Colonial Bldg. & Loan Ass'n v. Griffin

• Decision Date: 17 December 1915
• Docket Number: No. 38/324.,38/324.
• Citation: 96 A. 901,85 N.J.Eq. 455
• Parties: COLONIAL BUILDING & LOAN ASS'N v. GRIFFIN et al.
• Court: New Jersey Court of Chancery

96 A. 901

85 N.J.Eq. 455

COLONIAL BUILDING & LOAN ASS'N

v. GRIFFIN et al.

No. 38/324.

Court of Chancery of New Jersey.

Dec. 17, 1915.

Bill to foreclose by the Colonial Building & Loan Association against Margaret Griffin and George I. Macklin, with cross-bill by the defendant Griffin against the defendant Macklin. Decree for complainant, and answer by way of cross-bill stricken out.

Joseph F. Farmer, of Jersey City, for complainant. John F. Marion, of Jersey City, for defendant Griffin. Treacy & Milton, of Jersey City, for defendant Macklin.

GRIFFIN, V. C. The complainant filed its bill to foreclose, making the defendant Margaret Griffin a party as mortgagor, and also making the defendant George I. Macklin a defendant as the assignee of a mortgage made by the said defendant mortgagor to Max Sandt and assigned by said Sandt to Macklin. The bill sets forth the making of the mortgage by said mortgagor and her husband to one Sandt on October 7, 1912, to secure the payment of a note of $2,500, which mortgage was duly recorded, and also the assignment of the mortgage by Sandt to the defendant Macklin by assignment, dated March 31, 1914, recorded April 1, 1914.

The defendant Margaret answered the bill, and also filed an answer by way of cross-bill against the defendant Macklin setting up:

That her husband, Joseph, was negotiating for the purchase of a saloon in Jersey City from the said Sandt; that he had been engaged in the saloon business in lower Jersey City, and was desirous of securing the store at the junction of Communipaw avenue and Grand street, and desired her to go to New York, "as it would be necessary for her to sign some papers before he could obtain possession of the said saloon at the junction of Communipaw avenue and Grand street, Jersey City; that she demurred to executing any papers, informing her husband that, as she had no interest in the transaction of the purchase of the saloon, she did not think that she ought to be present at the negotiations or sign any papers. Upon her husband receiving her refusal he became greatly offended, and charged her with standing in his way of taking advantage of a good opportunity. Not desiring to destroy her husband's success in business, she consented to attend the negotiations for the purchase of the saloon."

She then says:

That she went with her husband to an office in the downtown section of New York, which she was informed was a law office; "that there were present the lawyer, whom she did not know, her husband, and a person she was informed was Max Sandt, and she was requested by her husband and the lawyer to sign some notes, which she was informed her husband was to give to said Max Sandt to secure the purchase price of said saloon, and at the same time she was requested to sign a mortgage to secure the payment; she again refused to sign said notes and mortgage, and her husband became very angry, and told her it was only a matter of form, that he would take care of the notes, and after considerable pursuasion on the part of her husband, and because of her fear to anger him, she consented to execute the necessary papers; that she did not sign a mortgage to secure a preexisting debt of her husband's, but, on the contrary, she was induced to sign as maker a series of promissory notes (the exact amounts and, dates she does not now recall), and that the mortgage she gave to Max Sandt was to secure said notes, and not to secure a debt of her husband's as by reference to said mortgage will more fully appear; that said notes were given to the said Sandt as part of the consideration for the said saloon sold by the said Sandt to her husband, and that she never directly or indirectly received any money, property, or thing of value for her own use or benefit, or for the use, benefit, or advantage of her separate estate, and that she never paid any of said notes as they came due, or was she ever requested to, nor had she ever paid any interest on any mortgage, or was she ever requested to, and that said notes and said mortgage are invalid according to section 5 of the Married Women's Act and the amendments thereto."

The defendant Macklin now seeks to strike out the part of the answer filed by way of cross-bill under rule 213 of this court for want of equity.

The answer in the nature of a crossbill sets forth the following upon which Margaret founds her right to relief, viz.:

(1) That she did not sign a mortgage to secure a pre-existing debt of her husband's;

(2) that she was induced to sign, as maker, a series of notes, and that the mortgage she gave to Max Sandt was to secure said notes, and not to secure the debt of her husband, although she avers that said notes were given as part of the consideration for the saloon sold by the said Sandt to her husband;

(3) that she never received any benefit to her use or to the benefit of her separate estate, and that said notes and mortgage were invalid according to section 5 of the Married Women's Act and the amendments thereto. Her prayer is that the bill of complaint be dismissed as to the particular mortgage made to Sandt and assigned to Macklin, and that it be declared not a lien upon the property, and for other relief.

The answer assumes that, if the notes are void within the meaning of the fifth section of the act, relating to the property of married women, the mortgage is likewise void, as being embraced within the provisions of the same section. These assumptions, however, are erroneous, in this, that while the contract contained in the notes, being purely executory (if within the statute), cannot be enforced, the conveyance by the mortgage, being executed, if given to secure the husband's debt, is good, and her title in equity can be foreclosed. Warwick v. Lawrence, 43 N. J. Eq. 179-184, 10 Atl. 376, 3 Am. St. Rep. 299; Shipman v. Lord, 58 N. J. Eq. 380-389, 44 Atl. 215; Walker v. Jos. Dixon Crucible Co., 47 N. J. Eq. (2 Dick. Ch.) 342, 345, 20 Atl. 885; Campbell v. Tompkins, 32 N. J. Eq. (5 Stew.) 170, s. c. 33 N. J. Eq. (6 Stew.) 362; Ferdon v. Miller, 34 N. J. Eq. (7 Stew.) 10, s. c. at page 521; Galway v. Fullerton, 17 N. J. Eq. (2 C. E. Gr.) 389; Merchant v. Thompson, 34 N. J. Eq. (7 Stew.) 73; Davidson v. Biddleman, 82 N. J. Law (53 Vr.) 92, 81 Atl. 366.

The record discloses that the wife was the maker of the notes, which were given as part consideration for the purchase of the saloon sold by Sandt, the payee, to her husband. Nothing appears to bring the case within the second proviso of section 5 of the Married Women's Act, and therefore the notes are void. Vliet v. Eastburn, 63 N. J. Law (34 Vr.) 450, 454, 43 Atl. 741; Id., 64 N. J. Law (35 Vr.) 627, 46 Atl. 735, 1061.

Assuming that the mortgage is void if there exists no debt secured thereby (Bliss v. Cronk, 62 N. J. Eq. [17 Dick.] 496, 50 Atl. 315, s. c. 68 N. J. Eq. [2 Robb.] 655, 60 Atl. 1133), the question arises: Is there such debt?

It Is an established rule that, when one gives an obligation which is void or avoided in payment or discharge of an existing obligation, the prior obligation continues and is enforceable. Executors of Williams v. Williams, 15 N. J. Law (3 Gr.) 255, 258, and cases therein cited; Leonard v. Trustees of First Congregational, etc., 2 Cush. (Mass.) 462, and cases therein cited.

Therefore, when the husband delivered the void notes of his wife for the part of the purchase money which remained unpaid at the consummation of the sale, he was and continued liable to pay the balance of the consideration, being the identical sums mentioned in said notes to the vendor, and, being so liable, it may be said that the notes and mortgage in question were given to secure the payment of the husband's debt, with the result, under the authorities above cited, that, in the absence of the other defenses set up in the answer by way of crossbill, the mortgagee had, before the assignment, good right in equity to foreclose the mortgage to pay this debt of the husband's; and his assignee, under the circumstances of this case, has a like right, because he took by assignment the debt of the husband to sustain his right under the mortgage, even though the husband's debt might not, in express words, have been assigned thereby. Jones on Mortgages, vol. 1, p. 641, § 829.

The case of Bliss v. Cronk, supra, is not contrary to the views above expressed, as the wife here fully comprehended the transaction. She gave her notes assuming them to be valid, and executed her mortgage to secure the payment of the moneys mentioned in the notes, which really constituted the debt of her husband. Now, after the mortgagee has parted with the title and possession of the property sold to the husband on the faith of the security delivered, the wife has discovered that the notes are void, and now seeks to avoid her mortgage on the ground that, the notes being void, the mortgage is likewise. A court of equity in such case will look at the substance and give effect to the admitted intentions of the parties, rather than follow the erroneous form adopted for carrying them into effect, which might lead to injustice, especially where there is no fraud or conduct which might move a court of equity to refuse its aid, and where the rights of innocent parties are not affected. If these views be correct, then, as the wife understood that she was giving a mortgage to secure the payment of the unpaid purchase price, and as this price was erroneously converted into her supposed debt, full justice will be rendered to her by now treating the mortgage as valid for the debt which was intended to be secured.

The answer by way of cross-bill further attacks the validity of the mortgage, alleging matter amounting to an assertion that the wife executed the mortgage under duress, misrepresentation, and undue influence. It is quite clear that the answer does not disclose duress exercised by the husband upon his wife, Margaret. In Remington v. Wright, 43 N. J. Law (14 Vr.) 451,...