Court Opinion

ID: 7287376
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:29:11.51814+00
Date Added: 2024-06-11T16:19:11.738967
License: Public Domain

The Vice-Chancellor.
It is quite clear from the evidence in this case, that the sale of the mortgaged premises was brought about by contrivance and design on the part of Dimoek and Schenck, and that their object was to buy the premises in, discharged of Stiger’s mortgage. This, I think, cannot reasonably be doubted. It is also quite clear that Schenck was acting as *429Dimock’s agent or coadjutor in the matter, and that the sale was urged on by Schenck, when Stiger was not present and did not expect it to take place because of certain negotiations between him and Dimock for a payment of $3000 on the decree, and an extension of the time of payment of the balance. Schenck was at the sale, and though Phillips was willing to have it adjourned, as a friend of Stiger, who was present, urgently requested, yet Schenck insisted on the sale proceeding, and bought the property in. The whole proceeding is plainly indefensible, and the ground taken in the bill is good, that the $6100 paid by Schenck amounted to only so much paid on the mortgages and costs of foreclosure. He was the owner of the equity of redemption before the sale, and he stood in no better position afterwards. The transaction resulted in extinguishing the mortgage of Phillips and making Stiger’s mortgage the first lien; a result not contemplated by the defendants, but the only one consistent with right and with the settled doctrine of equity. This doctrine is applied in many cases. It is well expressed and enforced, in Hilton v. Bissell, 1 Sandf. Ch. 409. There B. had purchased land, subject to two mortgages, the payment of which he assumed. The junior mortgage belonged to H. B. neglected to pay the interest on the senior mortgage, and it was foreclosed against B., H., and others. B. purchased the land at the master’s sale under the decree, and received a deed. There was no surplus. On a bill by H. against B. to foreclose the junior mortgage, it was held that the decree and sale were no bar to the suit. In equity, B.’s bid and purchase was held in favor of H., to be a payment and extinguishment of the prior mortgage, leaving the land subject to the junior lien. The court said, that B. was bound by his covenant to satisfy the second mortgage, and could not bo permitted so to do it, so as to defeat the benefit intended to be secured by his covenant, and thereby take advantage of his own wrong ; and that equity, disregarding the forms of title which B. had acquired, would consider him *430as the owner of the land, subject to H.’s mortgage, and discharged of .the mortgage to G.
The complainant, Stiger, is entitled to a decree of foreclosure of his mortgage thus equitably re-established, and to-have the land sold to pay the amount due on it for principal, interest and costs.
The premises appear, by the evidence, to be abundantly sufficient to pay such amount, but if a deficiency should be found to exist, the defendants will be personally liable to make it good, in fulfillment of the several and respective covenants contained in the deeds. The rule in respect to the equitable obligations arising against grantees, from stipulations of this description in deeds, was laid dowm in Klapworth v. Dressler, 2 Beas. 62. Where a grantee in a deed covenants with the grantor to pay off an encumbrance subsisting on the premises, if the-grantor is personally liable for the payment of the encumbrance, the grantee, by virtue of the agreement, is regarded in equity as the principal debtor, and the grantor as a surety only. The Klapworth case undecided before the statute of 1866, which expressly authorizes-decrees in foreclosure suits for the payment by the parties-liable at law or in equity for any deficiency after sale of the-land, and the decision in that case had a special basis in the-fact there alleged and established, that the obligor in the bond was insolvent. The insolvency of Weeks, the obligor here, is not proved, but .it is not necessary to appear, since the above mentioned statute, in order to sustain the decree. The-statute is applicable to foreclosure- suits, and this suit being one to set up the mortgage and foreclose it, is within the statutory letter and spirit. It was- objected at the hearing,, that Weeks not being a party defendant, a decree could not be made for payment of a possible deficiency. I am unable to see how he can be considered a necessary party, if he might have been a proper one. Such an objection, taken at the hearing and not by the pleadings, or at an earlier stage-of the cause, will not prevail if the requisite parties are-before the court to enable it- to' finally dispose of the case» *431I see no difficulty on this point. Nor is the objection good, that the mortgages, the payment of which was assumed in the deeds, were not sufficiently designated or described. They were the only mortgages on the premises, and answered respectively and together to the amounts mentioned in the covenants.
1 shall advise that the complainant is entitled to the relief prayed for in the bill.