Opinion
Decided June 8th, 1927.
1. In a suit to foreclose a purchase-money mortgage, a defense of paramount title will not be entertained in the absence of a covenant of title in the deed of conveyance to the mortgagor, unless fraud or mistake is disclosed.
2. In a suit to foreclose a purchase-money mortgage, a defense of prior encumbrances will not be entertained in the absence of a covenant against encumbrances in the deed of conveyance to the mortgagor, unless fraud or mistake is disclosed.
On bill to foreclose purchase-money mortgage. Hearing on motion to strike out affirmative defenses.
The bill seeks foreclosure of a purchase-money mortgage. The answer of defendant mortgagor sets up by way of defense the claim that at the time the land was conveyed to defendant and the purchase-money mortgage was executed by him two prior mortgages existed against the premises, which mortgages are still outstanding and unpaid, and also the claim that since the conveyance was executed defendant has ascertained that his vendor did not have title to an undivided one-half part of the premises so conveyed. Credit is sought for the amount of the encumbrances and for the failure of title to part of the land. No fraud or mutual mistake is alleged. Nor does it appear that the deed of conveyance to defendant contained either covenants of title or covenants against encumbrances.
Motion is now made in behalf of complainant to strike out these affirmative defenses.
Mr. William D. Lippincott, for the complainant.
Messrs. Knight Orlando, for the defendant.
In the absence of fraud or mistake defenses of this nature are wholly dependent upon the covenants contained in the deed of conveyance. When the deed from complainant to defendant contains a covenant against encumbrances the mortgagor will be entitled to a deduction for prior encumbrances. This is because in such circumstances that covenant may be deemed already broken when made and this court may appropriately determine an issue of that nature. When the deed contains a covenant of title this court will not undertake to adjudicate an issue of title to determine whether the covenant has been broken, but will leave that issue for the courts of law. This is because the primary jurisdiction for adjudication of legal title rests in courts of law. If there has been an ouster under a paramount title the covenant of title may be deemed broken and relief may be awarded; otherwise the utmost relief this court will grant in such circumstances is to stay the foreclosure pending an action at law. When the deed contains no covenants no relief will be awarded. This is because in buying without covenants the doctrine of caveat emptor must apply, and the deed is to be regarded as the final expression and measure of the engagements of the respective parties. These views will be found to be adequately supported in the cases cited in Kuhnen v. Parker, 56 N.J. Eq. 286, and Hawthorne v. Odenson, 94 N.J. Eq. 588, to which should be added Rathewicz v. Kara, 89 N.J. Eq. 203.
It follows that since the affirmative defenses disclose neither fraud nor mutual mistake nor covenants of title nor covenants against encumbrances, complainant's motion must prevail.