60 N.J. Eq. 403 | N.J. | 1900
The opinion of the court was delivered by
This is a petition filed in the court of chancery by the defendant in a cause that had been decided by this court and remitted for correction and execution.
The history of the litigation may be gathered from the reported opinions: Woodbury Heights Land Co. v. Loudenslager, 10 Dick. Ch. Rep. 78; Loudenslager v. Woodbury Heights Land Co., 11 Dick. Ch. Rep. 411; Woodbury Heights Land Co. v. Loudenslager, 13 Dick. Ch. Rep. 556.
Briefly restated for present purposes, the case is that Henry C. Loudenslager, while an officer of the Woodbury Heights Land Compaq, sold to it for $81,493.86 a tract of land that had cost him $66,223. The difference, $15,270.86, represented the profit of the transaction, divided between Loudenslager and .another officer of the company. Hpon a bill filed against Loudenslager alone the company obtained a decree for half of said profit, to wit, $7,635.43, with interest, for which execution has been levied upon the property of the defendant.
In the present petition the defendant shows that the said sum of $81,493.86 that formed the basis of the decree against him was made up in part of a mortgage for $5,000 made by him upon a parcel of said land conveyed to the complainant company and, he says, assumed by the company as'part of its purchase-price of the property, but which, irrespective of its assumption, was indubitably included in the said sum of $81,493.86. The petition further shows that this mortgage has not been paid, but is in the hands of the petitioner by assignment, and that he has
In its answer to this petition the complainant does not deny any of the facts stated, but alleges that the questions sought to be raised have been passed upon in the progress of the cause in chancery, and that the complainant has pleaded issuably to the action at law.
The learned vice-chancellor, to whom these matters were exhibited, dismissed the petition because a mere covenant could not be set off against a decree, and denied further relief because the merits of the petition, in his view, touched only the amount of the profits which had been settled' by the final decree. A bill of review to re-liquidate the amount of the decree was suggested, but not allowed.
None of these conclusions places the petitioner’s application in the light to which the equity of the present situation, as I understand it, entitled him.
As to the first point, while it is clear that the covenant cannot be set off as if it were already a debt of record, I think that the prayer for a stay of execution and for further relief should be so read, in view of the pending litigation at law, as to cover the time reasonably necessary for the termination of that suit. The uneontradicted state of facts is such as to incline a court of equity to hold its hand while the parties are litigating their differences in a court of law. This customary chancery practice would doubtless have obtained had not the vice-chancellor, who had had no personal acquaintance with the litigation in its
The sole issue upon which the amount of the decree rested was the difference between the price the defendant paid for the land and that at which he conveyed it to the complainant. Testimony was taken with respect to the price paid by the defendant, but with respect to the price at which the property was conveyed to the complainant, which is the matter now stirred, there was no question between the parties and could not have been any upon the issue tendered by the bill of complaint. In the bill itself this price is charged as
“eighty thousand dollars in money, said premises being conveyed subject to mortgages amounting in the aggregate to $41,100.00, which mortgages are stated in said deed to be a part of the consideration money therein mentioned.”
The deed to which the bill of complaint thus refers contains this clause:
“The above premises are conveyed under and subject to the payment of the principal amounts of 'the several mortgages hereinafter mentioned and the interest on the same from the date hereof.”
Among the mortgages that follow is the one for $5,000 above referred to. The answer admitted this charge, and the vice-chancellor took the figures that measured the profits from the bill, and upon it founded a decree for the complainant. It may well be doubted whether he would- have listened to the defendant had he sought to argue that his illicit profit might in
Even now, when the complainant has not paid $5,000 of the consideration money, and is defending at law against its payment, it is not clear to me how the matter bears upon the issue raised by the bill and settled by the decree. If the decree were opened to-day the proof would, as I see the case, be inadmissible unless the complainant were compelled to amend its bill and withdraw its admission as to the consideration of the deed to it from the defendant — an unheard of proposition. The gravamen of the petition is not that the decree is not right or that it does not bind the defendant, but that it is right and that it binds the complainant. The argument of the petitioner runs somewhat like this: The decree against me is for $7,635.43. That sum is the profit of my sale to the complainant if the consideration of the conveyance to the complainant was $81,493.86. The consideration of the conveyance was $81,493.86, if it included the mortgages subject to which I sold the land, one of which was the $5,000 mortgage I had placed upon it. Hence, when the complainant alleged that the consideration was $81,493.86, and that computed in that sum was the mortgage debt on the land, it admitted that my $5,000 mortgage was part of the consideration. And when it took a decree against me for the difference between $81,493.86, which included my mortgage, and the sum I had paid for the land, it became part of that decree that as to me the complainant was primarily liable to pay that mortgage. So that now when that mortgage is in my hands unpaid, equity will consider that to have been done that should have been done, and will permit the complainant to execute this decree against me only upon the condition that it credit upon the execution the sum so established by the decree to be due to me.
In support of this argument the petitioner might cite the language of Chancellor Haines in Tichenor v. Dodd, 3 Gr. Ch. 457: “By the terms of the deed, the mortgage money was to he
"1. In equity a stipulation of this kind is regarded as a contract to indemnify the grantor against the mortgage debt.
“2. The mortgage debt does not thereby become a personal debt of the grantee.
“3. The equity is operative between the parties to the deed only.
“4. If the purchaser buy the mere equity of redemption, he may discharge his equity to the mortgagor by releasing the lands.
“5. If by the terms of the purchase the mortgage debt is by agreement taken as part of the consideration money, equity raises upon the conscience of the purchaser an obligation to indemnify the mortgagor against the mortgage debt.”
In other words, the mortgage debt may by agreement, if so stated in the deed, be charged upon the unpaid purchase-money, which is a different thing from the legal assumption of the mortgage debt by the grantee.
If to the circumstances of the above case we add that the grantee has parted with the mortgaged lands and that the debt charged upon the unpaid purchase-money is payable to defendant in execution with respect to a decree based upon such unpaid purchase-money, the general nature of the relief to which the petitioner considers himself entitled is spread before us.
It is not essential to this suppositional argument that the complainant should have assumed the payment of the mortgage subject to which it accepted the conveyance from the defendant. That is the subject of the action at law, and depends upon the language of the deed of conveyance. Let the construction of the covenant be what it may, there is no question upon this' peti
Inasmuch as the order dismissing the petition is to be reversed in order that the court of chancery may stay the execution of its 'decree pending the action at law, the petition thus rehabilitated may stand open for such purposes as the advice of counsel and the practice of that court may admit.
I have not considered whether by a different presentation of the facts the defendant ought to be permitted to file a bill of
For .reversal — The Chief-Justice, Depue, Van Syckel, Dixon, Garrison, Lippincott, Gummere, Ludlow, Colluis, Bogert, Nixon, Hendrickson, Adams, Vredenburgh — 14.
For affirmance — None.