Summary
In Kortright v. Cady, 21 N.Y. 343, it was held that the tender of the money due upon a mortgage at any time before foreclosure discharges the lien, though made after the law day, and not kept good.
Summary of this case from Sanford v. Savings & Loan Soc.Opinion
June Term, 1860
Joshua M. Van Cott, for the appellant.
Joseph Blunt, for the respondent.
The common law recognized two kinds of landed security, respectively known as the vivum vadium, and mortuum vadium. The vivum vadium consisted of a feoffment to the creditor and his heirs, until out of the rents and profits he had satisfied himself his debt. The creditor took actual possession of the estate, and received the rents and applied them from time to time in liquidation of the debt. When it was satisfied, the debtor might reenter and maintain ejectment, and it was said to have been called vivum vadium, because neither debt nor estate was lost. This mode of security is said not to have been very general, and it was superseded by the mortuum vadium, or mortgage, so called because on breach of condition the estate was rendered indefeasible in the mortgagee, and absolutely lost to the mortgagor. Littleton, section 332, thus describes the mortuum vadium, or mortgage: "Item: if a feoffment be made upon such condition that if the feoffer pay to the feoffee at a certain day, c., forty pounds of money, that then the feoffee may reënter, c. In this case the feoffee is called the tenant in mortgage, which is as much as to say in French, come mortgage, and in Latin, mortuum vadium; and it seemeth that the cause why it is called a mortgage is, for that it is doubtful whether the feoffer will pay at the day limited such sum or not; and if he doth not pay, then the land which is put in pledge upon condition for the payment of the money is taken from him forever, and so dead to him upon condition, c. And if he doth pay the money, then the pledge is dead as to the tenant." Upon the execution of such a mortgage, the legal estate vests in the mortgagee, subject to be defeated on performance of the condition by the mortgagor. To divest the estate of the mortgagee, it was necessary for the mortgagor to make payment at the day according to the condition of the mortgage; or if, at the appointed day, legal tender of the money was made and refused, the condition was satisfied equally as if payment had been made, and the mortgagor or his heirs might reenter. This appointed day for the payment of the money, to secure which the mortgage was given, became known in legal parlance as the law day. But a distinction was taken between a sum in the nature of a gift secured on the land, and where the security was given to secure a debt due. The former was, in the case of a tender and refusal, absolutely lost; but the latter, the debt, was regarded as still subsisting as a personal duty, and might be recovered by action at law. As if A borroweth a hundred pounds of B, and after mortgageth lands to B, upon condition for payment thereof, if A tender the money to B, and he refuseth it, A may enter into the land, and the land is freed forever of the condition; but yet the debt remaineth, and may be recovered by action of debt. But if A, without any loan, debt or duty preceding, enfeoff B of land upon condition for the payment of a hundred pounds to B, in the nature of a gratuity or gift, in that case if he tender the hundred pounds to him according to the condition, and he refuseth it, B hath no remedy therefor. (Co. Litt., 209 b.) Littleton, in section 335, says that it is to be remembered that when such tender of the money is made, and the feoffee refuse to receive it, then the feoffee hath no remedy by the common law, because it shall be accounted his own folly that he refused the money when a lawful tender of it was made to him. The same writer, in section 338, says that in all cases of condition for payment of a certain sum, in gross, touching lands or tenements, if lawful tender be once refused, he which ought to tender the money is of this quit, and fully discharged forever afterwards.
Coke, in his Commentaries, in reference to these rules, as applicable to tenders and their effect, says it is to be implied that the tender is made at the due time and place according to the condition. The reason for this is obvious, under the rules already stated, as applicable to the absolute vesting of the estate in England in the mortgagee, upon the condition broken. If tender or payment was not made at the law day, according to the condition, the estate vested absolutely in the mortgagee; and by the strict rules of the common law, all interest or right therein, of redemption, passed from the mortgagor. If the mortgage debt was afterwards paid by the mortgagor, a reconveyance of the estate by the mortgagee was necessary to vest the same in the mortgagor. By the civil law, the debtor might redeem the estate on payment of his debt, at any time before sentence passed. The doctrine of forfeiture of the common law was decidedly opposed to this principle. In the eye of equity, the absolute forfeiture of the estate, whatever might be its value, on the breach of the condition, was regarded as a flagrant injustice and hardship, although perfectly accordant with the system on which the mortgage itself was grounded. The courts of equity, therefore, stepped in to moderate the severity with which the common law followed the breach of the condition. Leaving the forfeiture to its legal consequences, they operated on the conscience of the mortgagee, and acting in personam, and not in rem, they declared it unreasonable that he should retain for his own benefit what was intended as a mere pledge; and they adjudged that the breach of the condition was in the nature of a penalty which ought to be relieved against, and that the mortgagor had an equity to redeem on payment of principal and interest and costs, notwithstanding the forfeiture at law. Thence grew up the system in England of filing bills in equity to redeem, and in this State the filing of bills in equity by the mortgagee to foreclose and cut off this right of redemption in the mortgagor.
The rule in England was therefore ancient and well settled, that payment on the law day extinguished the interest of the mortgagee in the lands mortgaged; and tender and refusal at the same time produced the same result. But payment after, and acceptance, did not revest the estate in the mortgagor without a reconveyance from the mortgagee; and a tender and refusal would, of course, not produce that result. The mortgagor's only remedy was to avail himself of the benefit of the rule in equity, and file his bill to redeem. The only question presented for our consideration in this case is, whether a tender of the sum due on a mortgage, after the day appointed by it for its payment, extinguishes the lien of the mortgage on the land covered by it. We have seen that by the common law such tender and refusal upon the law day extinguishes the lien of the mortgage, though the debt remains. In this State, the law is well settled that a mortgage is a mere security or pledge of the land covered by it for the money borrowed or owing, and referred to in it, and that the mortgagor remains the owner of the estate mortgaged, and may maintain trespass as against even the mortgagee. ( Runyan v. Mersereau, 11 John., 534.) The debt, in the eye of the law, thus becomes the principal, and the landed security merely appurtenant and secondary; and the rights of the parties must be governed by those principles of law applicable to analogous cases. Acceptance of payment of the amount due on a mortgage, at any time before foreclosure, has always been held to discharge the incumbrance on the land; as acceptance of the amount for which personal property was held discharged it from the pledge. Tender and refusal are equivalent to performance. ( Kemble v. Wallis, 10 Wend., 374.) This is to be taken with the reservation already stated, that the debt or duty remained, and that the rejected tender, at or after the stipulated time of payment or performance, has the effect only to discharge the party thus making it from all the contingent, consequential or accessary responsibilities and incidents of his contract, but without releasing his prior debt. ( Coit v. Houston, 3 John. Ca., 243.) In Hunter v. LeConte (6 Cow., 728), the Supreme Court held that a tender of rent takes away the right to distrain till a subsequent demand and refusal; but it does not take away the right to sue for the rent as for a debt. It only saves the interest and costs. And that a tender of rent makes a distress wrongful, though the tender be not made till after the rent day. It will readily be perceived that the principle of this case bears directly upon the question now under consideration; and it is not perceived, if it be sound, why a tender and refusal of the amount due on a mortgage does not extinguish its lien, equally with a tender of rent and refusal, which, as we have seen, extinguishes the right of distress. But a still closer analogy to the present question is presented by the law of tender, as to the lien on goods pledged. Lord Ch. J. HOLT, in his opinion in the celebrated case of Coggs v. Bernard (2 Lord Ray., 909), speaking of the fourth class of bailments, says: "If the money for which the goods are pawned be tendered to the pawnee before they are lost, then the pawnee shall be answerable for them, because the pawnee, by detaining them after the tender of the money, is a wrongdoer, and it is a wrongful detainer of the goods, and the special property of the pawnee is determined." So also COMYN: "By tender of the money, the property in the goods is determined, and the pledge ought to be returned. But if the pawnee refuse to restore the pledge upon tender, trover lies against him." (Comyn's Dig., tit. Mortg., A, and cases there cited.) Holding, as we do, therefore, in this State, that the land mortgaged is but a security for the debt due to the mortgagee, in other words, a pledge to him to secure its payment, it is difficult to see why the principles enunciated and well settled in reference to the pledge of personal property do not apply, and why a tender and refusal at any time of the full amount of the debt due does not extinguish the lien of the mortgagee, or pledgee, in the one case as it clearly does in the other.
But I think we are not left at liberty to settle this case on principle, but are to regard it as authoritatively disposed of by the courts of this State. A very careful examination of the decisions has brought my mind to the conviction, contrary to my first impression, that we should regard the question now presented as not open to further discussion. I shall recur to the cases in which this question has arisen; and I think an examination of them will lead to the same conclusions to which I have arrived.
The first in chronological order is that of Jackson v. Crafts (18 Johns., 110), decided in the Supreme Court in 1820. In that case, the defendant, the mortgagor, while the advertisement of the sale of the mortgaged premises was pending, tendered to the plaintiff, an assignee of a bond and mortgage on premises occupied and owned by the defendant, the amount due on the mortgage and the expense of the advertisement of sale. The tender was made to the attorney for the plaintiff, who had in his hands the bond and mortgage for foreclosure. The money was refused and the sale took place, and the plaintiff became the purchaser and brought ejectment for the premises. The case turned upon the effect of the tender, made, as it was conceded, after the law day. The court held that the tender and refusal, although made after the law day, extinguished the lien of the mortgage, and that the plaintiff could not recover. This case has been criticised and its authority attempted to be weakened, because, in the citations from Bacon and Coke, the distinction was not noticed that they referred to and spoke of the effect of tenders at the law day. But an examination of the context of the opinion shows, I think, that the learned judge who delivered it was not unmindful of this fact, and intended to hold that, in the light mortgages were regarded in this State, it was quite unimportant whether the tender was made at the law day or after. The court, in that case, certainly held that a tender after the law day extinguished the lien of the mortgage.
In Merritt v. Lambert (7 Paige, 344), decided by Chancellor WALWORTH in 1838, he held that a tender of the amount due on a mortgage after the law day did not extinguish the lien of the mortgage. He reviews the decision of the Supreme Court in Jackson v. Crafts ( supra), and holds that it is not sound law.
The same question arose again in the Supreme Court, in the case of Edwards v. Farmers' Fire Insurance and Loan Company (21 Wend., 467). It is to be observed that this case and that of Merritt v. Lambert originated from the same transaction. Edwards the mortgagor, after the law day had passed, tendered to the defendants, the mortgagees, the full amount of the mortgage and the costs and expenses of a foreclosure and sale upon which the defendants had become the purchasers. It was contended on the part of the plaintiff, and so held by the court, that the defendants, by the sale at which they became purchasers, on the foreclosure of a mortgage to them, stood in the same position they did originally as mortgagees, and had no higher or other rights or equities. Other questions arose in the case; but the main one discussed, and upon which the Supreme Court passed, was, whether the tender and refusal after the law day extinguished the lien of the mortgage. The opinion of the court was delivered by COWEN, J., who exhausted the law on the subject. His reasons and the authorities there cited seem to me fully to sustain the conclusion to which he arrived, that in this State a tender and refusal of the amount due, at any time after the mortgage debt became due, extinguished the lien of the mortgage. Chief Justice NELSON concurred in this result — Justice BRONSON dissenting. The case was taken to the Court for the Correction of Errors, and the judgment of the Supreme Court was affirmed. (26 Wend., 541.) Two opinions were delivered in that court: one by Chancellor WALWORTH, in favor of reversing the judgment of the Supreme Court, on two grounds — first, that the agreement for sale made by the company with the Merritts, mentioned in the pleadings, was a valid sale by the defendants of the premises within the meaning of their charter, and that consequently they were no longer the owners of the mortgaged premises; second, that the tender of the mortgage money after there had been a default to pay it at the day cannot have the legal effect of depriving the mortgagee of his security, if for any cause he does not think proper then to receive the amount so tendered. The Chancellor enlarges upon the second ground, and restates the reasons which he had given for his opinion in Merritt v. Lambert ( supra). He says: "It now remains for the other members of this court to decide whether the Vice-Chancellor and Mr. Justice BRONSON and myself, on the one side, or the other two Justices of the Supreme Court and the Assistant Vice-Chancellor, on the other, have taken the correct view of the important legal questions involved in the case." It does not appear from the reported cases whether the Vice-Chancellor and Mr. Justice BRONSON concurred with the Chancellor in his views on the second point above referred to, and which, it is evident, he regarded as the controlling one in the case. This question is the main one considered by Senator VERPLANCK, who delivered the opinion of the court for affirmance. He discusses this question with his usual learning and research, and arrives at the clear conclusion that a tender of the amount due on a mortgage after the law day, extinguishes the lien of the mortgage. It does not appear distinctly that all the judges voting for affirmance concurred with him upon this ground; but I think the case, as stated by the reporter, shows that they must have done so. If we should adhere to the rule laid down by this court in James v. Patten (2 Seld., 9), it must be held that the judges concurring in the opinion delivered by Senator VERPLANCK are to be regarded as agreeing with him upon all the points discussed; but, irrespective of that rule, we think it quite clear that the case was decided on that point.
The same question was again presented in the Supreme Court in Arnot v. Post (6 Hill, 65). The court was then held by the same judges as sat in Edwards v. Farmers' Fire Insurance and Loan Company ( supra). BRONSON, J., delivered the opinion of the court in this case, and says: "It has always been held that a tender at the day discharged the lien of the mortgage; and although a clear departure from the old law, it is fully settled in this State that a tender after the day will have the same effect. (Citing Jackson v. Crafts, and Edwards v. Farmers' Loan Company, supra.) I know that in the case of Edwards v. Farmers' Loan Company the law day was extended by the charter of the company; but the broad principle was asserted that a tender at any time before foreclosure, although the law day has passed, will have the effect of discharging the lien of the mortgage." The judgment in this case was reversed in the Court for the Correction of Errors, by a vote of eleven to nine, (2 Denio, 344.) Senator HARD, who delivered the first opinion for reversal, says: "It is undoubtedly a well settled principle, that a tender at the day of the amount secured by a mortgage upon lands extinguishes the lien. It has been decided in this State, although the principle is a departure from the ancient law, that a tender after the day and before foreclosure discharges the lien." But he adds, that, "where the mortgage has been foreclosed, there is no authority for saying that a tender to the purchaser under the foreclosure will extinguish his title." He then discusses the cases of Jackson v. Crafts, and Edwards v. Farmers' Loan Company, and holds that they decide nothing in conflict with this proposition. Upon this ground he was for reversal of the judgment of the Supreme Court; and he certainly advances nothing in conflict with what he states had been decided in this State, to wit, that a tender after the day and before foreclosure discharges the lien. An examination of the opinion delivered by Senator PORTER will show that his vote for reversal proceeded on the ground that the purchaser at the mortgage sale could not be divested of the title he acquired at it, by a tender of the amount due on the mortgage by the mortgagor. I do not understand this Senator as advancing any idea in conflict with the rule of decision as stated by Senator HARD.
It is true that Senator JOHNSON, in his opinion, proceeds to show that the cases of Jackson v. Crafts and Edwards v. Farmers' Loan and Trust Company fail to establish the rule that an unaccepted tender to the creditor by one entitled to redeem a mortgage, made after the law day, will extinguish the lien of the mortgage. After discussing these cases, he says: "I think, therefore, it may be safely assumed that there is no binding authority requiring us to hold that a mere tender after the day of payment has passed, will have the effect of discharging the lien." He then discussed the effect of the sale upon the right of redemption; and upon both grounds was in favor of reversing the judgment of the Supreme Court. Senator SEDGWICK concurred with Senator JOHNSON substantially, and Senators BOCKEE and CLARK delivered verbal opinions in favor of reversing, on the ground that a tender after the law day did not extinguish the lien. TALCOTT, Senator, who delivered an opinion for affirmance, discusses both grounds; and, in reference to the tender extinguishing the lien of the mortgage, says, after citing the cases of Jackson v. Crafts and Edwards v. Farmers' Loan Company, and that of Burnett v. Denniston (5 John. Ch., 35): "These cases hold that a tender will discharge the lien of the mortgage, though not made until after the law day; and that doctrine is in accordance with the theory of mortgages now well established by a series of recent decisions." GARDINER, President, delivered an opinion in favor of affirmance, discussing only the effect of the sale; and Senator LESTER also delivered an opinion for affirmance, on what grounds it is not stated. Assuming that the nine members who voted for affirmance concurred in the opinion of Senator TALCOTT, and that the five Senators who voted for reversal, and expressed no opinion, concurred in the views expressed by Senators JOHNSON, SEDGWICK, BOCKEE and CLARK, we then have eleven members of the court affirming it to be the well settled rule in this State that a tender after the law day will extinguish the lien of the mortgage.
This brief review of the course of decisions in this State, it is submitted, shows that, in truth, the rule has prevailed here, and been well recognized, ever since the decision of Jackson and Crafts in 1820; and that the doubts thrown upon that decision by the Chancellor, in Merritt v. Lambert, have never been adopted by any other court in this State, but were distinctly repudiated and overruled by the Court of Errors in Edwards v. Farmers' Loan and Trust Company, and by the Supreme Court subsequently in Arnot v. Post; and this rule was again affirmed in that case by the Court of Errors, in 1845. We are bound, therefore, I think, to regard this as the settled law of this State, and are not at liberty to return to the old rule of the common law, which has been shown to be wholly inapplicable to the light in which mortgages are regarded in this State.
It is not perceived how the mortgagee is to be embarrassed, or his security impaired, by the adoption of this rule, as seems to be supposed by the Chancellor in Edwards v. Farmers' Loan Company (26 Wend., 552). If the mortgagor does not tender the full amount due, the lien of the mortgage is not extinguished. The mortgagee runs no risk in accepting the tender. If it is the full amount due, his mortgage lien is extinguished and his debt is paid. This is all he has a right to demand or expect, and all he can in any contingency obtain. His acceptance of the money tendered, if inadequate and less than the amount actually due, only extinguishes the lien pro tanto, and the mortgage remains intact for the residue. A much greater hardship might be imposed, and serious injury be produced, by holding that the mortgagor cannot extinguish the lien of the mortgage by a tender of the full amount due. It has never occurred to any judge to argue that a pawnee was in great peril, and in danger of losing the benefit of his pawn, by the enforcement of the well settled rule, that a tender of the amount of the loan and interest, and refusal, extinguished the lien on the pawn. Littleton well says, that it shall be accounted a man's own folly that he refused the money when a lawful tender of it was made to him. The only effect upon the rights of the mortgagee is, that the land or thing pledged is released from the lien, but the debt remaineth.
The only remaining question to be considered is, whether the tender in this case was well made, it not being followed with the allegation of touts temps prist, and the money not having been brought into court. It will be seen, by reference to the authorities, that these are not required when the tender has only the effect of extinguishing the lien, and does not operate to discharge the debt or sum owing. In the latter case, the averment of touts temps prist, followed up by bringing the money into court, is essential to a good plea of tender. ( Hume v. Peploe, 8 East., 168; Giles v. Hartis, 1 Lord Ray., 254.) But if a man make a bond for the payment of a loan of money, and afterwards make a defeasance for the payment of a lesser sum at a day, if the obligor tender the lesser sum at the day, and the obligee refuse it, he shall never have any remedy by law to recover it, because it is no parcel of the sum contained in the obligation. And in this case, in pleading of the tender and refusal, the party shall not be driven to plead that he is yet ready to pay the same, or to render it in court. (Co. Lit., note to § 335.) The same principle was held by the Supreme Court of this State in Hunter v. Le Conte (6 Cow., 728), and cases there cited.
No question in reference to the taxes arises in this cause, upon the facts found by the referee. The referee found in favor of the appellants upon the question relating to them; and to his finding in that respect, the plaintiff took no exception. It is not, therefore, to be reviewed in this court.
The judgment appealed from should be reversed, and a new trial ordered, with costs to abide the event.
After the suit was commenced to foreclose the mortgage, Cady, who had become the owner of the land, tendered the amount due, with the costs, which being refused, he set up the tender in his answer, in bar of the further maintenance of the action. The only question in the case is, whether a tender, made after a mortgage is due, by the owner of the lands mortgaged, discharges the lien.
Forty years ago, this question was fully determined by the Supreme Court of this State, in the case of Jackson v. Crafts (18 John., 110). Mr. Justice WOODWORTH, in delivering the opinion of the court, observed: "From the nature of the interest the mortgagee has, there is no necessity of a reconveyance by him to the mortgagor after the mortgage has been paid. When that is done, the mortgagee has no title remaining in him to convey, and consequently, by our laws, on payment of the money, he is not deemed a trustee, holding the legal estate for the benefit of the mortgagor. The only question, then, is, whether tender and refusal are equivalent to payment." Having thus truly stated the relation between mortgagor and mortgagee, according to the law as it was then and has been ever since well settled in this State, he cited some of the early English authorities, holding that a tender of the money due discharged the land from the lien.
Nearly twenty years after this decision was made, the same question again arose concurrently, or nearly so, both in the Court of Chancery and the Supreme Court. The case in each of those courts originated in the same transaction, which was this: In 1823, one Edwards mortgaged land in Buffalo to the Farmers' Fire Insurance and Loan Company in New York. The company foreclosed that mortgage in Chancery in 1833, and at the sale under the foreclosure, Tibbetts, their president, purchased a portion of the lands for the benefit of the company, so that the company was deemed the real purchaser. In 1835 they entered into a written contract with W.T. and Isaac Merritt, whereby they agreed to sell to them the land so purchased, and the Merritts paid a part of the price agreed on. By a clause in the charter of the company, it was declared that when the corporation became the purchaser of any land mortgaged to them, the mortgagor should have the right of redemption of such lands on payment of principal, interest and costs, so long as the same should remain in the hands of the corporation unsold. After the company made the said contract of sale to the Merritts, Edwards, the mortgagor, claiming that the lands in question still remained in the hands of the company unsold, tendered to them the amount of the mortgage debt with interest and costs, and demanded a release or reconveyance of the premises. The tender and release being refused, he brought ejectment against the company in the Supreme Court. ( Edwards v. The Farmers' Fire Insurance and Loan Company, 21 Wend., 467.) The controversy in Chancery was upon a bill filed by the Merritts to enforce the specific performance of a contract with one Lambert for the exchange of the same lands for other real estate in the city of New York; and the question was, whether they could make title to the said lands in Buffalo. Before filing that bill, the heirs of Tibbetts had conveyed to the Merritts in pursuance of the contract of the company; but that conveyance was given after the above mentioned tender. ( Merritt v. Lambert, 7 Paige, 344.) The question of title in both of these controversies depended on two considerations: First, did the lands remain in the hands of the company unsold, notwithstanding the contract to sell them to the Merritts? Second, if so, then did the tender by the mortgagor discharge the lien of the mortgage? — it being, of course, conceded that, under the said clause in the charter, the right to pay off or redeem the mortgage existed, notwithstanding the foreclosure and purchase by the company. The Chancellor was of opinion that the contract with the Merritts was in effect a sale to them, which cut off all the rights of the mortgagor; in other words, that, by reason of that sale having been made, the saving clause in the charter had no effect. He was also of opinion that if the right to redeem was still left in the mortgagor, a mere tender unaccepted did not discharge the lien.
In giving his views upon the last mentioned question, the Chancellor criticised the opinion of Judge WOODWORTH in Jackson v. Crafts ( supra), for the reason that the English authorities which he referred to related to a tender on the day when the mortgage debt became due. (Bac. Abr., tit. Tender, F.; Co. Lit., 209 b, § 338; 20 Viner, tit. Tender, N., § 4.) On this criticism, I shall make one or two observations. By the ancient common law, a mortgage was a grant of land defeasible on the condition subsequent of paying the money at the exact time specified. (1 Powell on Mortgages, 4.) On failure to perform that condition, the grant was absolute, and neither tender nor payment made afterwards could have the effect to revest the title. The specified time of payment was called the law day, because after default the legal rights of the mortgagor were gone. The estate became vested in the mortgagee absolutely, because the original grant was freed from the condition. "For these reasons," the Chancellor himself remarked, "it is, that the mortgagor, or his assigns, or subsequent incumbrancers upon the mortgaged premises, are driven to a bill to redeem, where the mortgagee refuses to receive what is equitably due to him. But this could not be necessary," he added, "if a mere tender of the amount due after the mortgage has become forfeited would have the legal effect of discharging the mortgaged premises from the lien of the mortgage." It is a self-evident proposition, which the Chancellor need not have undertaken to prove, that when the law was that even payment after the law day would not discharge the mortgage, a mere tender could not have such an effect. He was probably quite correct in saying that the English authorities cited by Judge WOODWORTH referred to tender at the day, because those authorities were of a date when even payment after the day did not divest the estate or interest of the mortgagee. But Judge WOODWORTH and the eminent men who sat with him on the bench of the Supreme Court considered, what the learned Chancellor seems to have failed to notice, the fundamental change which the law of mortgage had undergone long before the decision in Jackson v. Crafts was pronounced. In this State, a mortgage had always been regarded as a mere security or pledge for the debt; and the rule had always been, that payment at any time discharged the lien, so that no reconveyance of the estate was necessary. It seems to me, therefore, that the authorities cited by the Supreme Court, on the effect of tender, were extremely pertinent to the question, because they showed very conclusively that a tender at the law day had the same effect on the mortgage as a payment on that day. Underlying this particular proposition, of course, was the more general doctrine that when a certain effect must be given to a payment, a tender will have a like effect. This was what the Supreme Court undoubtedly meant, and the authorities cited simply showed the application of the principle to the law of mortgage. The principle itself, or its application, was not questioned by the Chancellor; but he did not consider, so far as appears, that the rule had become entirely settled, giving to a payment after the day, and on the day, precisely the same consequences. I think, therefore, with great respect for a jurist so learned and accurate, that he differed from the Supreme Court, and criticised its opinion, without due reflection upon the real ground of the decision.
I turn now to the controversy which arose concurrently in the Supreme Court, and directly presented the question for the second time in that court. ( Edwards v. The Farmers' Fire Insurance and Loan Company, supra.) At the trial, the Circuit Judge had ruled in favor of Edwards, the mortgagor, upon both the points above stated. That is to say, he held that, notwithstanding the contract of sale to the Merritts, the lands in question still remained in the hands of the company unsold, and that the tender after the law day extinguished the lien of the mortgage; the foreclosure itself having no contrary effect, according to the express provision of the charter. The plaintiff had a verdict accordingly. A new trial was moved for in the Supreme Court, and denied, — the opinion of the court being delivered by Mr. Justice COWEN, who examined both these questions, and especially the one now presented to us, at great length and with great ability. In the course of the discussion he also spoke of the provision in the charter as an extension of the law day; but to that consideration I think only small importance should be attached, for the charter only extended the " right of redemption," in other words, the right to pay off the mortgage, leaving the effect of an unaccepted tender to depend, as it did before the foreclosure, upon general principles of law. If the concurrence of Chief Justice NELSON had been placed on this special and narrow ground, undoubtedly he would have so stated. Mr. Justice BRONSON dissented from the conclusion; but whether on the ground that the executory sale to the Merritts had cut off all the rights of the mortgagor, or on the ground that a mere tender does not remove the lien of a mortgage, does not appear.
After a decision so authoritative as that of Jackson v. Crafts, and the lapse of nearly twenty years, there being in the intermediate time at least two distinct recognitions of the doctrine in the Supreme Court (5 Wend., 617; 11 Id., 538), this question might well have been regarded as at rest. It sprang, however, into a new existence under the opinion of the Chancellor; and although the Supreme Court, with a new bench of judges, reaffirmed its position after a most elaborate and searching examination, the subject was perhaps a suitable one for final adjudication in the tribunal of last resort. The action of ejectment was accordingly carried to the Court for the Correction of Errors, which affirmed the judgment of the Supreme Court. ( Farmers' Fire Insurance and Loan Company v. Edwards, 26 Wend., 541.) The cause was most fully argued by some of the ablest gentlemen at the bar, and the decision of the court was pronounced beyond all possibility of cavil on the very point now in controversy. The Chancellor, who was a member of the court, and could and did take part in the decision, was for reversal on two grounds, which he stated: 1. That the written contract to sell the premises to the Merritts was a sale within the meaning of the saving clause in the charter of the company. After that contract was made, and a part of the purchase money paid, he thought the lands no longer remained in the hands of the company unsold, so as to authorize the mortgagor to redeem. 2. On the ground that a tender of the mortgage money after default in payment at the day, could not in any case have the effect to extinguish the lien. With the Chancellor concurred seven of the Senators. Senator VERPLANCK delivered an opinion in favor of affirmance, discussing on the other side the same questions and no others. He made no attempt to sustain the decision on the ground that the law day of the mortgage was extended by the charter, in any sense different from a mere continuation of the right to redeem or pay off the debt after the original default and after the foreclosure and sale. No member of the court, on either side of the general question, so much as mentioned that ground of decision; and most manifestly the right to redeem given by the charter, notwithstanding a foreclosure and purchase by the company, could not have, and was not designed to have, the effect of enlarging the contract in respect to the specified time of paying the debt. With Mr. VERPLANCK concurred the President of the Senate and a majority of the Senators. We are bound to say, that the judgment was pronounced on the two propositions discussed in the respective opinions, and it necessarily affirmed both of those propositions. There is no other conceivable explanation to the judgment, unless we say that a judicial foreclosure and sale created a new law day of indefinite continuance, after the one appointed in the contract had long since passed; and this we cannot say, because such a position was in itself wholly untenable, and was not even alluded to by any member of the court. No one who will read the case with a little attention, can fail to be satisfied that it was a decision most deliberately pronounced upon the very question now to be determined.
Thus far it would seem that no legal proposition was ever more firmly settled by a course of adjudication, than the one which this case presents. It is somewhat extraordinary, therefore, that there is a further history of the question. In Arnot v. Post (6 Hill, 65), the action was ejectment to recover lands which had been mortgaged by Vial to Winans. The plaintiff's title was under a sale upon a judgment recovered against the mortgagor, soon after the giving of the mortgage. The defendant was in possession, and his title was under a sale upon the foreclosure of the mortgage by advertisement according to the Revised Statutes (2 R.S., 546, § 8), which saved the rights of judgment creditors and of other mortgagees from the effect of such sales. The sale on the judgment took place several years after the foreclosure and sale under the mortgage. Arnot, the plaintiff, was the purchaser, and, claiming that his rights were unaffected by the foreclosure, he tendered the amount due on the mortgage with interest and costs, which being refused, he then brought the ejectment. The questions were these: 1. Whether the foreclosure, according to the true interpretation of the statute, cut off the plaintiff entirely, so that he had no rights either at law or in equity. 2. If not, then whether the judgment creditor could sell on his execution so that the purchaser could, in that manner, acquire the title subject to the mortgage, or whether he must go into equity for relief. 3. These points being in his favor, then the only further inquiry was, whether the tender discharged the mortgage. To entitle him to recover in that action, it was necessary that each of these points should be determined in his favor; and they were so determined. The opinion was given by Judge BRONSON. Without reexamining the question on the effect of the tender, he very properly said that the law was fully settled in this State by the series of adjudications which I have mentioned. The case was carried to the Court of Errors, where the judgment was reversed ( Post v. Arnot, 2 Denio, 344); and the material inquiry now is, whether that decision reversed the rule on the point now under consideration, or unsettled the law which had been so well established. A little attention to the case will show that it did not. The reversal was by a vote of eleven to nine; so that the change of a single vote would have produced a different result. On the argument of the case, the three points above mentioned were urged on behalf of the plaintiff in error. Six of the Senators delivered written or oral opinions in favor of reversal, of whom only two, who did not express their views in writing, placed that conclusion on the single ground that the tender did not discharge the mortgage. The Senator (Mr. PORTER), who delivered the leading opinion in the case, avoided that ground altogether. The other three of the six were for reversal upon that and the other points in the case. The case does not disclose the views of the five members who silently voted for reversal. We have, therefore, no evidence that more than five members of the court out of twenty — the number present and voting — were of opinion that a tender of the money due upon a mortgage, whether made at the time or after it is due, does not extinguish the lien. It is a perfectly just commentary upon the case to say, that it settled no legal proposition whatever, and much less must it be received as unsettling a rule which had become firmly fixed in the jurisprudence of this State.
Such being, as I think, the clear result of the authorities, a renewed discussion of the question may seem to be unnecessary. I cannot help saying, however, that a decision by this court in opposition to the rule laid down in the cases referred to, would introduce into the law of mortgage an inconsistency too plain to escape observation. In the early history of that law, the courts of equity, departing from the letter of the contract, but adhering to the intention of the parties, adopted the just and liberal doctrine that a mortgage was but a pledge or security, always redeemable until foreclosure. The courts of law followed in the same direction. As Lord REDESDALE observed (Mitf., 428): "The distinction between law and equity is never in any country a permanent distinction. Law and equity are in continual progression, and the former is constantly gaining upon the latter. A great part of what is now strict law was formerly considered as equity, and the equitable decisions of this age will unavoidably be ranked under the strict law of the next." Such, preeminently, has been the course of jurisprudence on this subject. The doctrines originating in the courts of equity, respecting the rights of mortgagor and mortgagee, have been incorporated into the code of the common law, so that there is now no difference between the two systems. This has been true in substance for nearly a century past. In Martin v. Mowlin (2 Burr., 978), decided by the English King's Bench in 1760, it was held that whatever words in a will would carry the money due upon a mortgage would carry the interest in the land. Lord MANSFIELD said: "A mortgage is a charge upon the land, and whatever would give the money would carry the estate in the land along with it. The estate in the land is the same thing as the money due upon it. It will be liable to debts; it will go to the executor; it will pass by a will not made and executed with the solemnities required by the statute of frauds. The assignment of the debt, or forgiving it, will draw the land after it as a consequence; nay, it would do it though the debt were forgiven only by parol." So, in The King v. St. Michaels (Doug., 632), it was said by the same judge, that "a mortgagor in possession gains a settlement, because the mortgagee, notwithstanding the form, has but a chattel, and the mortgage is only a security." To the same effect is The King v. Edington (1 East., 288), and such is the uniform tenor of the English authorities. (See 6 Conn., 159.)
In this State, the rules of law and equity in regard to mortgages have never differed in any degree; it being the doctrine of both systems that a mortgage is but a personal interest merely. This proposition, in its full length and breadth, was determined in Runyan v. Mersereau (11 Johns., 534), where the question arose in the most direct manner, whether the freehold was in the mortgagor or mortgagee. The plaintiff, deriving title under the mortgagor, sued in trespass for cutting timber; the defendant justifying under a license from the mortgagee. It was held that the action was maintainable; the decision being placed explicitly on the ground that the former was the real owner of the land, while the latter had a chattel interest only. So it has been held in repeated decisions, that the mortgagee cannot, in any way, convey, devise, mortgage or incumber the land, while the mortgagor can do all these things; that judgments against a mortgagee, which are a lien on all legal estates, do not affect his interest in the lands mortgaged; that such an interest does not descend to heirs, but goes to the personal representative as a chose in action; that it is not subject to dower or curtesy; that it passes by a parol transfer, and by any transfer of the debt; and, finally, that it is extinguished by payment, or by whatever extinguishes the debt. (3 Johns. Cas., 329; 1 J.R., 590; 4 Id., 42; 7 Id., 278; 15 Id., 319; 6 Id., 290; 2 Paige, 68, 586; 5 Wend., 603; 2 Barb. Ch., 119.)
But it has been said that the mortgagee could maintain ejectment against the mortgagor, until our Revised Statutes abolished that remedy in such a case, and that even since those statutes, the mortgagee, being in possession, may retain it until the debt is paid. All this is true; but it presents no anomaly or inconsistency in the law. The mortgagee's right to bring ejectment, or, being in possession, to defend himself against an ejectment by the mortgagor, is but a right to recover or to retain the possession of the pledge for the purpose of paying the debt. ( 6 Conn., 163.) Such a right is but the incident of the debt, and has no relation to a title or estate in the lands. Any contract for the possession of lands, however transient or limited, will carry the right to recover that possession; and such was deemed to be the nature and construction of a mortgage, it being considered that the parties intended the possession of the thing hypothecated should go with the contract. Ejectment was not, in fact, a real action at the common law. That remedy, in its origin, was only to recover possession according to some temporary right; and it was only by the use of fictions that the title was at length allowed to be brought into controversy. (3 Bl., 199, 200.) When the legislature, by express enactment, denied this remedy to mortgagees, they undoubtedly supposed they had swept away the only remaining vestige of the ancient rule of the common law which regarded a mortgage as a conveyance of the freehold; yet I see nothing inconsistent or anomalous in allowing the possession, once acquired for the purpose of satisfying the mortgage debt, to be retained until that purpose is accomplished. When that purpose is attained, the possessory right instantly ceases, and the title is, as before, in the mortgagor, without a reconveyance. The notion that a mortgagee's possession, whether before or after default, enlarges his estate, or in any respect changes the simple relation of debtor and creditor between him and his mortgagee, rests upon no foundation. We may call it a just and lawful possession, like the possession of any other pledge; but when its object is accomplished, it is neither just nor lawful for an instant longer.
There are terms of the ancient law which have come down to us, having long survived the principles of which they were the appropriate expression. Thus the words "law day" once, and very expressively, marked the time when all legal rights were lost and gone, by the mortgagor's default. There is now no such time until foreclosure by a judicial sentence or sale under a power. But the term is still in use, serving no other purpose than to engender confusion and uncertainty in minds which derive their conceptions from words rather than things. So we have the terms, "redemption" and "equity of redemption," which belonged to a system of law that gave the legal estate, defeasibly before default and absolutely afterwards, to the mortgagee, and which, while that system prevailed, were descriptive of the mortgagor's right to go into equity, on the condition of paying his debt, to redeem a forfeited estate and demand a reconveyance. These descriptive words yet survive, and are in use, although the ideas they once represented have long since become obsolete. Even the word "forfeiture," still so often used, is no longer, in reference to this subject, the expression of any principle, as it once was. There is now no forfeiture of a mortgaged estate. The mortgagor's rights may be foreclosed by a sentence in the courts, or by a sale had in the manner prescribed by the statute law, if he has himself, in the contract, given authority thus to sell; but, until foreclosure, his estate, the day after a default, is exactly what it was the day before. Controversies like the present would cease to arise, if the mere terms of the law were no longer confounded with its principles.
The proposition, that a tender of the money due on a mortgage, made at any time before a foreclosure, discharges the lien, is the logical result of premises which are admitted to be true. These are, that the mortgagor has the same right after as before a default to pay his debt, and so clear his estate from the incumbrance; and that payment being actually made, the lien thereby becomes extinct. We have, then, only to apply an admitted principle in the law of tender, which is, that tender is equivalent to payment as to all things which are incidental and accessorial to the debt. The creditor, by refusing to accept, does not forfeit his right to the very thing tendered, but he does lose all collateral benefits or securities. (3 Johns. Cas., 243; 12 J.R., 274; 6 Wend., 22; 6 Cow., 728; Coggs v. Bernard, 2 Lord Ray. R., 916.) Thus, after the tender of a money debt, followed by payment into court, interest and costs cannot be recovered. The instantaneous effect is to discharge any collateral lien, as a pledge of goods or the right of distress. It is not denied that the same principle applies to a mortgage, if the tender be made at the very time when the money is due. If the creditor refuses, he justly loses his security. It is impossible to hold otherwise although the tender be made afterwards, unless we also say that the mortgage, which was before a mere security, becomes a freehold estate by reason of the default. That this is not true, has been sufficiently shown.
It is said that mortgagees will be put to great inconvenience if at any period, however distant from the time of maturity, they must know the amount of the debt and accept a tender on peril of losing their security. The force of this argument is not perceived. As a tender must be unqualified by any conditions, there can never be any good reason for not accepting the sum offered, whether it be offered when it is due or afterwards. By accepting the tender, the creditor loses nothing and incurs no hazard. If the sum be insufficient, the security remains. It is only by refusing, that any inconvenience can possibly arise. But, whatever may be the consequences of refusal, the creditor may justly charge them to his own folly.
The judgment of the Supreme Court must be reversed, and a new trial granted.
SELDEN, CLERKE, WRIGHT, BACON, and DENIO, Js., concurred; the latter putting his concurrence on the ground that the question was so far determined by authority in this State, that it would now be indiscreet to reexamine it in the light of reason and the analogies of the law.
The only question involved in the case is, whether the tender made by the defendant Cady, under the circumstances, was effectual to extricate the premises in question from the lien created by the mortgage of Blunt to Miller. This tender was made after the day provided in the bond and mortgage for the payment of the money, which is called the law day. If the sum tendered was sufficient in amount, and was made to the proper person, the question is reduced to the single point whether the lien of a mortgage is, ipso facto, discharged by a tender of the amount due made after the law day; because, if it is, there is no necessity, in an answer setting it up, of the allegation of tout temps prist, or of any evidence to show that the tender has been kept good, neither of which is contained in the present case; but the defendant relies solely upon the fact of a tender and refusal as equivalent to payment, for the purpose of extinguishing the lien of the mortgage.
If a tender has the effect in any case to release the lien, it produces that effect the moment it is made, whether accepted or refused. If accepted, it is a payment; if refused, it is the folly of the holder of the mortgage, and the lien is gone and cannot be restored by his subsequent change of mind and offer to receive the money tendered. This must be so; otherwise, the tender would not discharge the lien. It is quite different from the case of an ordinary plea of tender at common law, for the purpose of stopping interest and preventing costs, in an action for money due on contract, in which the plea must contain the averment of tout temps prist, and where a replication of a subsequent demand, before suit, of the money tendered, and refusal by the defendant, would be a good answer to the plea.
In the case of a mortgage which is collateral to the debt, it is agreed that a tender may be made by the person owning the equity of redemption, which will extinguish the lien of the mortgage forever, without affecting the debt. The primary object of a foreclosure suit is to enforce the lien, and if that is met by a sufficient tender, the cause of action is gone and cannot be restored by a subsequent demand and refusal. It is important, therefore, to consider whether the tender in the present case, being made after the law day, if good in other respects, had the effect to discharge the lien of the mortgage.
In the case of Jackson v. Crafts (18 Johns. R., 110), it was decided that the tender in that case, which had been made long after the time appointed in the mortgage, had the effect to discharge the land from the lien of the mortgage. The question of the time when the tender was made, does not appear to have been raised; nor does the distinction between a tender made on the day, and one made afterwards, appear to have been considered by the court. The authorities cited and relied upon by Judge WOODWORTH, who delivered the opinion of the court, are, Bacon's Abridgement, title Tender (F.); Coke on Littleton, 209 b, section 338; Id., 207 a, section 335; and 20 Viner, title Tender, n, section 4. These authorities establish the principle that a tender at the time and place, according to the condition of the mortgage, will discharge the lien. They prove nothing more, as is clearly shown by the Chancellor, in Merritt v. Lambert (7 Paige, 344), and by Senator JOHNSON, in Post v. Arnot (2 Denio, 344-357). The passages referred to in Coke on Littleton will be found in Thomas' edition, volume 2, pages 58 and 60.
In Merritt v. Lambert ( supra), the Chancellor says: "The correct principle, as intended to be laid down by Littleton and Coke, is, that if there is a tender of the mortgage money at the time and in the manner prescribed in the condition of the mortgage, and the mortgagee refuses to receive it, the condition is complied with; and the estate reverts back to the mortgagor by the express terms of the instrument. So that if the mortgagee is so unwise as to refuse his money when it is tendered at the time and place and in the manner prescribed in the instrument itself, he necessarily must lose his security upon the land, which was merely collateral to the debt; although the mortgagor may still be liable for the money, where there is an existing indebtedness. But if the money is not paid by the day, the condition on which the land was to revert to the mortgagor has not been complied with; and the interest of the mortgagor in the land is then reduced to a mere equity of redemption, and an actual payment, not a mere tender, then becomes necessary to discharge the legal and equitable lien of the mortgage upon the land." In the Farmers' Fire Insurance and Loan Company v. Edwards, in the Court of Errors (26 Wend. R., 541-554), VERPLANCK, Senator, says that the ancient common law doctrine, as thus stated by the Chancellor in Merritt v. Lambert, is undoubtedly stated with precision. They both agree that the authorities cited by Judge WOODWORTH, in Jackson v. Crafts, were inaccurately applied to a case of payment after the day.
The next case in order of time, in our own courts, to that of Jackson v. Crafts, upon this question — if, indeed, that case can fairly be regarded an authority upon the question — is Merritt v. Lambert ( supra), where the Chancellor held the doctrine contained in the above extract from his opinion to be still the law in this State.
Afterwards came the case of Edwards v. The Farmers' Fire Insurance and Loan Company (21 Wend., 467), which was an action of ejectment tried at the Erie Circuit in July, 1837. The action was brought to recover certain premises which had been mortgaged by the plaintiff to the defendants as security for a loan, and which had been bought in by the defendants at a master's sale in pursuance of a decree of foreclosure of such mortgage, and duly conveyed to them by the master; and, subsequently, the plaintiff had tendered to the defendants the full amount of the moneys due upon the mortgage and the costs of foreclosure, which the defendants refused to receive, whereby the plaintiff contended, under the circumstances of the case, that he had become entitled to be restored to the possession of the premises. The plaintiff recovered a verdict, which the defendants moved to set aside and for a new trial. The motion was denied by the Supreme Court in July, 1839.
It is important to state, that the act incorporating the defendants (Laws of 1822, ch. 50, p. 42, c.), the second section of which authorizes the company to loan money on bond and mortgage, provides in the third section, among other things, "that, in all cases where the said corporation have become the purchasers of any real estate on which they have made loans, the mortgagors shall have the right of redemption of any such property on payment of the principal and interest and costs, so long as it remains in the hands of the corporation unsold."
The opinion of the court was delivered by Justice COWEN, who, after disposing of some preliminary questions in favor of the plaintiff, proceeds to say: "Then, what were the plaintiff's rights, as declared by this charter? I answer, that he had a legal statute right to redeem, so long as the property remained in the defendants' hands unsold; and this, notwithstanding the decree of foreclosure. I will put it that the defendants had made a legal and valid stipulation in their mortgage, that the plaintiff might so redeem; for the charter shall be read as a part of their mortgage." The learned justice was willing to rest his decision upon that statement of the plaintiff's rights; regarding the statute as a part of the contract contained in the mortgage, by which the defendants agreed to receive the money whenever offered by the plaintiff, provided they had not sold the mortgaged premises, and that the law day continued as long as the premises remained in the hands of the defendants unsold. All that he says afterwards, is in answer to the objections by the defendants' counsel, that the law day was passed when the tender was made, and for that reason it gave the plaintiff no right of possession, c.; in which he attempts to show, that, assuming the tender to have been after the day, yet that it was as effectual for the purpose of working a release of the lien of the mortgage as if made on the day, and that the ancient common law rule on the subject was necessarily abrogated or modified by the change which had been wrought in the character of mortgages by modern legislation and adjudication. He came to the conclusion that a new trial should be denied. The case states that the Chief Justice (NELSON) concurred in that conclusion, and Mr. Justice BRONSON dissented. The case does not show that the court decided anything on the particular question under consideration. All that was decided was, that a new trial should be denied. Upon which of the two grounds stated by Judge COWEN the Chief Justice placed his concurrence, or whether upon both, does not appear. If he regarded the clause in the defendants' charter above referred to as an extension of the law day or of the time appointed by the parties within which the plaintiff was at liberty to pay, c., he must necessarily have concurred in the conclusion arrived at by Judge COWEN, whatever his views might have been on the other question. Nor does it appear upon what ground Judge BRONSON dissented. Excepting for the fact that there were other questions in the case, he must have differed from Judge COWEN upon both the grounds upon which he thought the action might be sustained; for if he thought either was tenable, he could not have dissented. So that it may well be, that in the decision of the case a majority of the judges entertained the opinion that a tender after the day does not, per se, discharge the lien of a mortgage. The case was afterwards taken to the Court of Errors, where the judgment of the Supreme Court was affirmed by a vote of eleven to nine. (26 Wend., 541.) Two opinions were written upon that decision; one by the Chancellor, for reversal, in which he adheres to his views upon the effect of a tender after the day as expressed in Merritt v. Lambert, and the other by Senator VERPLANCK, for affirmance, in which he expresses his full concurrence in all the views and positions of Judge COWEN in the same case in the Supreme Court. The case does not show upon what grounds any of the members of the court, except the Chancellor and Senator VERPLANCK, based their decisions. All the votes for affirmance, except Senator VERPLANCK'S, might well have been on the ground stated by Judge COWEN in the court below. We see, therefore, that the case is no authority upon the precise question which we are called upon to decide in the case at bar.
The case of Arnot v. Post and others (2 Denio, 344), comes nearest to deciding the precise point now before us of any of the cases in this State, excepting those of Jackson v. Crafts, in the 18th of Johnson, and Merritt v. Lambert, in the 7th of Paige.
Arnot v. Post was an action of ejectment, tried at the Circuit in Chemung county, in May, 1843. The defendants were in possession of the premises as tenants of Simeon Benjamin, whose title was that of a purchaser at a foreclosure sale by advertisement under the statute, by virtue of a power of sale contained in a mortgage given by Joseph Vial and Uriah Smith, dated May 1, 1827, of which mortgage Benjamin was the assignee at and before the time of the foreclosure and sale. The purchase by Benjamin at the foreclosure sale was on the 23d of August, 1830. The money secured by the mortgage was all due in April, 1828.
Arnot, the plaintiff, claimed title by virtue of a purchase by him of the premises in question at a sale thereof by the sheriff on an execution issued upon a judgment against Vial and two others, docketed August 6, 1827, and a deed from the sheriff in pursuance thereof. On the 21st of September, 1838, and after the deed from the sheriff to the plaintiff, which was dated in May, 1838, the latter tendered to Benjamin the principal and interest due on the mortgage, with the costs of the foreclosure, which Benjamin refused to receive. The Circuit Judge decided that the tender discharged the lien of the mortgage, and that the plaintiff was entitled to recover. The Supreme Court, in October, 1843, denied a motion for a new trial, and ordered judgment for the plaintiff.
In delivering the opinion of the court, BRONSON, Ch. J., takes the ground that the plaintiff was not affected in any respect by the statute foreclosure and sale to Benjamin; that the statute in force at the time of the foreclosure sale (2 R.S., 546, § 8), declared that subsequent mortgagees and judgment creditors should not be prejudiced by any such sale, nor should their rights or interests be in any way affected thereby; and that, therefore, the tender should have the same effect as if no such foreclosure had ever been had. In this, it seems to me, he was clearly right. As to Arnot, the judgment creditor, there had been no foreclosure. The Chief Justice then says: "It has always been held, that a tender at the day discharged the lien of the mortgage; and although a clear departure from the old law, it is fully settled in this State that a tender after the day will have the same effect." For this, he cites Jackson v. Crafts, and Edwards v. The Farmers' Loan and Insurance Company ( supra). He admits that in the last case the law day was extended by the charter of the company, but contends that the broad principle was asserted, that a tender any time before foreclosure, although the law day had passed, would have the effect of discharging the lien of the mortgage.
I think I have shown, that, although the principle was asserted in the case, by COWEN, J., in the Supreme Court, and by VERPLANCK, Senator, in the Court of Errors, yet that the contrary was as broadly asserted, and that the case proves nothing with certainty on either side of the question.
This case of Arnot v. Post, which we are now reviewing, was afterwards taken to the Court of Errors, where the judgment of the Supreme Court was reversed by a vote of eleven to nine. Upon the decision in the Court of Errors, seven written and two oral opinions were delivered. They were by Senators HARD, PORTER, JOHNSON, SEDGWICK, BOCKEE and CLARK for reversal, and the President of the Senate and Senators TALCOTT and LESTER for affirmance. Senator TALCOTT and the President put their decisions upon the same grounds as stated by the Supreme Court. The report of the case states that Senator LESTER delivered a written opinion in favor of affirmance, but upon what ground does not appear. It is presumed to have been the same as that of the Supreme Court, as I cannot conceive of any other.
Senator HARD, in his opinion, discusses the question whether the old rule, which requires a tender to be made on the law day in order to discharge the lien, was still the law of this State. He regards the authorities as somewhat conflicting, and the rule adopted by the Supreme Court of very questionable authority, and thinks the judgment of that Court not sustained by the cases referred to by Chief Justice BRONSON. His conclusion, as I understand, is, that where the tender is after the day, the only remedy of the owner of the equity of redemption is by a bill to redeem.
Senator PORTER makes no allusion in his opinion to the distinction between a tender before and one made after the law day as to its effect upon the lien of the mortgage, but places his decision upon the grounds that, under the particular circumstances of the case, the plaintiff's remedy, if he had any, was by a bill to redeem. JOHNSON, Senator, holds that an unaccepted tender after the day does not, per se, in any case discharge the lien of a mortgage. Senators SEDGWICK, BOCKEE, and CLARK concurred in the views of Senator JOHNSON.
I admit that this case, which I believe is the latest one on the subject in this State, does not prove conclusively that the admitted rule of the common law before repeatedly referred to is still the law of this State; yet its strong tendency is that way. In view of all our reported cases on the subject, the most that can be said against it is, that it is at this day an open as well as a vexed question. The Court of Chancery has persistently adhered to it, as it was found to exist at the formation of the Government; and the Supreme Court has as strenuously insisted upon applying the same rule to the case of a tender after the day as all agree exists when the tender is made at the day.
My own opinion is, after a careful examination of the cases, that the weight of authority is in favor of the rule as it existed at the common law. If that rule has not been abrogated or modified, all will admit that it is the plain duty of the courts to follow and enforce it. Clearly there is no stare decisis in our way. It is of importance that the rule be definitely settled, and its boundaries defined. Before we hold a rule different from what we find it settled by the common law, we should require evidence that the rule has been changed by competent authority, either expressly or by necessary implication.
This evidence, the advocates of the change of the rule claim, is found in the changed character of a mortgage upon land, in consequence of various legislative enactments. We are told that when the rule of the common law in question was adopted, a mortgage conveyed a conditional estate in the premises, which entitled the mortgagee to possession, and upon which he could maintain ejectment; and that a mortgage does not now pass any estate in the land, but is merely the creation of a specific lien as security for the payment of a debt or the performance of a duty; and that the statute has taken away the right of the mortgagee to maintain ejectment. All this is true; and doubtless other shades of difference may be found between the legal effect of a mortgage at common law and as it now exists. But they will be found to relate to the remedy, or to consist in collateral or incidental circumstances. Mortgages are substantially what they always were. The fact that they are not now regarded as transferring the freehold, but are merely specific liens, is altogether theoretical and ideal, so far as respects the question under consideration. The great object of these instruments is the same now as it always was — that of security for the payment of money or the performance of a duty. A mortgagee in possession is now, as always heretofore, accountable for rents and profits, and he may still defend his possession with the mortgage the same as ever. I know of no difference between the right of the mortgagor, or the person owning the equity of redemption, to redeem the premises from the lien of the mortgage, as that right now exists, and as it existed in the time of Coke or Littleton. That right is governed now by substantially the same rules as then.
The rule contended for by the plaintiff is reasonable, convenient and just. In the first place, the parties to the mortgage have, by agreement, fixed upon the time of payment and if the mortgagor fulfills his agreement by paying on the day appointed, or tendering payment on that day, the lien is discharged. The parties are then to be ready, the mortgagor to pay, and the mortgagee to receive. If the former performs his duty, or tenders performance, and the latter refuses, his lien is gone forever; he has no excuse for his folly, and is entitled to no consideration for the loss of his lien. On the law day, each party is presumed to know exactly what his duty is, and the amount the mortgagor is bound to pay and the mortgagee entitled to receive.
If the mortgagor allows the law day to pass without payment or tender, he then is a defaulter. If he can discharge the lien by a tender of payment the next day, there is no reason why he may not do the same by a tender after the lapse of one year or of ten years.
Suppose the mortgagee goes into possession under the mortgage, by consent of the mortgagor, immediately upon default of payment, and the latter takes no steps towards payment for years after; what amount shall he tender when he gets ready for payment? what abatement from the principal and interest shall be made for mesne profits? Shall the defaulting mortgagor be permitted to select his own time, and then make a tender of such an amount as he shall deem proper, and the mortgagee be bound to accept it in full, at the peril of losing his lien forever?
Suppose again the case of a defaulting mortgagor, who claims to have made partial payments, or to be entitled to a set-off, about which he and the mortgagee in good faith differ: according to the rule claimed by the defendant, he must accept in full the amount tendered at the peril of losing his lien, provided, upon a litigation, it shall be adjudged that the tender was sufficient in amount. It seems to me that the old rule is the only just and wholesome one that can be recognized. It is quite as favorable to the mortgagor as he can in reason ask. If he makes a sufficient tender after the day and before an action is brought to foreclose the mortgage, let him keep the tender good, and, when he is sued, let him set it up as a defence, bring the money into court and offer payment as in other cases, and the court will, in such a case, decree the mortgage satisfied and discharged, and adjudge costs against the plaintiff. Or if for any reason the mortgagor, or the person whose duty or interest it may be to have the lien discharged, does not wish to wait the mortgagee's time for foreclosing, let him make his tender and keep it good, and then bring his action to redeem, alleging the tender and offering to pay; and if, upon the trial, it is found that his tender was sufficient and the plaintiff was ready to pay, the court would give him all the relief which equity and justice required. In all these cases, the mortgagee would have the right to have the disputed questions adjudicated, without losing his lien for the amount in equity and justice due to him.
The rule contended for by the defendant would, in many cases, operate as a bounty to negligent and defaulting debtors, and mortgagees would, under its workings, be induced to purchase their peace at an unjust sacrifice of their rights.
For the foregoing reasons, I am of the opinion that the rule of Littleton, as expounded by Coke, and as, all now admit, was the rule of the common law in relation to the effect of a tender after the law day, is still the law of this State; and as the tender in this case has not been kept good, and the defendant's answer contains no offer of payment, and the facts found by the court before whom the cause was tried do not show that the tender has in any sense been kept good, or that the defendant was ready to pay, c., I think that he can have no benefit by reason of it; and that the judgment should be affirmed, with costs.
Judgment reversed.