Opinion
04-17-1896
HOPLER v. CUTLER et al.
Mr. Kitchel, for complainant. A. W. Cutler, for defendants.
Bill by James H. Hopler against August W. Cutler and another to foreclose a mortgage. Decree for complainant.
Mr. Kitchel, for complainant.
A. W. Cutler, for defendants.
EMERY, V. C. The bill in this case is filed to foreclose a mortgage, and the defendants to the bill are the holder of another mortgage upon the premises, and the owner of the equity of redemption. The title of the owner of the equity of redemption is derived under a sale made upon a judgment obtained against the mortgagor. The complainant claims priority over the defendant's mortgage, and also over the title derived under the judgment, on the ground that the mortgage, and also the judgment, are subject to his mortgage. The defendants claim priority over the complainant, under their respective mortgage and judgment title; but the owner of the equity, by his answer, admits that his title is subject to the defendant's mortgage. The two points to be decided, upon the pleadings and proofs, are, therefore, the priority of the complainant's mortgage as to the defendant's mortgage, and also as to the judgment title.
The status of the record title of the respective parties is as follows: On September 19, 1876, one Edward W. McClave, of Newark, N. J., under whom all the parties claim, was the owner of the mortgaged premises. By deed bearing that date, acknowledged September 27, 1876, and recorded October 6, 1876, McClave and wife conveyed the premises to one Delia A. Davenport for the consideration of $642 named in the deed. Delia A. Davenport and William E. Davenport, her husband, executed a mortgage on the premises to one Henry Speer to secure the payment of $200, with interest, in one year from date. This mortgage was dated October 4, 1876, acknowledged October 5, 1876, and recorded October 7, 1876, one day after the record of the deed. This is the complainant's mortgage, to which he derived title by an assignment from the administrators of Henry Speer dated December 10, 1887, Speer having died in 1877. The defendant's mortgage was originally given by Delia A. Davenport, the purchaser (her husband joining in the execution of the mortgage, but not being named as a party thereto), to Edward W. McClave, the vendor of the premises. This mortgage was dated October 5, 1876, one day later than complainant's mortgage, and was acknowledged on October 5, and recorded October 16, 1876, ten days after the record of the deed, and nine days after complainant's mortgage was recorded. The McClave mortgage was given to secure $442, with interest, and was stated to be given upon premises conveyed by McClave to Delia A. Davenport by deed dated September 17, 1876, and to be given as part of the consideration money. This sum ($442), together with the $200 secured by the Speer mortgage, made up the whole consideration money named in the deed ($642), but the Speer mortgage was not stated to be given to secure part of the purchase money. The title of the defendant A. W. Cutler, under the judgment, originates in a judgment obtained by Worthington & Smith against Delia A. Davenport and William E. Davenport, in the Morris county circuit court, on October 13, 1872, upon which levy was made under an alias execution issued December 13, 1883, and sale thereunder made to the defendant A. W. Cutler, to whom the property was struck off at public sale for $100, paid to the sheriff. The complainant claims priority over both the purchase-money mortgage given to McClave, and over the judgment,—over the former because, as alleged in the bill, the purchase-money mortgage was executed and recorded subsequent to his mortgage, and with full notice thereof, and over the judgment because complainant's mortgage was given by the purchaser, Delia A. Davenport, at the same time with the conveyance to her, and to secure the payment of part of the purchase money advanced by Speer, and is therefore, under the seventy-seventh section of the act relating to conveyances (Revision, p. 167), claimed to be preferred to the previous judgment against the purchaser.
The proofs taken show that the property in question, which was owned by McClave, was sold to Mrs. Davenport, and that by the agreement made between McClave, Davenport and his wife, and Speer, at the time of the sale, Speer was to advance $200 of the purchase money to McClave, for which $200 Speer was to receive a mortgage on the property, which was to be prior to the mortgageto be given to McClave to secure the balance of the purchase money. This money ($200) was actually advanced by Speer to McClave under this agreement, and at the same time with this advance the deed was delivered to Mrs. Davenport, and the mortgage to Speer delivered to him. These deliveries were in fact made two hours or more previous to the execution and delivery of the purchase-money mortgage by Mrs. Davenport to McClave for the balance of the purchase money. The McClave bond and mortgage, as originally drawn, bore the same date with the deed (September 17, 1876); but after the arrangement that the Speer mortgage should be the first lien, and in order that the record might show its priority, the dates of the McClave bond and mortgage were changed to October 5, 1876, being one day subsequent to the date of the Speer mortgage (October 4, 1876), and the actual execution and delivery of the McClave mortgage were postponed until two hours or more later on the same day of the delivery of the Speer mortgage. McClave further agreed to withhold his mortgage from record for a few days, and it was retained for ten days. This state of facts in relation to the actual status of the two mortgages is proved by the evidence of William E. Davenport, who is the only witness to the transaction now living. Parol evidence is competent to establish the facts showing priority of the delivery, and also to establish the agreement. Hendrickson v. Woolley, 39 N. J. Eq. 307. Davenport's evidence is clear and direct, but it is urged that his credibility is affected by reason of his relationship to the complainant, his brother-in-law, who has purchased his mortgage for a nominal consideration, and that the mortgage of McClave, admittedly given for purchase money, should not be postponed, except upon undoubted proof. But the evidence of Davenport is corroborated in part by another witness, Hopler, who saw Speer pay, and McClave receive, the $200, and saw the deed and a mortgage delivered at the time of this payment. This witness was not present at the subsequent delivery of the McClave mortgage, two hours late. Moreover, the changes in the dates of the McClave bond and mortgage,—the change in the latter referring to the date of the deed,—and the retention of the mortgage from record for ten days, also corroborate Davenport's account in a decisive manner; for such changes and retention undoubtedly established a preference for the Speer mortgage on the record, and no other reason for the changes, than this intention so to prefer, has been suggested or can be perceived. I conclude, therefore, that the complainant's mortgage has priority over the McClave mortgage, not only because, on the face of the records, it is entitled to priority, and must retain this priority until postponed by sufficient proof (Hendrickson v. Woolley, supra), but also because it is proved that the defendant's mortgage was in fact executed, delivered, and recorded subsequently to the complainant's mortgage, and with full notice thereof, and under an agreement by the vendor, McClave, that complainant's mortgage should be prior to his mortgage. The defendant Condict W. Cutler, as assignee of the McClave mortgage, took it with notice on the record that it was a subsequent mortgage, and subject to the actual agreement to that effect, which was intended to be carried out by the record.
As to the title under the judgment, the purchaser under execution has the prior prima facie title on the record, inasmuch as Speer was not, upon the record, the vendor of the premises conveyed to the judgment debtor against whom the judgment was outstanding at the time of the conveyance, and there was nothing in the mortgage itself to show that it was given for purchase money. The purchaser's interest in the lands conveyed became therefore subject at once to the judgment, unless, under the facts proved, the complainant's mortgage is preferred, as a purchase-money mortgage. This depends on the question whether the above statute (Revision, p. 167, tit. "Conveyances," § 77) extends to third persons who advance the purchase money, and take mortgages to secure the repayment to them, or is intended only to reach to the vendor. The language of the act is, "Whenever lands, tenements, or hereditaments lying and being in this state, are or shall be sold and conveyed, and a mortgage is given by the purchaser or purchasers at the same time, on the lands sold, to secure the payment of the purchase money or any part thereof, such mortgage shall be preferred to any previous judgment which may have been obtained against such purchaser or purchasers." The complainant's mortgage has been clearly proved to have been in fact given by the purchaser, at the same time with the purchase, upon the lands sold, to secure the payment of part of the purchase money; and, in the absence of an express restriction of the benefit of the statute to mortgages given to the vendor I can see no good reason for holding that the statute does not extend to any mortgage given in fact to secure the purchase money, and either to a vendor or third person. That has been the construction given to a similar statute by the supreme court of New York. Beebe v. Austin (1818) 15 Johns. 477. Our act was originally passed June 5, 1820 (Rev. Laws, p. 747, § 9), and subsequently to the New York statute, which was passed in 1808. See Stow v. Tifft, 15 Johns. 460, 464. This section was declared by Beasley, C. J., in Wallace v. Silsby (1880) 42 N. J. Law, 1, 9, to have been merely declaratory of the common-law rule in such cases; and he further declared that upon general principles, as well at law as in equity, and independent of statutory regulations, evanescent or temporary seisins, given to accomplish a present object, would not avail, in behalf of previous creditors and others, to frustratethis object, by giving to them estates or interests which would defeat such object. This decision was an extension, to the case of a grantee for a special purpose, of the rule relating to transitory seisins previously applied to claimants of dower and liens, by judgment or otherwise. That third persons who advance the purchase money to the vendor for the vendee, taking mortgages therefor at the same time from the vendee, are entitled to stand in the same position as the vendor, is established by the following cases: Clark v. Butler (1880; Van Fleet, V. C.) 32 N. J. Eq. 664. In this case the mortgage was given by the vendee, not to the vendor, but to the holder of two mortgages existing at the time of the sale, and which were released upon the execution of the mortgage. Bradley v. Bryan (1887; Bird, V. C.) 43 N. J. Eq. 396, 13 Atl. 806. Here the mortgage was given by the purchaser to the grantor of the vendor. In both these cases the real purpose of the mortgage was, as in the present case, to secure to the mortgagees the part of the purchase money which had, in effect, been advanced by them to the vendor, and for the purchaser, at the time of the purchase. Further citation of authorities is, I think, unnecessary.
It appeared in the proofs that the administrators of Speer, in making up their inventory and appraisement of his estate in 1887, in referring to the mortgage now in question, stated "that this mortgage is considered doubtful," and that in 1880, in making their final account of the estate, they further stated, "This mortgage is not collectible at present, there being a judgment and bond and mortgage ahead of it." Mr. Cutler, the purchaser at the execution sale in 1883, and who negotiated in 1887 the assignment of the McClave mortgage to his son, the defendant Condict W. Cutler, says that before he purchased this mortgage he examined the records of the Speer account. He now claims that, by reason of this statement on the record as to the priority of the McClave mortgage, the administrators of Speer, and the complainant, who claims under them, are estopped from now setting up priority over the Speer mortgage. There is no sound basis, as it seems to me, for this contention, and for these reasons, among others: First. The administrators had no right or power, by such a statement, to divest or affect the actual rights of the estate in the mortgaged premises; nor can the statement prevail at all to affect the rights of Speer to which the complainant succeeds by regular title. Secondly. The statement cannot be considered as made to the defendant, or as made for the purpose of influencing his action, nor as enabling him to act thereon in the purchase of the mortgage. It was intended for the information of the parties interested in the estate, and as the judgment of the administrators at that time, and the defendant had no right to rely on this statement as made by way of estoppel to a person who proposed to make a purchase adverse to the estate. In no respect, as it seems to me, can the defendants, or either of them, appeal to this statement as such an estoppel in their favor as will prevent the court from adjudicating upon the real merits of the case, and status of the parties, as they are presented under the recording acts and in the evidence. The complainant is entitled to a decree declaring that his mortgage is the first lien upon the premises.