(CLARK, J., dissents, arguendo, in which MONTGOMERY, J., concurs.)
A makes a promissory note to B for borrowed money payable on a day certain, and to secure it he and his wife give B a mortgage on land, duly registered, and the money is used in improving the mortgaged premises. After maturity of the debt and before any sale or foreclosure proceedings begun, the mortgagor tenders to the mortgagee the amount then due principal, interest and costs then incurred, and the mortgagee refuses to accept the tender and surrender his note and mortgage. Does this tender discharge the lien on the mortgaged land? The above statement discloses the only question presented in the record in the present action. It does not appear that the money tendered was deposited anywhere, nor that it was kept ready for the plaintiff in case
of demand, nor that it was tendered at the trial. The plaintiff instituted this action for possession of the land and to recover a judgment on the note, and for a decree condemning and ordering said land to be sold to satisfy his judgment. The defendant pleaded his tender among other things and relied on it as a discharge of the mortgage lien. At the trial the plaintiff had judgment for the principal money and interest and cost, prior to the day of tender, and also in order to sell the (4) land to satisfy the judgment. The defendant Beasley excepted "because the court declined to hold that the tender discharged the lien of the mortgage on the land," and appealed. The effect of a legal tender, in case the security had been wholly personal, is not presented, and we express no opinion on that question, nor is the effect of a tender made before or at maturity, called the law-day, in case of a mortgage security, presented.
We are not aware that the question now before us has ever been directly presented to this Court. In some of our sister states, either by statute or judicial ruling, the mortgage lien is held to be only a mere security or pledge, with the title remaining in the mortgagor, and that a tender kept intact discharges the lien, and in some that the debt is discharged, because the condition of the mortgage contract is performed and that the title of the mortgagor is complete without reconveyance or other equivalent act. This is the result of the harsh rule of the common law. But in those states, if the mortgagor should call on the court of chancery to remove the cloud on his title or to work out any other object, he is required to pay the debt on the principle that he must do equity if he asks for it.
In New York, after several cases much considered, it was finally settled by a divided court in Kortright v. Cady, 21 N.Y. 343, that a tender, although not kept good, made after the law-day at any time before foreclosure, discharges the lien. In a few other states the same doctrine prevails, but they all rest on the holding that the mortgage is a mere security or pledge without any legal title in the mortgagee. The several decisions in such states present various phases of the question. In New York, in Tuthil v. Morris, 81 N.Y. 99, which was an action to restrain a sale and to have the mortgage canceled (5) of record, on the ground that the amount of the mortgage had been duly tendered and refused, the Court say "a party coming into equity for affirmative relief must himself do equity, and this would require that he pay the debt secured by the mortgage and the costs and interest, at least up to the time of the tender. The most that could be equitably claimed would be to relieve the debtor from the payment of interest and costs subsequently accruing, and to entitle him to this relief he should have
kept his tender good from the time it was made." And there are many similar decisions in those states.
But it is claimed that the present action is not one for equitable relief. We think this is a misapprehension. It is true that it is an action for possession, for judgment for the amount of the debt "to be discharged upon the surrender of the said land, or the sale thereof under an order of the court, and for costs and any other necessary relief," and the defendant after pleading tender and refusal prays the court "that said land be discharged from any liability for the payment of said note and that said mortgage be declared satisfied." Here, both parties are asking the court to do things which a court of law could not do. Before the Constitution of 1868, neither party could get any equitable relief except by a bill in equity, but under that Constitution and The Code either party can assert and obtain his equitable relief in any action at law by the other party, thus expediting business and saving costs. And the moment either party by his pleadings sets out and asks equitable relief, the court of Equity acquires jurisdiction, clears the deck, and adjusts all equities between the parties, and this view clearly embraces the present case.
In a much larger number of the states, we think the rule is different from that in New York. In North Carolina the mortgagee has (6) the legal estate and the mortgagor is the equitable owner. Until the day of redemption is past, he may pay the money according to the proviso in the contract and avoid the conveyance at law, and this is termed his legal right of redemption. After the day of redemption is past, he has still an equity of redemption which is a continuance of his old estate. Hemphill v. Ross, 66 N.C. 477. Colebrook on Collateral Securities, sec. 157, says there are few states where the mortgage is regarded as merely subsidiary to the debt, an incident to the principal, the shadow which follows and depends upon the substance. "This is not the view taken in this State of these relations, nor is it in harmony with the general course of adjudications elsewhere. The note is the personal obligation of the debtor; the mortgage is a direct appropriation of property to its security and payment." Capehart v. Dettrick, 91 N.C. 344
and 353.
The mortgagee may at any time take or recover possession of the mortgaged land, unless expressly forbidden by the terms of the deed or by necessary implication. 1 Jones on Mortgages, sec. 58.
With this view of the mortgagee's estate and its incidents, what is the effect of the tender relied on in this case? Does it discharge the lien? The burden of showing tender and refusal is on the party pleading it. The defendant can derive no benefit from his plea of a tender, because
it is not accompanied by a payment into court of the amount admitted to be due. S. v. Briggs, 65 N.C. 159. We have also omitted to notice that a plea of tender is incomplete unless accompanied by a payment of the sum tendered into court. Terrell v. Walker, 65 N.C. 91. It was insisted that in the opinion of Pearson, C. J., in Capehart v. Biggs,77 N.C. 261, the expression, "The plaintiff might invalidate a sale made under the power by proof that before the sale, or even (7) on the day of sale, he tendered the balance due with the expenses incurred." We must assume that he meant a tender kept good by payment into court; especially as, in Cope v. Bryson, 60 N.C. 112, he had already said that defendant must plead "tender and refusal and `always ready,' and pay the money into court and take a rule on the plaintiff to take it or proceed further at his peril."
In Shields v. Lazear, 34 N.J. Law, 496
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(CLARK, J., dissents, arguendo, in which MONTGOMERY, J., concurs.)
A makes a promissory note to B for borrowed money payable on a day certain, and to secure it he and his wife give B a mortgage on land, duly registered, and the money is used in improving the mortgaged premises. After maturity of the debt and before any sale or foreclosure proceedings begun, the mortgagor tenders to the mortgagee the amount then due principal, interest and costs then incurred, and the mortgagee refuses to accept the tender and surrender his note and mortgage. Does this tender discharge the lien on the mortgaged land? The above statement discloses the only question presented in the record in the present action. It does not appear that the money tendered was deposited anywhere, nor that it was kept ready for the plaintiff in case
of demand, nor that it was tendered at the trial. The plaintiff instituted this action for possession of the land and to recover a judgment on the note, and for a decree condemning and ordering said land to be sold to satisfy his judgment. The defendant pleaded his tender among other things and relied on it as a discharge of the mortgage lien. At the trial the plaintiff had judgment for the principal money and interest and cost, prior to the day of tender, and also in order to sell the (4) land to satisfy the judgment. The defendant Beasley excepted "because the court declined to hold that the tender discharged the lien of the mortgage on the land," and appealed. The effect of a legal tender, in case the security had been wholly personal, is not presented, and we express no opinion on that question, nor is the effect of a tender made before or at maturity, called the law-day, in case of a mortgage security, presented.
We are not aware that the question now before us has ever been directly presented to this Court. In some of our sister states, either by statute or judicial ruling, the mortgage lien is held to be only a mere security or pledge, with the title remaining in the mortgagor, and that a tender kept intact discharges the lien, and in some that the debt is discharged, because the condition of the mortgage contract is performed and that the title of the mortgagor is complete without reconveyance or other equivalent act. This is the result of the harsh rule of the common law. But in those states, if the mortgagor should call on the court of chancery to remove the cloud on his title or to work out any other object, he is required to pay the debt on the principle that he must do equity if he asks for it.
In New York, after several cases much considered, it was finally settled by a divided court in Kortright v. Cady, 21 N.Y. 343, that a tender, although not kept good, made after the law-day at any time before foreclosure, discharges the lien. In a few other states the same doctrine prevails, but they all rest on the holding that the mortgage is a mere security or pledge without any legal title in the mortgagee. The several decisions in such states present various phases of the question. In New York, in Tuthil v. Morris, 81 N.Y. 99, which was an action to restrain a sale and to have the mortgage canceled (5) of record, on the ground that the amount of the mortgage had been duly tendered and refused, the Court say "a party coming into equity for affirmative relief must himself do equity, and this would require that he pay the debt secured by the mortgage and the costs and interest, at least up to the time of the tender. The most that could be equitably claimed would be to relieve the debtor from the payment of interest and costs subsequently accruing, and to entitle him to this relief he should have
kept his tender good from the time it was made." And there are many similar decisions in those states.
But it is claimed that the present action is not one for equitable relief. We think this is a misapprehension. It is true that it is an action for possession, for judgment for the amount of the debt "to be discharged upon the surrender of the said land, or the sale thereof under an order of the court, and for costs and any other necessary relief," and the defendant after pleading tender and refusal prays the court "that said land be discharged from any liability for the payment of said note and that said mortgage be declared satisfied." Here, both parties are asking the court to do things which a court of law could not do. Before the Constitution of 1868, neither party could get any equitable relief except by a bill in equity, but under that Constitution and The Code either party can assert and obtain his equitable relief in any action at law by the other party, thus expediting business and saving costs. And the moment either party by his pleadings sets out and asks equitable relief, the court of Equity acquires jurisdiction, clears the deck, and adjusts all equities between the parties, and this view clearly embraces the present case.
In a much larger number of the states, we think the rule is different from that in New York. In North Carolina the mortgagee has (6) the legal estate and the mortgagor is the equitable owner. Until the day of redemption is past, he may pay the money according to the proviso in the contract and avoid the conveyance at law, and this is termed his legal right of redemption. After the day of redemption is past, he has still an equity of redemption which is a continuance of his old estate. Hemphill v. Ross, 66 N.C. 477. Colebrook on Collateral Securities, sec. 157, says there are few states where the mortgage is regarded as merely subsidiary to the debt, an incident to the principal, the shadow which follows and depends upon the substance. "This is not the view taken in this State of these relations, nor is it in harmony with the general course of adjudications elsewhere. The note is the personal obligation of the debtor; the mortgage is a direct appropriation of property to its security and payment." Capehart v. Dettrick, 91 N.C. 344
and 353.
The mortgagee may at any time take or recover possession of the mortgaged land, unless expressly forbidden by the terms of the deed or by necessary implication. 1 Jones on Mortgages, sec. 58.
With this view of the mortgagee's estate and its incidents, what is the effect of the tender relied on in this case? Does it discharge the lien? The burden of showing tender and refusal is on the party pleading it. The defendant can derive no benefit from his plea of a tender, because
it is not accompanied by a payment into court of the amount admitted to be due. S. v. Briggs, 65 N.C. 159. We have also omitted to notice that a plea of tender is incomplete unless accompanied by a payment of the sum tendered into court. Terrell v. Walker, 65 N.C. 91. It was insisted that in the opinion of Pearson, C. J., in Capehart v. Biggs,77 N.C. 261, the expression, "The plaintiff might invalidate a sale made under the power by proof that before the sale, or even (7) on the day of sale, he tendered the balance due with the expenses incurred." We must assume that he meant a tender kept good by payment into court; especially as, in Cope v. Bryson, 60 N.C. 112, he had already said that defendant must plead "tender and refusal and `always ready,' and pay the money into court and take a rule on the plaintiff to take it or proceed further at his peril."
In Shields v. Lazear, 34 N.J. Law, 496, it is held, "but an unaccepted tender of the mortgage money, made after the day prescribed in the mortgage, will not affect the lien of the mortgage on the land. It is neither performance of the condition nor payment or satisfaction of the debt. Its only effect will be to stop the running of interest and to subject the mortgagee to the costs of a redemption by bill in Equity. InBilzell v. Hayward, 96 U.S. 580, it is stated that "To have the effect of stopping interest or costs, a tender must be kept good; and it ceases to have the effect when the money is used by the debtor for other purposes." A plea of tender, not accompanied by profert in curia, is bad.Saper v. Jones, 56 Md. 503. A tender, after default, does not discharge the lien of a mortgage, although sufficient in amount. When a tender is made after the day, it should be kept good. Crain v. McGoon, 18 Am. Law Register, 178 (Ill.); Merritt v. Lambert, 7 Paige, 344; Maynard v.Hunt, 5 Pick., 240; Matthews v. Lindsay, 20 Fla. 973. A tender, to prevent the running of interest, must be continuing. Using the money after refusal by the creditor to receive it, destroys this attribute of a legal tender. Gray v. Angier, 62 Ga. 596. In tender, where the money is brought into court and deposited and left with the plaintiff, he is entitled to cost only. Shiver v. Johnson, 62 Ala. 37. A tender of payment, to be effectual, must be kept good and be ready at any time. To get the benefit of a tender, the money must be placed in the (8) custody of the court, so that it may be awarded to the party to whom it rightfully belongs. Frank v. Pickens, 69 Ala. 369. The general rule is that in a plea of tender, it must be accompanied with an averment that the defendant was, and still is, ready to pay it, and that the money is produced in court. 2 Greenleaf, Ev., 589, Part IV. The payment of money into court is an admission of indebtedness to the amount paid in, and whatever may be the result of the trial the money
belongs to the plaintiff, and the party paying it in loses all right to it. 25 A. E., 943. It is seldom that a case of absolute refusal after tender is made out, for it is generally attended with circumstances that explain the refusal.
Upon the weight of current authorities and upon general reasoning and a due regard for fair dealing, we are of opinion that the defendant's plea of tender was not available, except to stop interest and save him costs after the tender, which was accorded to him at the trial. To decide otherwise might be to let the defendant keep his money, discharge the security and the plaintiff get nothing from any quarter. This would be monstrous.
The law contemplates the payment of just debts. We see no error in the judgment below.
Affirmed.