Opinion
September Term, 1863
John H. Reynolds, for the appellant.
L. Tremain, for the respondent.
It is insisted by the defendant's counsel, that the plaintiff is not a bona fide purchaser of the mortgaged premises, and for that reason is incapable of maintaining this action. It is a sufficient answer to this position to say, that there is no finding of the referee, to the effect that the purchase by the plaintiff was not made in good faith; nor did the defendant's counsel ask the referee to find any such fact. All that appears in the report on the subject, is, that on the 15th day of June, 1853, Ephraim Beach conveyed the whole of the real estate described in the mortgage, by warranty deed, to the plaintiff. We must assume, from this finding, that the conveyance was made and received in good faith, and as we can review questions of law only, and not questions of fact, we are not required to look into the evidence to ascertain whether the referee would not have been justified in finding that the conveyance was obtained by the plaintiff in bad faith. The question of good faith, however, in the sense in which it is presented here, does not appear to me to be material, provided the plaintiff has, in fact, the legal title to the land covered by the mortgage. He claims no prior equity against the defendant on the ground of being a bona fide purchaser. He stands upon his rights as the legal owner of the lands, subject to the mortgage, and if he is such legal owner, he has a right to maintain an action to compel the discharge of the mortgage if it be fully paid; or to redeem the lands from its lien if it be not paid; and it is wholly immaterial in this respect, in what manner, or for what consideration, or with what object, he acquired the title. The holder of the mortgage has no interest in this question. I have, however, looked at the evidence, so far as it is disclosed in the case, and can discover no ground for impeaching the good faith of the purchase by the plaintiff. He gave a mortgage for $25,000 to the grantor, in consideration of the conveyance, and there is nothing to show that he was advised of any special object on the part of the grantor in making the conveyance, or that he knew of the existence of the mortgage in question.
It is next insisted on the part of the defendant that no case was made by the plaintiff entitling him to equitable relief. That the only appropriate judgment upon the facts, as finally established, was that directed by the referee, dismissing the complaint, and leaving the defendant at liberty to commence an action to foreclose her mortgage if she saw fit.
The plaintiff stated in his complaint, that he was the owner of lands encumbered, as appeared by the records in the county clerk's office, by a mortgage of $52,000, and many years' interest; that the mortgage was held by the defendant and was fully paid; and he prayed to have it discharged upon the records. By her answer, the defendant claimed that there was due to her, upon the mortgage $10,000, and interest from 1839. After a very tedious trial, lasting more than five years, it is established by the report of the referee, that the statements of the plaintiff were all true, except that a small sum, less than $1300, besides interest, remained due on the mortgage. It would certainly be a cause of reproach to the administration of justice, if on that state of facts the court could give no judgment except to dismiss the action, leaving the parties to repeat the same tedious process, in another form, before the controversy between them could be ended. The law, however, is not justly subject to any such reproach. Regarding this as an action quia timet merely, to remove the cloud of the mortgage from the plaintiff's title, upon the allegation that the mortgage was fully paid, it was entirely proper, when it appeared by the evidence that a balance remained unpaid, to grant the relief demanded by the plaintiff, conditionally, as was done by the court below. Judge Story, treating of the cancellation or delivery up of securities, says: "In all cases of this sort, where the interposition of a court of equity is sought, the court will, in granting relief, impose such terms upon the party as it deems the real justice of the case to require; and if the plaintiff refuses to comply with such terms, his bill will be dismissed. The maxim here is emphatically applied: he who seeks equity must do equity." (2 Eq. Jur. § 693; see also, §§ 705-707.)
The complaint, however, embraced not only the features of a bill quia timet, but also of a bill to redeem. The plaintiff alleged that the mortgage was paid, and demanded judgment that it should be canceled and discharged on that account; but it was also prayed that the balance, if any was due on the mortgage, should be ascertained and determined by the judgment of the court, and that the other demands of the plaintiff against the defendant should be applied to the payment of such balance, if sufficient for that purpose, and if not sufficient, then to the reduction thereof, and that the bond and mortgage, if thereby paid, be canceled and discharged, and that the plaintiff have judgment for the balance of his demands, if any; to which was added the general prayer for such relief as the nature of the case should require. The plaintiff, therefore, contemplated the possibility of a balance being found due on the mortgage, and demanded such relief as would be agreeable to equity, on that state of facts. There is no express general offer to pay any balance which might be found due, but it was held, under the former system of pleading, that such an offer, in a bill to redeem, was not necessary, ( Quin v. Brittain, Hoff. 353;) and it is certainly not indispensable now. Were such offer necessary, it might fairly be inferred from the offer to pay the amount due by the application of the balance of other accounts. The case, therefore, was in form one in which it was proper to allow the plaintiff to redeem, and I can discover nothing in his position to render such redemption unjust or inequitable. The judgment, as modified by the Supreme Court, terminates the controversy between the parties in regard to the mortgage, whether the plaintiff complies with the conditions imposed upon him or not. If he fails to redeem within the time appointed, the dismissal of his complaint as the consequence of such failure, operates as a foreclosure of the mortgage. ( Quin v. Brittain, supra; Bishop of Winchester v. Paine, 11 Ves. 199.)
The principal remaining question which requires notice, arises out of the admission of the testimony of the mortgagor, to show payment of the mortgage. The defendant having neither appealed from the judgment rendered upon the report of the referee, nor made any case on his part, it is questioned whether the exceptions taken by him are available in her behalf upon this appeal. As a general rule, exceptions taken by the prevailing party, on a trial, are not available in the subsequent proceedings, on an appeal from the judgment by the unsuccessful party, where the prevailing party has not also appealed. Indeed such exceptions under ordinary circumstances, do not properly constitute any part of the case, on appeal. Under the circumstances presented by this case, however, the defendant could not have sustained an appeal, whether the decision of the referee admitting the testimony now objected to was right or wrong. No appeal on her part could have raised that question, as she could appeal only from the judgment, and not from any decision of the referee, which did not affect the judgment; and the decision in question did not. She excepted to the testimony when it was given, but no use of it was made against her, and no judgment entered, by an appeal from which she could raise the question of the validity of her exception, until the judgment against her was pronounced by the Supreme Court, based upon the testimony thus excepted to. From that judgment she has appealed, and if the testimony was not legally admissible, it would seem to savor strongly of injustice, to deny to her the benefit of her exception. If it were necessary now to determine this question, I should hold, as at present advised, that the exceptions taken by the present appellant upon the trial, and appearing upon the record, are available to her upon this appeal. There will, however, be no necessity of deciding this question, if the court shall concur with me, in the conclusion to which I have arrived, that the testimony of the mortgagor was properly admitted.
The provisions of the statute, which were in force when the cause was tried, and which are relied upon, to sustain the objection to the testimony, are as follows:
"§ 398. No person offered as a witness, shall be excluded by reason of his interest in the event of the action.
§ 399. The last section shall not apply to a party to the action, nor to any person for whose immediate benefit it is prosecuted or defended. When an assignor of a thing in action, or contract, is examined as a witness, on behalf of any person desiring title through or from him, the adverse party may offer himself as a witness to the same matter in his own behalf, and shall be so received. But such assignor shall not be admitted to be examined in behalf of any person deriving title through or from him against an assignee, or an executor, or administrator, unless the other party to such contract or thing in action, whom the defendant or plaintiff represents, is living, and his testimony can be procured for such examination; nor unless at least ten days' notice of such intended examination of the assignor, specifying the points upon which he is intended to be examined, shall be given in writing to the adverse party." (Code of Procedure, as amended in 1851, §§ 398, 399.)
There is no ground whatever for the position that the witness was rendered incompetent by the first clause of § 399. He was in no sense a party to the action, nor was it prosecuted for his benefit. Whatever may have been the object, or the consideration, of the conveyance of the land, by him, he could not afterwards question the validity of such conveyance; and having no interest in land, and being released from liability upon his covenants, he could not be benefitted by the plaintiff's success. ( Jackson v. Stevens, 16 John. 110; McCrea v. Purmort, 16 Wend. 460.) Neither could the record in this case, whatever its results, be made use of, for or against the witness, in an action on his bond. McLaren v. Hopkins, supra.)
The objection, based upon the other portion of § 399, is, I think, equally untenable. The conveyance of land, is not an assignment of "a thing in action or contract." (2 Bl. Com. 397; 1 Chitty's G.P. 99, note p.; Gillet v. Fairchild, 4 Denio, 82; Hudson River R.R. Co. v. Lounsberry, 25 Barb. 597.) The case was, therefore, not within the letter of the statute, and I am satisfied was not within the intention or object of its provisions. No inconvenience has ever resulted from the common law rule admitting the testimony of the grantor of lands as a witness under such circumstances, and I see no propriety in extending the statutory exclusion to cases not clearly embraced by its terms.
If the plaintiff had not abandoned the claim to recover the alleged balance of the assigned accounts, the testimony would undoubtedly have been inadmissible, notwithstanding the limitation placed upon its effect by the referee; because a considerable part of it bore directly upon the question of such balance, through the accounts which the witness proved. The referee could not, so long as the question of the general accounts was before him, render the receipt of such testimony rightful, by declaring that its application should be limited to another issue, in relation to which the witness was competent to testify. But this objection was removed when all claim to a recovery upon the accounts was abandoned. It has been questioned whether there was such an abandonment on the trial, but the report of the referee on that subject is conclusive here. The testimony of the mortgagor was therefore properly admitted.
It is insisted, that if the decision of the referee was in any respects erroneous, the Supreme Court should not have pronounced a final judgment on the appeal, but should have ordered a new trial. If any material error had occurred on the trial, or in the findings of fact by the referee, a new trial would doubtless have been necessary; but the only error appearing in the case, was in the judgment which he directed to be entered as the legal result from those facts. That error it was the province of the Supreme Court to correct; it has been corrected by the entry of the appropriate judgment, and that judgment should be affirmed, with costs.
After an examination of this case, I have come to the following conclusions:
(1.) The complaint was sufficient to authorize a judgment allowing the plaintiff to redeem if a balance should be found due on the mortgage. The case made was undoubtedly, in one aspect, that of a full payment; but it was conceded that it would depend upon the proof and the state of the accounts, and impliedly that it might turn out that some amount less than that which the defendant claimed would appear to be unpaid. Hence one part of the prayer was that the balance, if the debt were not fully paid, might be ascertained and determined, and there was a prayer for general relief, such as might be agreeable to equity. After the trial, the plaintiff asked that a judgment for a redemption should be given in case the mortgage should not be found to be fully paid. When such a result was arrived at by the referee he should have adjudged that the plaintiff redeem or be precluded, according to the usual course in redemption suits, or in suits having a double aspect, looking to satisfaction or redemption as the case, on the accounts, should require. It follows that, if there were no other difficulty, the general term was right in pronouncing such a judgment as the referee should have given.
(2.) But the defendant's counsel insists that error was committed on the trial, on account of which the determination that only $1259.84 was due ought not to be sustained. The judgment of the special term being in the defendant's favor he could not appeal, and hence had no opportunity of reviewing the rulings upon which the alleged errors are predicated. Hence he urges that the general term, if it determined that the judgment on the report was wrong, should have awarded a new trial, in order that the questions which arose upon the testimony might be determined in such a manner that they could be reviewed by the general term, and in this court. The answer which the judges at the general term gave to this suggestion was, that the defendant might have appealed to the general term from the determination that only a certain amount was due, although the general judgment was in his favor. This answer is not satisfactory to my mind. No doubt a party may appeal from any separate part of a judgment which is adverse to him, though he may be satisfied with other portions of it. But I think this was not a case of that kind. Here the only judgment was in favor of the defendant, dismissing the complaint. It was no part of the adjudication that only a limited amount remained unpaid. That determination was in the finding, but was not one of the items of the judgment. It could no more be appealed from than any of the conclusions of fact or of law stated by the referee, or any of the reasonings of the court. But I am of opinion that it was competent for the general term to have reviewed the case on the exceptions taken on the trial, and also upon the facts, so far as to determine whether the findings were warranted by the evidence, and that this court can review the case so far as questions of law were raised upon the trial, by the exceptions, although the defendant could not and did not appeal to the general term. Suppose the general term, upon an examination of the case, on the plaintiff's appeal, upon the view of its jurisdiction which I have suggested, had come to the opinion that although the judgment was not consistent with the finding as to the amount, yet that there were errors of law or fact of such a character that the finding ought not to be sustained, it would have been its duty to have refused to modify the judgment so as to allow a redemption. But it should have set it aside and have ordered a new trial, so that the question as to the amount due could have been tried and determined in a manner free from any just exception. If, on the contrary, the general term had considered that the trial had been legal and free from just exception, and that the determination of the question of fact was warranted by, and not against the weight of evidence, it would have been their duty to do what they actually did in the judgment before us, namely, modify the judgment so that it should conform to the legal result of the findings. The office and jurisdiction of the general term being such as I have stated, we are to assume that it found no error to exist in the trial; that the exceptions taken in the progress of it were not well taken; and that the conclusions of fact found were not against the weight of the evidence. The jurisdiction of this court is to review the determination of the general term upon all these questions, except as to the facts, or the conformity of the finding with the evidence. So far as the conclusions of fact are concerned the case ends with the general term, but as to the matters of law, we sit in review of its determination. It follows that we are bound to look into the exceptions to the ruling of the referee, and to award a new trial if any of them are well taken, and this is the only remaining question in this case.
(3.) The defendant, on the trial, objected to the maintenance of the action on the ground that the plaintiff did not appear to be a bona fide purchaser of the mortgaged premises. There was a motion for a nonsuit on that ground, which was denied, and the defendant's counsel excepted. I see no reason to doubt but that, as between Ephraim Beach and the plaintiff, the title to those premises passed from the former to the latter by the conveyance executed shortly before the suit was commenced. Although Ephraim Beach admitted, in effect, in his testimony, that the conveyance was made to enable him to be a witness in the suit the plaintiff was expected to commence to procure the satisfaction of the mortgage, that was not a circumstance which could impair the effect of the deed, as between the parties. If the plaintiff, by that conveyance, became the owner of the premises, as he clearly did, he was entitled to all the legal and equitable remedies which any owner would have to procure the removal of an alleged incumbrance which was inequitably set up or kept on foot against the land. Supposing this to have been a deed of gift as between the parties, the defendant could not question the consideration, for he had no more right against a voluntary grantee than he had against the grantor. Except as to the competency of the grantee as a witness, he was not injured by having to contest the matter with the plaintiff rather than with his grantor. I have looked into the authorities cited to show that a person acquiring title under such circumstances can not file a bill of this nature, but I think they do not establish that position. The right to redeem mortgaged premises, or to have a mortgage satisfied when the mortgage debt has been paid, is as absolute a right as any known to the law, and it is not the less absolute that it has to be asserted in a court of equity. But the change of title to the mortgaged premises in this case let in the grantor, Ephraim Beach, as a witness. If the law had determined that a party parting with title under such circumstances, with a design to give testimony for the grantee, in an expected controversy, would not be competent to give testimony for his grantor, of course the plaintiff would be beaten, unless he could prove his case by other testimony. But such a person is not, in law, incompetent as a witness, however strongly the circumstance may operate against his credibility. The case is not within the provisions of § 399 of the code, which forbids an assignor of a thing in action to testify on behalf of a person claiming title through him, where the other party to the contract is not living. That rule applied, as the referee held, to the assigned personal demands, but not to the land which was conveyed. The reason upon which that exception was founded would probably apply to a case situated like this. But the statute does not reach such a case, and the only advantage which the defendant could have from this peculiar feature of the transaction would be to question the credibility of the witness. We are to assume that the referee made all due allowance for that circumstance. The question on the merits was, whether the $10,000 of state stock was delivered to the testator, T.B. Cooke, under an agreement that the proceeds of the sale of it should be applied to the payment of the indebtedness secured by the mortgage, or whether it was delivered to him without such agreement, so that it would be applicable on the general accounts existing between these parties. The referee took the first mentioned view of this evidence, and accordingly applied the whole proceeds towards the extinguishment of the debt secured by the mortgage, irrespective of any other demands Cooke had against Beach. Whether this was right was a question upon the proof, which we can not go into. If it was not, by the agreement and understanding of the parties applicable specifically to the mortgage debt, then it could not be availed of by the plaintiff, except by way of set-off, or upon some principle of the implied appropriation of payments, and in either case the whole of the accounts between the parties must have been examined. The plaintiff's counsel declined to go into the accounts, and the referee did not examine them, though there was evidence respecting them. He held that the evidence showed that the proceeds of the stock were, by the agreement of the parties, to be applied towards the indebtedness of $10,000 secured by the mortgage. Th whole question on the merits was, whether this conclusion was right. As we must assume it to have been correct, because we have no jurisdiction to review it, we can not do otherwise than affirm the judgment of the Supreme Court.
DAVIES, HOGEBOOM, and MULLIN, JJ. concurred.
This case was referred to a referree to try the issues. Upon the trial the referee dismissed the complaint. The plaintiff appealed to the general term, which decided that the referee erred, and that upon the facts found by the referee the plaintiff was entitled to equitable relief and after settling the amount due on the mortgage, gave a judgment allowing the plaintiff to redeem on payment thereof. It appears to me the general term had no authority to render such a judgment. By § 330 of the code the appellate court may reverse, affirm or modify the judgment appealed from, and may if necessary order a new trial, and by § 10 this power is conferred on the court of appeals. This is the extent of the power possessed by the appellate court. In this case the referee dismissed the complaint and rendered judgment for the defendant. This judgment the court could reverse, and if necessary could order a new trial, and they did reverse the judgment, because they set aside the dismissal of the complaint in favor of the defendant. But they went further, and rendered a judgment in favor of the plaintiff. Such a judgment was neither an affirmance or a modification of the original judgment, but a rendition of an entirely different judgment, in favor of another party. Such a course must work great injustice to the party whose judgment is reversed. He may have exceptions to rulings upon the trial which he loses the opportunity of reviewing, and which may have excluded evidence that would have materially affected the decision. It is said he should have excepted and made his bill of exceptions if he wished to preserve his rights. But the successful party has no right to appeal. The 348th section of the code only allows an appeal from a judgment, and not for exceptions merely. The notion of a successful party appealing from a judgment in his favor might be very acceptable to his debtor against whom he had obtained a judgment, but not very beneficial to the creditor, who thereby would stay the collection of the debt due him, for fear his adversary might appeal and obtain a judgment in his favor. I doubt whether any court in this state would consent to hear argued a bill of exceptions where the judgment was rendered in favor of the party appealing. In Astor v. L'Amoreux, (4 Seld. 107,) this court held that the general term erred in reversing a judgment in favor of the plaintiff, and ordering judgment for the defendant. The same rule should be applied to this case. It becomes, therefore, necessary to inquire whether the referee erred in dismissing the complaint, in order to decide whether a new trial should be granted.
The complaint states facts, and asks for relief which could have been granted by the referee to the full extent to which the general term have rendered judgment in his favor, unless it be necessary for the plaintiff to tender the amount due before commencing his action.
The finding of the referee is that Ephraim Beach conveyed the whole estate to the plaintiff; that Beach resided on a portion of it, and received the whole of the rents and profits; but there is no finding that the conveyance was fraudulent, or that the plaintiff was not a bona fide holder. In the absence of any such finding we are bound to presume the contrary, and that the conveyance did in reality pass the title to the plaintiff. He was then, if a bona fide holder, entitled to the relief sought, and the referee should not have dismissed the complaint. Upon the whole I think justice will be promoted by sending this case back to the referee for a new trial, to give the parties an opportunity to review the case after having the opinions of the courts above. And in order that the proper judgment may be rendered by the referee, the judgment should be reversed, and a new trial ordered.
WRIGHT and JOHNSON, JJ., concurred with INGRAHAM, J.
Judgment affirmed.