Opinion
09-13-1901
PROVIDENT LIFE & TRUST CO OF PHILADELPHIA v. PARROTT et al.
H. M. Cooper, for complainant. J. W. Parrott, pro se.
(Syllabus by the Court.)
Bill by the Provident Life & Trust Company of Philadelphia against John W. Parrott and others. Decree for complainant.
H. M. Cooper, for complainant.
J. W. Parrott, pro se.
GREY, V. C. The bill in this case is filed to foreclose a mortgage given to the complainant to secure the payment of a promissory note of John W. Parrott for $4,000. which had come to be due, and remained unpaid, and prays for answers without oath. The defendants in the foreclosure are John W. Parrott; his wife, Sarah G. Parrott, who holds title to the equity of redemption; and one Ella S. Carroll, who holds a later mortgage. A decree pro confesso has been taken against the defendants Sarah G. Parrott and Ella S. Carroll. The defendant John W. Parrott has filed an answer, admitting that the mortgage now in suit was given to the complainant, and another one, for $5,000, made by one Clarence M. Du Bois, was assigned, both of them to secure the note of the defendant John W. Parrott for $4,000 to the complainant The answer contains this admission: "And this defendant is now indebted to the complainant in the sum of four thousand dollars and interest thereon at the rate of six per cent. per annum from August 13, 1899." The defendant John W. Parrottthen sets up as a defense that the complainant has caused both mortgages to be sold at auction, when no bidders were present, and bought them in for nominal sums, and that the defendant Parrott did not bid them in because the plaintiff declared at the time that all that was wanted was $4,000, with interest. The defendant John W. Parrott further sets up as a defense to the foreclosure the allegation that at the time the $4,000 loan was made it was agreed between the parties that the balance of that loan after paying $2,000 on the Du Bois mortgage should be at once sent to St. Paul, to enable the defendant Parrott to improve property there; that the complainant failed to send that balance to St. Paul in time to enable the property to be rented, and that the defendant Parrott thereby lost about $2,000. He also sets up in his defense to this foreclosure the allegation that the complainant was proceeding to foreclose the Du Bois mortgage, but had not made Sarah G. Parrott, the owner of the fee, party to the suit. 'The answer further declares the said defendant Parrott is willing to pay the sum actually due to the complainant after making a reasonable and equitable allowance for the loss be has sustained, within a reasonable time, provided the plaintiff cancel said $4,000 mortgage, and either cancel the $5,000 Du Bois mortgage or assign it to him, Parrott. At the hearing of the cause the defendant Parrott filed an amendment to the answer by way of cross bill, setting up that the complainant had prosecuted the Du Bois foreclosure to final decree and sale, without making Mrs. Parrott a party, and had purchased the property at the foreclosure sale. He asked that he be credited the amount of the Du Bois mortgage for $5,000 for the mortgage for $4,000, now in suit, or the purchase price paid by the complainant under the Du Bois sale, and a portion of the sum of $4,000, not paid by the complainant to the defendant, and the losses which were sustained by the defendant Parrott by the fault of the complainant in refusing to deposit a portion of the moneys loaned in St. Paul, and prays that the complainant now pay the defendant the amount now due him, and cancel the mortgage of $4,000. Issue was joined on these pleadings, and the cause came to a hearing thereon. The complainant made formal proof of his mortgage and debt, and the defendant John W. Parrott then went upon the stand himself, and sought to prove the case set up by him in his defense. It was shown that this mortgage and the Du Bois mortgage were pledged as collateral for the $4,000 note of the defendant John W. Parrott, and had, under the terms of the pledge, been sold, and bought in by the complainant. It appeared that Mr. Parrott was desirous of disputing in this suit the amount due on his note (the original debt), and the complainant's counsel offered that, if Mr. Parrott would pay the amount which a master might find to be due on his note (the original debt), the complainant would not insist upon absolute ownership of the collateral bought in by it at the auction sale. A reference was made to a master to ascertain what was so due on the original loan. Testimony as to losses claimed to have been suffered by Mr. Parrott because he was hindered in his building operations by the alleged delay of complainant in forwarding the loan was rejected because in the nature of unliquidated damages, and not admissible. This proposal and reference was at the time supposed to be favorable to the defendant Parrott. The master repurted on the original loan in accordance with the order of reference, dealing with the mortgages as still in pledge. The defendant Parrott has excepted to the report, and in argument now insists upon his right to stand upon the questions raised, as he claims, by the pleadings and evidence, and to have a decision upon his rights as there asserted.
There was no definite or formal agreement between the parties, when the reference was made, that the master's report of the amount due from Mr. Parrott on the original loan should be accepted as a settlement, and that payment thereof should be made by Mr. Parrott to the compainant, who should then deliver the collateral. I think Mr. Parrott is entitled to have the cause heard and tried on the issues joined, as he now insists shall be done, irrespective of the attempted settlement by the master's report. Considering the case in the manner in which the answering defendant now contends it must be heard, irrespective of the proposed plan, the defense to this foreclosure is based by the defendant upon the following points: 'The defendant admits in express terms in his answer that the mortgage of Sarah G. Parrott's lands in process of foreclosure in this suit was given to secure the payment of John W. Parrott's note for $1,000. He further admits that the $4,000 and Interest remains unpaid. The bond and mortgage now in suit have also come to be due. The complainant, who is the mortgagee in the mortgage, is seeking to collect the mortgage debt by this foreclosure. This suit John W. Parrott, who is the husband of the mortgagor, defends. The first ground of defense is that the complainant company, which alleges itself to have become the absolute owner of the mortgage by auction sale and purchase by itself, is not the owner of the mortgage, because, the defendant insists, there was no effectual auction sale, and because the complainant company induced him (Parrott) not to bid at the sale. Both the pleadings and the proofs show that the two mortgages had been pledged to the complainant company to secure Parrott's $4,000 note. The express terms of that note authorized the complainant company to sell the mortgages, and to become the purchaser at public sale, if it were the highest bidder. The proofs show that there was a duly-advertised sale, which the defendantParrott attended. His own evidence shows that the usual proceedings at such sales were observed, and the complainant purchased as the highest bidder. That there were few or no bidders but the complainant company did not defeat the sale. The evidence offered by the complainant and that of the defendant Parrott himself fairly shows that there was such an auction sale of the two mortgages as was required by the contract of pledge appended to the defendant Parrott's promissory note, and that the complainant company, as the highest bidder, purchased them, and became the absolute owner. The claim that the complainant company officers induced Mr. Parrott to refrain from bidding is not sustained. He swears that just previous to the sale he made them a proposition that he should give the title to the mortgages to complainant, and that the complainant should let him redeem them afterwards, and save the expense of the auction sale, and that the officers said, "Well, all we want is the money and interest on it." This was no offer of an inducement to Mr. Parrott to refrain from bidding. The complainant's officers were attending the advertised sale of the collateral because the money and interest owed by Mr. Parrott had not been paid. He also attended the sale He did not tender payment of the debt. He did offer to transfer the title to the collateral, but there is no proof that they accepted his offer; on the contrary, the fact that the sale immediately after went on, in the presence of both parties, is conclusive proof that his proposition was refused. So far as the right to foreclose the $4,000 mortgage is concerned, it is not necessary that the complainant company should have become the absolute owner of it in order to foreclose it. That company was admittedly the pledgee of the $4,000 mortgage upon Sarah G. Parrott's lands to secure the payment of John W. Parrott's promissory note of $4,000. As pledgee, the complainant has the right to foreclose the mortgage upon default. Jones, Pledges, § 659. The pledge being admitted beyond dispute, the complainant in this suit, if it failed to prove an absolute ownership by the purchase at the auction sale, might justly be allowed to amend its bill of complaint on the undisputed proofs, and proceed with its foreclosure, holding the mortgage as pledgee. The proceeds of such a sale, when made, would be applicable in satisfaction of the original debt.
The conclusion that the complainant com pany became by purchase at the auction sale the owner of the mortgage now in process of foreclosure is an end at once of the defenses sought to be offered by the answering defendant, Parrott. These were all in the nature of set-offs or counterclaims in reduction of the original loan made to him by the complainant company. These, he insists, must be considered in this foreclosure suit in reduction and satisfaction of the mortgage debt, and that he is entitled in this suit to an affirmative decree in his favor against the complainant company for a large balance of damages due him after crediting enough to satisfy the whole mortgage debt. He claims that the complainant company misapplied $304.84 of the original loan by using it to pay taxes in the wrong year. The evidence shows that he, by his signature, approved the payment of this sum. His answer in this cause in express terms admits that he owes the whole $4,000 of the principal debt of the original loan, with interest, which would be impossible if $304.84 of it had been originally misapplied. He contends that in this suit the complainant company should be charged with losses which he says he suffered in building operations in St. Paul because they did not promptly forward the original loan, or part of it. But he accepted the moneys when they were forwarded, and has ever since retained them, and his promissory note contains an absolute promise to pay, without any mention of a term that damages for delays in forwarding the funds may be offset. Such damages are necessarily unliquidated, and the court of appeals has several times decided that damages of that character must be settled, not in this court, but before a jury. Alpaugh v. Wood, 45 N. J. Eq. 156, 16 Atl. 676, and cases there cited.
The same ruling must apply to the defendant Parrott's contention that in this suit this court should hear and decide whether another foreclosure suit on the Du Bois mortgage was rightfully conducted, and should, in this suit, give him credit for alleged damages resulting to him, as he says, because of the misconduct of the complainant company in conducting that foreclosure suit. Irrespective of these objections, all of the defenses advanced by the defendant John W. Parrott are foreign to a foreclosure suit. Chancellor Green declared in Dolman v. Cook that a proceeding to foreclose a mortgage is a proceeding in rem, and that nothing may be set up by way of satisfaction of it, in whole or in part, except payment. There must either have been a direct payment of part of the debt, or an agreement that the sum proposed to be set off should be received and credited as payment. Dolman v. Cook, 14 N. J. Eq. 68, and cases there cited. Chancellor Zabriskie declared the same rule in Dudley v. Bergen, 23 N. J. Eq. 401. It may also be noted that this foreclosure is against the lands of Sarah G. Parrott. The litigated claims of John W. Parrott against the mortgagee cannot be entertained. White v. Williams, 3 N. J. Eq. 384. He admits in the most formal manner, in his answer in this cause, that he owes the $4,000 to the complainant. He has never offered to repay it, and does not now do so. He attempts to justify his failure to pay by charging the complainant with responsibility for losses which he claims it caused him. These losses must, in their nature if existent, be unliquidated damages, becausethe complainant has never agreed with him upon any factor by which they can be computed. If he desires to litigate with the complainant the matters here sought to be offered by way of counterclaims, it must be by direct suit by himself against the complainant. The complainant is entitled to a decree for the amount of the mortgage debt and the interest due thereon.