Opinion
03-28-1892
LOCKARD v. JOINES.
George S. Grosvenor, for complainant. Howell Bros., for defendant.
(Syllabus by the Court.)
Bill by Robert L. Lockard against William Joines to have declared null and void the cancellation of a certain mortgage.
George S. Grosvenor, for complainant.
Howell Bros., for defendant.
BIRD, V. C. The effect of the statements and prayer of the bill in this case is, if the prayer be granted, to have declared null and void the cancellation of a mortgage which had been given to the complainant. He was the owner of a tract of land subject to a mortgage of $1,200. He sold the land to the defendant, Joines, for $—. In the deed it was provided that Joines should assume the payment of the $1,200. Joines gave a mortgage for $1,100 to secure that much of the additional consideration money, and it was stipulated therein that it was for the purpose of securing so much of the purchase money. The balance was paid in cash. Joines took possession of the premises and had control for several months, but failed to pay any additional part of the consideration money, or any of the interest accruing thereon, or any of the taxes. In August last he proposed to Lockard, the complainant, to reconvey to him the premises. Lockard says in the bill that he inquired of Joines if there was anything in the way of such reconveyance, and that Joines told him there was nothing except the mortgages and the taxes; and, believing what Joines said to be true, he agreed to the reconveyance of the premises, and to release Joines from his obligations, and to allow him $2,550. Joines made and executed a deed with full covenants, which Lockard accepted. The latter paid to Joines about $42, being the difference between the consideration agreed to be paid or allowed to Joines and the amount of the mortgages, with interest, and the amount of unpaid taxes, with interest. He delivered up to him, not only the bond which he had given, but also the said mortgage for $1,160. This mortgage was canceled of record against the protest of Lockard. It appears by the bill that the other three defendants had each obtained judgments against Joines prior to this agreement, and had taken levies upon Joines' interest in the premises, and that they threatened to sell Joines' interest under their judgments. Lockard alleges that he was entirely ignorant of the existence of these judgments, and that he was surprised when he learned of them, because, as above stated, he had relied upon the assertion of Joines that there was nothing in the way of his taking title to the premises. An injunction staying the sale of the said premises under said judgments was asked for, and it was allowed, upon the ground that a fraud had been perpetrated upon the complainant.
But the case made by the bill is not sustained by the proofs upon final hearing. Lockard, in his testimony, makes no pretense whatever that he inquired of Joines as to the condition of the title with respect to liens or incumbrances of any kind, or in any general manner as to whether there was anything in the way of his taking title or not. This absence of proof upon this material point leaves it necessary for the court to determine whether or not, under such circumstances, the complainant is entitled to relief in this court. That the complainant has suffered against his expectations, there can be no doubt. It may be, too, that a pitfall was prepared for him; for it was not until after these judgments had been obtained against Joines, as I infer from the testimony, that Joines became solicitous to reconvey to Lockard, and that Joines' wife urged Lockard to accept such reconveyance. But, notwithstanding this consideration, it does not appear that Joines or his wife did anything whatsoever to mislead Lockard. And yet it may well be said that Joines only had in view relief against his bond; for the testimony shows that the real intention of both parties, in the very beginning of the negotiations, was simply to release Joines from such obligations, and that nothing else was contemplated by them. When Joinesfirst applied to Lockard for a settlement, he asked him to take the property back, and to release him. Joines did not then, or at any other time, so far as the testimony shows, ask for a surrender or a cancellation of the mortgage. Nothing has been proved to make it manifest that the mortgage was an object of consideration until they had completed their calculations, and the bond was about to be surrendered. Lockard says that he surrendered the mortgage because he thought it was right so to do, and supposed that nobody else had any interest in it. I am satisfied that Lockard did not consider the value of said mortgage to him as a protection to his title, and that he had no knowledge of his right to retain the mortgage under the agreement. In other words, it was no part of the agreement that he should surrender the mortgage with the bond. It is perfectly evident that Lockard supposed that he was discharging all liabilities to which the premises were subject, over and above the two mortgages and the taxes, and that, when he surrendered to Joines the mortgage which Joines had given him as part of the consideration money, he was reinstated in his former position; that is, that he held the title thereto, with no other claims against the premises than the $1,200 mortgage which he himself had given, and which Joines had assumed the payment of. Of this I have not the slightest doubt, and to my mind there can be no doubt whatever but that Joines was fully aware that Lockard supposed he was taking the reconveyance of the premises free from all further liens, although he may not have actively encouraged any such supposition. Their calculation with respect to incumbrances, including taxes as well as mortgages and the interest thereupon, and the payment of the small excess of $42 to Joines, makes this very clear. This fact shows that Lockard was looking after the Hens or incumbrances upon the premises. It is absurd to suppose that he would strain at a few dollars for taxes, and disregard hundreds of dollars by way of judgments.
However, I think the conclusion reached by the court of errors and appeals in the case of Henry v. Kannaman, 6 N. J. Eq. 626, must be the guide of the court in this case, unless an important and controlling fact is found in this case which does not appear to have existed in that. In that case the chancellor sustained the application for an injunction under many circumstances very similar to those presented here, but the court of errors and appeals reversed him. I have examined the authorities with great care, subsequent to that case, and have been unable to find any in which the authority of that case has been at all questioned. Is there any fact in this case which may fairly be laid hold of by the complainant, distinguishing his case from the one above cited, which fact is a sufficient foundation for a decree in equity in his favor? The testimony in this case shows that the real intention of the parties, in the very beginning of the negotiations, was simply to release Joines from the obligations upon his bond, and that nothing else was contemplated by them. When Joines first applied to Lockard for a settlement, he asked him to take the property back, and to release him from his obligations. Joines did not then or at any other time, so far as the testimony shows, ask for a surrender or a cancellation of the mortgage. It does not appear to have entered into their calculations in ascertaining the amount which was secured thereby, but was voluntarily surrendered by Lockard to Joines without any knowledge or consideration of his rights. If this appears to have been the intention of the parties, then the surrender of the mortgage and its cancellation, evidently, was a mistake. In such case a court of equity has the power to correct the mistake and to reinstate the parties. If such was their intention, then the complainant ought to be permitted to enjoy the benefit which would result from the interposition of the mortgage prior to the lien of the defendant's judgments. "Equity cares very little about mere matters of form. It endeavors to deal with the substance of affairs, and to regulate its judgment according to the real purposes which have controlled parties in the matters brought before it for relief or correction." Livermore v. McNair, 34 N.J. Eq. 478. The case of Mulford v. Peterson, 35 N. J Law, 131, further shows that even courts of law are ever ready to make a practical application of this principle. The case of Hutchinson v. Swartsweller, 31 N J. Eq. 206, may be referred to in aid of this proposition. In that case the mortgagee, in ignorance of any subsequent incumbrance, surrendered a mortgage, with the view of taking another in lieu thereof, without knowing of any such subsequent incumbrance, and the court sustained the application to have such new mortgage stand in the place of the former one, which was surrendered "A court of equity will keep an incumbrance alive, or consider it extinguished, as may best serve the purpose of justice and the just interest of the parties." "The union of the equity of redemption with the legal estate produces a merger of the mortgage, unless it be declared to be kept on foot for some beneficial purpose." Starr v. Ellis, 6 Johns. Ch. 395. And this principle was approved by the chancellor in the case of Neville v. Demeritt, 2 N. J. Eq. 336, and subsequently recognized in this court in the following cases: Stillman v. Stillman, 21 N. J. Eq. 126; Clos v. Boppe, 23 N. J. Eq. 270; Speer v. Whitfield, 10 N. J. Eq. 107; Deare v. Carr, 3 N. J. Eq. 513: Parker v. Child, 25 K. J. Eq. 41; Hinchman v. Emans, 1 N. J. Eq. 100; Van Wagenen v. Brown, 26 N. J. Law, 196, 204; Andrus v. Vreeland, 29 N. J. Eq. 394; Hoppock v. Ramsey, 28 N. J. Eq. 413; James v. Morey, 2 Cow. 246, 14 Amer. Dec. 475, and cases cited, p. 512. The intention of the party interested is to control. See Jones, Mortg. § 848. In the case of Stantons v. Thompson, 49 N. H. 272, this is based upon the presumption, as a matter of law, that the party must have intended to keep on foot his mortgage title when it was essential to his security against an intervening title, or for other purposes of security;and it is no mutter whether the parties, through ignorance of such intervening title or through inadvertence, actually discharged the mortgage and canceled the notes, and really intended to extinguish them. Still, on its being made to appear that such intervening title existed, the law would presume conclusively that the mortgagee could not have intended to postpone his mortgage to the subsequent title.
It cannot be concluded, without proof, that Lockard intended to pay the debts of Joines without any consideration, and it would be highly inequitable for the court to compel him to do so. There is no dispute but that the interest of Joines in the premises, over and above the mortgages and taxes, is subject to the judgments against Joines, and liable to be sold therefor. The cancellation should be annulled, and the mortgage surrendered to the complainant, to be held by him as a muniment of title. I will advise accordingly.