Opinion
March, 1904.
Edward F. McCormick, for plaintiff.
Cadman Peck, for defendants Charles J. Smith and others.
The general rule is that where the title to the land and the ownership of the mortgage debt become vested in the same person, the mortgage is thereby merged and extinguished. Thomas Mort. (2d ed.), 257.
It is also a well-settled rule, that when a greater and a less estate meet in the same person, equity will preserve them distinct, provided there is an express or implied intent to do so, and justice requires it. Spencer v. Ayrault, 10 N.Y. 204; Smith v. Roberts, 91 id. 475; Sheldon v. Edwards, 35 id. 279, 285.
In Clift v. White, 12 N.Y. 536, it is said in reference to this subject: "That the question is upon the intention, actual or presumed, of the person in whom the interest is united. That if it be perfectly indifferent to the party whether the charge should or should not subsist, it sinks."
The intention of Julia A. Smith, the mortgagee and grantee, is expressed in the instrument of conveyance to her of the mortgaged premises. It was therein stated that the mortgage was not to be considered as merged, but such intention was, nevertheless, qualified by the further statement that the mortgage "was to be held as protection to title." I think the "title" thus referred to meant the title as it existed at the time of the conveyance, and which was then the subject of consideration. The purpose of this provision in the deed was to protect the grantee against any liens or charges on the title which might have intervened intermediate the execution of her mortgage and the deed of conveyance to her of such mortgaged premises. It is conceded that there are no such liens.
The clause in the deed under consideration, that the mortgage was to be held as protection to title, adds nothing and is meaningless, unless it is a qualification or limitation of the general statement that the mortgage was not to be considered as merged. The plaintiff seeks to construe the entire provision as if the last clause had not been used. The entire provision must be so construed, if possible, as to give effect and meaning to each part thereof. This can only be done by limiting the provision against the merger to the protection of the title as it then existed.
We must attribute to the parties to the conveyance a fair and honest purpose. It is by no means probable that Mrs. Smith intended to hold the mortgage as a "protection" against her own subsequent acts. Suppose, for instance, that she had subsequently executed a mortgage or a deed of said premises, either with or without covenants, could it be reasonably claimed that she could have enforced this mortgage in question as against her subsequent mortgagee or grantee? In Starr v. Ellis, 6 Johns. Ch. 395, 397, Chancellor Kent, in speaking on this question, said: "A court of equity will keep an incumbrance alive, or consider it extinguished, as will best serve the purposes of justice, and the actual and just intention of the party. It must, at all events, be an innocent purpose, and injurious to no one. * * * It (the mortgage) could not be of any use, but a mischievous one, as against subsequent purchasers or incumbrances, and for such a purpose, the merger is not to be prevented." The construction contended for by the plaintiff would make the merger clause in the deed not merely a protection to title, but a weapon in the hands of the grantee as against her own subsequent acts. The plaintiff in this action takes no greater right to the mortgage in question than her testatrix had during her lifetime. And if the latter could not enforce the mortgage against those claiming under her, the plaintiff cannot enforce it against these devisees who have succeeded to the title under the will of the deceased. It may also be observed that if this action can prevail, a judgment of deficiency may also be recovered against the maker of the bond.
Moreover, there is positive indication that the testatrix did not intend that the mortgage should be enforced as against these devisees. It is stated in the brief of the learned counsel for the plaintiff, that the conveyance in question was for the sum of one dollar. The inference from this is that the equity of redemption in the premises was valueless, and that the only consideration for the conveyance was the mortgage then on the property. If the plaintiff's theory is correct that this mortgage is in force for the purpose of this action, we must ascribe to the testatrix the inconsistent and unreasonable purpose of devising merely a naked title which she intended should be cut off by such an action as this. This action will completely defeat the devise in question. The theory of an intention on her part to keep alive the mortgage is inconsistent with her last declared intention of creating a devise which would be destroyed by such mortgage, if plaintiff's theory is correct.
Complaint dismissed, with costs.