Case ID: ny_16/html/0567-01.html
Source: Caselaw Access Project
Author: {"author": "Selden, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Campbell v. Hall and others.
    A mortgagee of land is not estopped by judgment in an action or the award of arbitrators, between his mortgagor and a prior mortgagee, rendered after the execution of the second mortgage, but may litigate the amount due upon the prior mortgage, notwithstanding such judgment or award.
    Appeal from the Supreme Court. The action was to foreclose a mortgage executed in 1833 by the defendant Consalus and wife to Elisha Jenne, which by sundry mesne assignments came to the hands and was the property, in 1853, of Archibald Linn, by whom it was afterwards assigned to the plaintiff in this action. While Linn was the owner and holder of the mortgage he had extensive business and moneyed transactions with Consalus. While Linn was thus the holder Consalus commenced three actions against him, one of which was to obtain satisfaction of this mortgage on the ground that it had been paid. The three cases were referred to the same referees, under a stipulation that they might decide upon principles of equity; that the pleadings might be amended, and should be considered as amended, to meet the evidence that might be given in the causes, and that the reports of the referees should be final and conclusive between the two parties. The referees settled the accounts between the parties, and in their report, dated January 19, 1853, stated an account of what was then actually due on this mortgage, $2754.88, as well as what was due to Linn upon other demands in litigation, and covered by the amended pleadings and evidence. Upon this report judgment was entered, dismissing the complaint in the action of Consalus for the satisfaction of the mortgage.
    George W. Hall, one of the appellants, and who is the holder of a mortgage executed by Consalus and wife, May 1, 1851, of the same premises, by them before mortgaged to Jenne, was not a party to either of the three actions so referred as aforesaid.
    After the report of the referees, and on the 24th o January, 1853, Linn assigned the mortgage to Campbel the plaintiff in this action, who instituted the action in mediately thereafter. The defendants put in answers avei ring that the mortgage was paid by the transactions between Linn and Consalus before the assignment to.the plaintiff On the trial, which was before a referee, the plaintiff' gave in evidence the judgment roll, including the report of the referees, in the action brought by Consalus against Linn for the satisfaction of the mortgage. The defendants objected, that the effect of the stipulation before mentioned rendered the referees mere arbitrators and their report an award; and that it had not been proved as an award, and upon this, among other grounds, moved for a nonsuit, which was denied. The referee decided that the defendant Hall was bound by the judgment in favor of Linn against Consalus, and could not be permitted to show payments made upon the mortgage previous to the commencement of the suit in which that judgment was rendered, unless he showed collusion between Consalus and Hall in procuring it. To this decision, and the exclusion of testimony in accordance with it, Hall excepted. The referee reported that there was due bn the mortgage $2834.46; and the ordinary judgment of foreclosure and sale was entered at special term, and afterwards, upon appeal, affirmed by the Supreme Court, at general term in the fourth district. The defendants appealed to this court.
    
      John Brolherson, for the appellant.
    
      John II Reynolds, for the respondent.
   Selden, J.

The only point which it is necessary to consider in this case is whether the defendant George W. Hall, who holds a second mortgage upon the premises covered by the mortgage which this action is brought to foreclose, is precluded by the proceedings in the suits of Consalus, the mortgagor, against Archibald L. Linn, from contesting the amount due upon the prior mortgage.

In the view I have taken of this question it is immaterial whether the effect of the stipulation between the attorneys m the suits of Consalus v. Linn operated as a discontinuance of those suits, and a submission of the controversy to the arbitrament of the referees, or not. Upon the trial before the referee in this cause those suits were treated as continuing in court, notwithstanding the stipulation, and as terminating in a valid judgment by which the parties were estopped; and Hall, the second mortgagee, was held bound as a privy, by the judgment against Consalus, equally with Consalus himself. The Supreme Court, at general term affirmed the decision of the referee, holding, however, that the suits were discontinued, but that the report of the referees was binding as an award, and was conclusive, as to the amount due upon the prior mortgage, upon the defendant Hall as privy in estate with Consalus the party to the award.

The question is whether the result of the controversy between Consalus and Linn, considered either as a judgment or an award, could operate to estop the defendant Hall, who was not a party to the proceedings.

The rule that judgments, decrees, awards, &c., are binding upon both parties and privies is stated by Lord Coke as follows : “ Privies in blood, as the heir; privies in estate, as the feoffee, lessee, &c.; privies in law, as the lord by escheat, tenant by the curtesy, tenant in dower, the incumbent of a benefice, and others that come -under, by act of law or in the post, shall be bound by and take advantage of estoppels.” ( Coke Litt., 352, a.) This rule is so complex, and embraces such a variety of relations, that it must necessarily be taken with many modifications.

It will be found unsafe to assume that estoppels extend as a matter of course to all who are in any manner in privity with the principal party. The reasons for holding privies bound by estoppels vary with the nature of the privity, and it is necessary to consider these reasons and to see how far they are applicable to the present case. Thus, where a father succeeds to the estate of his son, by means of a descent first to an uncle and then to the father, the latter, according to Lord Coke, is not estopped by any act of the son, notwithstanding the privity in blood between them ; and the reason given is that he cannot be the heir of his son. (Coke Lilt., 12 a.) Lord Hale, however, appears to have thought this reason insufficient. (Coke Litt., note 60, by Hargrave & Butler.)

Again, the privity between tenant and reversioner is equally perfect, whether the tenancy be for life or for years; and yet, in the one case the reversioner is, and in the other is not, bound by a yerdict against the tenant. The reason why he is held to be estopped, in case of a tenancy for years, is, that he has a right to be heard in any suit concerning the estate to which the tenant is a party. (Rush-worth v. Countess of Pembroke, Hard., 472.) That reason, however, does not apply in case of a tenant for life; who is at liberty either to call upon the reversioner for aid, or not; as he sees fit. Hence the lattei, who has no right to inter fere where no aid is prayed, is not bound- by the verdict. (Cow. & Hill’s Notes, 813, note 567; Bac. Abr., Evidence, F.)

The kind of privity which exists between grantor and grantee is of a nature still different. The grantee in such a case is estopped by the act or admission of his grantor, or by a judgment, decree, &c., against him, because he holds by a derivative title from such grantor, and cannot, therefore, be in a better situation than the party from whom he obtained his right. (Bac. Abr., Evidence, F.) This being the reason for the rule, it follows that it can have no application except where the conveyance is made after the event out of which the estoppel arises. The principle in such cases is, that the estoppel attaches itself to and runs with the land. The grantor can transfer no greater right than he himself has, and hence the title which he conveys must necessarily be subject, in the hands of the grantee, to all the burdens which rested upon it at the time of the transfer.

On the other hand, nothing which the grantor can do. or suffer to be done after such transfer can affect the rights previously vested in the grantee. It is obvious, therefore, from the examples which have been given, that the rule that estoppels are binding upon privies as well as parties, should be stated with qualifications, especially as applicable to privies in estate. The privity between grantor and grantee is the same whether the grant be made before or after the fact upon which the estoppel arises.

In Comyn’s Digest (Evidence, A, 5), it is said that “a verdict in another action for the same cause shall be allowed in evidence between the same parties. So, it shall be. evidence when the verdict was for one under whom any of the present parties claim.” This cannot be sustained in the broad and unqualified terms in which it is stated. In Doe v. The Earl of Derby (1 Adolph, & Ellis., 783), Littledale, J., quotes the passage from Comth, and says : “ But that must mean a claim acquired through such party subsequently to the jerdict’’

The question' we are considering arose in the case of Winslow v. Grindall (2 Greenl., 64). There Winslow had conveyed to one Fairfield, with covenants of seizin and warranty. Fairfield, after conveying to the person under whom the defendant claimed, had commenced a suit against Winslow upon his covenants, and recovered on the ground that Winslow was not seized. Upon the trial, Winslow, after showing a prima, facie title, offered the judgment in the suit brought against him by Fairfield in evidence, to show that when he conveyed to the latter he had no title, and consequently the defendant, who claimed under Fairfield, could have none. This evidence was offered on the ground of the defendant’s privity with Fairfield. But the court held, according to the note of the reporter, that “ the grantee of land is not bound by a judgment in a suit commenced after such grant, by his own grantee against his immediate grantor upon the covenants in his deed.”

It is said in Rolle’s Abridgment that “If a party, after verdict and judgment against him, assign his interest, the assignee is bound by the verdict. Thus, after verdict against J. S. and judgment, he aliened to J. E., and it was held that the verdict was evidence against J. E., for it would have been evidence against J. S. at the time of the transfer,. and the substitute cannot be in a better condition than the principal.” (2 Roll. Abr., 680.) This plainly implies that if the conveyance were before the verdict the assignee would not be estopped.

The same rule applies, I apprehend, between mortgagor and mortgagee, whether the mortgage be considered as the conveyance of an estate or the mere creation of a lien-in the case of Adams v. Barnes (17 Mass., 365), a mortgagor, when sued for possession, had defended on the 1 ground of usury, and failed, and then assigned his right to Adams, who brought an action against the mortgagee, which he attempted to support by proof of the usury. But the court held the plaintiff concluded by the former judgment. Jacksoh, J., said: “ It is such an estoppel as Tuns with the land, and extends to all who are privies in estate to either of the parties to such judgment. A judgment which affects directly the estate and interest in the land, and binds the rights of the parties, is at least as effectual as a release or confirmation by one party to the other. Such an estoppel makes part of the title and extends to all who claim under either of the parties to it.” The reasoning of the learned judge shows that, by the last clause, he meant all who derived title from either of the parties after the recovery of the judgment. The estoppel, to bind the grantee or mortgagee, must exist at the time of the execution of the deed of mortgage. Were it otherwise, a second mortgagee would be bound by the foreclosure of a prior mortgage in a suit commenced after his mortgage was executed, without being made a party; which is contrary to the well known and well established doctrine on the subject.

It is plain, therefore, that as the mortgage to the defendant Hall was executed May 1,1851, and the suits of Consalus v. Linn were not commenced until September thereafter. Hall cannot be concluded by that suit, whatever may have been its result or the nature of the proceedings therein.

The judgment must be reversed and a new trial must be ordered, without costs to either party in this court.

All the judges concurring,

Judgment reversed and new trial ordered.