Opinion
02-12-1894
SOUTHER v. PEARSON et al.
E. M. Colie, for complainant 。 C. B. Harvey, for defendants.
Bill by Charles E. Souther against Edward A. Pearson and others for the foreclosure of a mortgage. Decree for complainant.
E. M. Colie, for complainant 。
C. B. Harvey, for defendants.
GREEN, V. C. This is a bill to foreclose a purchase-money mortgage given by Edward A. Pearson and wife to Erastus E. Marcy upon certain premises on Orange mountain, lying west of and abutting on Prospect avenue, containing 17.328 acres, to secure the payment of $2,500 in five years, with interest at 5 per cent., the property having been conveyed by Dr. Marcy to Pearson by deed of the same date. The interest was paid in full to March 10, 1889, and is indorsed upon the bond, as well as a credit of $2,500 on account of the principal. Edward A. Pearson and wife, by deed dated December 1, 1888, conveyed to the Orange Mountain Land Company 14.788 acres, with a frontage of 900 and odd feet on Prospect avenue, leaving the title to the balance of 2.540 acres of said tract in Pearson. Subsequently several judgments were obtained against the Orange Mountain Land Company, and execution issued, by virtue of which the sheriff of Essex county sold the property so conveyed to the Orange Mountain Land Company to George Spottiswood, to whom it was conveyed by the sheriff by deed dated January 20, 1891. Subsequently Mrs. Pearson, by deed, released her dower in the same premises to the grantee. August 5, 1891, George Spottiswood and wife executed and delivered to Erastus E. Marcy a deed which purports to convey the whole 17.328 acres, but it does not appear that Spottiswood had any title other than that from the sheriff, which could be for only 14.788. The answering defendants charge that by theseconveyances the mortgage given by Pearson to Marcy merged as to the whole of the premises conveyed by and described in the complainant's mortgage. The complainant contends that there was no merger, but that it was the intention of Marcy that the mortgage should remain an existing lien upon the whole of the premises, and that it still remains and is a valid lien thereon. July 11, 1889, Isaac W. Maclay and William E. Davis recovered judgment in the supreme court against Edward A. Pearson, and a number of other judgments were obtained against said Pearson in the supreme and Essex county circuit courts, on some of which judgments executions were issued, by virtue of which the sheriff of Essex county sold the premises described in the mortgage, excepting thereout the premises described in the deed of Pearson to the Orange Mountain Land Company to the said Isaac W. Maclay and William E. Davis, and conveyed the same to them by deed dated August 25, 1891. This deed conveyed the 2.540 acre tract. December 22, 1891, Erastus E. Marcy assigned the mortgage from Pearson to himself to the complainant it is admitted that this assignment to complainant was for the convenience of bringing this suit, as the latter lives in New Jersey, and Dr. Marcy only had a summer residence here. January 14, 1892, Erastus E. Marcy and wife, by deed dated on that day, conveyed to John Crosby Brown the premises described in the deed from Pearson to the Orange Mountain Land Company, being the 14.788 acres, and on January 16, 1892, the complainant, Charles E. Souther, released the 14.788 acres from the lien of the mortgage. It appeared in evidence that the consideration paid by John Crosby Brown for the property was $2,500, and that the same payment was the consideration for this release. All the deeds and mortgages mentioned were recorded on or about the day of their respective dates in the Essex county register's office. The object of the bill is to foreclose this mortgage as a subsisting lien upon the 2.540 acres for the balance due on the bond. The 14.788 acres, having been released by the complainant, are not included in this suit These having been sold by Dr. Marcy to Mr. Brown for $2,500, the only questions which the defendants can raise are: First, whether there was such a merger as to annul the mortgage; and the next, what equities arise in favor of the defendants by virtue of the release of the 14.788 acres from the mortgage?
It is claimed, in the first place, that the deed from Spottiswood to Marcy operated to merge the mortgage in the ownership. The property described in this deed, it is true, embraces the whole tract, but Spottiswood's title did not cover the 2.540 acres. All that he could possibly obtain by virtue of a sheriff's sale under a judgment against the Orange Mountain Land Company was so much of the tract as had been conveyed to the company by Pearson, namely, 14.788 acres. The modern doctrine with reference to merger is that the question is to be decided not alone from the fact of the mortgagee taking a conveyance of the mortgaged premises, but is to be ascertained from the intention of the parties to the transfer. And while it might be assumed, if unexplained, that a party who took a conveyance of premises, on which he at the time held a mortgage, intended by accepting such conveyance to no longer regard his mortgage as an incumbrance thereon, such presumption I do not think is to be indulged in when the property conveyed to the mortgagee is not coextensive with that covered by his mortgage; for the presumption referred to, which operates as an extinguishment of the security, is based on the fact that the pledgee has become the owner of the pledge, with the consequent inconsistency of holding that in pledge of which one is the absolute owner,—a condition which does not follow from the fact that the mortgagee obtains title to only a part of that which formed his security. Nor is merger to be predicated on the fact that the Orange Mountain Land Company, in their deed from Pearson for 14.788 acres, assumed the payment of this mortgage. No agreement which Pearson and his grantee could make could possibly affect the security held by Dr. Marcy, nor does he become a party to that agreement by becoming a grantee of the purchaser at a sheriff's sale under a judgment against the land company.
Next, how are the rights of the defendants, as the owners of 2.540 acres, affected by the release of the 14.788 acres in the mortgage? This release was given by the present complainant to John Crosby Brown, a purchaser from Dr. Marcy. Hill v. Howell, 36 N. J. Eq. 25, was a suit brought for the foreclosure and sale of mortgaged premises. The mortgage was given by one Howell, who subsequently sold to one Smith. He conveyed six portions of the land to different parties, and afterwards the mortgagee released the tract sold fourthly in order of time. The chancellor held that, as the mortgagee had actual notice and knowledge of the first, second, and third conveyances at the time she released the fourth from the incumbrance of her mortgage, she must, before resorting to the first, second, and third tracts on foreclosure, credit those tracts with the value of the tract released; and that value must be estimated as of the time when the release is given, although the tract released was then worth less than it was when the deed for it was given. Applying the principle of this case to the one in hand, it is incumbent upon the complainant to credit the remaining tract with the value of the 14.788 acres at the time the release was given, which was January 16, 1892. I think the value of $200 per acre must be accepted from the evidence as the value at the time of the release, although the witnesses intimate that that is a high price.
I will advise a decree for the complainant on the lines suggested, and will pass upon the question as to the apportionment of the costs on settlement of the decree. A copy of the proposed decree, and notice of motion to settle the same, should be served on the defendants' solicitor.