Coonrod v. Kelly

• Decision Date: 05 December 1902
• Docket Number: 5.
• Citation: 119 F. 841
• Parties: COONROD v. KELLY et al.
• Court: U.S. Court of Appeals — Third Circuit

119 F. 841

COONROD v. KELLY et al.

No. 5.

United States Court of Appeals, Third Circuit.

December 5, 1902

Joseph Colt, for appellant.

Joseph Cross, for appellee.

Appeal from the Circuit Court of the United States for the District of New Jersey.

Before ACHESON, DALLAS, and GRAY, Circuit Judges.

GRAY Circuit Judge.

This is an appeal from a decree of the circuit court of the United States for the district of New Jersey (113 F. 378), in a suit in equity brought by the appellant, by bill filed against the above-named defendants.

The essential facts, as disclosed by the pleadings and testimony are that, some time prior to May 1, 1899, George Booth, one of the defendants, who was doing business as agent of his wife, Ella Booth, another of defendants, became indebted to William H. Coonrod, the complainant, to the amount of about $2,400. Ella Booth at that time owned the real estate described in the bill, situate in North Plainfield, Somerset county, N.J., which was subject to a mortgage for $10,000 held by the Mutual Life Insurance Company of New York, on which, at the time of the transactions herein set forth there was due $5,000 of principal and $102 of interest. On or about May 1, 1899, it was arranged between the Booths and Coonrod that a mortgage for $10,000 on this property of Ella Booth should be given to Coonrod, and that Coonrod should pay off the amount due on the mortgage to the Mutual Life Insurance Company, cancel the debt of $2,400 due to Coonrod from the Booths on book account, and advance them $2,498 in cash, the balance necessary to make up the $10,000. A bond for the amount of $10,000, in favor of Coonrod, and a mortgage to secure the same upon the property of Ella Booth, above mentioned, were executed, in the absence of Coonrod, by George and Ella Booth, on May 1, 1899, before a notary public. This bond and mortgage were afterwards, on the 3d of May, 1899, delivered to the said Coonrod, in the office of his attorneys, Colt & Howell, in Newark, N.J. At the time of the delivery, a search of the property mortgaged certified by one Badgley, attorney or agent of the Booths, up to May 2, 1899, was exhibited to the appellant. This search showed that the property in question was clear of liens, except the stated mortgage to the mutual Life Insurance Company for $10,000, as to which it was noted that $5,000 of the principal had been paid. It was also stated by the parties mortgagors at the time of the delivery to Coonrod, that the mortgage delivered would be a first lien on the property described in it, after the cancellation of the mortgage to the Mutual Life Insurance Company. The delivery of the bond and mortgage by Booth to Coonrod was made shortly after 11 o'clock A.M. on the 3d of May, 1899. About 2 o'clock, or between 1 and 2, of the same day, the Booths went to the office of Frederick J. Howlett, one of the defendants, and, pursuant to an arrangement previously made, executed and delivered to the said Howlett a mortgage for $8,000, upon the same premises which were described in the Coonrod mortgage.

It is in testimony, and not disputed, that immediately after the delivery of the Coonrod mortgage, it was handed by Coonrod to Mr. Howell, his attorney, in order that it might be recorded, and that Mr. Howell, on the same day, Mary 3, 1899, mailed it to the clerk of Somerset county for that purpose. On the 5th of May, he received it back, with a letter dated May 4, 1899, stating that the mortgage was not sufficiently stamped, and that on that day, May 5th, Mr. Howell stamped the mortgage and remailed it to the clerk of Somerset county, with his check for two dollars and a half, the amount of recording fee. It was received and recorded by the clerk on May 6, 1899. the mortgage on the same property subsequently delivered to Howlett on the said 3d of May, was taken by Howlett personally, in the afternoon of that day, to the office of the clerk of Somerset county, and lodged for record as of that date.

On the day on which the transaction was closed, May 3, 1899, Mr. Howell testifies that as attorney for Coonrod, he deposited the draft for $5,000 and a check for $5,102, to the order of the Mutual Life Insurance Company of New York, and having had the same certified, sent one of his clerks with it to New York, to pay off and take up the mortgage held by that company. This was done, and the bond and mortgage held by the Mutual Life Insurance Company was returned. The mortgage was then forwarded by Mr. Howell to the clerk of Somerset county for cancellation, and it appears by the clerk's certificate that the said mortgage of the Mutual Life Insurance Company was canceled of record on May 8, 1899.

Howlett held the $8,000 mortgage until June 30, 1899, when he made an assignment there of to the Dime Savings Institution of Plainfield, N.J., one of the defendants. The bill charges, upon information and belief, that Howlett never paid or advanced to George Booth and Ella Booth, his wife, any moneys whatever on account of the $8,000 mortgage made to him, and that the making, execution and delivery of said mortgage was a scheme devised by the Booths and Howlett to place upon the records an incumbrance in a secret manner, and for the purpose of defrauding either the complainant or such person as might subsequently become assignee of the said Howlett mortgage; that neither of them ever made any disclosure of the facts in relation to the making of the said $8,000 mortgage, and that complainant discovered it by accident in the latter part of November, 1899. Complainants, therefore, insist that said mortgage never had any validity in the hands of the said howlett, and was never a lien upon said premises, and that the Dime Savings Institution of Plainfield acquired no better security or lien than Howlett, and that, therefore, said mortgage is invalid in the hands of the said savings institution as against complainant's mortgage.

The bill also charges, upon information and belief, that the Dime Savings Institution of Plainfield had full knowledge and lawful notice that the mortgage made by the Booths to complainant was executed and delivered prior to the mortgage made by them to said Howlett, and that said savings institution had lawful notice that complainant's said mortgage was a first and paramount lien upon said lands. The bill further charges that, inasmuch as the moneys advanced by complainant to the said Booths, on the said $10,000 mortgage, or a portion thereof, were used for the purpose of taking up and paying off the prior mortgage on said lands held by the Mutual Life Insurance Company of New York, complainant is and should be subrogated to the rights of the said Mutual Life Insurance Company under the said mortgage, and by virtue thereof has acquired in equity and now holds the same rights in said property, and the same lien thereon, as was held by the said Mutual Life Insurance Company at the time complainant took up and paid off said mortgage. And the bill further charges that, by virtue of the premises, complainant now holds a first and paramount lien upon the said property, by virtue of his own mortgage and of the mortgage held by the said Mutual Life Insurance Company.

The bill prays: (1) That an account may be taken, under the direction of the court, of the amount due upon complainant's said mortgage; (2) that defendants, or some of them, may be decreed to pay to complainant the amount found due, with interest thereon, by a short day to be appointed by the court, and that in default thereof, a foreclosure may be...