Hinchman v. Admrs. of Emans

1 N.J. Eq. 100

• Court: New Jersey Court of Chancery
• Decided: October 15, 1830
• Status: Published

Opinion

The Chancellor.

The pleadings present two or three points to which the evidence has been directed.

First-—It is alleged that the complainant’s mortgage was fraudulently dated the 1st of April, when in truth it was executed on the 2d ; or that the defendant’s mortgage was fraudulently dated the 2d of April, when in truth it was executed on the 1st. The bonds and mortgage of complainant are dated on the 1st: those given to Emans arc dated on the 2d. The mortgages are acknowledged of the same days that they respectively bear date. There is no evidence to show that these acknowledgments are falsely dated. It appears by the testimony of John R. Hinchman, the scrivener, that while lie was drawing the writings, lie was directed by Cummins Oliver, to date his mortgage and bonds one day the oldest. Emans was present at the time, as was also Peter Wortman, one of the defendants. Cummins Oliver spoke loud enough to be heard by all. Wort man was assisting in the business of Emans, his father-in-law, and drew some of the writings. The testimony of Cummins Oliver is very full as to this matter. He says the papers were acknowledged on different days, and that it was talked of over and over again, and well understood that his mortgage should bear date first and have the priority. The defendants’ allegation in this behalf is not sustained by proof.

Secondly—-It is alleged that the mortgage from Chidestcr toOii-ver was without consideration, and therefore fraudulent as against the defendants.

The mortgage was given from Chidester to Cummins Oliver, to secure the payment of one thousand one hundred and thirty dollars. It appears that this property, in 1814, belonged to Nicholas Emans, who purchased it at sheriff’s sale. In 1814, he sold it to Jonathan Oliver, and took a mortgage on it for one thousand and five dollars. Afterwards, on the 21st of May, 1816, Jonathan Oliver sold the property to one Jason King, for three thousand dollars, who gave a mortgage and four bonds for the purchase money. Two of these bonds were passed to Emans, and two of them Oli ver passed elsewhere. Jason King soon after conveyed the property back to Jonathan Oliver, to wit, on the 3d May, 1817. On the 27th of May, 1817, Oliver gave a new mortgage to Emans for one thousand and fifty-five dollars and ninety-four cents, and the bonds accompanying the mortgage of 1814 were cancelled.

It appears further, by the testimony of Cummins Oliver, (for there is no other evidence on the subject.) that when Jason King re-conveyed the premises back to Jonathan Oliver, two of the four bonds which he had given to Jonathan Oliver were outstanding, and Cummins Oliver, with one Hart, became security for the delivery of those bonds to King. Jonathan Oliver represented that they had been pledged, and that about twenty dollars would redeem them. One was represented to be in the hands of Jeduthan Condict, and one in the hands of Samuel Halliday, late sheriff of Morris. Cummins paid eight hundred and twenty-four dollars to take up these bonds, and upon this, Halliday assigned the two bonds and the mortgage to Cummins Oliver. Besides this, he paid other debts for Jonathan Oliver, to the amount of two hundred and fifteen dollars, making in all one thousand and thirty-nine dollars. Cummins alleges that he held these bonds and the mortgage until he got the mortgage from Chidester, in 1818. On the 15th of September, 1817, Jonathan Oliver sold the property to Cummins Oliver, and gave him a deed ; and on the 1st April, 1818, Cum-mins. Oliver conveyed the property to Japhet B. Chidester, for two thousand seven hundred dollars, or thereabouts.

From this, it would seem, that the property was conveyed by Jonathan Olivet to Cummins Oliver in good faith ; he being the owner of the property, sold to Chidester, and the mortgage given to him by Chidester for the balance of the purchase money, was a mortgage for a valuable consideration. It is not material now to inquire, whether the mortgage and bonds originally given by King and assigned over by Halliday to Cummins Oliver, were existing liens on the property on the 1st of April, 1818 ; or whether or not the transaction between Oliver and King was valid. It is sufficiently proved, that Cummins Oliver advanced upwards of one thousand dollars for Jonathan Oliver, and in satisfaction of his debts. This was a sufficient consideration for the conveyance from Jonathan to Cummins Oliver, subject to the mortgage of Emans, which was upwards of one thousand dollars. There is no pretence of proof that this sale was made subject to the trust (to pay the debt to Emans) mentioned in the answer. Cummins Oliver swears it was an absolute sale; and in the absence of all evidence on the part of the defendants to the contrary, it must be so considered: and Cummins, being the absolute owner, his conveyance of the property to Chidester, must be taken to be a fair and bona fide transaction. This second ground of the defendants is not supported.

Thirdly—The defendants insist, in the next place, that advantage must have been taken of the imbecility of Emans ; that the giving up of his prior lien could only have been induced by some collusion or contrivance ; that it amounts to a legal fraud, and therefore the Emans mortgage should be preferred. In regard to the prior lien, the complainant denies the pretension of the defendants, and insists that the King mortgage then in the hands of Cummins Oliver, dated in 1816, was a lien on the property ; the mortgage was certainly produced at the time the new mortgages were given, and if it was then operative on the property, it was prior to the mortgage produced there by Emans, because that was given by Oliver in 1817, and the former bonds cancel* led. It is contended, however, that the King mortgage was not a subsisting lien on the property in 1818 ; and therefore that the mortgage of Emans from Jonathan Oliver was the oldest lien. However fraudulent the conveyances between Oliver and Jason King may have been, I doubt whether the defendants can set it up at this time as against the complainant. Emans had notice of this conveyance, and of the King mortgage. He actually took two of the four bonds accompanying the mortgage, probably as collateral security : he made no complaint of baud at that lime. The conveyance did not disturb the lien of his mortgage. The taking of the two bonds from King, the owner of the property, was, if any thing, a sanction on the part of Emans of the lawfulness of his right. Two of the bonds and the mortgage were assigned over to Cummins Oliver, as we have seen, for a valuable consideration ; and although he afterwards purchased of Jonathan Oliver the equity of redemption, I am not prepared to say. that he was not warranted in retaining the mortgage as a securi ty for his title. It is not a necessary consequence, when the le gal and equitable titles unite in the same person, that the equitable title becomes merged in the legal. A court of chancery will consider the mortgage as subsisting, when the purposes of justice require it. I incline to the opinion that the King mortgage was a lien on the property on the 1st of April, 1818, when the two mortgages now in question were given ; but as the view which I take of the case renders it unnecessary to decide that point, I desire to be understood as expressing no definite opinion upon it.

Admitting that, in strictness of law, the King mortgage in the hands of Cummins Oliver was no lien on the property ; are the circumstances attending the execution and delivery of these mortgages, of such character as to call for the equitable interference of this court to alter what appears now to be the legal rights of the parties ? The power of the court is undoubted, and in all proper cases it should be fearlessly, though cautiously exercised.

There are various species of fraud which are the foundation of equitable relief. They are admirably classified by Lord Hard-wicke, in the case of Chesterfield v. Jansen, 2 Ves. 155. Fraud may arise from facts and circumstances of imposition : it may be apparent from the intrinsic value and subject of the bargain itself, such as no man in his senses, and not under delusion, would make on the one hand, and as no honest or fair man would accept on the other : it may be inferred from the circum stance and condition of the parties contracting, for it is as much against conscience to take advantage of a man’s weakness or necessity, as his ignorance; and it may also be collected from the nature and circumstances of the transaction, as being an imposttion on third persons. Will this case come properly under any of these species of fraud ? Does the fact that a priority was given to the complainant’s mortgage, warrant the inference of fraud and circumvention ? It is very evident, that whether in strictness the King mortgage was a lien or not on the property on the 1st of April, 1818, it was so considered by the parties: they acted on that supposition : both parties may have been mistaken, without subjecting themselves to the imputation of baud. If Emans was mistaken in regard to this matter, and acted under that mistake, without any improper concealment or misrepresentation on the part of Oliver, and when he might have been advised on the subject if he had taken the precaution ; can he come now into a court of equity for relief l It does not appear that he was constrained to come into this “ new arrangement,” as it is called. He had his old mortgage of 1817. The change of the securities was voluntary, so far as we know; and it does not appear that any artifice was made use of, to induce him to take the second mortgage. Under these circumstances, he cannot be permitted to disavow or avoid the operation of an agreement entered into with a full knowledge of the facts, on the ground of ignorance of the legal consequences flowing from those facts. Shotwell v. Murray, 1 Johns. C. R. 516.

Cummins Oliver assigns, as the reason why the first mortgage was given to him and the second one to Emans, that the King mortgage was older than the one Emans then held ; and therefore he had a priority. This was doubtless the opinion of Wort-man, the friend of Emans. He stated that he thought they (Emans and himself) ought to have the oldest claim ; and he had been at a good deal of trouble and expense in searching records, looking about titles, &c. but it did not turn out so. Emans thought too, that his mortgage should be the oldest; but it appears finally to have been agreed on that the property was enough to satisfy both mortgages, and that it made but little difference which was first. There is no evidence to show what the actual value of the property was at that time. The first mortgage from Oliver to Emans in 1814, was for one thousand five hundred dollars, and it is safe to conclude that the property was worth at least that amount at that time. Real estate after-wards commanded a higher price in the market. In 1818» when these mortgages were given, it was not far from its maximum ; and if property had not greatly depreciated, the present difficulty would probably never have been heard of.

The taking of the second, or junior mortgage, on the part of Emans, may have been injudicious; but 1 do not feel warranted in saying that the procurement of the first, on the part Oliver, was fraudulent; more especially as Emans voluntarily relinquished his orignal lien of 1814, and took the second mortgage of Oliver in 1817, with full notice that the King mortgage of prior date was outstanding and uncancelled. But for that, the probability is, his original priority would never have been affected.

There is considerable evidence as to the incapacity of Emans. Doubtless his faculties were impaired; and if this business had been transacted by him alone, the case rvould have presented much stronger claims to the consideration of the court. But he had with him a friend and adviser, in whom he had confidence, and who, as it is proved by the testimony on both sides, was his general agent. Joseph Smith, a witness for defendant, says, that Wortman was his agent or assistant from the time of his first illness till his death; that during the years 1817', 1818, and 1819, the old man often went from home to settle accounts, with Peter Wortman to assist him. Under these circumstances, there is, as T conceive, no sufficient warrant for the interference of the court, on the ground of incapacity.

On the whole case, I am of opinion that the complainant is entitled to his decree for a sale, and that the money be appropriated in discharge of the two mortgages in their order of priority on the record.

Let it be referred to a master to take an account, making all just allowances for the use and occupation of the premises, <fcc.