Opinion
01-07-1892
RISLEY v. PARKER et al.
Charles A. Baake, for exceptant. A. Stephany, opposed.
Petition by Emma M. Parker and Alice Ann Thompson, second mortgagees, for surplus moneys arising on a sale on foreclosure. The foreclosure proceedings were brought by Risley, the holder of the first and third mortgages, against John A. Parker and Anna M. Parker, mortgagors, and others. The defendant Anna M. Parker objected to the payment of the surplus moneys to the second mortgagees on the ground that the mortgage was fraudulent, and for a fictitious consideration. The master found in favor of petitioners. Defendant excepted.
Charles A. Baake, for exceptant.
A. Stephany, opposed.
PITNEY, V. C. The bill herein sets out three mortgages, one dated March 14, 1883, made by one Mason, the then owner of the premises, to the complainant; then a conveyance by Mason on the 19th of March, 1883, to John A. Parker and Anna M. Parker, who, as the evidence shows, were husband and wife; then a mortgage, dated March 24, 1883, from John A. Parker and Anna M. Parker to Emma M. Parker, Roxanna Parker, and Alice Ann Thompson, which last-named mortgagees are the petitioners in this proceeding; then, third, a mortgage by John A. Parker and Anna M. Parker to one Lake, and an assignment by Lake to the complainant. With regard to the second mortgage made to the petitioners herein the allegation of the bill was as follows: "But your orator, while admitting the lands mentioned in the said mortgage are intended to be and are the same premises as described in the mortgage of your orator charges that the lastmentioned mortgage is null and void, because it was executed and delivered without consideration." No answer was filed by either of the defendants, and an interlocutory decree was taken, with an order of reference to a master in the usual form. On that order of reference the mortgage of the petitioners was presented to the master, and the petitioners, or some of them, and John A. Parker and Anna M. Parker, his wife, were sworn as witnesses, and upon the evidence taken before him the master reported as follows: "And I do certify and report that I do find that there is nothing due unto the defendants Emma M. Parker, Alice A. Thompson, and Roxanna Parker upon their said mortgage, but that the same was given and executed without consideration, and for the purpose of fraud, as is alleged in the complainant's bill, and should be set aside, and for nothing holden; and I do further report that the same was given unto the defendants Emma M. Parker, Alice A. Thompson, and Roxanna Parker, children of the defendant John A. Parker, to save the defendant John A. Parker's property from the effects of a certain suit at that time pending in the supreme court of the state of New Jersey against the defendant John A. Parker and others." Upon that report a decree was made establishing the two mortgages of the complainant, and dealing with the mortgage of the petitioners in these words: "And that the mortgage of Emma M. Parker, Roxanna Parker, and Alice A. Thompson is not a lien upon the said premises." Execution was issued accordingly, and the premises brought to sale, and produced $97.80 more than the amount necessary to pay all incumbrances, which sum has been paid to the clerk of this court. The mortgagees in the second mortgage petitioned this court to have that money paid out to them on their mortgage. No answer was made to the petition. It was referred to the same master who previously reported in the cause; and, after hearing all the parties, and considering the same evidence which had been taken before him in the original reference, and further evidence taken before him on the petition, he reported in favor of paying to the petitioners the said surplus money. To this report exceptions were filed by Anna M. Parker, (wife of John A. Parker, and one of the mortgagors in the mortgage held by the petitioners,) as follows: First. That petitioners' mortgage was a mere fiction, without consideration. Second. The signature of this exceptant was obtained by fraud and misrepresentation, to cheat and defraud her. Third. That the master erred in excluding exceptant's testimony as to fraudulent character of said mortgage of petitioners, as appears by the testimony returned by the master. Fourth. The report of the master awarding the surplus to the petitioners is unjust and against the rights of this exceptant. Fifth. That the master should have awarded one-half of said surplus money to this exceptant.
In his brief, exceptant's counsel took the point that the first report of the master and the decree of this court thereon is conclusive of the petitioners' rights. The evidence of the exceptant herself, taken before the master on the first reference, was conclusive as to the fact that the disputed mortgage was made for the purpose of protecting her husband's property against a judgment which he anticipated might be rendered against him in a suit then pending. This is the exceptant's language: "On or about March 24, 1883, at the request of my husband, John A. Parker, I joined with him in making a mortgage in the sum of four hundred dollars to Emma M. Parker, Roxanna Parker, being daughters-in-law of John A. Parker, and Alice Ann Thompson, being John A. Parker's daughter. At the time I joined my husband in executing the foregoing mortgage I understood from him—also from the conveyancer, A. J. Smith—that said mortgage was executed solely and only to protect the property from any judgment that might be obtained in a suit then pending by one Shaw against my husband, John A. Parker, as constable, for sale of goods that he had made as constable against the said Shaw, and that the mortgage was created without consideration." John A. Parker, her husband, swore that "at the time of executing the $400 mortgage I named that sum because I believed lowed them at least $400; but they had never asked me for the money, nor did they ask me for the mortgage security. At the time of executing the mortgage there was a suit pending for damages against James H. Mason and myself in favorof Emeline Shaw. I did not execute the mortgage as a protection against any judgment in the above matter of suit. I did not give the reason to my wife for executing the $400 mortgage that it was to protect against the Shaw judgment especially, but at the executing of the $400 mortgage I said to my wife that it was to protect us from anything that should happen, and to hinder any one from getting judgment and selling the property away from us." At the time this testimony was taken the husband and wife were not on good terms, and that condition has continued since. The mortgage was duly recorded and delivered to the husband of one of the mortgagees, and has been under their control ever since. It is perfectly well settled that a mortgage given under such circumstances and for such purposes is perfectly valid as between the parties, and is void only as against creditors. It is also good as a pure gift as between the parties. Aller v. Aller, 40 N. J. Law, 446. The master in his first report evidently made a mistake in that respect. He should have reported the whole amount to be due upon themortgage, and should have postponed it to the third mortgage held by the complainant. The solicitor of complainant also made a mistake in introducing into his decree the clause declaring that the mortgage in question was not alien upon the premises. The question, however, is as to the effect of that report and decree, and I think upon very plain principles they ought not to be held binding upon the petitioners herein.
The clause in the bill which charges that petitioners' mortgage is null and void because it was executed and delivered without consideration must be construed, as it was construed by the master, as meaning that it was null and void as against the complainant's third mortgage. It was no business of the complainant whether or not it was valid as between the mortgagor and mortgagee, so long as it was not permitted to stand in the way of his third mortgage, and the clause in question, for present purposes, must be construed as meaning that, and nothing more. The only issue in regard to this mortgage between the complainant and any of the defendants was as to whether or not it had priority over his third mortgage, and all that complainant had any right to ask a decree for, and all that the court had any authority on the pleadings to decree, was that it did not have priority over the complainant's third mortgage. There was no issue framed or tried between John A. Parker and his wife, Anna M. Parker, on the one side, and the petitioners, as mortgagees in the Becond mortgage, on the other side. No such issue was tried, even if framed, and, if it had been, the finding of the master, so far as it relates to that issue, is contrary to evidence and law. I do not think it binding upon the petitioners upon the principle established in Munday v. Vail, 34 N. J. Law, 418. But if in its present shape it stands in the way of petitioners, it will be modified, and made to conform to the tacts and law of the case upon a motion made for that purpose, and such motion may be considered as made and granted.
Only one other exception remains to be considered, viz., that the master excluded the exceptant's testimony as to the fraudulent character of the mortgage. His report shows that Anna M. Parker appeared, with counsel, and, being sworn, was asked this question: "Will you please state the circumstances or facts that are within your knowledge concerning the execution of this $400 mortgage? (Objected to. Not admitted by the master, because already shown by the testimony and the evidence taken before him on the previous reference.)" In strictness, perhaps, the master was right in excluding all evidence of this character, not on the ground that the witness had already been sworn on the subject, but that she had filed no answer to the petition, and there was no pleading under which it could be received. However, the amount in controversy is so small that I am willing to treat the matter as if an answer had been filed, and give Mrs. Parker an opportunity to be sworn before me in open court on any motion day when I am at Camden, if her counsel think it is worth while for her to do so in the face of her evidence given on the first hearing.