Court Opinion

ID: 8267913
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:13:40.216544+00
Date Added: 2024-06-11T16:43:25.742924
License: Public Domain

Parker, J.
I concur in that part of the opinion just read which reverses so much of the decree as relates to the defendant Jennie E. Dunn; but I dissent from so much as affirms the decree against the defendant Woodbury D. Holt.
In the year 1874, Keziah Dunn, the complainant, became the owner of a mortgage, given by Alexander Dunn and William C. Dunn to Isaac A. Dunn, upon real estate in the city of Trenton, to secure the sum of $8,000. It was a first mortgage on a very small part of the premises — a part of little value, and a third mortgage on the residue, on which were the buildings, and in which consisted nearly the entire value of the property.
The complainant, who resided in the city of Philadelphia, on coming into possession of the mortgage, requested Mr. Holt to receive from the mortgagors the interest as it accrued, and after deducting the sum of $10 a year for his trouble, to' transmit the interest to her. This he did for several years. The interest was paid to him promptly, and he as promptly sent it to the *451complainant. In October, 1877, the mortgagors defaulted in the payment of interest, and complainant was duly informed of the fact by Mr. Holt.
Mr. Holt was a counselor-at-law, residing in the city of Trenton. He had never been counsel of the complainant, never had given to her advice as a lawyer, and never had received a fee from her as counsel or adviser. The extent of his business relations with complainant, previous to her selling to him the mortgage in question, was, as before stated, i. e., receiving interest moneys and transmitting the same to her. It was a kind of business not necessarily pertaining to his profession and one which any agent, not a lawyer, could have done.
At the time the mortgagors ceased to pay the interest, the complainant was indebted to Mr. Holt in about the sum of $500. This indebtedness was for moneys which, at her urgent request, Mr. Holt had from time to time loaned to her. She had assigned him the mortgage as collateral security for the money he had loaned. The assignment, on its face, was absolute, although both parties understood, and without dispute acted on the understanding, that it was collateral for the loan.
On the 8th day of December, 1877, the complainant, desiring to raise more money, requested Mr. Holt to buy her mortgage, which, after some hesitation, he did. She sold it to him for $975, and gave him a certificate that the assignment he had held as collateral should be and was an absolute assignment of the mortgage. “
A few days after this sale, the complainant became dissatisfied with the price for which she had sold the mortgage to Mr. Holt, and without Mr. Holt’s knowledge, she consulted Edward T. Green, Esq., a counselor-at-law, residing in the city of Trenton. Mr. Green advised her to go to E. H. Murphy, also a counselor-at-law, as well as a banker and broker in Trenton, a gentleman who was thoroughly conversant with the value of real estate and of mortgage securities in that city. She immediately wrote to Mr. Murphy, stating that she had placed a business matter in the hands of Edward T. Green, counselor-at-law, and that he had advised her to go to him (Murphy) and put the mortgage *452in his hands for sale. Thus the complainant repudiated the sale of the mortgage she had already voluntarily made to Mr. Holt, and regarded her absolute assignment to him as of no effect. Prom that time she assumed a position adverse and hostile to Mr. Holt, and if there had ever existed between them the confidential relations of counsel and client (of which there is no proof), those relations were then severed; their interests were antagonistic, and Mr. Holt was not in a position to influence the complainant if he had desired to do so.
In all future transactions, in reference to the mortgage, the complainant had the benefit of the advice of her counsel, Mr. Green and Mr. Murphy. Soon after he received the letter from complainant, above referred to, Mr. Murphy visited her. To him she expressed dissatisfaction with the price at which she had sold the mortgage, but she did not to him complain of any fraud or deception on the jjart of Mr. Holt. She requested Mr. Murphy to see Mr. Holt and ask him if he would not pay her more money for the mortgage, and in the event of his not agreeing to do so, then to ask him to re-assign to her the mortgage if she would repay to him the money he had paid her for it.
Mr. Murphy communicated to Mr. Holt what the complainant had said to him. How did Mr. Holt act ? He had an absolute assignment of the mortgage. Did he make an effort to hold on to it ? Did he show any disposition to prevent complainant getting more money for the mortgage if she could ? On the contrary, he acted with the utmost fairness towards the complainant. He, without a moment’s hesitation, told Mr. Murphy that if the complainant was dissatisfied with her bargain he would surrender the mortgage to her, upon her repaying to him the money he had given her for it.
Mr. Murphy subsequently told the complainant the offer Mr. Holt had made. She then said she was not able to l’aise the money to repay Mr. Holt, and instructed Mr. Murphy to try to sell the mortgage for more than Mr. Holt had paid for it, and out of the moneys he received to pay Mr. Holt the moneys he had paid her; or if he could not find a purchaser for the mortgage, at a greater price than Mr. Holt had given, then to try to *453get Mr. Holt to pay her an additional sum for the mortgage. Failing, after days of effort, to sell the mortgage for more than Mr. Holt had given her for it, Mr. Murphy, in carrying out his instructions, applied to Mr. Holt and urged him to pay an additional sum for the mortgage of which he then held the unconditional assignment, and after some urging, Mr. Holt did agree to give, and did give complainant the additional sum of about $900, making in all the sum of $1,875. In consideration of this sum the mortgage again became the absolute property of Mr. Holt, the assignment being through the medium of Mr. Murphy, one of the counsel of complainant and her agent to sell it.
In no part of the transaction can I see any evidence of fraud, or overreaching; or any disposition on the part of Mr. Holt to take advantage of complainant.
It seems to me that he was disposed to give, aud did give her opportunity to obtain all she could for the mortgage, by selling it for the highest price possible, after she had assigned it absolutely.
"When she found it unsalable, and would not bring more than he had already paid for it, Mr. Holt gave her nearly $1,000 more than he first had agreed to give, or was under any obligation, legal or equitable, to give.
In view of these facts, Mr. Holt surely became the absolute owner of the mortgage, to do with it as he saw fit, after the second sale to him by complainant, under the advice and supervision of her counsel. He had the right to sell it for all he could get.
The decree appealed from obliges Mr. Holt to pay the complainant the sum of $2,325 and interest, being the excess for which he was so fortunate subsequently as to sell his mortgage. On what ground is such a decree based? The opinion of the vice-chancellor shows that it was grounded on the fact that Mr. Holt was a lawyer, and the alleged fiduciary and confidential relations existing between him and the complainant, arising out of the assumption that they stood in the relation of counsel and client. The opinion disavows the existence of fraud, or the slightest imposition on complainant on the part of Mr. Holt.
Now I agree with other members of the court that members *454of the legal profession should be held to strict responsibility in transactions with their clients, and that, when deception has been practiced, or any advantage taken of a client, by a member of the bar, he should not reap any profits, but should be made to disgorge. But I have never understood this salutary principle to extend so far as to include a transaction such as has been developed by the evidence in this cause. I think that a lawyer, not counseling or advising a mortgagee in respect to disposing of a mortgage, and doing nothing except, at a prior date, receiving interest on it, and sending the same to the mortgagee, is not prohibited by any rule of law or equity from purchasing the mortgage, at request of the mortgagee, if he shall give more for it than any other person can be found to give, after repeated efforts on behalf of the mortgagee tó sell; especially where the mortgagee, in the sale, is acting under the direction and advice of counsel employed to sell the mortgage to the best advantage.
It is said that the price paid by Mr. Holt for the mortgage was inadequate. The testimony shows that at the time complainant sold her mortgage to Mr. Holt, real estate, in the city of Trenton, was very much depressed in value. The witnesses differed as to the value of the property in question at that time,, some of them placing it as low as $14,000 or $15,000. But it is not so much the value of the mortgaged premises that is to be considered in this cause as the value of a third mortgage on the premises, with $12,000, besides taxes and interest, as liens ahead of it. Do any of the witnesses say that this mortgage, at the time Mr. Holt bought it, was worth more, or, in the market, would have brought more than Mr. Holt gave for it? Mr. Hancock, the chief witness for complainant, on the question of value, says he thought it was worth more, but, in the same breath, he said that he did not dabble in second or third mortgages ; that he would not have advanced, at that time, any money upon a third mortgage on that property with an encumbrance of $12,000, accrued interest and unpaid taxes ahead. He adds that at that time second and third mortgages were not negotiable, but had been just before, but that those who took them came out minus.
*455Such mortgages as the one in question have no certain value. 'What such a mortgage is worth is mere, matter of speculation, and depends upon circumstances. It may happen that an advance will be realized, but, in a majority of cases, there will be a loss, if real estate be depressed, and the prior encumbrances amount to one-half the former estimated value of the premises. In nearly every case, about the time of this transaction, where the property was sold under foreclosure proceedings, the second and third mortgages were' cut out, if the prior encumbrances were of any considerable amount. Hence it was that Mr. Murphy could not find a purchaser for the mortgage who would give more, or as much for it as Mr. Holt. Mr. Holt Avould not have been able to dispose of it had it not happened that subsequently Jennie E. Dunn made up her mind to secure the premises as a business stand for her husband, and, being able to raise the money to buy it, and to quiet the prior encumbrancers, she did so.
At the time Mr. Holt purchased the mortgage of complainant, he did not know that Jennie E. Dunn or any other person wanted the property. Had not Mr. Holt been so fortunate as to have found a purchaser in Jennie E. Dunn, and the property had been .sold on foreclosure, it is quite certain that he would not have realized any amount over what he had given for the mortgage, but the strong probability is that he would have lost every dollar he had paid for it. The price paid by Mr. Holt to complainant for the mortgage was not, at the time he bought it, inadequate, but at that time, under all the’circumstances, was its full value.
It is said that when Mr. Holt purchased the mortgage, the mortgagors had compromised with their creditors, and that Mr. Holt should have communicated that information to complainant. There is no evidence to show that Mr. Holt then knew of the compromise. He swears he did not know of it until afterwards. The complainant was frequently in Trenton, and her counsel resided in that city. They had as good opportunity to know of the compromise as Mr. Holt.
The fact is, that the compromise was not made by the mortgagors, but by the firm of Dunn & Murray with their creditors; *456and such compromise did not extend to encumbrances on the real estate.
I think the decree against Mr. Holt is inequitable, and I vote to reverse the decree as to him,'as well as to Jennie E. Dunn.
For affirmance — The Chief-Justice, Depue, Dixon, Knapp, Magie, Soudder, Van Syckel, Brown, Clement, McGregor, Whitaker — 11.
For reversal — Parker, Reed — 2.