Mills v. Van Voorhis — 10 Abb. Pr. 152

Majority

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MILLS a. VAN VOORHIS.

Court of Appeals;

December, 1859.

Headnote

Parties in Foreclosure.—Dower.—Specific Performance.— Compensation.—Partial Performance.

In foreclosing a purchase-money mortgage, the wife of the mortgagor is a necessary party.

The provision of 1 Revised Statutes, 741, § 6—that the wife is not entitled to dower

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in lands mortgaged when purchased, for the purchase-money", as against the mortgagee, and those claiming under him,—does not affect her right to dower in the equity of redemption.

A foreclosure, though effected in the lifetime of the mortgagor, is not effectual to bar his wife’s inchoate right of dower, unless she is made a party.

The wife of the grantee of an equity of redemption in lands subject to a mortgage, is a necessary party to an action against the grantee for foreclosure of the mortgage.

The omission to make such wives parties to the foreclosure, constitutes a defect iu the title which discharges a purchaser from specific performance. Such a defect is not a proper subject for compensation.

The practice of decreeing performance, at the suit of the purchaser, notwithstanding defects in title, should be very cautiously adopted ; and where such relief was not asked at the trial, it cannot be granted on appeal.

A new trial awarded, on the ground that the case had not been fully considered in certain important aspects.

Appeal from judgment.

The action was by a purchaser, for specific performance. The defendant was owner of real property, a portion of which he sold to one Learned, taking from him a purchase-money mortgage. Learned sold various lots to third persons. On a foreclosure, by suit, of the purchase-money mortgage, these grantees were made parties; but their wives were not. On a sale under the decree the defendant bid in the premises; and subsequently entered into the contract to convey them, to enforce which this action was brought. The plaintiff had objected to the title on the ground of defect of parties in the foreclosure.

The referee before whom the cause was tried, was of opinion that the title was sufficient, but that the plaintiff was in fault for not having accepted the deed which the defendant had tendered ; and adjudged that the plaintiff was not. entitled to specific performance, but only to recover back his payment and interest, and to have the contract cancelled.

From this judgment the plaintiff appealed; but it was affirmed in the Supreme Court at general term, on grounds stated in the report of the case in 23 Barb., 125 .

The plaintiff appealed to the Court of Appeals.

Cummins, Alexander, and Green, for the appellants.

J. K. Porter, for the respondent.

It would not necessarily follow, even if all the objections originally taken by the plaintiff to the title of the defendant were unfounded, that a specific performance of the contract must be decreed. As, however, there is nothing in the case to impeach the good faith of the plaintiff, nor any thing shown on the part of the defendant which would make it inequitable to compel a performance, it would seem that a court of equity, in the exercise of a sound discretion, would be called upon, if there is no defect in the title, to require the defendant to perform. The only objection not obviated by the proof given at the hearing, was that based upon the omission to make the widow of one person and the wives of others interested in the premises as grantees of the mortgage, parties to the suit to foreclose the mortgage given by Hans Learned to the defendant. This was the only objection considered by the referee or by the Supreme Court, and the only one which it is necessary to consider here.

The case does not show very clearly, whether Learned the mortgagor had a wife, or, if he had, whether she was made a party to the suit or not.

But the mortgage having been given for purchase-money, both the referee and the Supreme Court have assumed, that the question whether it was necessary to make the wives of the grantees of the mortgagor parties in order to cut off their equitable rights, is identical with the one whether it was necessary, if the mortgagor had a wife, to make her a party for that purpose. This assumption is no doubt correct to this extent, viz.: that if the dower-rights of the wife of the mortgagor, in the equity of redemption, were such as to require that she should be made a party to the foreclosure, then for the same reason it would be necessary to make the wives of the grantees of that equity parties. The converse of the proposition, however, may not be, and I think is not, true. If it be unnecessary in such cases to make the wife of the mortgagor a party, it is because the statute concerning mortgages for purchase-money has made it so. This statute, however, does not extend to the wives of the grantees of such mortgagor, and can in no way affect their rights.

But as the conclusion to which I have arrived, as to the necessity of making the wife of the- mortgagor himself a party, is

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decisive of this branch of the case, I will consider the question in the aspect in which it was considered by the court below. Is it necessary, then, in foreclosing a purchase-money mortgage, to make the wife of the mortgagor a party, in order to cut off her rights in the equity of redemption ?

1. Would it be necessary independent of the statute? 2. If so, does the statute render it unnecessary? Whether at common law it would be necessary to make her a party, must depend upon the question whether she has any interest, either legal or equitable, complete or inchoate, in the mortgaged premises. If she has such an interest, however remote, then, upon the plainest and most familiar principles, that interest cannot be affected unless by virtue of some statute, by a suit in equity to which she is not a party. This is not only well settled by authority, but results from the simplest and most obvious principles of justice. The doctrine has been frequently applied to the inchoate rights of dower of a married woman. It was so applied in the case of Wilkinson a. Parish (3 Paige, 653), where it was held that the purchaser of premises sold under a decree for partition, takes the same, subject to the right of dower of the wife of one of the tenants in common, unless the wife was a party to the suit.

It is entirely clear, therefore, that if the wife of one who owns real estate, subject to a mortgage given for purchase-money, has any inchoate dower-rights at all in respect to such property, these rights, unless by virtue of the statute, could not be affected by a foreclosure suit, to which she is not made a party, and a purchaser under such a foreclosure would not obtain an unincumbered title. That she has rights of this description, under the principles uniformly applied to mortgages in this country, is, I think, too clear to be denied. It having been for the last half century the settled doctrine in this State, that the mortgagor, notwithstanding the form of the instrument, is to be regarded as the real owner of the property, and the mortgagee, until he obtains possession, as having only a lien or charge upon it, the courts were bound in consistency to hold, as they have repeatedly held, that the dower-rights of widows extend to equities of redemption. This has never been doubted since the days of Hitchcock a. Harrington ( 6 Johns., 290 ); Collins a. Torrey (7 Ib., 278). The same doctrines prevail in some, if not

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all the other States. (Fish a. Fish, 1 Comst., 559 ; Snow a. Stevens, 15 Mass. R., 279 ; Gibson a. Crehn, 3 Pick., 475 .)

That a mortgagor who has purchased land, and given back a mortgage for the whole or a part of the purchase-money, is the owner of an equity of redemption in the premises so purchased, will not be disputed; and there is not the slightest legal, difference between this equity, so far as he is concerned, and one where the mortgage was given for borrowed money. His rights in the property are in all respects the same, and the same proceedings are necessary to foreclose them. If, therefore, he is to be regarded as the real, beneficial owner of the property in the one case, he is in the other; and it would seem plainly to follow that if his widow is entitled to be endowed of this equity in the one case, she must be equally so in the other.

There is nothing in the case of Stow a. Sifft ( 15 Johns., 458 ) which conflicts with this conclusion, even if the doctrine of that case could be sustained.

When a married man owning unincumbered real estate executes a mortgage upon it, in which his wife does not join, as her inchoate interest in the property precedes that of the mortgagee, it seems perfectly just that her rights, if not released, should be paramount to his. But where the purchase-money has never been paid, and the mortgage is given for that, there is an apparent injustice in permitting the rights of the wife to prevail over the prior rights of the vendor; and it was to avoid this result, that the late Supreme Court adopted the somewhat peculiar doctrine of the case of Stow a. Sifft. It had been said in several old English cases, that when the seizure of the husband was instantaneous only, as when the title was transferred to and from him at the same instant, and by the same act, there no right of dower would attach, and it was upon the doctrine of these cases that the Supreme Court rested its decision in the case of Stow a. Sifft. On looking carefully into these old cases, however, it appears that in none of them, was the conveyance intended to vest any beneficial interest in the husband ; the object being in every case merely to transfer the title to, or perfect the title in, some other person. These cases, therefore, would seem scarcely to afford any solid foundation for that of Stow a. Sifft.

But that case, assuming it to have been rightly decided, has

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no bearing upon the point presented here. The question there was not, whether the widow was entitled to dower in the equity of redemption, subject to the lien of the mortgage, but whether her right of dower was paramount to the rights of the mortgagee, and whether she could recover her dower in opposition to the mortgage, and without offering to redeem it. There is nothing in the case of Stow a. Sifft, or any other well-considered case, nor in reason, to show that the wife or widow of one who has given a mortgage for purchase-money, whether she has or has not joined in the mortgage, is not as much entitled to be endowed of the equity of redemption—that is, of the interest justly and beneficially vested in her husband—as the wife of any other mortgagor.

The only effect of the decision in Stow a. Sifft was to place the wife of one who had, during coverture, given a mortgage for purchase-money in which she had not joined, substantially in the same position as if the mortgage had been given for purchase-money, or any other indebtedness before coverture, or as if she had joined in a mortgage for such indebtedness after coverture. A feme-covert, who executes a mortgage jointly with her husband, is nevertheless entitled to dower in the equity of redemption of which her husband is seized; notwithstanding the mortgage, and this right, as we have seen, is not affected by a foreclosure in equity, unless she is made a party. If omitted, she can come in at anytime afterwards and redeem, notwithstanding a decree and sale in the foreclosure suit. It is the same under the decision in Stow a. Sifft, in case of a purchase-money mortgage, although the wife may not have joined in such mortgage. At common law, therefore, aside from our statute on the subject, it is plain that a wife or widow, in such a case, must be made a party to a foreclosure suit, or her right to redeem the premises from the lien of the mortgage will remain unaffected.

Does the statute in question prescribe a different rule ? Its language is this : “ Where a husband shall purchase lands durizig coverture, and shall at the same time mortgage his estate in such lands to secure the payment of the purchase-money, his widow shall not be entitled to dower out of such lands as against the mortgagee, and those claizning under him, although she shall not have united in such mortgage ; but she shall be entitled to

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her dower as against all other persons. (1 Rev. Stat., 741, § 5.) It is manifest on the face of this provision, within the express declaration to that effect contained in the revisor’s notes, that its design was simply to confirm, by positive enactment, the rule adopted in the case of Stow a. Sifft (supra). The sole motive for that decision was, as we have seen, not to interfere with the widow’s claim of dower in the equity of redemption, but to prevent that claim from having a preference over the mortgagee when given for purchase-money. The motive for the enactment was precisely the same, and the reason upon which both the decision and the statute were founded goes no further. Care seems to have been taken, in framing the statute, thus to limit its effect. The words “ although she shall not have united in such a mortgage,” plainly import a design to make the position of the widow as to a mortgage for purchase-money, not signed by her, the same as in respect to any other mortgage which she had signed.

But it is said that the statute goes further than this, and denies to the widow all right to dower, as against the mortgagee, and any person claiming under him. Hence, as every person deriving title under the foreclosure may be said to claim under the mortgagee, it is insisted that all claim to dower on the part of the widow, not only in the land at large, but in the equity of redemption, is cut off by such foreclosure, whether she is made a party or not.

The objection to this construction is, that it is inconsistent with the reason upon which the statute was founded, as gathered from the history of the law on the subject, as well as from the express declaration of the revisors; and inconsistent also with the object and intent of the statute, as plainly evinced by its phraseology in other respects. Parties obtaining title under the foreclosure, claim, not only under the mortgagee, but under the mortgagor also. They obtain the rights of both. So far as they claim under the mortgagee alone, they are protected by the statute against the widow without her having been made a party. In that portion of the estate she has no interest; but in respect to the portion which, under the foreclosure, is obtained from the mortgagor, viz., the equity of redemption in which she has an interest, her rights are not affected unless made a party.

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This construction makes the whole law on the subject reasonable and consistent, while any other would produce manifest incongruity and injustice. These views accord with, and are sustained by, those expressed by the vice-chancellor and chancellor in the case of Ball a. The Mayor, &c., of New York (10 Paige, 56), so far as that case involved the question presented here. In that case, the foreclosure was not completed until after the death of the mortgagor, and hence it did not become necessary to determine the effect of a foreclosure in his lifetime. There is not the slightest reason, however, for giving to such á foreclosure any greater effect in cutting off the dower-rights of the wife of the mortgagor, than to one which takes place after his death. The inchoate rights of the wife are as much entitled to protection as the vested rights of the widow. Neither can be impaired by any judicial proceeding to which she is not made a party.

If this reasoning is sound, it follows that it was absolutely necessary to make the wives of the grantees of Learned parties to the foreclosure suit, in order to cut off their inchoate rights of dower.

The wives of the grantees of a mortgagor have the same rights of dower in the equity of redemption, as the wife of the mortgagor himself. The cases of Collins a. Torrey ( 7 Johns., 278 ), and Snow a. Stevens ( 15 Mass., 279 ), were both cases of this description. The plaintiff in each was the widow, not of the mortgagor himself, but of a grantee of such mortgagor; and, in each, she was held entitled to dower in the equity of redemption. These are leading cases in the respective States, and have been repeatedly sanctioned and approved by the courts of both.

The necessity of making the wives of the grantees of Learned parties, therefore, in order to foreclose their rights, is clear.

The defendant, therefore, has not a perfect title, nor would a foreclosure of the Learned mortgage necessarily give him such a title, as the grantees’ wives not made parties to the first foreclosure, would have a right to come in and redeem. The plaintiff cannot, therefore, have a judgment or decree for a complete performance.

But he insists, that if he has not made a case for full and complete performance, he is nevertheless entitled to a judg

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ement that the defendant convey such title as he has, with compensation for the defects, and he asks for such a judgment.

It is quite clear that this is not a case for compensation. It would, obviously, be entirely impracticable to arrive at any reasonably accurate estimate of the defects in the defendant’s title, or to ascertain what sum would be an adequate compensation for them—depending as they do upon the deaths of a number of individuals, upon the survivorship of their respective wives, upon the time when, if ever, their rights of dower shall accrue, and many other contingencies too uncertain to be capable of even a proximate estimation. Again, the contract requires the defendant to give a deed with covenants; and it would be necessary to modify these covenants, so as to exempt the defendant from liability for any failure of title growing out of the defects compensated for, which would still further complicate the case. For these, and other similar reasons which might be suggested, no judgment for compensation could with propriety have been given by the court below, even if the plaintiff had asked for such a judgment upon the trial, and had furnished the court, so far as practicable, with the necessary facts upon which to predicate it.

The plaintiff, however, further asks, if the opinion of the court should be against him upon the two points already considered, that the defendant be required to convey that portion of the premises to which he has a perfect title, and offers to accept of such a conveyance.

The Court of Chancery in England has frequently exercised the power here sought to be invoked, and our courts have in some instances followed their example. But it is obvious that in this country, where the value of real estate is so fluctuating, changing not unfrequently from day to day, the practice of making such decrees, if generally adopted, would give to the purchasers of such property great advantages over the vendors. By availing themselves, as in this case, of some defect in the title to a portion of the premises, they might keep the matter in abeyance, perhaps, for years, secure against loss, in case of a fall, but ready to avail themselves of any rise in the value of the property. Although, therefore, the power of making such decrees no doubt exists, it should in this country, at least, be exercised with great deliberation and caution.

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In the present case, however, I feel'hound to say, that I see nothing in the facts developed, which throws the least suspicion upon the fairness and good faith of the plaintiff, and I should feel strongly disposed to grant him the relief sought in this last request, if it could he properly given in the present position of the case.

It is of no consequence that no such offer is made or relief asked in the complaint. But the difficulty is, that no such ground was taken or suggestion taken at the trial. Very many circumstances might exist, which would make it highly inequitable to make such a decree. The relative value of the different portions of the property may have entirely changed; the delay may have wrought inevitable changes in the relation of the whole or of parts of the premises, to the defendant’s other property ; valuable improvements may have been made under circumstances which would justify them. The defendant was clearly entitled to an opportunity to prove any circumstances of this nature which might have existed, and as no such decree could be made, unless asked for by the plaintiff, the defendant was not called upon to offer the proof, unless such a request was made. It is plain that no such decree can be made, without giving to the defendant an opportunity to adduce proof on this subject. What the plaintiff asks, therefore, is, in substance, that the judgment be reversed to enable him to make this additional offer and claim, notwithstanding no error was committed by the referee in disposing of the case, as it was presented before him.

These views, in which Judges Allen and Gray concur, would lead to an affirmance of the judgment. But one of my associates, Judge Strong, is of the opinion that it was unnecessary to make the wives, either of Learned himself or of his grantees, parties to the foreclosure, and is in favor of reversing the judgment for that reason. The other four, viz., Johnson, Ch. J., and Comstock, Denio, and Grover, JJ.—while they concur in holding that the wife of Learned, if he had a wife, and the wives of his grantees should have been made parties in order to cut off their rights in the equity of redemption, and that the title of the defendant is defective in consequence of the omission to make them so—nevertheless think, inasmuch as the referee decided that the defendant had a perfect title, and that the plaintiff was

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in fault for not having accepted the deed when tendered, that the case had never been fully considered in its other aspects; and that there ought to be a new trial to give the parties an opportunity to present the facts and equitable considerations bearing upon the plaintiff’s claim to partial relief, and to have the <• same deliberately passed upon by the Supreme Court.

The judgment, therefore, must be reversed, and there must be a new trial, with costs to abide.