Opinion
Decided October 9th, 1935.
1. Defendant counter-claimed to complainant's bill to foreclose, setting up complainant's warranty deed and the contention that the title conveyed was defective, and praying that the deed be declared void, the purchase-money mortgage canceled of record and the money paid to complainant returned. There being no allegation of encumbrance, nor of fraud or misrepresentation by the complainant, nor of mutual mistake or any other ground of equitable jurisdiction, nor any allegation or offer to prove eviction, nor any pending action at law to determine the issue of the alleged defective title, the counter-claim held, to constitute no defense to the foreclosure suit and no ground for a stay.
2. Under the circumstances of the case, defendant must seek his remedy at law; counter-claim dismissed.
3. Although complainant first objected to the counter-claim at the trial the objection did not come too late. Being jurisdictional, it may be made at any time.
4. The objection to the counter-claim could and should have been made earlier; no costs other than costs on an uncontested foreclosure will be allowed, and the counsel fee will be merely nominal.
On appeal from a decree of the court of chancery advised by Vice-Chancellor Buchanan, who delivered the following opinion:
"Complainant's bill is to foreclose a purchase-money bond and mortgage of $12,800, made to complainant by defendant Pompeo, May 7th, 1926. Due proof in respect thereof was made, showing the full amount of principal due and owing, together with interest at six per cent. from May 7th, 1932.
"Proof was also made by the United States of America, as a subsequent encumbrancer, that there is due to it $29.45, balance of a judgment for costs entered October 17th, 1929.
"The answer sets up no defense other than a denial of the amount alleged to be due; and admittedly the amount alleged and proven as due and owing on the bond and mortgage is correct, unless the defendant is entitled to some deduction or other relief in respect of his counter-claim.
"This counter-claim sets up only complainant's warranty deed to defendant and certain allegations of fact as to the chain of title antecedent to the deed by which complainant took title, and defendant's contention is simply that the title conveyed to him by complainant was and is defective, and he prays that that deed be `declared void,' or (inferentially) that there be a decree for reconveyance by defendant to complainant, and that the purchase-money mortgage be `canceled of record,' and that complainant return to defendant the portion of purchase price actually paid in cash.
"There is no allegation of encumbrance, nor of fraud or misrepresentation by complainant, nor of mutual mistake, nor of any other ground of equitable jurisdiction; and defendant's counsel admitted that the sole contention was that there was a failure of consideration by reason of the alleged defective title.
"There is neither allegation nor offer to prove eviction, nor any pending action at law to determine the issue as to the alleged defective title.
"Under such circumstances, the matters set up by this counter-claim constitutes no defense to the foreclosure suit, and no ground for stay. Hawthorne v. Odenson, 94 N.J. Eq. 588; Security Trust and Savings Bank v. Reed, 101 N.J. Eq. 53; approved in Emery v. Hansen, 107 N.J. Eq. 117 (at p. 119). Neither do they set forth any equitable cause of action; defendant's remedy must be sought at law.
"Complainant is entitled to decree of foreclosure in usual form; and the counter-claim must be dismissed.
"Defendant urges that this legal objection by complainant to the counter-claim is not set up in his answer to the counter-claim and, being made for the first time at the trial, comes too late. The objection being jurisdictional may be made at any time. The counter-claim presents an issue as to title, and this court is without jurisdiction to entertain such an issue in the absence of any other facts giving rise to equitable jurisdiction.
"It is true that the objection could and should have been made earlier — as by motion to strike; even if it had been made in the answer to the counter-claim, defendant would have been appraised thereof and would have produced his witnesses in court at his own risk. In view of these facts, no costs will be allowed complainant other than the costs as on an uncontested foreclosure, and the counsel fee in such costs will be merely nominal."
Mr. Terry Parker, for the appellants.
Mr. Alexander Schenck, for the respondent.
The decree appealed from will be affirmed, for the reasons stated in the opinion delivered by Vice-Chancellor Buchanan in the court of chancery.
For affirmance — THE CHIEF-JUSTICE, TRENCHARD, PARKER, LLOYD, CASE, BODINE, DONGES, HEHER, PERSKIE, VAN BUSKIRK, HETFIELD, DEAR, WELLS, JJ. 13.
For reversal — None.