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Arnot v. Post

6 Hill & Den. 65 Court N.Y. Sup. Ct. English

Delivered by *67 By the Court, Bronson, J.

Contents

Majority

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Arnot vs. Post and others.

Headnote

A tender to the mortgagee or his assignee at any time before foreclosure, although the law day has passed, will have the effect of discharging the lien of the mortgage.
Under 2 it. S. 547, § 8, the right of a judgment creditor who had a lien on mortgaged premises prior to their being sold in virtue of a statute foreclosure, was not affected by such sale.
A mortgage dated in May, 1827, was foreclosed under the statute in 1830, and B. became the purchaser of the premises. In 1836, a creditor, having a judgment against the mortgagor some three months younger than the mortgage, caused the premises to be sold under a Ji. fa., and they were bid in by A. The sheriff executed a deed to A. in 1838, who shortly afterwards tendered to B. the
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amount due upon the mortgage, together with the costs of foreclosure, which B. reiused to receive. Held, in ejectment by A. against the tenants of B., that the tender discharged the lien of the mortgage, and that A. was entitled to recover.
The case of Klock v. Cronkhite, ( 1 Hill, 107 ,) commented on and explained.
Ejectment for certain lands in Elmira, Chemung county, tried before Monell, C. Judge, at the Chemung circuit, in May, 1843. On the 1st of May, 1827, Joseph Vial and Uriah Smith, being owners, mortgaged the premises to Clark Winans to secure the payment of $600; of which half was payable in April, 1828, and the other half a year afterwards, with interest. On the 9th July, 1827, Winans assigned the mortgage to John Arnot and Egbert Egberts; who, on the 20th February, 1830, assigned the mortgage to Simeon Benjamin. Benjamin foreclosed the mortgage by advertisement and sale mider the statute, and became himself the purchaser on the 23d August, 1830. The defendants are the tenants of Benjamin.
On the 6th August, 1827, Rosevelt and Rosevelt recovered a judgment against Joseph Vial and two others for $776,25. In July, 1836, a fi. fa. was issued on the judgment, by virtue of which the sheriff sold the premises in question to John Arnot, the plaintiff, for $150. The deed of the sheriff to the plaintiff was dated May 23d, 1838. On the 21st September, 1838, the plaintiff tendered to Benjamin the principal and interest due on the mortgage, with the costs of foreclosure, which Benjamin refused to receive. The judge decided that the tender discharged the lien of the mortgage, and divested the title which Benjamin acquired under the foreclosure; and that the plaintiff was entitled to recover. The defendants excepted. They also excepted to the decision of the judge in receiving evidence of the tender. Verdict for the plaintiff. The defendants now moved for a new trial on a bill of exceptions.
B. D. Noxon, for the defendants.
J. A. Collier, for the plaintiff

The facts 'of the case may be brought within a narrow compass. There was first a mortgage, and then a judgment against the mortgagor. The mortgage was afterwards foreclosed by advertisement and sale under the statute, and Benjamin became the purchaser. The defendants are his tenants, and stand in his place. Subsequent to the foreclosure the premises were sold under the judgment, and the plaintiff became the purchaser. His deed from the sheriff is dated in May, 1838. In September following he tendered to Benjamin the principal and interest due on the mortgage, with the costs of the foreclosure, which Benjamin refused to receive; and the question is, whether the tender extinguished the lien of the mortgage. The judge held that it did. And so we held between these parties at a former term, when the question was decided on the argument. But as the counsel for the defendants thinks the case was not then fully considered, we have looked into the matter again, to the end that the error, if there be one, may be corrected before any injury has been donej and before it has passed into a precedent.

A statute foreclosure bars the equity of redemption of the mortgagor, and all persons claiming under him by title subsequent : but the rights of other mortgagees, and of judgment creditors having a lien, are saved. They shall not “be prejudiced by any such sale, nor shall their rights or interests be in uny way affected thereby.” ( 2 B. 8 .546, § 8.)[1] So far as relates to the judgment creditor, the sale can have no greater effect than that of passing the interest of the mortgagee to the purchaser, who stands in the character of an assignee. The equity of the mortgagor is barred by the sale. But the rights of the creditor are Unaffected, As to him, there has been no foreclosure; there is nothing but an assignment of the mortgage. The purchaser has come into the place and succeeded to the rights which the mortgagee had before the sale. If this be so, then the creditor may sell under his judgment, and the purchaser will acquire

(a) (a) Otherwise under the act of April 12th, 1842. (Sess. Laws of 1842, p. 365, § 6.)

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the equity of redemption, or the right of redeeming from the mortgagee or his assigns. His right to sell after the foreclosure is just as perfect as it was before. A sale is the only mode in which he can assert his legal rights. Without a sale he has nothing but a lien; but on a sale the purchaser acquires an interest in the land. He gets what the mortgagor had at the time the judgment was docketed, which was before the foreclosure, to wit, the equity of redemption; and this, although it is still called an equity, has in our law become, for most purposes, the legal estaté. The purchaser under the judgment is the owner of the land, subject only to the incumbrance of the mortgage. That charge upon his estate he has the right to extinguish by payment, and then his title will be complete.

It has always been held that a tender at the day discharged the lien of the mortgage; and, although a clear departure from the old law, it is fully settled in this state that a tender-after the day will have the same effect. (Jackson v. Crafts, 18 John. 110 ; Edwards v. Farmers’ Loan Company, 21 Wend. 467 , and 26 id. 541 .) I lmow that in the last case the law day was extended by the charter of the company; but the broad principle was asserted that a tender at any time before foreclosure, although the law day has passed, will have the effect of discharging the lien of the mortgage. Here, so far as the judgment creditor and the purchaser under the judgment are concerned, there had been no foreclosure.

Let us now apply what has been said. Benjamin, who purchased at the mortgage sale, became thereby the assignee, and stood in the place of the mortgagee. His purchase barred the right of the mortgagor; but as against the judgment creditor and the plaintiff who purchased under the judgment, Benjamin got nothing but an assignment of the interest of the mortgagee. Being assignee, he was the person entitled to the money, and the tender was properly made to him. The plaintiff, as purchaser under the judgment, had acquired all the interest which the mortgagor had before the foreclosure. He owned the land, subject only to the incumbrance of the mortgage. He had the same right to pay the money and discharge the lien of the mortgage, as the mortgagor had at the time the judgment was dock

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eted. Now, it is settled, as we have seen, that tender at or even after the law day, has the same effect as payment or actual satisfaction would have, so far as the lien of the mortgage is concerned. And here, the tender having been made by the proper person, and to the proper person, the lien of the mortgage was thereby discharged. The mortgage no longer stands in the plaintiff’s way, and he is entitled to recover the land as a purchaser under the judgment.

The argument for the defendants turns altogether upon making something out of the foreclosure of the mortgage. But so far as the plaintiff is concerned, there has been no foreclosure. The statute says it shall be nothing. The counsel relies confidently on the case of Klock v. Cronkhite, ( 1 Hill, 107 ;) but it will not answer his purpose. There, Elwood had purchased under the judgment before the foreclosure of the mortgage; and as he stood in the character of assignee of-the mortgagor at the time of the foreclosure, we held that he was barred hy it. The statute expressly cuts him off. But here, the plaintiff purchased after the foreclosure, and the statute just as plainly saves bjs rights.

A remark which fell from me in Block v. Cronkhite has been thought of some importance. I said, that a judgment creditor, having nothing but a lien, must go into equity to, redeem; he has no title at law. Although that question was not necessarily involved in the case, I see no reason for doubting the accuracy of what was then said. So long as the judgment creditor has nothing but a lien, he clearly has no legal title to the property. He must go into equity if he goes any where. I do not see that he can make a valid. tender, for there is no privity between him and the mortgagee. No one but the mortgagor, or some one who has acquired his interest, has the right to tender the money and discharge the mortgage. A mere lien does not transfer the title to the property, either at law or in equity. But here there was a legal privity between the parties. The plaintiff had the title, and Benjamin had an incumbrance upon the land. The plaintiff had acquired the same right to remove the charge that belonged to the mortgagor before he was fore

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closed. He could therefore make a tender, and the tender discharged the lien.

The reconsideration of the case has confirmed our first impressions.

New trial denied.

END OP OCTOBER TERM.

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