Bergman v. Fortescue

• Decision Date: 03 March 1908
• Citation: 69 A. 474,74 N.J.E. 266
• Parties: BERGMAN v. FORTESCUE et al.
• Court: New Jersey Court of Chancery

69 A. 474

74 N.J.E. 266

BERGMAN

v. FORTESCUE et al.

Court of Chancery of New Jersey.

March 3, 1908.

Bill by Henry J. Bergman against Jane Fortescue and others to foreclose a purchase-money mortgage. Decree of foreclosure stayed until a judgment can be rendered in a pending action at law by defendant to recover damages for breach of covenant in the deed.

The bill is filed to foreclose a purchase-money mortgage for $100,000 made by Jane Fortescue to the Columbia Real Estate Company, and dated March 1, 1906. The mortgage by its terms matures five years after its date; but the mortgage and the bond which it secures contain a provision to the effect that the mortgagee may declare the whole principal debt due in the event of any failure on the part of the mortgagor to pay all taxes which may at any time be assessed against the property, and to produce to the mortgagee a tax receipt therefor within 30 days after such taxes shall have become due and payable. The bill avers that the taxes which became due December 20, 1906, were not paid by defendant, and that complainant has for that reason exercised his election to declare the whole principal debt due and payable.

The answer of defendant Fortescue asserts that complainant has waived his right to declare the mortgage due and payable by receiving certain interest payments since the default of the mortgagor. The following facts may be said to be admitted: December 20, 1906, the taxes for the year 1906 became due, and were not paid. March 1, 1907, a semiannual installment of interest fell due. March 30, 1907, defendant paid to the mortgagee the interest which had fallen due March 1st. At the time this payment was made the mortgagee did not know that the taxes were unpaid. May 8, 1907, the mortgage was assigned to complainant. Between May 8 and June 19, 1907, complainant ascertained that the taxes were not paid, and on the latter date filed his bill of foreclosure. July 1, 1907, defendant paid the, taxes which fell due December 20, 1906. September 10, 1907, defendant paid to the complainant the interest which fell due September 1, 1907, and subsequently amended her answer setting forth the interest payments.

By way of cross-bill defendant asserts that the mortgage was made to secure the payment of a part of the purchase money for lands at that time conveyed by the Columbia Real Estate Company to defendant Fortescue by deed containing a covenant of special warranty, and that the covenant was broken by reason of the fact that a portion of the premises were held by a tenant under a lease from the Columbia Real Estate Company. The cross-bill seeks to offset against the mortgage debt damages sustained by defendant by reason of the breach of the covenant of warranty. An action at law is now pending which has been brought by defendant to recover damages for the breach of covenant referred to in the cross-bill.

Thompson & Cole, for complainant Bourgeois & Sooy, for defendant.

LEAMING, V. C. (after stating the facts as above). I am convinced that neither of the interest payments operated as a waiver of complainant's rights to enforce the payment of the entire mortgage debt.

In accepting the interest payment of March 30th, the mortgagee cannot be said to have waived the benefit of the covenant touching the nonpayment of the tax, for such nonpayment was unknown to the mortgagee at that time. It would be unreasonable to hold that the nonproduction of the tax receipt operated to charge the mortgagee with knowledge that the tax was...