Opinion
02-29-1888
LAMBERTVILLE NAT. BANK v. BOSS et al.
C. A. Skillman, for complainant. H. A. Flack, for defendant Hoffman. J. L. Conett, for defendant Dilts.
On bill to foreclose. The bill was filed in this case to foreclose two bonds and mortgages assigned to the complainant. On the same day the above mortgages were given, another mortgage was given on the same premises to Mrs. Mary Johnson for $1,000, which mortgage, being recorded before the two mortgages which are being foreclosed, was a prior lien on the premises. After the filing of the original bill in the case an order was obtained by which the complainant was ordered to amend its bill. Prior to filing the amended bill, Mrs. Johnson assigned her mortgage to the complainant, and thus all the mortgages on the premises were owned by the complainant.
C. A. Skillman, for complainant. H. A. Flack, for defendant Hoffman. J. L. Conett, for defendant Dilts.
BIRD, V. C. The bill in this case is filed to foreclose a mortgage given by A. J. Ramsaville and wife to Mrs. Permelia Boss and her son, R. R. Boss, to secure a bond given to her for $1,750, and a bond given to him for $2,000; which bonds and mortgages were assigned to W. Dalton & Co. as collateral security, and afterwards by W. Dalton & Co. to the complainant; which last assignment was made at the request of R. R. Boss, and upon the agreement between him and the bank that the hank should hold the mortgage as collateral security for certain amounts then due to the bank from Boss, and for certain advances which the bank, at that time and by virtue of such agreement, promised to make to Boss; and which last assignment was assented to by Mrs. Boss for the purpose of carrying out the agreement made by her son with the bank. This mortgage was executed and delivered on the 6th day of December, 1878, on which day another mortgage was given by A. J. Ramsaville upon the same premises to Mrs. Mary Johnson for $1,000; as to which there is no dispute, except as to whether it is subject to the judgment next mentioned. On the 12th of February, 1878, the inhabitants of the township of Delaware recovered a judgment against Daniel Sharp and the said A. J. Ramsaville and Robert Sharp and others for $794.52, which judgment was a lien upon the said mortgaged premises, as well as upon the real estate of the other defendants. An execution was issued upon that judgment, and a levy made upon certain real estate; but whether a levy was made upon the real estate included in this mortgage or not is a question which I will determine hereafter. The claim, however, of the present holder and assignee of the said judgment is that it has priority, and is entitled to be paid before the said mortgages.
The complainant insists that although this judgment in favor of the inhabitants of the township of Delaware were otherwise a valid lien and entitled to be paid before its mortgages, it has really and from an equitable stand-point been paid and satisfied out of the real estate of one of the defendants named in that judgment. It insists that that satisfaction resulted from these proceedings. The said judgment was against one Robert Sharp, who owned a valuable house and lot a short time prior to the rendition of the judgment, and which through sundry conveyances he had conveyed to his wife, who held the same at the time of the rendition of said judgment, without any consideration, and with the full purpose and intent of defeating the collection of the said claim in favor of the inhabitants of the township of Delaware; and that afterwards, and on the 10th of September, 1879, one Mary Menaugh recovered a judgment against the said Robert Sharp, and filed her bill in the court of chancery against the said Sharp and his wife, for the purpose of having the said conveyance to her declared void as to creditors; and that upon the 21st day of December, 1880, she obtained a final decree declaring the said conveyance void as to creditors; and that after such decree she proceeded upon herjudgment and execution at law to make sale, and sold the house and lot to the defendant Robert Dilts; and that said Dilts purchased the said house and lot, which was worth in the neighborhood of $3,000, for the very moderate sum of $800, because it was understood at the time that the judgment of the inhabitants of the township of Delaware was also a lien upon the said house and lot, and could be enforced as such; and that to that end the bill of complaint had been filed in the court of chancery by the owner of said last-named judgment, for the purpose of having the said conveyance to Sharp's wife set aside, but was not prosecuted because of the success to that end of the suit instituted by Mary Menaugh. It is said that one Catherine Hice also had a judgment for $——, which was also a lien on Robert Sharp's house and lot, but which was obtained, as were the others, after the conveyance thereof to his wife, and that Mrs. Hice had likewise proceeded in this court for the purpose of obtaining equitable relief, and that her suit was suspended also because of the success of Mrs. Menaugh's suit; and that Mr. Dilts, after purchasing the Robert Sharp house and lot, under the execution in favor of Mrs. Menaugh, paid and discharged the Hice judgment, and also the judgment of the inhabtants of the township of Delaware, he taking an assignment of the latter. Now, Mr. Dilts claims on his part that this judgment in favor of the township is not a lien upon the Robert Dilts house and lot which he bought, but that if it ever was, he had a right to take an assignment of the same, and to hold it as a lien upon the real estate of A. J. Ramsaville prior to the lien of the complainant's mortgages.
How, then, do these claims stand upon the question of priority? Counsel for complainant insists that there was no levy taken upon the mortgaged premises by virtue of the execution which was issued upon the judgment in favor of the township. While that would be necessary in order to give said judgment priority over a subsequent judgment upon which an execution had been issued and a levy taken, it was not necessary to give the judgment priority over a mortgage which was taken subsequent to the rendition of the judgment. The provision of the statute (Revision, 1044, § 9) respecting the liens of judgments in such cases has never been extended to mortgages. Hence, if there be nothing else in the case to control, I think very clearly the judgment in favor of the township and now held by Dilts, the defendant, would be entitled to priority over the mortgage, although no levy was ever made. But another question presents itself in this connection arising from other facts and circumstances. There is nothing to show that the execution which was issued upon the judgment in favor of the township was ever levied upon the real estate of Robert Sharp, which was purchased by the defendant Dilts; and if this be so, then the sale made under the subsequent judgment, execution, and levy in favor of Mrs. Menaugh destroyed the lien of the judgment in favor of the township, after which it was no longer a burden upon that real estate, and the defendant Dilts was under no obligation whatever to discharge it. Revision, 1044; Williams v. Gilbert, 37 N. J. Eq. 84, and cases cited. Thus it would seem that the Robert Sharp real estate referred to stands entirely discharged of the said judgment in favor of the township. But still another question is presented from other facts which have influence in determining the rights of the parties with respect to the real estate covered by these mortgages. The judgment in favor of the township was recovered February 12, 1878. A. J. Ramsaville conveyed to H. P. Cullen all his real and personal estate for the benefit of his creditors on the 6th day of January, 1879. The said Cullen, as assignee of said Ramsaville, sold and conveyed the said mortgaged premises to the said R. R. Boss on the 8th day of April, 1879. While the said Boss was the owner of the said mortgaged premises, John Ramsay, on the 21st day of May, 1879, recovered a judgment against him (Boss) for $1,604. Afterwards, on the 31st of March, 1886, a sale of the interest of the said Boss, in the said mortgaged premises, was made under the judgment soobtained in favor of Ramsay; L. Hoffman, one of the defendants, being the purchaser for one dollar. The question is, what is the effect of the levy under the execution upon this Ramsay judgment and of the sale upon the prior judgment in favor of the inhabitants of the township of Delaware? It would seem under the decision referred to and the statute that if there had been any execution issued upon the judgment in favor of the township, and no levy taken upon the mortgaged premises, that the levy by virtue of the execution issued subsequently, and a sale by virtue of that levy, would wholly discharge the land in question from the judgment obtained from the township. Therefore, was there a levy upon the judgment in favor of the township? It is alleged by the complainants that there was none; while, on the other hand, it is insisted by the defendant Dilts that there was a levy. The execution issued in that case, together with the levies made by the sheriff, is in evidence; but from anything that appears in the bill of complaint, or in the levies so attached, or in the proof, I cannot identify the lands named in the said levy as the lands described in the mortgage or in the bill of complaint. Counsel for the defendant Dilts says that the execution having been issued, there was a levy; and if there was not, there ought to have been; and insists that it is the duty of the court to take as performed that which ought to have been performed. I see no reason for adopting this method. If any of the parcels of land referred to in the levy is in fact the same as the land mentioned in the complainant's mortgages, it was the duty of the defendant Dilts to establish that by proof, showing clearly their identity; having failed to do which, the court cannot be expected to go further. Now, if this be so, then the inhabitants of the township, by virtue of their judgment, had a lien which was of the same force and effect as a lien acquired by a mortgage; and as between that judgment and the mortgages of the complainants, the judgment was prior, and remained prior until the levy of the execution issued upon the judgment in favor of Ramsay, which was subsequently obtained. The sale under that judgment and execution effectually dissevered the lien of the judgment in favor of the township, and this by virtue of the statute; but this sale did not affect the mortgage in favor of the complainant, because the statute respecting the priority of judgments has no application to judgments and mortgages. This being so, and the mortgages which the complainant holds being prior in point of execution and of registry to the Ramsay judgment, they remain prior to that judgment as a lien upon the mortgaged premises; and the said mortgaged premises, as I have said, are discharged from the judgment in favor of the township. See Williams v. Gilbert, supra.
What, therefore, is due to the bank upon these mortgages by virtue of the agreement between the bank and Boss? It is claimed by Hoffman, the owner of the equity of redemption, that the bank is only entitled to $1,038.63, the amount actually due to W. Dalton & Co. at the time the latter assigned said mortgage to the complainant. I cannot think this a correct interpretation of the agreement. So far as the testimony goes, at that time the whole amount due upon the mortgage was $3,750, no part ever having been paid to Mrs. Boss or to her son. As I have said, Boss and his mother agreed with the bank that it should hold these bonds and this mortgage as collateral security for the amount due the bank from him, and for future advances. The bank paid to William Dalton & Co. the amount of $1,056.63, due to them. There was at that time a large amount due to the bank for notes discounted for Boss, and immediately afterwards other large advances were made to him. There is nothing in the case that gives birth to any equity between the bank and Hoffman, the holder of the equity of redemption, in favor of Hoffman. It is not anywhere shown that when the bank took an assignment of the mortgage it did so for any other purpose than to benefit the mortgagees themselves. It is true, at the time the bank took such an assignment, the Ramsay judgment was a matter of record, and the bank is presumed to have taken it with knowledgeof the existence of such judgment; but Boss and his mother had taken their mortgage before the judgment, and had a right, as against the judgment of Ramsey under which Hoffman, the present owner, purchased, to enforce their bonds and mortgage against the said mortgaged premises for the entire amount that was due upon the bonds; and such right had been assigned to Dalton & Co., and by Dalton & Co., at the request of Boss and his mother, to the complainant for the very purpose of securing them to the full extent of their rights and interest in the said mortgage. Therefore, it seems to me that since Boss and his mother had an unquestioned right at that time to collect the $3,700, and all interest which had accrued, the same right could be conferred upon the bank. It would be quite inconsistent, I think, to say that because the Ramsay judgment was a matter of record at the time of the assignment of Dalton to the bank; that all that the bank could actually recover would be the amount which they paid Dalton & Co., and the amount which was then actually due to the bank from Boss; and to give to Boss and his mother the balance due upon the said mortgage. True, a creditor might claim the balance due to Boss; yet, here stands a creditor (the complainant) claiming it.
Again, the bank was let into the possession of the mortgaged premises about April 1, 1881, and are responsible for the rents from that time, and must account for them, including the year when it says they received none, unless it shall appear that the yearly rental value was less than the amount of cash which it received upon an agreement of sale made during that year, in which case it will be charged with such cash payment, and not with any rent for that year; but in case the real value was in excess of such cash payment, then the bank will be charged with the cash payment and also with such excess of the rental value. It seems to be agreed between counsel that the entire value of these rents is $1,061.75. If this be the correct amount, how shall it be applied? Shall it be applied towards the reduction of the complainant's two mortgages, at its own discretion, or shall it, in equity, be applied to the payment of the first mortgage, for $1,000, and then, upon a sale of the mortgaged premises, the proceeds first applied to discharge the balance due on said $1,000 mortgage, and then to the payment of the amount due upon the Ramsay judgment, so assigned to said Hoffman? It is seriously contended that the latter is the true legal and equitable status. But I cannot see the basis for any such structure. The Ramsay judgment is out of the controversy, as the facts now stand. It ceased to be a legal factor in November, 1886, when a sale of the mortgaged premises was made by virtue of the execution upon that judgment. As to that judgment, it was completely executed against that land when that sale was perfected; and the plaintiff in that execution then exhausted his remedy against that much of the defendant's property. His lien was at an end. He could have no more claim upon it than upon personal property after a judicial sale or execution. Then, clearly, if his lien was exhausted, and if he could not again sell the land, he has no right or interest in the mortgaged premises as a judgment creditor. He has no equity which should control the disposition of the proceeds of sale, except as the owner of the equity of redemption which he purchased at the sale under the Ramsay judgment; and as to this, he only stands where Ramsey stood.
But, again: Boss confessed a judgment to Dalton & Co. for $638.76, which has been assigned. No levy was taken on the mortgaged premises, but goods were sold to the amount of $423.55, and the assignee of the judgment took possession of the store of Boss and "run" it for some time; and since he has not shown that there is in truth any balance due, (which I think under the circumstances was his duty,) I will hold that his judgment was in contemplation of law satisfied.
My conclusion then is that the complainant's mortgages are the first liens of the mortgaged premises; and that the complainant is entitled to exhaustthe whole amount due on the mortgage to Mrs. Boss and R. R. Boss, in satisfaction of their claim against the latter. A reference will be ordered to ascertain, upon the statement of an account, the amount due to the complainant.