Opinion
Submitted June 22, 1877
Decided September 25, 1877
Samuel A. Noyes, for the appellant.
Matt. H. Ellis, for the respondent.
The plaintiff holds a fourth mortgage, two mortgages intervening between his and defendant's mortgage. If the defendant is permitted to sell under its judgment of foreclosure, it will destroy plaintiff's investment; he will be obliged to raise the money and bid enough to pay all the mortgages and to pay all the expenses of the sale besides. He may thus be subjected to great embarrassment, loss, and damage. That, under such circumstances, he has the right to redeem from the prior mortgage is too well settled to need further discussion now. (2 Story Eq. Jur., § 1023; 4 Kent's Com. [11th ed.], 177; 1 Hilliard on Mortgages, 221; Norton v. Warner, 3 Ed. Chy. R., 106; Western Ins. Co. v. Eagle F. Ins. Co., 1 Paige, 284; Pardee v. Van Anken, 3 Barb., 534; Ellsworth v. Lockwood, 42 N.Y., 89; Dings v. Parshall, 7 Hun, 524.)
It is not necessary to go the length of holding (what is warranted by the general language used in some of the books), that a junior mortgagee, simply as such, has, under all circumstances, the right to pay off or redeem from a senior mortgage past due. Such a right may not exist when the senior mortgagee desires to hold his mortgage as an investment, and does not seek or threaten to enforce its collection. In such case the junior mortgagee may be in no danger of loss or embarrassment, and thus may not have any equitable right to disturb or interfere with the senior mortgage to which he is not a party, and for the payment of which he is in no way liable.
After the defendant had advertised the real estate for sale under judgment of foreclosure, the plaintiff claims that he made a tender of the amount due upon the judgment, and for the costs and expenses to that time in satisfaction and payment of the mortgage and judgment. But the referee has found that the tender was made, and that the plaintiff demanded at the time the right to redeem, and a transfer of the mortgage to him, and this finding of the referee is a fair inference from the evidence on the subject. A tender, to have the effect claimed for it by the plaintiff, should be made in unmistakable terms. The mortgagee should not be left in doubt as to what is meant. Here the defendant evidently understood, and had the right to understand, that what plaintiff wanted was to redeem from and have a transfer of its mortgage; not that he wanted to satisfy and discharge it. The owner of the land subject to a mortgage, commonly called the owner of the equity of redemption, has the right always to pay and satisfy a mortgage past due. And it matters not whether he is personally liable to pay the debt secured by the mortgage. The right to discharge his land from the incumbrance is incident to the ownership, and when he makes a lawful tender he destroys the lien. ( Kortright v. Cady, 21 N.Y., 343; Stoddard v. Hart, 23 id., 560; Hartley v. Tatham, 1 Keyes, 222.)
But, as before stated, a junior incumbrancer may not occupy the same position as the owner of the land. There is certainly not always the same reason for allowing him to discharge the incumbrance but whether he has the same right to discharge as the owner, it is not necessary to determine now, as plaintiff did not seek or offer to pay and discharge the mortgage and judgment. What he sought was a transfer of them to him, that he might enforce them against the land. If one desires to make a tender, which shall destroy the lien of an incumbrance, and have, so far as concerns it, the effect of payment, he must make an absolute tender of payment, which, if received, will discharge the debt and the incumbrance. Here no such tender was made. What the plaintiff did was a tender in the exercise of his right of redemption, with a demand that the mortgage and judgment be transferred to him. He desired to become a purchaser of the securities, and in such case the tender does not operate to destroy the securities, but gives the party a footing in equity to compel the transfer demanded, if he is otherwise entitled to it. Hence, it was properly held below that the tender did not cancel or discharge the lien of the mortgage or judgment. If, therefore, the tender was sufficient, the plaintiff was entitled to have the securities transferred to him, and whether it was or not depends upon circumstances now to be considered.
There was a judgment against the mortgagor, owned by Prime, which was older than either of the mortgages; and Lawrence, who then owned the fourth mortgage, desired to sell the same to plaintiff, who objected on account of the prior lien of the judgment. He then, for the purpose of inducing plaintiff to take his mortgage, procured from Prime a written instrument, whereby he agreed with him, Lawrence, that the lien of the judgment should be postponed, and should be considered subsequent to the mortgage. Thereupon Lawrence assigned the mortgage to the plaintiff; thereafter Prime caused an execution to be issued upon his judgment, and the mortgaged premises to be sold thereon. At the sale the premises were purchased for the defendant, and a sheriff's certificate of sale was given to it. It had no notice of the agreement postponing the lien of the judgment until after the purchase at the execution sale. After all this, it commenced the foreclosure of its mortgage. Upon these facts the defendant claims that the plaintiff was not entitled to redeem from and have an assignment of the mortgage, without also paying up and redeeming from the sheriff's sale upon the execution.
The referee decided against this claim, and also decided that the lien of defendant, under the sheriff's certificate, was subsequent to the plaintiff's mortgage, and whether the referee decided correctly or not, depends upon the effect of the agreement between Prime and Lawrence.
It is not disputed that the agreement was good between the parties thereto. There is no reason why plaintiff, as assignee, may not have the same benefit of the agreement which Lawrence could have had. Lawrence made the agreement for the benefit of his mortgage. Its purpose was to fix the relative position to be occupied by the two securities, and it affected and attached itself to the securities whoever owned them. The agreement made the mortgage the senior security, and its character as such was not destroyed by its sale to the plaintiff.
If Prime had become the purchaser at the sheriff's sale, it is not disputed that his title would have been subsequent to the mortgage. His general lien under the judgment would have been converted into a specific lien on the real estate covered by the mortgage. A purchaser at an execution sale can get no better title than the judgment actually gives him. If a judgment has been satisfied, although not canceled of record, even a bona fide purchaser under an execution issued upon the judgment will get no title. ( Wood v. Colvin, 2 Hill, 566; Carpenter v. Stilwell, 11 N.Y., 61; Craft v. Merrill, 14 id., 456.)
The docket of a judgment is not for the protection of purchasers under the judgment. It is for the benefit of the judgment-creditor, and the protection of purchasers from the judgment-debtor. The sole purpose of an execution is to enforce a judgment for just what is due, and no more. An execution and the sheriff are instrumentalities provided by law, by which a judgment-creditor enforces his judgment, and the sheriff can give no better title or greater right by a sale on an execution than the judgment-creditor could give, if he were allowed to seize property and sell by virtue of his judgment without an execution. If the judgment is void or has been paid, the purchaser takes nothing. The rule of caveat emptor applies to every purchaser at a sheriff's sale, of either real or personal property, by virtue of an execution. He buys at his peril, and if by any valid agreement the judgment has lost its apparent position as a lien upon real estate, his lien under his purchase is just that which the judgment creditor had. It is true that thus purchasers at sheriff's sales may sometimes be misled, but the courts have ample power usually in such cases to relieve them.
It was no more necessary for Armstrong to record this agreement than it would have been to have recorded a written discharge or satisfaction of the judgment, if he had paid it to protect himself against a subsequent sale under the execution. The recording act has nothing to do with the case.
The plaintiff is in no way estopped. He did nothing to induce the defendant to purchase. It does not even appear that he knew of the sale and purchase under the execution at the time they transpired. He was not bound to give defendant notice of the agreement or to record it.
We conclude, therefore, that the judgment was postponed to plaintiff's mortgage, and that he had the right to redeem from defendant's mortgage, and have the same assigned to him without also paying or redeeming from the judgment, and that the decision of the referee was right.
The order of the General Term, so far as it reverses the judgment entered upon the report of the referee, must be reversed, and that judgment affirmed; and so far as it affirms that judgment it must be affirmed, neither party to have costs upon the appeal to this court.
All concur, except ALLEN, J., not voting.
Judgment accordingly.