Opinion
02-24-1904
MEEKER v. WARREN et al.
John H. Meeker, pro se. Mr. Duffield, for defendant Knapp. Adrian Riker, pro se, as receiver of the Newark Coal Co.
Bill by John H. Meeker, as administrator of Chauncey S. French, against Helen E. Warren and others.
John H. Meeker, pro se. Mr. Duffield, for defendant Knapp.
Adrian Riker, pro se, as receiver of the Newark Coal Co.
STEVENS, V. C. The material facts are as follows: The bill is filed by complainant a judgment creditor, against Helen E. Warren, a judgment debtor. It prays, in the alternative, that a deed given by her to John E. Knapp may either be set aside on the ground of fraud, or may be declared to be a mortgage. The complainant has Joined as parties other Judgment creditors whose judgments antedate his own. He insists that his Hen is superior to these Judgments, and also to the mortgage deed, if it shall be deemed such. The defendants, except Mr. Knapp and Mrs. Warren, are holders of judgments recovered against Helen E. Warren in the months of January, March, and May, 1898. No executions issued thereon until after execution issued by complainant The conveyance by Mrs. Warren to Mr. Knapp bears date May 31, 1890. It was recorded December 7, 1899. The complainant's judgment, for $879.12, was recovered on June 20, 1902, and execution issued thereon on the same day.
The principal question is one of priorities. Under the evidence, there can be no doubt that the deed was given to secure Mr. Knapp as surety on a lease made by the Orange Bank to Mrs. Warren. There is no proof that this deed is fraudulent, and it stands, therefore, as a mortgage to secure the money which he paid ($816) on his guaranty.
This being so, the case conies directly within the authority of Clement v. Kaighn, 15 N. J. Eq. 48, of Williams v. Gilbert, 37 N. J. Eq. 84, and of Andrus v. Burke, 61 N. J. Eq. 297, 48 Atl. 228. Under the rule laid down in those cases, the priorities are as follows: (1) Knapp's mortgage; (2) complainant's judgment; (3) the judgments of defendants, in the order in which executions were issued.
It is earnestly argued by complainant's counsel that the cases above cited, and which are cases in this court, are repugnant in principle to Hoag v. Sayre, 33 N. J. Eq. 552, decided by the Court of Appeals. The difficulty with this position is that that court thought otherwise. Beasley, C. J., said: "Chancellor Green decided that the first judgment on the mortgaged premises, by reason of the failure to sue out execution upon it, should be postponed to the incumbrance of the Junior judgments, and, as an inevitable consequence, that it should be postponed to the mortgage which was prior to the junior judgments, and whose priority was not to be affected by any laches of the holder of a prior judgment." He said further that the principle of decision then announced was but the development of the principle maintained and acted on in Clement v. Kaighn. In Clement v. Kaighn there was first a judgment without execution, then a mortgage, and then judgments followed by executions levied. In Hoag v. Sayre, as the case stood in the Court of Appeals, there was, first, a mortgage, not properly filed, but of which the second mortgagee had actual notice; then, a second mortgage; then, a judgment, with execution. In the first case the order of priority was held to be (1) the mortgage; (2) the junior judgments; (3) the senior judgment. In the second case the order of priority was held to be (1) the judgments to the full extent of the first mortgage; (2) the second mortgage; (3) the sum remaining due, if any, on the Judgments; (4) the first mortgage. The complainant's contention is that inasmuch as the judgment creditor was, in the Hoag Case, put in the shoes of the first mortgagee because the second mortgagee had taken with notice, so, in a case standing in the situation of the Clement Case, the junior judgment creditor should be allowed to stand in the shoes of the senior judgment creditor, because the senior judgment has priority over the mortgage. There appears, however, to be a difference. The statute declares the unrecorded mortgage on real estate void only to a limited extent. It is void as against judgment creditors. It is good as against the mortgagor and as against his assigns, if those assigns take with notice, and consequently as against the second mortgagee. It may well be held that, as against the mortgagor and the second mortgagee with notice, the estate carved out of the fee by the first mortgage sufficiently subsists to admit of the judgment lien (perfected by execution) fastening upon it, and so taking precedence over the estate of the second mortgagee, who remains in precisely the same position as before. He is neither advanced nor postponed. On the other hand, judgment liens, before levy, are general and indefinite, vesting no estate. By force of the statute, such liens have precedence in the order of the date of their entry, but this order of precedence may be changed by execution and levy. So far as levies are made, the judgments take precedence in the order in which they are made. Under this statutory system there is no ground for holding that one judgment creditor shall stand in the shoes of another, and have all that other's rights. His Hen must either—except, of course, in cases where the judgments or executions are entered or levied simultaneously—precede or follow. Such, to use the words of Beasley, C. J., is the "inevitable consequence" of the legal enactments of the subject. Whether this be the true ground of the distinction or not, it has been adjudged by the Court of Appeals to exist, and that, so far as this court is concerned, is an end of the matter. I may add that the hardship, if any, is not upon the junior Judgment creditor, who stands, with reference to the mortgage, just as he ought to stand, but upon the senior, who is postponed not only to the junior, but also to the mortgagee. But it must be remembered he owes his loss of precedence to his own lack of diligence. The statute says that, if he does not levy, he shall lose his priority over the creditor who does. And the courts say that, as a necessary consequence, he shall also be postponed to the intermediate mortgagee. The result of his lack of diligence is that he is visited with a double, instead of a single, penalty. If the fund be greater than the junior judgment, the senior creditor can pay off the judgment, and regain his priority by its extinguishment. If it be less than the judgment, he cannot get the fund in any event.
It is further argued by counsel that the deed, being one of quitclaim, merely, did not convey the fee. If this be so, then complainant's bill should be dismissed, for Mrs. Warren in that case still holds the legal title, and there is nothing to prevent complainant from proceeding with his execution. The bill cannot be sustained as one to quiet title, under the statute, for the complainant has not the statutory prerequisite—peaceable possession—and, besides, it is not framed on that theory. But the point itself has been decided adversely to the contention. Havens v. Seashore Land Co., 47 N. J. Eq. 365, 20 Atl. 497.