Slack v. John

51 A. 151, 63 N.J. Eq. 126, 18 Dickinson 126, 1902 N.J. Ch. LEXIS 89

• Court: New Jersey Court of Chancery
• Decided: February 4, 1902
• Status: Published

Opinion

Grey, Y. C.

The sole .matter here in dispute is the claim of the defendant Holland that he has, in another suit, obtained a decree of this court that the deed from Annie Burns to the mortgagor, Augustus E. John, conveying the mortgaged premises, was void because obtained to be made by undue influence exercised by John over the grantor, Annie Burns. Holland v. John, 15 Dick. Ch. Rep. 435. Because of this decree Holland claims that John, the mortgagor, was not the owner of the mortgaged premises when he executed the complainant’s mortgage, and that the complainant’s mortgage is therefore a- nullity. The defendant Holland further insists that he claims by a title which is hostile and adverse to the complainant’s mortgage, and that such an issue cannot be tried in a foreclosure suit, and he contends he must be dismissed in this suit, with costs, under the rulings in Wilkins v. Kirkbride, 12 C. E. Gr. 93, and cases there cited. .

The settlement of this claim of the defendant Holland involves an inquiry into the title to the mortgaged premises which John, the mortgagor, held at the time he made the mortgage, and into the effect of the suit of Holland upon that title. The premises were conveyed by Annie Burns to John by deed dated March 29th, 1897. The mortgage was made by him to the complainant on July 1st, 1897, and was recorded the same day. At the latter date there was nothing on the face of the record of the title which in any way warned the complainant that John’s title to the mortgaged premises was impeachable. Nothing is alleged charging that the complainant participated in any acts of undue influence whereby Annie Burns was induced to convey the title to John, the mortgagor, nor is it charged or contended that the complainant, when she took her mortgage from John, had any notice of any undue influence or of any fraudulent acts oh John’s part whereby he obtained the title. Nor is there any dispute that the complainant mortgagee did in fact pay the mortgage money ($500) to the mortgagor, John. It is admitted to be still owing with interest.

There is in fact no issue raised by the pleadings in this suit, challenging the validity of the complainant’s mortgage because its acceptance was a part of any scheme of undue influence. All that is charged is that in the previous suit between the present defendant Holland and the mortgagor, John, a decree lias been made declaring the deed whereby John received title to be void, because obtained by undue influence exerted by him over Annie Burns, the previous holder of the title. No proof has been offered here to show that there was any such undue influence exerted, or to indicate that the complainant participated in it or knew of it.

The defendant Holland relies wholly on the decree- in the previous case of Holland v. John, as conclusively establishing the total nullity of John’s holding of title to the mortgaged premises, not only in favor of his claim as heir-at-law of Annie Burns, the unduly influenced grantor, but that the deed to Burns so obtained, is by that decree made void ab initio, and that all John’s acts as owner of the property, and especially his mortgage to Mrs. Slack, are by the same decree made null and void.

The decision of this cause must therefore depend upon the effect of the decree in the above-cited case of Holland v. John upon the complainant as the holder of her mortgage.

Mrs. Slade’s mortgage was received by her and recorded on July 1st, 1897. The suit of Holland v. John was begun in March, 1899, nearly two years afterwards. That suit was between Holland as complainant and John as defendant. Mrs. Slack was not made a party. It determined, as between Holland and John, that the deed whereby John received the title to the mortgaged premises was obtained by undue influence exerted by John over Annie Burns, who conveyed to him. It adjudged nothing as to Mrs. Slack’s rights. She never had her day in court, giving her an opportunity to deny and refute Holland’s allegations of undue influence and fraud. She is in no way bound by the determination in that suit. This is plainly apparent as an essential principle in the administration of justice, and has been declared by the highest authority. Haughwout v. Murphy, 7 C. E. Gr. 531 (Court of Appeals).

In the absence of any force in the proceedings and decree in Holland v. John to affect Mrs. Slack’s mortgage, there is nothing in the pleadings or proofs here submitted on the part of the defendant which offers any defence to this suit for the foreclosure of that mortgage. Every element of the defence is dependent upon the claim that Mrs. Slack’s mortgage is a nullity because of the decree against her mortgagor, John. That decree bound Mr. John but not Mrs. Slack. As against her there has been no determination that the deed from Annie Burns to John was obtained by undue influence. As to Mrs.,Slack that deed must in this suit stand unimpeached. John, for the purpose of this suit, had the right to make Mrs. Slack’s mortgage.

- The claim that Holland’s title is hostile to the mortgage is controlled by the same circumstances and need not be considered.

The interesting question of the position of a bona fide mortgagee for value presently passed, who innocently takes a mortgage from a mortgagor, who has obtained title by a fraud, is not presented in this case. The only attempt to show fraud or undue influence is the presentation of the proceedings and decree referred to, which, as above shown, are -in no way binding on Mrs. Slack, who was not a party to them’.

A decree will be advised in accordance with the views above expressed.