Case ID: nj-eq_6/html/0009-01.html
Source: Caselaw Access Project
Author: {"author": "The Chancellor.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE AMERICAN LIFE AND FIRE INSURANCE AND TRUST COMPANY v. PETER M. RYERSON.
    1. When a mortgage is foreclosed for default of payment of an installment, the residue of the money not being due, the whole premises will not be directed to be sold unless a necessity for such a course exists; and when in such a case a decree has been entered for the sale of the whole premises, the court will, in its discretion, regulate the process of execution under the decree.
    2. A borrowed money of B on an agreement, making it payable in installments, and gave his notes for the payment of the installments, and a decree in this court against A was assigned to B as collateral security for the payment of the notes. The decree assigned was general, that the mortgaged premises be sold to pay the whole sum mentioned in the decree, and that a fi. fa. issue for the sale of so much of the mortgaged premises as would be sufficient to pay the said sum. The mortgaged premises were manifestly divisible. An installment having become due, the .sheriff was about to sell under the decree to raise the whole sum. He was restrained by order of the court. And subsequently, on a motion to vacate the order, it was held that the decree could be used only so far, and at such times as should be necessary to enforce the performance of the principal agreement, (the agreement i.n which the money was borrowed and the notes given,) and in the same way as if the court had been asked to direct process of execution on the decree in view of the principal agreement.
    3. The motion to vacate the order was denied, and a sale was directed of so much of the mortgaged premises as would be sufficient to pay the installment which had become due.
    ■On the 13th October, 1840, “ The American Life rad Fire Insurance and Trust Company ” Sled their bill against Peter M. Ryerson and wife, and others, to foreclose a mortgage, dated July 10th, 1835, given by Ryerson and his wife to the said company, to secure the payment of a bond of the same date, given bv Ryerson to the company, conditioned for the payment of $20,000, in five years from date, with interest, payable half yearly.; with a provision that in case the interest should at any time be in arrear for ninety days, the whole principal should be forthwith paid. Two years’interest was due when the bill was filed. To this bill Ryerson filed an answer, on the 24th May 1841, setting up usury. On the 6th of July, 1842, the company made an assignment to Patrick McCauley, Geo. F. Taiman and Anthony Barclay, in trust, &c.
    The assignment authorizing two of the trustees to act, Barclay declined accepting the trust; McCauley and Taiman accepted. On the 10th of October, 1844, McCauley and Taiman and “ The American Life and Fire Insurance and Trust Company” filed a bill called an original bill in the nature of a supplemental bill, stating the assignment, &e. To' this bill Ryerson, on the 5th of March, 1845, filed an answer, setting up the usury again, and admitting the assignment to McCauley and Taiman. No replication to this answer was put in. No future proceeding was had in the cause till September 18th, 1845. On this last-mentioned day a decree was entered for $21,000 and costs by the written consent of Ryerson, stating that on a compromise had with the complainants he had agreed to withdraw his defence and consent to a decree for that amount, with interest from September 6th, 1845; this written consent being signed July 26th, 1845.
    At this point of time, according to the petition of Ryerson, on which the motion is made, the following facts occurred. The petition, after stating that the lands covered by the'said mortgage. amount, in extent, to 4500 acres,and that there are on the premises a forge, grist mili, saw mill, several farm houses and dwelling houses for workingmen j and that he had commenced building a furnace on the premises or on a part thereof; and that it was very important for him to finish the furnace and commence making iron , sets forth that the bonds of the said “ The American Life and Eire Insurance and Trust Company ” became very much depreciated, and that he found he could buy them at 20 per cent, of their par value. That he, therefore, made an arrangement with Taiman, (one of the assignees of the company,) by which Taiman agreed to take the bonds of the company for £5000 sterling and $400 in cash, in payment of the said mortgage. That having made this arrangement, he, the petitioner, applied to the Greenwich Bank of Eew York for a loan of money. That the said Greenwich Bank then held a claim against the petitioner for over $8000 which had been always disputed by the petitioner as being upon a usurious consideration, and which had never, on that account, been presented, and which the said bank considered of little value, and which they had before that time, and then also, offered to the petitioner to settle for $1000. That when he applied to the said bank for a loan of money, as aforesaid, he stated to the bank his anxiety to get the furnace complete and in operation ; and that, as soon as he could do so, he would be in the receipt of money, and would repay them the money they would advance him, together with their said above-mentioned claim. That he, the petitioner, would not have agreed to pay the said claim except for the consideration stated in his petition, and which he considered as a bonus for the loan and in fact a usurious consideration for the same. That thereupon the said bank and the petitioner came to an agreement to the effect following: that the bank would loan the petitioner $12,000, and Christian E. Detmold should lend the petitioner $1500; sad that out of this money the petitioner, or the bank for him, should buy up the said bond and mortgage of the American Life and Eire Insurance and Trust Company as before agreed upon, and that $4000 of the money should be expended on the furnace which the petitioner had begun to build as aforesaid, to complete the same. That the petitioner being in very needy and embarrassed circumstances, and looking to the starting of his furnace to extricate himself, was obliged to submit to such terms as the said bank might impose. That the bank required — 1st. That a decree should be entered in the said suit in chancery, in favor of McCauley and Taiman, assignees of the American Life and Fire Insurance and Trust Company, on the 26th of July, 1845, for $21,000, besides costs; that they should assign the said decree to Christian E. Detmold; and that Detmold should assign it to Benj. F. Wheelwright, the president of the said bank, in trust for the said bank. 2d. That the petitioner should give his nine notes, for $1500 each, to said Detmold, payable in 6, 9, 12, 15, 18, 21, 24, 27 and 30 months from date, all to be dated Sept. 12th, 1845, with interest ; and that the last eight notes should be endorsed by Detmold to the bank. 3d. That the petitioner should confess a judgment in the Supreme Court of New York for $8487, with costs, the amount of the said disputed claim of the said bank against him; and that this amount should form a part of the $21,000, for which the said decree should be entered. 4th. That the petitioner should procure an assignment to the bank of a judgment for $3218.87, which A. P. Hopper had recovered against the petitioner in the Supreme Court of New Jersey, a part of which had been paid ; Hopper to have all the moneys to be raised on said judgment, but the bank to have the control of the judgment. 5th. That the petitioner should assign to Wheelwright a lease he had made to Stephen High ter of the said forge, at an annual rent of $500. 6th. That the petitioner shall assign to Wheelwright a right, which he had by the will of his lather, to dig any quantity of ore-from the Ringwood Great Furnace tract, for this furnace ; which tract or right was not embraced in said mortgage. That all this was done as agreed upon; and that the bank agreed not to issue execution in case the said notes should be paid, as by reference to the agreement, a copy of which is appended to the petition, will appear. That the petitioner has since expended the said $4000 on the furnace; and that he found that it was necessary to expend a still larger sum to complete it; and that beyond the said $4000 he has expended the further sum of $8000, making the sum of $12,000 actually expended on the said furnace, ■dam and property. That he has been delayed in finishing the said furnace — first, by the difficulty he has had, in his embarrassed circumstances, to raise the money to finish it; and, secondly, by the sickness which has prevailed among his workmen, twenty of them employed there having become unable to work, fourteen of whom he sent to the hospital in New York : and, thirdly, by the sickness of the petitioner. That he expects to get the furnace in operation in less than a month from the date of his petition; and has prepared rising 50,00c bushels of charcoal, and about 80> tons of iron ore, to carry on the furnace, which forms no part of the $12,000 expended on the freehold. The petitioner states that he believes that when the furnace shall go into operation, he can dear from the same, and the use of wood and ore, $850 a week. That the bank knew he was straining every nerve to get the furnace into operation, anti that lie was expending a very large sum of money on the property covered by their mortgage. That only two of the said notes are due and payable to the bank, amounting to $3(X'0. 'i'he petitioner states that the real consideration for the batik to make the said loan, was the obtaining the said decree for $21,000, and the securities before mentioned, which embraced the said unjust claim of $8487, by reason whereof the bank obtained security for $8487 beyond the amount loaned by it to the petitioner. That Wheelwright has caused the whole property to be advertised for sale under the said decree, on the 12th October, 1846, and has declared and threatened, and the petitioner says he has no doubt he intends to sell the whole, unless restrained, not only for the amount so loaned, but also for the said debt of $8487. The petition prays that the sale may be stayed for some reasonable time after the furnace shall go into operation, and until the petitioner shall have time to file his bill to open the said decree, or obtain such relief as the court shall direct, and for such further and other relief, &c.
    The agreement referred to in the petition bears date September 12th, 1845, and is au agreement between Peter M. Ryerson, of the first part, Christian E. Detmold, of the second part, and the Greenwich Bank, of the third part. It recites that a decree had been entered in the Court of Chancery of New Jersey, in certain causes lately pending in that court, on original bill and supplemental bill, between the American Life and Fire Insurance and Trust Company and McCaulay & Taiman, assignees, complainants, and the said Ryerson and others, defendants, for the foreclosure of a certain mortgage given by Ryerson ; by which decree the sum of $21,000 had been established as the amount due, besides costs; which decree had been assigned to Detmold, and by him had been assigned, by one instrument, bearing even date with the agreement, to Benj. F. Wheelwright, in trust, &c. The agreement further recites that Ryerson was Indebted to the bank in $8487, with the costs, on a certain judgment recovered against him by the bank, in the Supreme Court of New York, on the said 12th of September, 1845, (the date of the agreement.) It then recites that, as part of the agreement and of the consideration thereof, Detmold had paid to Ryerson $400^, and doth, by the said agreement, agree to pay to Ryerson the further sum of $4000, as the same may be required for completing the furnace on the property described in the said mortgage, to be expended by and under the directions of Detmold. It then recites that Ryerson had made and delivered to Detmold his nine several promissory notes for $1500 each, with interest, dated on the day of the date of the agreement, payable severally in 6, 9, 12, 15, 18, 21, 24, 27 and 30 months; the same being for part of the moneys due on the said decree. It then recites that the bank had loaned t® Detmold, on the last eight of the said notes, $12,000; that said eight notes have been endorsed by Detmold to the bank ; that a certain judgment against Ryerson, in the Supreme Court of New Jersey, had been assigned to the bank by one Andrew Hopper, by an assignment dated September 1st, 1845, for the purposes mentioned in the said assignment. And then the parties to the said agreement agree as follows: That is to say, Ryerson agrees to pay Wheelwright, trustee, $1500 of principal on said decree, with interest on the whole sum of $21,000, decreed to be paid thereby, in six months from the date of the agreement; and $1500 of principal, with all interest remaining due on the amount of said decree unpaid, at the expiration of every succeeding’ three months after the time fixed for the first payment ; and also, at the time of the last payment, $987, with interest and costs, on the said judgment of the bank against Ryerson; and in case such payments are made, the said Wheelwright, trustee, is not to proceed on the decree to a tale of the premises, and the bank is not to proceed on the said judgments, unless compelled by Hopper to proceed on his judgment. so assigned to the bank; and when the same is all paid off, the decree is to be assigned to Ryerson, the said first-mentioned judgment to be canceled, and the said last mentioned judgment to be re-assigned to Hopper. And iu case of default in making any of said payments, as above agreed, the parties are to be at liberty to proceed on the decree and judgments, without first having recourse to the personal property of Ryerson on the said last-mentioned judgment. The agreement then states that it is expressly understood that, out of the moneys received by the said Wheelwright, as aforesaid, the said nine notes are to be paid in their order, as they may respectively become due, and the balance to be appropriated towards the payment of the remaining $7500 of the decree, and the sum of $987 on the said judgment of the bank, with interest and costs; and the bank further agree not to proceed iu any manner on the said notes against Detmold, in case of default iu the payment or any of them, till Wheelwright trustee, shall have completely exhausted his iegal and equitable rights against the mortgaged premises, under the said decree; and the bank further agree with Detmold not to part with any of the said notes. And, in consideration of the premises and of the assignment of said decree by Detmold to Wheelwright, iu trust as aforesaid, and of $1 paid by Detmold to the bank, the bank acknowledges t(’.at half of the said judgment in Hew York against Ryerson Delongs to Detmold, and that he is to be paid the half of all sums collected or paid on if.
    On this petition aud copy of agreement annexed, an order was made, staying the sale till the further order of the court.
    The motion now is, that the order staying the sale be vacated.
    
      
      R. Van Arsdale and P. D. Vroom, for the motion,
    
      A. S. Pennington and B. Williamson, contra.
    
   The Chancellor.

It is manifest, from an examination of the agreement of the date of September 12th, 1845, between Ryerson, Detmold, and the Greenwich Bank, that the amount of the decree entered in the suit in this court, in favor of the American Life and Fire Insurance and Trust Compaiay against Ryerson, was not the basis of the said agreement between Ryerson, Detmold, and the Greenwich Bank. The agreement states that a decree had been entered in favor of the said company for.............................:............................$21,000

That the decree had been assigned to Detmold, and by him assigned to Wheelwright in trust, &c.; that the bank had, on the day of the date of the agreement, recovered a judgment in New York, against Ryerson, for ............................................... 8,487

These two sums amount to........................... $29,487

And yet the whole sum which, by the agreement, is to be paid by Ryerson, is.................................... 21,000

But, further, in addition to the amount of the decree.. 21,000

and the amount of the bank judgment.................. 8,487

the agreement says that Detmold has paid Ryerson... 4,000

and agrees to pay him the further sum of $4000, as the same may be required for completing the furnace, to be expended by and under the direction of Detmold ................................................... 4,000

These four sums amount to................................. 37,487

And yet the whole sum which, by the agreement, is to be paid by Ryerson, is.................................... 21,987

What, then, was the basis of the agreement? The $13,500, for which Ryerson gave his nine notes, bearing the same date with the agreement, and payable at different periods 13,500

and the amount of bank judgment......................... $8,487

make the exact sum of....................................... $21,987

the payment of which by Ryerson is provided for by the agreement, and on the payment of which the assigned decree is to be assigned to Ryerson, and the judgment of the bank to be canceled.

But, for what were Ryerson’s notes, for $13,500, given ? Were they given for or to secure the decree assigned to the bank ? Clearly not; for the agreement says that the bank loaned §12,000 (to Betmold) on the last eight of them Retinoid retained the first of them. It is clear, then, that Ryersou’s notes for $13,500 were given for money to be advanced on them. And that amount, with the amount of the bank judgment entered against Ryerson, amounts to the. $21,987, which, by the agreement, Ryerson is to pay.

But how much money did Ryerson get, or get the benefit of? Tiie agreement says that Betmold paid him.............. $4,000

and agrees to pay him (in the manner above stated).... 4,000

These sums, with the amount of the judgment........... 8,487

amount to.................................. ......... ............ $16,487

The amount to be paid by Ryerson, by the terms of the agreement, is.......... ...... ......... .. ... ........... $21,987

being $5500 more than the money he got, and was or is to get, and the amount of the judgment. For what was Ryerson to pay this additional $5500 ? The answer is plain. The decree in the case of the American Life and Eire Insurance and 'Trust Company v. Ryerson was to be arranged, and, instead of being canceled, was to be assigned to the bank, to secure the whole money advanced, and for which Ryerson’s notes for $13,500 were taken ; $8000 of wiiich was paid or to be paid to him, and the residue of which was to be paid for the said decree; and if $5500 was paid for the decree, then the amount paid or to be paid Ryerson, and the amount paid for the decree, amount to the $13,500 for which Ryerson gave his notes, and the decree was to be an additional security for the amount of the bank judgment and for the $13,500 for which Ryerson gave his notes ; this $13,500 also including the amount paid for the decree. To carry out this arrangement, Ryerson withdraws his answers filed in the suit in this court, of the American Life and Fire Insurance and Trust Company, against him, and consents that a decree be entered therein for $21,000. The amount required to buy the depreciated bonds of that company, to an amount sufficient to procure the assignment of. the decree, was then arranged by the bank, and the assignment of it obtained; the arrangement was completed, and the said tripartite agreement entered into. This agreement, when examined carefully, is itself, notwithstanding its involution, sufficient to satisfy us that the substance of the transaction is as above stated. But the petition of Ryerson, on which the order now sought to be vacated was made, states distinctly that such was that arrangement; and, for the purposes of this motion, must be taken as true.

Whether there was usury in this agreement, I do not now find it necessary to express an opinion. Indeed it caimot, from the facts before us, be certainly told, as it seems to me. We are not toid how much was paid to get the assignment of the decree. If $5500 was paid for the decree, and $8000 was paid to Ryerson, that would .make the $13,500 for which Ryerson’s notes were given. This would leave the question of usury in the agreement to rest on the fact, as stated in the agreement, that $4000 of the money was to be paid to Ryersou, as the same might be required for completing the furnace, to be expended by and under the direction of Detmold ; the notes drawing interest for the whole amount from their date. Whether there was usury in the bank judgment, we have no means of telling.

On the petition of Ryerson, so far as it rests on the allegations of usury, the order to stay the sale is not sustainable. The petition must be left, in that respect, to such other course as he may be advised to adopt. If, indeed, the property was manifestly indivisible, and the money was all due, and the party having the control of the decree (which, in the view I have taken, is to be regarded as only an additional security for the payment of the money,) was about-to sell the whole property to raise the whole money, and the usury was made manifest by the petition, a grave question would be presented. A party complainant in this court may have relief tp the extent of the usury, though it should be held that he was not entitled to have the securities entirely defeated j and the court might order a stay of sale till the amount of the usury could be ascertained. But I do not think it necessary to go farther into this part of the case. The property is manifestly divisible, and but a part of the money is due. The decree which has been assigned to the bank is but one of the securities for the money. The court should, in my judgment, act upon the principal agreement and allow the decree to be used only bo far and at such times as shall be necessary to enforce the performance of the principal agreement, and in the same way as if it had been asked to direct process of execution on that decree in view of the principal agreement The decree, as entered, was general, that the mortgaged premises be sold to raise and satisfy the whole §21,000, and that a Ji./a. issue for the sale of so much of the premises as would be sufficient to pay that sum. The officer to whom the fi. fa. was directed was not authorized by the decree to sell only enough to pay what was due under the terms of the agreement. When, therefore, he was about to sell the promises to pay the whole sum when only a small portion of it was due, Ilyerson’s only resort was an application to the court to stay the sale as proposed to be made. And I apprehend that the relief, which I think ought to be afforded on this part of the case, comes within the principle on which this court uniformly acts in ordering sales of mortgaged premises, it does not direct the whole to be sold when only one installment or portion is due, if a part of the premises can be sold to pay that installment. And, in this case, it seems to me it would be manifest iujustice to sell 4500 acres of land in various tracts, and farms aud dwelling houses, and a grist mill, saw mill, forge aud furnace, to pay the small portion of the money that has become due under the said agreement. In Campbell and others v. Macomb and others, 4 John. Ch. 61, 534, it appeared, by the master’s report, that there was due to the plaintiffs, as trustees of a charity school, on two bonds aud mortgages, §1575, for interest; that the principal was not yet due, but that the bonds had become forfeited at law by the non-payment of the interest; and that there was due to the complainant Campbell $27,499.98, on two judgments; and that the mortgaged premises were manifestly indivisible and could not be sold in parcels. On this report, a decree was entered that the mortgaged premises, being a stone dam and bridge, be sold, and the proceeds be applied to pay the interest due, and then the principal of the bonds and mortgages, though not due, and the residue towards paying Campbell’s judgments. Before the day of sale, the owner of the equity of redemption paid all the arrears of interest and the costs, and thereupon applied to the court for an order staying the sale, and it was granted. A petition was then presented on the part of Campbell, stating that he was personally bound as collateral security for the payment of the two bonds and mortgages; that he held two judgments against the mortgagor, for moneys advanced and for his indemnity as such security; that the obligor and mortgagor was insolvent; that the security for the principal of the mortgage debts was much impaired, the dam having been much injured by a storm, since the filing of the bill, and prayed that the mortgagor or the owner of the equity of redemption be ordered to give security to repair the dam, or pay the mortgage debt, or that the order staying the sale be vacated. In opposition to this motion, an affidavit was read, that the present owner of the equity of redemption was rebuilding the dam, and would probably finish it in two months. The Chancellor denied the motion. He said that when the premises are indivisible the whole may be sold, and the proceeds applied to pay not only the portion due but also the residue of the debt, though not due; but that this arises from the necessity of the case; and that more than is due is not to be raised out of the mortgaged premises when that necessity does not exist. It is obvious that where a part of the premises can be sold to pay what is due, the necessity of selling the whole does not exist. In that case, the Chancellor said that though there was a regular decree for the sale of the whole premises, yet there could be no doubt of the power of the court, in its discretion, to regulate the process of execution under the decree. In that case, the necessity for the sale of the whole existed at the time of the decree; for the property was indivisible; but the Chancellor said that necessity was avoided before the sale, by the voluntary payment of what was due; and that ail that the party could in conscience require was, that the decree might remain as a security for subsequent defaults, and afford him an easy and prompt remedy when they occur. He referred to the case of Judd v. Evans, 6 Term Rep. 399, showing that a court of law, after judgment and execution for the entire debt, will relieve the defendant, on his paying the installment due, retaining the judgment as a security for future installments.

in the case before us, it cannot be that there is any necessity for selling the whole of the premises to raise the amount that has become due under the agreement; and the time stipulated for the agreement may have been, and probably was, a most essential consideration with the petitioner.

The motion to vacate the order staying the sale is denied. This I suppose to be all that I am called upon to say at present, ihe party holding the decree may desire to answer the petition, or take some course to controvert the facts stated in it, and; thereupon, move again to vacate the order.

Motion denied.