Case Name: William Ketchum v. The Executors of Job Johnson et al.
Court: New Jersey Court of Chancery
Jurisdiction: New Jersey
Decision Date: 1843-10
Citations: 4 N.J. Eq. 370
Docket Number: 
Parties: William Ketchum v. The Executors of Job Johnson et al.
Judges: 
Reporter: New Jersey Equity Reports
Volume: 4
Pages: 370–377

Head Matter:
William Ketchum v. The Executors of Job Johnson et al.
The party calling the subscribing witness to an instrument, is not concluded by his evidence, and if the witness deny the execution of. the instrument, other witnesses may be called to establish it.
A mere equity cannot be sold by virtue of an execution at law.
It seems that the equity of redemption of the mortgagor cannot be sold upon an execution at law after the mortgagee has been let into possession.
Bill for redemption. The bill was originally filed against Job Johnson in his lifetime. It charges, that on or about the seventh day of February, eighteen hundred and twenty, Job' Johnson,, having loaned to his brother, John A, Jbhnson, the sum eight hundred and five dollars, the said John A. Johnson, in order to secure the repayment of the said loan, with interest, made and executed to the said Job Johnson a deed of conveyance, in fee simple, for a tract of land containing forty acres and one rood. That at the time of the execution of the said deed, the said Job Johnson, by way of condition or defeasance of said deed, made and executed, under his hand and seal, the following instrument of writing, to wit:
“Articles of agreement, made the seventh day of February, in the year of our Lord eighteen hundred and twenty, between Job Johnson, of the township of Independence, in the county of Sussex, and state of New-Jersey, of the first part, and John A. Johnson, of the same place, of the second part, witnesseth, that the said John A. Johnson, of the second part, did execute a certain deed of indenture, for a certain lot or parcel of land, containing forty acres and one rood, be the same more or less, for the sum of eight hundred and five dollars, and bearing even date with this article: Now it is the true intent and meaning of this article, that if at any time hereafter the said John A. Johnson, his heirs, executors, administrators, or any of them, do well and truly pay back unto the said Job Johnson the purchase money above mentioned, the said Job Johnson doth agree for himself, his heirs, executors or administrators, to convey back the above bargained lot; and to the true performance of the above, the said Job Johnson, of the first, doth bind himself, his heirs, executors, and every of them, in the penal sum of sixteen hundred and ten dollars.”
That on or about the first of April, eighteen hundred and twenty, the said defendant, under and by virtue of the said deed of conveyance, entered into possession of the said premises, and hath ever since received and taken the rents, issues and profits thereof to his own use. That on the eleventh of May, eighteen hundred and twenty-four, judgment was rendered in the supreme court of this state, in favor of Peter Apgar, against the said John A. Johnson and one C. L.; that by virtue of a writ of execution issued upon the said judgment, the sheriff of the county of Sussex levied upon and exposed to sale all the right, title and interest of the said John A. Johnson in the said tract of land; and that on the sixth day of July, eighteen hundred and thirty-nine, the same was by the said sheriff struck off and sold to the complainant; and that by deed of indenture bearing date on the sixteenth day of the same month of July, the, said. lot, of land, and all the right, title and interest of the said John A. Johnson therein, was, in pursuance of the said sale, conveyed to the complainant.
The bill states, that by virtue of said conveyance the complainant is entitled to redeem the said premises; and prays that he may he permitted to redeem the same, and that the defendant may be decreed to reconvey the premises, upon the payment of the principal, money so lent, with interest, after deducting the rents, issues and profits received by the defendant.
The-defendant, Job Johnson, by his answer, denies that the deed in the complainant’s bill specified, was executed to him by way of mortgage, or as security for the re-payment of a loan, but states that the said conveyance was made and intended as an absolute conveyance for the price therein specified, and. for that amount of money previously and then due and owing from the complainant to. the defendant. Denies the making of any, loan, or that he ever executed the instrument of writing charged as a defeasance in the complainant’s bill; alleges that the defendant entered into possession of- the said premises immediately after the execution of the said deed, having paid a full and adequate price; that he has ever since used and enjoyed the same as his own property, and that he has from time to time built and put upon the said premises, various buildings and permanent improvements, at a cost of about eight hundred dollars. That by means of these improvements, and the general rise- of property, the land now far' exceeds in value its original cost.. That the said buildings were erected and improvements made upon the said premises, with the full knowledge of the complainant, who never pretended to the defendant or to any other person, to the defendant’s knowledge, that he had any right, or interest in the same.
That the complainant, at the term of February, eighteen hundred and.thirty-four, applied for his discharge as an insolvent debtor, and was discharged upon the said application; that the, inventory of his property, filed by the complainant, upon his said application, contains no account of any interest, claim or demand in or to the said tract of land so sold to the defendant. Job Johnson having died after answer filed, the suit was continued against his executors. Final hearing upon bill, answer, replication and proofs.
Saxton and W. Halsted, for complainant.
An absolute deed with a defeasance constitutes a mortgage: 2 Vernon, 84; 2 John. Chan. 189; Saxton, 534; 1 Green’s Chan. 264; 15 Viner's Ab. 472; 3 Wendell, 213.
The deed and defeasance executed in this case, constitute a mortgage: 1 Peere W. 270; 4 Mass. 443; 3 Atkyns, 280; 4 Kent’s Com. 129; 1 Wash. 14; 5 Binney, 499; 9 Wheat. 489.
The equity of redemption may be sold, notwithstanding the mortgagor is out of possession: Halsted’s Dig. “ Equity of Redemption;” 3 Hals. 313; 1 South. 277; 1 Vernon, 447, 488; 4 Kent’s Com. 154, 126; 2 Pick. 276; 5 Har. and John. 312; 1 Conn. 563; 4 Conn. 235; 5 Conn. 592.
A mortgagee in possession, cannot claim an allowance for permanent improvements made by him on the mortgaged premises: Saxton, 138.
J. W. Miller and Dayton, for defendants.
The contract between the parties was a mere agreement to reconvey. It did not constitute a mortgage: 2 Story’s Eq. 287; 4 Kent’s Com. 141, 4; 1 Powell on Mort. 138, note T; 6 Paige, 480; 1 Fonb. Eq. 262, 3, note H; 3 Paige, 421; 7 John. Chan. 40; 12 Vesey, 332; 19 Vesey, 412; 2 Atkyns, 496; 2 Freeman, 150; 7 Cranch, 218; Coote on Mort. 33, 4.
A mortgagee in possession by the Consent of the mortgagor, is entitled to compensation for his improvements: 4 Kent’s Com. 167; 19 Vesey, 413; 7 Cranch, 218; 5 Paige, 9.
A mortgagor out of possession, has no interest which can be sold under an execution at law: 7 John. 282; 5 Hals. 193, 202; 4 Kent’s Com. 160; 1 Caine’s C. E. 46; 4 John. 42; Saxton, 298; Story on Bailments, 239; 4 Cowen, 461.

Opinion:
The Chancellor.
John A. Johnson, of the township of Independence, in the county of Sussex, by deed dated the-seventh of .February, eighteen hundred and twenty, conveyed to his brother, Job Johnson, a lot of land situated in that township, containing forty acres. The deed is absolute on its face, and states the consideration to be eight hundred and five dollars. It is, however, the real character of the transaction, that creates the dispute. The complainant charging in his bill, that the deed was designed as a mere security for the loan of money, and that a defeasance was executed by the grantee at the time-he received it, by which a power of redemption in the nature of a mortgage was given to the grantor. The defendant, on the other hand, insists by his answer, that it was a sale of the entire interest, absolute in its character, and without any agreement whatever for redemption or repurchase of the premises. Much of the evidence in the cause is taken on this point, and I am entirely satisfied that the writing marked exhibit B., on the part of the complainant, providing for a reconveyance of the property on certain terms, was executed by Job Johnson, at the-time he took the deed, and is to be considered as part and parcel of the same contract. The two papers bear the same date, appear to have been drawn up by the same person, and the handwriting of Job Johnson to the defeasance is incontestibly proven. All the witnesses agree that the handwriting is Job Johnson's, and some of them are men of business and competent judges. The subscribing witness, it is true, while he admits that he signed the paper, declares that Job Johnson did not sign it in his presence, and had not signed it when he placed his name to it. This'may be so, and yet, in a transaction of twenty years standing, it is not safe to trust to the memory upon a subject like. that. There is another witness, (Phebe Quick,) who declares that she saw Job Johnson and the witness sign the paper; that the witness did not see Johnson sign the paper, but came in directly after and affixed his name to it. It is most probable, the witness has some indistinct idea that he did not see Johnson sign the paper, but be that as it may, it is clearly mani fest that Johnson did sign it, for his handwriting seems to have been well known, and is testified to by many and very respectable witnesses, by men who had opportunities of knowing his handwriting, and there is not one person brought to deny the genuineness of the signature. While it is a settled rule of law, that the subscribing witnéss, if within the reach of the process of the court, must be called to testify; yet when he is so called, the party is not bound by his oath alone, should he deny the execution, but he may call other witnesses and prove the handwriting of the party to the instrument.
The writing being thus proven, what is its character? The complainant calls it a defeasance, in the' nature of a mortgage, while the defendants consider, it a contract for repurchase upon certain terms. It is often difficult to decide this question; the distinctions are nice and depend on the peculiar circumstances of the case. I incline to the opinion strongly, that the true and just construction of this instrument is, to consider it a contract for repurchase. The sale was made at a specified price, and is absolute on its face ; the possession was taken immediately by the purchaser; it does not appear to have been given for a loan of money, but in satisfaction, and that in part only, of a previous indebtedness. The conduct of the parties show this to have been their view, for Job Johnson went on and made valuable improvements on the land, built a barn and other buildings, planted an orchard, and put up stone fences in the presence of John A. Johnson, who was his brother, and without any question being raised by him respecting his right to do so. It appears too, that in eighteen hundred and thirty-four, John A. Johnson took the benefit of the insolvent act, and in the schedule of his property, made under oath, no mention is made of this. The sale to the defendant was made on the seventh of February, eighteen hundred and twenty, and he went into possession within a very short time thereafter, perhaps,a month or two, and acted as the owner, making essential improvements in the property, until the sixth of July, eighteen hundred and thirty-nine, (a period of more than nineteen years,) when the sheriff of Sussex sold to the> complainant for fifty dollars, all the right of John. A. Johnson, his father-in-law, in the said forty acre lot, by an execution issued on an old judgment in favor of Peter Apgar, against the. said John A. Johnson and Christopher Little,' entered in the supreme court in May term, eighteen hundred and twenty-four. The defendant gave a full price for the land when he bought, and any present increased value, is derived from the improvements he placed upon it, and the gradual rise of property in that part of the country. The complainant, it will be observed, is not a creditor of John A. Johnson, nor has he any transfer from- him of his right, but claims as a voluntary purchaser for a nominal price, to redeem the land by paying off anything that may remain due on the consideration of eight hundred arid five dollars, paid by the defendant, after deducting the rents, issues arid profits It is plain from the bill, that the complainant's belief is, that-the rents, issues and profits of the lánd, arid which'arise mainly from the improvements placed, upon it, will pay' off the whole debt, and leave him the property clear.
There is nothing in the case that should prompt me to aid in any such result. After so long a time has passed by, after the value of the premises have been increased by the labor and money of the defendant, I should with very great reluctance deprive him of the reward due to his industry, and bestow it on one having no higher claim than that presented by the complainant. In any. event, even if the party himself was seeking to redeem, be should, rinder the circumstances of this case, pay for all the improvements which the defendant has made on the property.
But the complainant has no right to redeem this property. He acquired no right by his purchase at the sheriff's sale, that can be recognized in-this court. The title to this land passed to the defendant's testator in eighteen hundred and twenty, and with it the. possession also. The judgment under which the sale- took place, was not entered until eighteen hundred and twenty-four, four year? afterwards. There was then nothing which could be sold on an execution at law; the title was gone from the defendant in execution, and the possession also, and nothing remained but a mere equity.
By the English law, the equity of redemption, even if the mortgagor remain in possession, cannot be sold on execution at law, but in this country it is otherwise. The mortgage is deemed with us a mere security for a debt, and the property may be sold by execution, subject to the lien. It may well be doubted, however, whether this is so when the mortgagee is in possession, for if the mortgagor surrenders that, the position of things is materially changed. The entry by the mortgagee or a foreclosure, puts a new aspect on the rights of the parties. Before entry or foreclosure, it is held that the equity of redemption may be sold on execution against the mortgagor, but not after. Then the legal title in the mortgagee becomes the subject of a sale by execution against him. This is the doctrine recognized in Jackson v. Willard, 4 John. 42; Collins v. Torry, 7 John. 282; 4 Kent's Com. 160, 1.
But whatever uncertainty there might be in the case of a mortgage, I think there can be none in a mere contract like the present, for a repurchase of the premises; that is a clear naked equity, and cannot be sold by execution at law. It comes within the principle of the cases in this court, of Disborough v. Outcalt and others, Saxton, 301; of Vancleve v. Groves and others; and of Den v. Steelman, 5 Halsted, 193, in the supreme court of this state.
The complainant's bill must be dismissed, with costs.