Opinion
12-19-1890
LEONARD et al. v. COOK.
W. J. Leonard, for complainants. J. E. Foster, for defendant.
Motion to dismiss.
W. J. Leonard, for complainants.
J. E. Foster, for defendant.
BIRD, V. C. The facts upon which this bill rests, so far as the defendant the Atlantic Highlands Savings Fund & Building & Loan Association is charged and sought to be made liable, and upon which this motion to dismiss, being in the nature of a demurrer, must be determined, are, in brief, as follows: The complainants sold to Cook their newspaper and printing plant. After this sale Cook conceived that he needed more room to carry on the business, and to that end proposed to purchase a lot called "Number 308 "of the complainants, upon which was quite a large building, not then in use. The complainants entered into negotiations for the purpose of selling the lot to him. Before the negotiations were completed, Cook commenced enlarging the said building. In a few days thereafter, negotiations had proceeded so far that the complainants directed their attorney to prepare a deed for the said lot, conveying it to Cook, which deed they executed. This deed was not delivered until about three weeks afterwards, (November 26, 1889.) During all this time the work of repairing and enlarging the building on the lot was carried forward under the direction of Cook. Cook became desirous of raising money by mortgage on said lot, and for that purpose requested the delivery of the deed to him. He stated that he wanted to use this money in paying for the improvements upon the lot. He had an offer of a loan of $600 upon the lot from the defendant the Atlantic Highlands Savings Fund & Building & Loan Association, provided it could have the first mortgage upon the premises. This fact Cook represented to the complainants, and they consented to forego, taking the first mortgage for $300, and to allow the association to have the first mortgage for $600, provided there were no other prior liens upon the premises. This was agreed upon bet ween the complainants and Cook, and the association and its solicitor and attorney were well advised of this fact. It was understood between the complainants and Cook that the deed was to be delivered to him that he might pass it to the association or its attorney, to enable the association to make search against the lot, and to prepare a mortgage from Cook to the association for the said $600, and that when these things were accomplished the deed was to be returned to the complainants; which understanding was known to the association and its attorney. At this time the complainants' attorney had possession of the deed, and they directed him to deliver it to Cook. Cook then passed the deed to the association or its attorney, and also had prepared a mortgage for $600 to the association, and that sum was then paid to Cook by the association. As intimated above, Cook stated to complainants that he wanted this $600 to discharge claims against said building, and that the association knew this fact, but that Cook did not apply allthe money for that purpose. The complainants relied upon these representations of Cook when they delivered the deed to him. It is stated in the bill that the association had such knowledge of the transactions between the complainant and Cook as imposed upon it the obligation of seeing to the proper application of the $600. The association, failing to have the said money so applied, became liable to have its mortgage proportionately reduced in favor of the complainants' $300 mortgage, because they say that their agreement with Cook was that, if they consented to take the second mortgage for $300, there should be no prior liens except the $600 to the association. There is a lien claim for said improvements against the said building for over $200, which, although not filed until four months after the delivery of the deed, is prior to both of said mortgages.
The bill, which was filed February 4, 1890, expressly alleges "that on or about the 24th day of November last your oratrixes consented to and did give to said Cook an order upon their attorney, William J. Leonard, for him to deliver the deed for lot 308 to Edgar H. Cook, in order that the mortgage aforesaid might be executed, and the building on said lot might be paid for out of the proceeds of the first mortgage; and that your oratrixes did stipulate with Edgar H. Cook, and intend, that the said deed and first mortgage should be recorded duly at the same time with their own mortgage; and but for the fraud of Edgar H. Cook, as in said original bill and proofs thereunder on file appears, the said mortgage of your oratrixes would have been so duly and simultaneously recorded, and the said lien claim duly paid." Another express allegation is: "And that said association, although their officers and counsel thereof well knew that your oratrixes stipulated with Edgar H. Cook, respecting and concerning the loan by the said association, that no other incumbrance except said mortgage of six hundred dollars should take precedence of your oratrixes' own stipulated mortgage aforesaid, and that said loan was by your oratrixes agreed upon to pay for said building, nevertheless did not pay, nor cause to be paid, the mechanics and material-men for labor performed and materials furnished, even up to the date of the execution and delivery by said Cook to said association of the said mortgage for six hundred dollars upon said lot No. 308, but, instead thereof, the said association paid to Edgar H. Cook personally the consideration money or loan made by said association, and secured by said mortgage, who used it in other ways, and for other ends." The bill further expressly alleges: "That your oratrixes' said attorney, William J. Leonard, Esq., did, pursuant to said order, deliver to said Edgar H. Cook said deed for his approval thereof, and to take to John E. Foster, Esq., counsel of said building and loan association, but stipulated with said Cook that the same should not be recorded, but should be returned by said Cook to him, the said William J. Leonard, Esq., as soon as the aforesaid purpose should be accomplished; that your oratrixes' said attorney, William J. Leonard, Esq., did on the same day (it being on or about the 25th day of November last past) notify the said John E. Foster, Esq., counsel for the said building and loan association, that Edgar H.Cook had the deed for the particular purpose aforesaid, and that he was authorized by your oratrixes to procure a loan for the said building and loan association, to be secured by a first mortgage on said lot No. 308, for the purpose of completing and paying for the building on said lot, and that Edgar H. Cook had agreed to return the said deed to your oratrixes' said attorney, and execute a mortgage to your oratrixes, subject only to the said stipulated mortgage for six hundred dollars." And the bill still further alleges: "That your oratrixes charge that Edgar H.Cook has never, though often urged to do so, duly executed and delivered their said stipulated mortgage upon said lot No. 308 to your oratrixes, subject only to the aforesaid mortgage for six hundred dollars, and wholly neglects and refuses so to do; and that said Edgar H. Cook did not pay off, nor did the Atlantic Highlands Savings Fund and Building and Loan Association pay off, the mechanics and material-men for labor performed and materials furnished in reconstructing the said building for a printing-office on said lot No. 308, according to the stipulations." The supplemental bill, from which the above extracts have been taken, makes reference to the original bill for support of the supplemental bill. It appears by the original bill that Cook promised to the complainants to put in an additional amount of machinery in the proposed new building, if they would consent to the loan of $600 proposed by the association, to be secured by the mortgage for $300, and also a chattel mortgage upon all the machinery as further security. By the original bill it appears that upon his making such promises they consented to deliver the deed for the premises, that he might have it recorded, and that he might execute a mortgage to the building and loan association, after which he was to execute the said mortgages to the complainants. I give the language of the original bill: "That your oratrixes were induced by the statements and representations of said Cook, made at that time, to consent, for his accommodation, to deliver to him the deed for said lot number 308, and also consent that a mortgage for six hundred dollars, instead of for three hundred dollars as aforesaid, should have precedence over their own stipulated mortgage as collateral security upon said lot number 308; and further to consent that the stipulated chattel mortgage aforesaid, and the stipulated second mortgage aforesaid, upon said lot number 308, should be executed within a few days afterwards. That your oratrixes accordingly, in pursuance of said agreement, and in full faith and reliance that it would be performed on the part of said Cook, delivered said deed for lot number 308 to said Cook, upon his promise to duly execute and deliver to them within a few days afterwards the chattel mortgageand second mortgage aforesaid." "That said Cook afterwards duly recorded said deed in the clerk's office of Monmouth county, and executed a mortgage to the Atlantic Highlands Savings Fund and Building and Loan Association upon said lot number 308 to secure the sum of six hundred dollars as aforesaid." "That said Cook did not at that time duly execute and deliver to your oratrixes, as agreed, a chattel mortgage upon property added to the said printing and publishing plant and business, to further secure the aforesaid indebtedness of said Cook to your oratrixes, and that he has not since done so, and. though often requested to do so, continues still in default." "That said Cook did not at that time duly execute and deliver to your oratrixes, as agreed the aforesaid second mortgage on lot number 308, to further secure the aforesaid indebtedness of said Cook to your oratrixes, and that he has not since done so, and, though often requested to do so, nevertheless continues still in default. "
The statements in the original bill are so manifestly inconsistent and irreconcilable with the statements in the supplemental bill respecting the terms upon which the said deed was delivered to Cook, so far as to the time of its being recorded, and as to the time in which he was to execute said mortgages to the complainants, in relation to the time when he was to execute the mortgage to the association, as to be absolutely destructive of their right to any standing in court. In the supplemental bill it appears that the deed was delivered only for the purpose of making an examination of the title, and of preparing a mortgage to the association, neither of which was to be recorded until the deed was returned to the complainants, and the said mortgages executed and delivered to them, while in the original bill it is emphatically declared that the deed was to be first recorded, and the mortgage made to the association, after which the claims of the complainants were to be secured by mortgage. Statements more diverse could scarcely appear. But the only real ground of complaint in the supplemental bill is based upon the fact that, more than four months after the delivery of the deed, a lien claim is filed against said building, which, by the terms of the bill, is impliedly admitted to be prior to said mortgage; the complainants, as above appears, charging that Cook and the attorney of the association promised that there should be no liens prior to the complainants' $300 mortgage except the mortgage of the association. In the first place, there is no satisfactory allegation showing that the association in any way became bound to the complainants. The allegation of promises made by the attorney of the association are certainly not sufficient, as they stand, to bind the association. It only appears that the association knew of the understanding between the complainants and Cook. Supposing that there was some contract, express or implied, between the complainants and the association, there is no allegation showing the extent or amount that was due to mechanics or material-men at the time of the execution of the mortgage to the association. It is stated that Cook assured them that he had made $1,000 worth of improvements upon the lot, and that it was the duty of the association to apply the $600 to the discharge of any prior liens against the lot, but that it had not done so. It especially charges that it did not pay and discharge the claim of Ingling for which he has since filed the lien. This, I think, is so uncertain and indefinite as to amount as to render it impossible for the court to say that any equity arises in behalf of the complainants against the association. It makes no pretense what claims existed against the building at the time of making the loan. Nor does it make any pretense of showing the amount due the defendant Ingling at that time. It simply asserts that his claim was not paid. These things being so, and it appearing by the bill that a large amount of these improvements were made after the mortgage to the association was delivered, I can see no grounds for charging the association with any liability. But, again, the bill does not show that the said lot is not abundantly worth the said $600 and the said $300 ana the said lien claim. For aught that appears satisfactorily, it may afford every security necessary to discharge every claim against it. Nor is there any allegation in the bill which shows that it is essential for the complainants to bring the defendant the association into this court. If such an agreement was entered into between the complainants and the association which the association has violated, and damages result to the complainants, surely the complainants have their remedy at law, unless they can show that the defendant the association is insolvent, and that therefore they would be deprived of all remedy unless this court interfered. Therefore, as this branch of the case stands, nothing more can possibly be made of it than a contract which has been broken by one of the parties, which may or may not result in damages to the other, and for the redress of which the appropriate remedy is an action at law. I will advise that the bill and supplemental bill, as against the association, be dismissed, with costs.