superior by reason of lack of notice &c., as hereinbefore discussed. In the case under consideration, the defendant Miller, by the deed from the sheriff, acquired the title which Adam B. Searles had on the 23d day of May, 1890, when he delivered the mortgage to Morris and others with all its attendant equities, and free from equities which Searles or subsequent holders of the prop
Upon all the questions argued I will therefore advise, first, that there has been no tender shown; second, that the bond formerly held by Edward B. Searles, claimed to be assigned to Henry B. Miller, has been paid; third, that the lots Nos. 2, 3 .and 4, held by the defendant Roderick B. Searles, should be first sold and the proceeds applied to the satisfaction of the bonds secured by the complainants’ mortgage and costs of foreclosure, and lot No. 1, held by the defendant Philip M. Miller, should be secondly sold and its proceeds applied to satisfy any balance remaining due on the complainants’ mortgage; that an order of reference be made to a master to ascertain and report the amounts due &c., on which reference the evidence taken on the hearing may be used, subject to these conclusions.