Opinion
07-28-1913
DONOVAN v. SMITH et al.
Roberson & Demarest, of Jersey City, for complainant. Austin Van Gieson, of Newark, for. defendant Walter M. Smith. James Benny, of Bayonne, for defendant Bayonne Building Ass'n No. 2. Philip F. Botzong, of Jersey City, for other defendants.
(Syllabus by the Court.)
Bill by Catherine Donovan against Walter M. Smith and others. Decreed according to opinion.
Roberson & Demarest, of Jersey City, for complainant.
Austin Van Gieson, of Newark, for. defendant Walter M. Smith.
James Benny, of Bayonne, for defendant Bayonne Building Ass'n No. 2.
Philip F. Botzong, of Jersey City, for other defendants.
ROE, Advisory Master. The facts of this case are that on December 4, 1895, one Thompson, being the owner of certain lands in Bayonne, executed a mortgage thereon to the Fidelity Title & Deposit Company to secure the payment of $2,500. Subsequently Thompson and wife conveyed the mortgaged premises to Lewis, subject to a mortgage. In 1897 Lewis conveyed the premises to one Lillian Smith, subject to the said mortgage. In 1898 the Fidelity Title & Deposit Company filed its bill of foreclosure in this court, making Lillian Smith the sole defendant On September 12, 1898, a final decree was entered for sale of the premises, and upon execution issued to the sheriff of Hudson county, the premises were sold on November 3, 1898, to the mortgagee for $1,500. This sale was confirmed, and the deed executed by the sheriff. In March, 1899, the purchaser, the Fidelity Title & Deposit Company, sold the property to one Herbert, and in 1899 Herbert conveyed the premises to Mary Donovan. During the same year Mary Donovan gave a mortgage to the defendant the Centreville Building & Loan Association for $5,000, the proceeds of which were used for the erection of a building on the premises. During the same year Mary Donovan made conveyances of part of the premises to complainant, part to Daniel F. Donovan, who subsequently conveyed said part to complainant. Other mortgages were made by various owners to other defendants upon various portions of said land. Lillian Smith at the time of the conveyance to her was a married woman, and wife of the defendant, Waiter M. Smith, to whom she had borne children. She died October 5, 1900, leaving the defendant Walter M. Smith and one child, the issue of the said marriage, her surviving. The fact that Lillian Smith was a married woman was not known at the time of the foreclosure and not until 1904. In 1904 the defendant Walter Smith demanded possession of the mortgaged premises, and brought an action of ejectment for the possession of same. The bill in this case is filed to restrain said action, and prays for a decree of strict foreclosure as against the defendant Walter M. Smith. The complainant is the owner of the original mortgage, upon which her bill is based.
Under the statutes of this state a married woman may be seized in fee of real estate as her separate property. The sale made under the foreclosure suit, in which her husband was not a party, was a judicial sale, and passed her title to the same to the purchasers under that foreclosure sale.
Apart from the statutes of New Jersey, giving effect to judgments against a married woman (Comp. St. p. 3236, § 12), equity has inherent power to make and enforce decrees against the separate estate of married women (Pom. Eq. Jur. p. 1121), but the statute expressly provides that no judgment or decree shall affect the interest of the husband in such real estate (Comp. St p. 3237, § 14). The estate of a feme covert in lands may be transferred by a decree of this court in an action in which the husband is not a party. For that purpose he is a proper, but is not a necessary, party. Bristol v. Skerry, 64 N. J. Eq. 625, 54 Atl. 135.
The defendant Walter M. Smith had an interest in said property; that interest was not an estate. The estate by the curtsey initiate has been destroyed in this state by virtue of the Married Woman's Act Porch v. Fries, 18 N. J. Eq. 204. Trade Insurance Co. v. Barracliff, 45 N. J. Law, 543, 46 Am. Rep. 792. The husband, therefore, had no estate in the equity of redemption of which his wife was seized, yet under the interpretations of our Married Woman's Act the husband has an interest in his wife's land, in case children are born to them. The interest is designated in our decision as an "inchoate right of curtesy." The Court of Errors and Appeals in Trade Insurance Company v. Barracliff, supra, characterizes this interest as "he surviving, would bloom into a freehold." This interest has been recognized by the Court of Chancery in the case of Doremus v. Paterson, 69 N. J. Eq. 193, 57 Atl. 548, and Leach v. Leach, 69 N. J. Eq. 620, 61 Atl. 562. The foreclosure sale, therefore, did notcut off the interest of the defendant Walter M. Smith as husband of Lillian Smith. That interest subsequently ripened into an estate by the curtesy, upon the death of his wife in 1900. The estate of the defendant Walter M. Smith, now outstanding, entities him to maintain a bill to redeem, and also entitles the complainant in this suit to maintain a bill to foreclose the interest of said Smith.
The complainant has filed such bill, and asks for a decree against the defendant Walter M. Smith of foreclosure without sale. This method of foreclosure without sale, or strict foreclosure, was the only method of foreclosing a mortgage in England for a long period after the Court of Chancery, in the reign of James I of England, had established the equitable principle of giving to the mortgagor the right of redemption, a principle fixed upon the common-law doctrine that a mortgage was a conditional conveyance in fee, which became absolute upon the failure to fulfill the condition of such mortgage by the payment of money on the due date. This right of redeeming "a dead pledge" was enforced in equity by a bill filed by the mortgagor to redeem the mortgaged premises after default. It also gave to the mortgagee the right to file a bill against the mortgagor, establishing the amount due upon the mortgage, and calling upon him to redeem the mortgaged premises at a certain time, or thereafter be foreclosed of such right of redemption. Pom. Eq. Jr. c. 5, § 1.
The two theories, legal and equitable, still prevail. The mortgagee after default had the legal remedy of an action of ejectment, and until our statute of 1880 (Comp. St. p. 3421, § 48) he could sue at law on his bond, and at the same time pursue his equitable remedy of foreclosure. The legal remedy of an ejectment yet prevails in this state. Mershon v. Castree, 57 N. J. Law, 484, 31 Atl. 602. Strict foreclosure was the only method of foreclosure that prevailed in England to a late date. Jones on Mortgages, § 1538. The sale of mortgaged premises under foreclosure proceedings was a doctrine that Courts of Equity subsequently adopted, in order to do justice to both mortgagor and mortgagee. Lansing v. Goelet, 9 Cow. (N. Y.) 352. The latter method of foreclosing by sale became so universal that the old doctrine of strict foreclosure is rarely called in operation in this state. It is still, however, a remedy that is available, where the conditions of such a sale would not operate to advantage, or where such sale would be unprofitable. One of the cases where the remedy of strict foreclosure is a proper remedy is in the case where a mortgagee is in possession under title from the mortgagor, and it is then used for the purpose of cutting off subsequent liens and incumbrances, as in case one has purchased on good faith at a mortgage sale which is not conclusive, against such incumbrancer, who is not made a party to the suit for foreclosure and sale, and the purchaser has gone into possession of the property under such sale. Benedict v. Gilman, 4 Paige (N. Y.) 58. Jones on Mortgages, p. 1540; Pom. Eq. Jur. p. 1227; Parker v. Child, 25 N. J. Eq. 41.
One class of incumbrancers may be the estate of a tenant for life. In such a case it is said in Pomeroy on Equitable Jurisprudence, § 1223, the problem then is to ascertain what portion of the total mortgaged debt represents the annual interest on the mortgage which the life tenant is bound to pay during his life, subtracting that amount from the total sum; the balance is the share which the owner in the fee must contribute, and for which the life tenant may hold the mortgage as a lien on the land. An element of uncertainty, the duration of the life tenant's life, is inherent in the problem, but the courts, both in this country and in England, have adopted the standard life table as the basis of such calculation in all such cases. In cases of dower, this rule has been adopted in this state. Chiswell v. Morris, 14 N. J. Eq. 101. In the present case, the fee of the property passed by the sale made under the foreclosure. After the sale this title was transferred to and rests in the complainant.
After the title of Lillian Smith passed, substantial permanent improvements were made in good faith by the owners upon the premises, enhancing the value to the extent of the cost of the same. Mortgages were given by owners and taken by the mortgagees in good faith, all under the impression that these various grantees were the owners in fee. They are entitled to be protected. Benedict v. Gilman, supra. It was two years after the sale, and after the improvements were so made and these mortgages given, that Lillian Smith died, and that the estate of the defendant Walter M. Smith became an absolute estate in curtesy. It was four years after the defendant Smith acquired this title that any of the parties knew of the existence of such interest in Walter Smith. The complainant is entitled to a decree for strict foreclosure. The amount that the defendant Walter Smith, the tenant for life, should pay to redeem the said premises is the portion of the mortgaged indebtedness representing the annual interest the defendant is bound to pay during his life, to be ascertained by the rules adopted by this court. To ascertain the amount of this indebtedness, to the principal of the original mortgage and the accrued interest should be added the cost of the permanent improvements put upon the mortgaged premises, put on in good faith by the holders of the title purchased under the original foreclosure. Interest should be added upon the last amount, and there should also be added the amount of municipal assessments, and taxes paid and accrued against the said mortgagedpremises, together with the cost of reasonable repairs to the buildings on said land. From the total of these amounts should be deducted the rents and profits of the lands, accrued since the possession under the deed given under the foreclosure proceedings. These amounts have been ascertained by the evidence taken in this case, and therefore it is not necessary to refer the same to a master to ascertain same. The balance so found is the amount of mortgage debt due to the complainant The proportion of this amount to be paid by Smith, the defendant, as tenant by the curtesy, should be ascertained by applying the tables of mortality attached to the rules of this court, and in conformity with those rules. The amount so ascertained is the portion of the mortgaged indebtedness that the defendant Smith should pay for the redemption of his estate of curtesy from the lien of the said incumbrances.
The decree should provide that the defendant have 90 days in which to pay the said amount to the complainant and upon paying the said amount in the presence of the master, he is entitled to a decree vesting in him (the defendant Walter M. Smith) his estate of curtesy free from the mortgaged liens of the complainant. The decree should further provide that out of the amount so paid for said redemption the unpaid taxes and liens on said property should be first discharged, and the balance of said amount applied proportionately to the reduction of the mortgages, held by the several defendants on said lands, and that if default be made by the defendant Walter M. Smith, in the payment of said amount at or before the time aforesaid, so mentioned, he shall be foreclosed and debarred of his right of equity in said property.
The complainant is entitled to her costs against defendant Smith.