Opinion
09-04-1896
CRESSEE v. SECURITY LAND IMPROVEMENT CO. et al.
William A Logue and Potter & Nixon, for complainant. H. M. Snyder, Jr., for defendants.
Suit by Ruhamah W. Cressee, administrator, against the Security Land Improvement Company and others, to foreclose a mortgage.
William A Logue and Potter & Nixon, for complainant.
H. M. Snyder, Jr., for defendants.
PITNEY, V. C. The case is easy of solution, though very complicated in the facts. I will try to state now, orally, my views of the case. The bill has two aspects. One is the foreclosure of a mortgage made by Rebecca A. Simpson to Humphrey Cressee, dated the 1st day of January, 1891, to secure the payment of $36,000, covering certain lands on an island called "Five-Mile Beach," Cape May county, between Cape May and Atlantic City. The bond, which is secured by the mortgage, was executed not only by Rebecca A. Simpson, but by John T. Ryon and Frederick E. Swope. Miss Simpson was a figurehead for Ryon and Swope. They were the real purchasers of the property, and immediately, or shortly after, conveyed it to the Security Land Improvement Company, which is now the owner of the equity—I believe I am right, Colonel; if not, set me straight—now the owner of the equity, and is one of the defendants. Swope and Ryon are also defendants. The mortgage was given for consideration money on the sale of the premises by Cressee, by contract, to Swope and Ryon, conveyance being, by their direction, made to Miss Simpson. The contract between them was dated two days before the deed, 30th of December, 1890. The deed sets out the contract to convey the lands and to take a mortgage back for the consideration money,— the land was to be divided into lots, and sold, —and an agreement to release the lots upon the payment on account of principal of a certain sum for each lot. The contract also provides for a conveyance by Ryon to Cressee of his interest in a certain portion of the land to be conveyed. That part of the agreement is in these words: "As there has been a difference of opinion as to the proper line of property between said Humphrey Cressee and the said John T. Ryon, and for the purpose and end of settling every and all such differences, it is agreed that the said John T. Ryon will give to Humphrey Cressee a quitclaim deed for all his right, title, and interest to all land as set forth on the plan of lots of the Five-Mile Beach Improvement Company between the northeast side of Twenty-Sixth avenue and the northeast side of Twenty-Ninth avenue and low-water mark in the Atlantic Ocean and the sound or channel on the northwest of the tract, clear of all claims and incumbrances, so that the said Humphrey Cressee can make a proper deed and title to the parties of the second part as set forth above, and receive the said mortgage of $36,000; at which time the said Humphrey Cressee is to deed to the said John T. Ryon all his right, title, and interests and claim to any lots as set forth on the above plan of the Five-Mile Beach Improvement Company between the northeast side of Twenty-Sixth avenue and the southwest side of Twenty-Fourthavenue and between the low-water mark in the Atlantic Ocean and the channel or sound on the northwest," etc. That is, Cressee agreed to convey to Ryon all northeast of Twenty-Sixth avenue, and Ryon agreed to convey to Cressee all southwest of Twenty-Sixth avenue. The mortgage ran for five years, and, interest and taxes being in arrears, the bill was filed. There is no dispute between the parties but that interest was in arrears, and taxes not paid. That is not set up as a defense, as I understand.
Mr. Swope and Mr. Ryon, the bondsmen, are made parties. Mr. Swope has not answered or set up any defense. Mr. Ryon has answered, and by his answer sets up that the procurement of the deed from him to Cressee, and then the sale from Cressee to him and Swope, were procured by fraud practiced upon him by Cressee, through Swope, as Cressee's instrument and aid; and that the whole transaction should be set aside, and he be restored to his original rights as they stood before the transactions which I have just attempted to state. The allegations of fraud are denied by the complainant, who was the administrator of Humphrey W. Cressee, and Mr. Ryon is put to his proof. He called Mr. Swope as his witness, and Mr. Swope denies in the most positive manner that there was any fraud, and says that it was a straightforward transaction. He says that the threes—Cressee, Ryon, and himself—got up the scheme to put these lands on the market, and they combined and formed—or rather, intended to form—a corporation, and all go in substantially on an equal footing, but that he (Swope), as I recollect his testimony, declined to have Mr. Cressee interested in the corporation to be formed, and therefore at his request, and by Mr. Ryon's consent, the transaction took this present form; that is to say, the corporation was formed, and the conveyance was made through Miss Simpson to the corporation, and the stock was equally divided between Mr. Swope and Mr. Ryon, and Mr. Cressee's interest was secured by this mortgage and another one, and that that was intentional, deliberate, and well understood. I cannot find any basis in the evidence for a change of the legal character which the parties gave the transaction. It seems to have been taken voluntarily and without any mistake, and everything seems to have been put in writing, and there is no allegation of any misapprehension as to the true character of the transaction. Hence it would be idle to ask the court to tear up the transaction, and put it back in its original status, and give these three parties an interest at the rate of four, three, and three, out of ten. Mr. Swope complained of Mr. Cressee that he didn't make the title good; that the property was subject to incumbrances put upon it and suffered against it by Mr. Ryon,—first a mortgage, and then three or four judgments. Now, Mr. Swope hasn't set up any defense on that ground. He has merely been called as a witness by Mr. Ryon. Now, as those Incumbrances were all suffered by Mr. Ryon, it clearly does not come within his right to set that up here. He conveyed by a deed a block of this property to Mr. Cressee the day before Cressee conveyed to Miss Simpson at the request of Swope and Cressee, and Mr. —— [looking at deed from Cressee to Miss Simpson]. There are no conveyances at all which affect those incumbrances. If there is anybody here at this stage of the case who is to blame for any default in selling, or Inability to sell, by reason of those judgments, it is Mr. Ryon, and not Mr. Cressee. Mr. Ryon cannot have any footing in this court, the transaction being as I have stated it, based upon the idea that the enterprise of selling these lands failed by any fault of Mr. Cressee. There is no pretense that between them—between Cressee and Ryon— they didn't convey a perfect title—excepting incumbrances for which Ryon was responsible—to the premises to Miss Simpson, and from her to the Security Land & Improvement Company; and I repeat, the only person to blame for the inability to make sale was Mr. John T. Ryon, and he is the only answering defendant here. Therefore, so far as the enforcement of the mortgage goes against Mr. Ryon, there has nothing appeared in this cause that can stay the hand of the court for a moment.
Now we come to the other aspect of the case, and about that I have had some doubt; not as to the merits, but as to the propriety of this proceeding. The bill, after the usual clauses for foreclosure of the mortgage, sets out that certain persons claim to have a lien upon that portion of the premises which lies between Twenty-Sixth and Twenty-Ninth avenues by virtue of having mortgages and judgments,—a mortgage executed by Ryon, and judgments against him; and it prays that those liens may be declared to be subject to the complainant's mortgage. I believe that is right, is it not, Colonel? Col. Potter: That is the general effect of it THE COURT: That is the effect of the prayer, and it states the reason; and upon consideration—the best consideration I can give the case—I think there is no misjoinder of causes of action, no multifariousness about the bill; and, if there were such misjoinder or multifariousness, the point has not been taken by any of the answering defendants. I think there is no multifariousness, for this reason: The object of the bill is to have the property sold, and the proceeds applied to the payment of this debt. Now, it is clearly to the interest of all parties to have the title ascertained and settled before the sale takes place, and it is also quite in line with the proceeding in a foreclosure suit to have the order of priority settled. And while it is well settled that a mortgagee who admits that there are other incumbrances prior to his cannot bring them in, and compel them tocome into court, and join in the sale by him, if those incumbrances are apparently prior, yet if he alleges by his bill that they are in equity subsequent to his, and asks that they be subrogated and made subsequent to his lien, then I think he is perfectly justified in bringing them into the bill to foreclose, to have the title settled at once. That, now, brings us to the incumbrances. That goes back to another transaction a little more than 10 years earlier, very much the same in its character and surroundings as the one that I have just been dealing with, and to understand the case it is necessary to keep them entirely separate in your mind; and I confess that, owing to the desultory and fragmentary manner in which this cause has been tried, I have at times been confused because there were introduced two transactions very much alike. Now, Mr. Humphrey Cressee seems to have been first and last an owner of considerable land on Five-Mile Beach, and some time in the year 1878 he conveyed a block of Five-Mile Beach to Messrs. Swope and Laverty,—the same Swope here sworn as a witness; and Mr. Laverty? I do not know whether he was sworn or not Counsel: He was.
THE COURT: To those two gentlemen; and he took back a big mortgage, precisely as he has done here. Those two gentlemen— Messrs. Swope and Laverty—also formed a corporation called the "Five-Mile Beach Improvement Company,"—precisely as Swope and Ryon formed a corporation in 1890 to exploit the second purchase from Cressee. Cressee conveyed that property to them in 1878, I think. Give the date of that, please.
Col. Potter: He didn't convey directly to Swope and Laverty; conveyed to Sperry.
THE COURT: Mr. Humphrey Cressee, in 1878, 19th of May, conveyed to William H. Sperry a tract of land on Five-Mile Beach, and William H. Sperry conveyed later to Swope and Laverty. Swope and Laverty formed the Five-Mile Beach Improvement Company, and conveyed the premises to that company. They, however, were the company; one was the president, and the other the secretary. The Five-Mile Beach Company, on the 26th of December, 1879, conveyed to Mr. Ryon what was supposed to be a portion of the land conveyed by Cressee to Sperry, and by Sperry to Swope and Laverty, and from them to the company; and that deed, I shall assume for the present purposes, conveyed to Mr. Ryon the whole or a portion,—that part of the premises here in question that laid between Twenty-Sixth and Twenty-Eighth avenues—so that Mr. Ryon became seised
Col. Potter: For the purpose of conveying the land between Twenty-Sixth and Twenty-Seventh avenues.
THE COURT: Where do you get the others?
Col. Potter: Two deeds made subsequently. THE COURT: This is between Twenty-Sixth and Twenty-Seventh?
Col. Potter: Yes, sir.
THE COURT: Between Eighteenth avenue and Twenty-Seventh avenue: that would be just one strip, between Twenty-Sixth and Twenty-Seventh avenues, included in this conveyance?
Col. Potter: Yes, sir.
THE COURT: When were the others conveyed ?
Col. Potter: There they are on your desk.
THE COURT: And on the 29th of March, 1881, the Five-Mile Beach Improvement Company conveyed to Mr. John T. Ryon all the lands between Twenty-Seventh and Twenty-Ninth avenues. The third deed was dated 1882, 14th of July, which amounts to nothing here. There were two deeds, then. I will repeat: One dated in December, 1879, conveying the tract between Eighteenth and Twenty-Seventh avenues, which included one strip between Twenty-Sixth and Twenty-Seventh avenues, here in dispute; and the other dated March 29, 1881, which included the strip between Twenty-Seventh and Twenty-Ninth avenues, and covered the rest of the land here in dispute. Those deeds I shall assume conveyed the title—the legal title—to Mr. Ryon, so far as they appear on their face, and for a valuable consideration. On the 19th of June, 1880, after the first of the deeds I have just recited, but before the second one, Swope and Laverty on the one part, and Cressee on the other part, entered into a written agreement by which they fixed—an informal agreement— by which they fixed a division line on Five-Mile Beach between the lands of the Five-Mile Beach Improvement Company on the northeast and of Cressee on the southwest, at a line which was to run across the beach from northwest to southeast at a distance of 46 1/2 rods northeast from where Lemuel Learning's cabtnused to stand; and if it is admitted that Lemuel Learning's cabin has been properly located by the evidence in this cause, that line will run through Twenty-Sixth avenue. That informal agreement was carried out by a more formal deed, which was dated, executed, and recorded on the 22d day of June, 1880, executed by the Five-Mile Beach Improvement Company, by F. E. Swope as president, and Laverty as secretary, and by Humphrey Cressee, under his seal, and properly proven and acknowledged in all respects, and recorded on the same day at Cape May courthouse. That has been called the "deed poll," to distinguish it from a deed of grant. It is not a deed of grant, and conveyed no title to anybody. Its language is this: "Whereas, the said Humphrey Cressee is the owner of other lands lying to the southwest of the premises described in the above-recited deeds" (which are the deeds from him to Sperry, and Sperry to Swope and Laverty, and Laverty and Swope to the Five-Mile Beach Improvement Company), "and whereas, there has been a misapprehension between the said the Five-Mile Beach Improvement Company and the said Humphrey Cressee as to the boundary line between theproperty of the said the Five-Mile Beach Improvement Company and the property of the said Humphrey Cressee, and this deed poll is executed by the said parties in order that all doubts as to the same may hereafter be quieted and set at rest forever: Now know ye that the said the Five-Mile Beach Improvement Company and the said Humphrey Cressee, for and in consideration of the premises and of the sum of one dollar, lawful money of the United States of America, paid by the one to the other at or before the time of the execution and delivery hereof, receipt whereof is acknowledged by these presents, have, and by these presents do, mutually agree with each other that the boundary line between their several properties shall be fixed and determined hereafter as follows,"—then describing the line running through Twenty-Sixth avenue, precisely as it was described in the preliminary agreement Now, let us stop a moment to see what that deed amounts to. If it could be treated as what is called now at law a "practical location," it would amount to a conveyance. It would be recognized at law as a "practical location," passing title on each side of it. I am by no means sure that a court of law would not so treat it. What I mean by "practical location" is this: Two adjoining owners are in some dispute about the line between them. They deliberately go together to mark it out, build a fence or put other monuments on that line; and in old times it was held that that did not pass any title; it only bound them in equity; but modern decisions, for the last 50 years, I think, have held that such conduct does pass the title, and may be set up at law. I am not sure that this deed is not good at law as a conveyance. I do not find it necessary to determine that question, for it is undoubtedly good in equity, and binds those parties.
Now, who were the parties to it? The Five-Mile Beach Improvement Company and Humphrey Cressee. But here comes the difficulty. I have already found as a fact that some six months prior to that the Five-Mile Beach Improvement Company had made a conveyance for a valuable consideration to John T. Ryon for a part of those premises, and that title was vested in him. Now, so far as his creditors are concerned (so far as John T. Ryon individually is concerned), it was all cured by the conveyance of December 31, 1890, or January 1, 1891; but, so far as his creditors are concerned, they stand on a different footing, and they must be dealt with. Now, there was only one of the two deeds made by the Five-Mile Beach Improvement Company to Mr. Ryon, which was executed prior to that agreement of June, 1880, called the "deed poll," and that deed is the one of December 26, 1879, and it was not recorded until November 18, 1880, four or five months after the recording of the deed poll. But that failure to record did not prevent the title passing when the deed was delivered; and if the Five-Mile Beach Improvement Company had made this settlement of the line by the deed poll without any consideration, a very serious question would arise as to whether or not Mr. Cressee could set it up against the prior holder of the title; the rule in equity being this: that where a man has the legal title he can only have that divested—the only way known for the present purpose—by a bona fide purchase without notice. Now, there was no pretense—there was no proof offered here— that Mr. John T. Ryon took any immediate possession under that conveyance of December 26, 1879. None of his creditors set it up. None of the creditors show any facts which gave Mr. Humphrey Cressee the least notice of that deed to Ryon when he made the deed poll of June 22, 1880. Therefore, if Cressee paid anything for that deed poll, he is a bona fide purchaser for value, in equity, and is entitled to take precedence of the unrecorded deed. Now, the contemporaneous agreement is produced, dated the same 22d day of June, 1880, entered into between the Five-Mile Beach Improvement Company and Cressee, by which the consideration is fully shown, and Mr. Swope proves it orally. Mr. Swope says that Mr. Cressee held the mortgage on all the Five-Mile Beach improvement Company laud, and they wanted to release a block—a large block—to a gentleman (Col. Brook, or some one who was interested in it, having negotiated its sale, or something of that kind, and wanted a block of six lots freed of the incumbrance), and in order to induce Mr. Cressee to release those lots they were obliged to accede to his demand to fix the line where it was fixed by the deed poll of June 22, 1880. Now, I shall not recite the contents of that contemporaneous agreement of June 22, but, as I recollect it sets up a full consideration, and it is such a consideration as cannot be now measured in money, because, if it had been taken in time—if Mr. Ryon had asserted his right in time, and said, "Here, to be sure, you have cut my title out, because I didn't get it recorded by paying so much money; yet I am willing to pay you that money back"—I say that might have been done if it had been taken in time, but the thing has gone too far, and the equitable title has become vested in Mr. Cressee. Now therefore Mr. Cressee, at least in equity, I say, has got a paramount title, because he has shown the consideration. He cannot be restored to his original position. The lots that he released are gone, and he took this location of the line in payment of it, and the result is that this deed stands as against Mr. Ryon.
How is it as against his subsequent incumbrances? I have not looked at the statute, but at that date—the time when this deed poll was made, in 1880—there was a provision in the statute for the recording of contracts, was there not, long before that? and, granting that it was a mere contract, it was such a one as the law provided for the record of. It passed an equitable title, and it seems to me is clearly within the recordbagacts. Then let us see where any of the subsequent incumbrances come in on the original title which was made by the first deed from the Five-Mile Beach Improvement Company to Ryon, which was really paramount in date to the deed poll. First is a mortgage,—a mortgage given to the Bethlehem Iron Company. They do not appear here and make any defense, and it does not appear whether their mortgage has been paid or not, and they took subject to the deed poll; and therefore, if I am right in my conclusion that it was a writing,—a deed of such a character as that all persons subsequently purchasing the title must take notice,—then they have no standing in this court.
In regard to the judgment creditors, their position is not so favorable as that of the mortgagee, for I held in Harney v. Bank, 52 N. J. Eq. 697, 29 Atl. 221, that a mere judgment creditor is never a purchaser for value, upon all the authorities except those of Pennsylvania. A purchaser under a judgment may be a bona fide purchaser, but the creditor himself is never a bona fide purchaser; and, quite independent of the recording of this deed poll, it would take precedence over these judgment creditors.
Now, that ends the case, as I understand it. There was a proceeding to settle this title by a bill in chancery, and very properly, because Mr. Ryon did appear to have a conveyance for a part which antedated this deed poll; but that was abandoned arid all settled, so far as Mr. Ryon was concerned, by the transaction of 1891; and I do not see that it has any bearing on this case, except to show the deliberateness of the transaction of December 21, 1891, when the parties were acting by counsel,—Mr. Ryon had counsel,— when he deliberately discontinued his suit.
There has been no ground suggested to me in this court by which this transaction should be torn up. An immense amount of testimony and very interesting evidence has been given about where the old line was, and it seems to me that there is strong evidence that Richard Ludlum did, by some means, move his line to the northeast, and naturally everybody would think that the rest of the lands were carried to the northeast up to what is called the "Twin Holly," and out of that arose a confusion. That of itself is a matter out of which a dispute might arise. The location of that line 40 or 50 years ago— and I have no doubt it is 40 or 50 years ago— was passed through the Twin Holly by Mr. Ludlum, whereas the true line was some distance to the southwest. And I may repeat here that a careful examination, not only of the evidence, but of the piece of the tree itself brought to me here in court, satisfies me that that tree was marked with a surveyor's mark, viz. a blaze and three notches below it. I have never seen a plainer surveyor's mark of that age, and I have seen a great many; and I must repeat my astonishment that a gentleman of Mr. Haines' standing could come here in front of anybody who knows anything about surveyors' marks on trees, and swear that there was no surveyor's mark on that tree. He says it was 40 years old, and Mr. Rhodes says about 50. That would bring it about the time that Mr. Rhodes says they settled on that place as the line. That location may be erroneous; probably was. Possibly it was further to the southwest, but the question is, was that not sufficient to justify Mr. Cressee in making a claim which he finally succeeded in having recognized for a consideration,—fixing his line at Twenty-Sixth street? I think, therefore, that the complainant is entitled to his decree of fore closure, and that he is also entitled to a decree declaring that none of the other parties can have a lien on this land.
Mr. Snyder: How about the usury?
THE COURT: I haven't considered that, because usury was not set up.
Mr. Snyder: Yes, it is.
THE COURT: If it is in the original agreement, I don't think that makes it usury.