Court Opinion

ID: 7093025
Source: CourtListenerOpinion
Date Created: 2022-07-24 12:07:56.984616+00
Date Added: 2024-06-11T16:13:09.001947
License: Public Domain

Dillon, J.,
dissenting. — I proceed to state, as briefly as may be, my views of the case, and the grounds of my partial non-concurrence in the result reached by the opinion which has just been pronounced.
The mortgage which the present petition seeks to revive and reinstate, secured two notes, one to Henry and one to Albert V. Vanniee. This mortgage was the first lien on the property. While Bergen, the mortgagor, was the owner of the property (subject, of course, to the lien of the mort*567gage of the Messrs. Yannice), the defendants, Greene, Traer . & Co., recovered their judgment against Bergen. This judgment was a lien on the premises, subject to the mortgage. While this was the situation, Henry Yannice (having • beeome the owner of both notes, secured by the mortgage) purchased of Bergen the mortgaged premises absolutely, paying therefor as follows: surrendering, or agreeing to surrender, and cancel the mortgage debt, and paying to Bergen the further sum of -six hundred dollars. This was" his contract with Bergen. This contract he now asks a court of equity to annul. He also asks that the deed which he received of Bergen be set aside; that the mortgage be revived, and that he be remitted to his original rights thereunder. This he asks,.not only against Bergen, but also' against the defendants, after they have become the purchasers • of the premises, under and by virtue of a sale by the sheriff, on an execution issued under their judgment
It is one thing to be entitled to this relief, as against Bergen, and another and quite a different thing to be entitled to it as against the defendants. Has the plaintiff made out a case, entitling him to relief as against Bergen ?
The contract which he and Bergen made is binding upon ■ them, and it is not properly within the power of a court of equity to set it aside, unless there was some fraud, accident ■■ or mistake.
Accordingly, the plaintiff bases his right to the relief > sought, upon the ground of fraud.
The evidence shows that, during the negotiation for the-conveyance of the premises, Bergen informed the plaintiff that there were no liens upon the premises. This was' false, because there was, at the time, an unsatisfied judgment in favor of one Webb, and also the judgment of-the defendants, and these were both liens. If the plaintiff, upon these false representations, was induced to take a-deed for the land, in satisfaction of his mortgage, it is plain, *568upon the most familiar and undisputed principles of equity, and .upon the authority of adjudged cases, that he would be entitled against Bergen to have the contract set aside, and Ms mortgage restored. Hyde v. Tanner, 1 Barb. S. C. R., 75, and cases cited; Miller v. Wack, 1 Saxton (N. J.) Ch. R., 204; Barnes v. Carnack, 1 Barb. S. C. R., 392; Burchard v. Phillips, 11 Paige, 61.
It is true, that the referee also reports that he finds that Yannice had actual notice, at the time he made this contract with Bergen, of the defendant’s judgment. If this was the fact, it would destroy the very ground of the plaintiffs’ equity as against Bergen. But, upon the whole, I am inclined to agree with the majority, that a fair view of the entire evidence and all the circumstances, favor the conclusion, that the plaintiff did not have actual knowledge of the defendant’s judgment, and hence, the right to the relief, as against Bergen, is established.
I now proceed to discuss the plaintiff’s rights as against the defendants, Greene, Traer & Co.
It was after the plaintiff received his deed from Bergen; that the defendants issued execution on their judgment, and became the purchasers of the premises at sheriff’s sale. The defendants are not shown to have had any knowledge of any misrepresentation by Bergen to the plaintiff. They had. knowledge of just what the records showed. The records showed that Albert Y. Yannice (to whom one of the notes was made payable) had entered satisfaction on the record of his interest in the mortgage. The records did not show that Henry Yannice had ever been the owner of. the note of Albert, or that Albert had ever parted with the note. The cancellation of the mortgage of record, as to the note payable to Albert Y., was, as to third persons and as to the defendants, perfect and complete at the time the defendants purchased at the sheriff’s sale. The record did not show that Henry had ever satisfied his interest in the *569mortgage. It only showed that there was recorded an absolute deed from Bergen to him for the property embraced in the mortgage.
With this brief statement of the facts, I will first discuss this branch of the case, on the fact found by the referee, that Bergen falsely represented to Henry that there were no liens on the premises, and on the assumption that the latter had no knowledge of the existence of the defendant’s judgment at the time he accepted the deed from Bergen. If these were the facts, the plaintiff would have been clearly and equitably entitled, as against the defendants, to the relief sought, at any time before the defendants became purchasers under their judgments.
If a mortgagee purchases the land, and as part of the consideration, cancels the debt, without knowledge of an outstanding judgment (in other words, acting under a mistake of fact), he is entitled to protection as against judgment creditors who became such after the execution of the mortgage thus canceled, and against the subsequent mortgagees without notice, if they became such anterior to the cancellation.
A judgment creditor is not a purchaser. Neither he nor the subsequent mortgagee, in the case just supposed, part with any value or alter their position in consequence of the cancellation. Cancellation is only prima facie evidence of the discharge of a mortgage, and it may be proved that it was made by accident, fraud or mistake. Neither of these parties has any equity or claim, under such circumstances, to resist the older and superior equity of the first mortgagee to a restoration to his original rights. As authority, for the foregoing principles, see Welton v. Tizzard, 15 Iowa, 495, and cases in this State and elsewhere, there cited, in relation to the rights of judgment creditors. Warner v. Blakeman, 36 Barb., 501; Hyde v. Tanner, 1 Barb., 75; Id., 392; Trenton Bank Co. v. Woodruff, 1 Greene Ch. R., *570117, 125; Miller v. Wack, 1 Saxton (N. J.) Ch. R., 204; Burchard v. Phillips, 11 Paige, 66.
The principle running through the whole of this class of cases is, that “ when the legal rights of the.parties have been changed by mistake” (or accident or fraud), “equity restores them to their former condition, when it can be done without interfering with any new rights acquired on the faith and strength of the altered condition of the legal rights, and without doing injustice to the rights of other persons.” Per Barculo, J., in Barnes v. Cornack, 1 Barb. S. C. R., 398. See, also, Star v. Ellis, 6 Johns. Ch., 392,.395, where Chancellor Kent says: “A court of equity will keep an incumbrance alive, or consider it extinguished, as will best serve the purposes of justice and the actual and just intention of the parties. It must, at all events, be an innocent purpose, and injurious to no one.'1’ See, also, James v. Johnson, 6 Id., 424; and S. C., 2 Cow., 246; Forbes v. Moffatt, 18 Ves., 384; Nevelle v. Demerett, 1 Green’s Ch. R., 321.
Such would be the rights of the plaintiff if he is to be treated as having had no knowledge of the defendant’s judgment at the time he accepted his deed from Bergen, and if he had applied for relief before the defendant’s position became changed from mere judgment creditors to that of purchasers.
I now proceed to consider the plaintiff’s rights, on the facts above supposed, he having delayed to apply for relief until after the defendants had (without notice of the plaintiff’s alleged equity or right to have his contract with Bergen canceled, and his mortgage revived), become the purchasers of the premises at sheriff’s sale.
'It will be remembered that at the- time of the sale by the sheriff, Albert had entered of record satisfaction of his interest in the mortgage. This prima facie canceled the mortgage as to one note. An ordinary purchaser *571would have the right to treat it as thus far canceled and satisfied, and would have been to this extent protected. This will not be disputed.
If an ordinary purchaser would be thus protected, the defendants, as the sheriff’s vendees, stand in my opinion upon ground equally high, and have rights equally large.
The law is, “that a purchaser at sheriff’s sale, will take the land, discharged of every claim or title, whether arising under an unregistered deed, or a mere equity of which he had no notice at the time of the purchase, and which would be invalid as against an ordinary purchaser.”
This is the doctrine deduced from the American cases, as laid down by Judge Hare in his note to Bassett v. Nasworthy, 2 Lead. Cas. in Eq., part 1, p. 76. And the rule applies equally where the judgment creditor is the purchaser, as where the purchase is made by a stranger. ( Waldo v. Russell, 5 Mo., 387; Ohio Life Ins. Co. v. Ledyard, 8 Ala., 866; Den v. Rickman, 1 Green N. J. (Law), 43, in all of which the judgment plaintiff was the purchaser. See, also, Orth v. Jennings, 8 Blackf., 420; Heister v. Fortner, 2 Binn., 40, 45; Mann's Appeal, 1 Barr., 24; Kaufflet v. Bower, 7 S. & R., 64, 82; Scribner v. Lockwood, 9 Ohio, 184; Jackson v. Post, 15 Wend., 588, reviewing and explaining former cases in 4 Cow., 599, and 9 Cow., 120; Jackson v. DuBois, 4 Johns., 216.)
In this last -case it was held that a mortgage not registered has priority over a judgment docketed subsequently, which is the doctrine in this State also. Norton v. Williams, 9 Iowa, 528; 10 Id., 353; 11 Id., 174; Welton v. Tizzard, supra. Spencer, J., remarks: “ The judgment being by act of law, does not destroy the lien acquired by the unregistered mortgage, nor gain a preference over it. Should the mortgagee permit a sale .to take place prior to the registry, then, in my opinion, the vendee of the sheriff would *572be protected from tbe mortgage, and it would lose its priority.” 4 Johns., 216.
In view of these authorities I cannot deem the majority opinion a true exposition of the law, so far as that; opinion holds that equities between Yannice and Bergen will follow the. land into the hands of the defendants, after they have become the purchasers of the land, without notice of those equities.
Such a rule tends to shake and unsettle the security which the law attaches to titles bona fide, derived by purchasers at sheriff’s sales. It is admitted that the defendants purchased bona fide, and without notice of the equities with which they are now sought to be charged. They are, in my opinion, entitled to the same protection, and stand as free from equities, of which they had no notice, as if they were ordinary purchasers. And their rights can no more be cut down by a court of equity, than by a court of law.
The equities of the plaintiffs, are not so strong as would be the equities in favor of a person who had an unrecorded deed, or who had fully paid for land without getting a deed ; and I can scarcely think that the equities of such a person should be allowed to prevail against the bona fide purchaser of the land at sheriff’s sale.
It follows that the defendants, as the sheriff’s purchasers (no notice of the plaintiff’s equities having been brought home to them prior to the sale by the sheriff), .are clearly entitled to hold the land, discharged of any lien of the mortgage, so far as it secured the note to Albert Y. Yannice, he having discharged his mortgage of record, prior to the sale by the sheriff.
But, under the view in which I am now considering, the case (viz., that the plaintiff had no knowledge of the defendant’s judgment, when he accepted his deed from-*573Bergen), a different result is reached, as to the other note which was payable to Henry Yannice.
No satisfaction of record was entered by him. His mortgage remained uncanceled, so far as the record disclosed to the defendant.
The record only showed that Bergen had conveyed his equity of redemption to Henry, It did not show whether Henry had taken this conveyance as additional security for his mortgage debt, or in satisfaction of it. As the mortgage was not satisfied of record by Henry, the inference would, perhaps, be, that he had taken the legal title with no intention to extinguish his mortgage.' See, as to merger, and effect thereof, Wickersham v. Reeves, 1 Iowa, 413; Wilhelmi v. Leonard, 13 Id., 330; White v. Hampton, Id., 259.
At all events, the mortgage remaining unsatisfied of record, as to Henry’s interest, would be notice to defendants of any rights or equities which Henry might be able to set up thereunder, as against the mortgagor. To this effect are the cases of Bolles v. Chaunsey, 8 Conn., 389; Hayden v. Burney, 7 Vermont, 493; and see Am. Law. Reg., Nov., 1862, p. 7, and cases; Brinckerhoff v. Lansing, 4 Johns. Ch., 65; Heard v. Evans, 1 Freem. Ch., 79; Packard v. Kingman, 11 Iowa, 219 ; Williamson v. Brown, 15 N. Y., 354, 359 (1857), containing latest New York doctrine as to notice.
Or, if it would not amount to notice, yet such a record remaining unsatisfied, would be sufficient to put defendants upon inquiry as to the interest or rights of Henry. If they did not wish to be affected by it, they ought to have made inquiry, and if they had made such inquiry, they would have become advised of his equities. Under the authorities above cited, defendants are not to be considered as purchasers, without notice as to the note payable to Henry, and as to which the mortgage had not been canceled of *574record. It is my opinion that the mortgage should be revived only, so far as this note is concerned.