Opinion
Argued May 20th, 1938.
Decided October 17th, 1938.
1. Agreement to make a mortgage on real estate is an agreement relating to an interest in lands and under the statute of frauds must be in writing in order to be legally effective.
2. The advancement, by an intending mortgagee of real estate to the proposed mortgagor, of the mortgage money, is not such a partial performance as will take the case out of the statute of frauds, and support a decree requiring that the agreement to mortgage be specifically performed.
On appeal from a decree advised by Vice-Chancellor Lewis, whose opinion is reported in 122 N.J. Eq. 596.
Mr. Edward F. Merrey ( Mr. Peter Cohn, on the brief), for the appellants.
Messrs. Mendelsohn Mendelsohn ( Mr. Sam Mendelsohn), for the respondent.
The facts are fully, and as we think after a careful examination of the evidence, correctly stated in the opinion of the learned vice-chancellor. The reasoning of the opinion below proceeds on the theory of awarding specific performance of an agreement to make a mortgage, on the ground of part performance by complainant, such part performance consisting simply of the advancing of the mortgage money. In support of this the opinion cites several decisions in other states, of course not controlling here, and three cases in this state, viz., Dean v. Anderson, 34 N.J. Eq. 496; Clark v. Van Cleef, 75 N.J. Eq. 152, and Rutherford National Bank v. H.R. Bogle Co., 114 N.J. Eq. 571. This last is a decision also by Vice-Chancellor Lewis, in which he relies, as in this, on the two earlier cases. An examination of them satisfies us that they are not in point on the facts. In Dean v. Anderson there was a complicated situation of exchange of properties, involving a mortgage. All the deeds were executed and delivered and all that remained was the delivery of one mortgage. In Clark v. Van Cleef, specific performance was denied on the ground that the six year statute of limitations having barred recovery at law, barred the equitable remedy as well. It will be seen, therefore, that what Vice-Chancellor Walker said in that case on the matter of specific performance was mere dictum, not essential to the decision. We think it is the settled rule that the payment of money, without more, does not constitute such a partial performance as to take the case out of the statute of frauds, where real estate is involved. Pom. Eq. Jur. ( 2d ed.) ¶ 2246; Cooper v. Colson, 66 N.J. Eq. 328, a decision of this court. And we consider that a mortgage creates an interest in lands, in the sense indicated by section 5 of the statute of frauds. In Bernheimer v. Verdon, unofficially reported in 49 Atl. Rep. 752, the late Vice-Chancellor Stevens held, at page 734, citing and following Browne, Stat. Frauds § 267, that an agreement to mortgage a lease was a contract for an interest in lands, within the fifth section; and this court in affirming adopted his opinion. 63 N.J. Eq. 312. In Joseph S. Naame Co. v. Louis Satanov, c., Corp., 103 N.J. Eq. 386, the late Vice-Chancellor Ingersoll held that a mortgage creates an interest in lands and that the statute is applicable. On appeal ( 109 N.J. Eq., at p. 167) we reserved the point as unnecessary to decide, but later, in George v. Meinersmann, 119 N.J. Law 460, held that an oral agreement not to foreclose a mortgage was within the statute, citing and relying on the Naame Case in 103 N.J. Eq. It follows that the simple transfer of the mortgage money from respondent to his wife's parents would not suffice to remove the bar of the statute.
The foregoing considerations require a reversal of the decree under review unless it can be supported on some other ground apparent on the face of the bill; and we find no such ground. The bill counts solely upon a proposition made by the defendants that if complainant would let them have the money, they would make a mortgage; and that he did let them have the money, but that they refused to make the mortgage. Consequently, as there was no contract in writing, and in view of the law as we have found it to be, there was no case for equitable intervention.
The decree is therefore reversed, and the case remitted to the court of chancery with directions to dismiss the bill of complaint.
For affirmance — HEHER, HETFIELD, DEAR, WELLS, WOLFSKEIL, JJ. 5.
For reversal — THE CHIEF-JUSTICE, TRENCHARD, PARKER, CASE, BODINE, DONGES, PORTER, RAFFERTY, WALKER, JJ. 9.