Morris v. Joyce

• Decision Date: 10 October 1902
• Citation: 63 N.J.E. 549,53 A. 139
• Parties: MORRIS v. JOYCE et al.
• Court: New Jersey Court of Chancery

53 A. 139

63 N.J.E. 549

MORRIS

v. JOYCE et al.

Court of Chancery of New Jersey.

Oct. 10, 1902.

Bill by Eliza A. Morris against John J. Joyce and others to foreclose a mortgage. Judgment for plaintiff.

F. P. McDermott, for complainant.

Addison Ely, for defendants.

EMERY, V. C. The complainant, Mrs. Morris, was the owner of a first mortgage for $3,000 on property of the defendant Joyce, situated in Point Pleasant. The mortgage was originally given by Joyce to the defendant Murphy, from whom Joyce purchased the property in November, 1895, and was a purchase-money mortgage. Joyce was Mrs. Morris' attorney, and looked after the investment of her entire funds. Mrs. Morris before May, 1899, left the bond and mortgage with Joyce to keep with her other papers, and on May 26, 1899, executed an assignment of the mortgage to the defendant Murphy. The consideration expressed in the assignment was $1, but the assignment contained a covenant that $3,000 was due, besides interest. As to the circumstances under which the assignment was made, the complainant says, substantially, that Joyce procured it by the statement that he wished to have the paper signed in order to make some change in her investments; and she further says that she understood it related to a $1,000 mortgage on Philadelphia property, which belonged to her, and which was also in Joyce's hands. She also says that, after this explanation was given by Joyce, the master, who had come to the house with him for the purpose of taking the acknowledgment, was called into the room, and the assignment was acknowledged. The master has no special recollection of the circumstances, and knew nothing about the transaction, but, speaking from his general custom, says that he explained to her the nature of the instrument. On the following day Mrs. Morris, as she says, went to Mr. Joyce's office, and, to her inquiry as to where he Invested the money, Joyce said that he found he did not have to make the change, and that he had put the papers back with the rest of the papers. The bond and mortgage, with the assignment to Murphy, were left with the defendant Joyce. Joyce applied to the defendant Murphy to purchase the mortgage himself, or to find a purchaser, which Murphy said he could not do. Joyce then stated that he wanted to raise some money for Mrs. Morris, and could get along with $2,000. After a consultation of Joyce and Murphy with an officer of the Manasquan Bank, it was arranged that the bank would discount Joyce's note for $2,000, if indorsed by Murphy, and Murphy agreed to indorse the note on the security of the mortgage. The note was so made and indorsed, and the bond and mortgage and the assignment were delivered to Murphy by Joyce for the purpose of securing Murphy's indorsement. The proceeds of the note were received by Joyce, who misappropriated them to his own use. Subsequently, and in November, 1899, Joyce applied to the defendant the Chosen Friends, etc., a loan association, for a loan of $3,200 upon the property. The written application signed by Joyce stated there was a $3,000 mortgage on the property, and also a $1,000 second mortgage, and that the $3,200 mortgage applied for was to be a first mortgage. Joyce's verbal statement to the officers of the association was that, although the first mortgage was for $3,000 on its face, it had been liquidated, and was only worth $2,000, and that the Manasquan Bank held it to secure the loan of $2,000 on a note. As to the $1,000 second mortgage, he stated that Murphy, who held this mortgage, had agreed to cancel his mortgage and take a new mortgage, subject to the loan association first mortgage of $3,000. The loan association did not have the entire $3,000 applied for on hand, and agreed with Joyce to assume the payment of the $2,000 note to the bank, which was then due, provided it could be renewed (this assumption being taken as payment of $2,000 of the mortgage), and to advance Joyce the balance of the loan, amounting, after charges due, to about $1,040. Without, in fact, making any previous arrangement with the bank or with Murphy about taking up or renewing the note, the loan association on November 9, 1899, took a mortgage on the premises from Joyce and wife to secure $3,200, and paid to Joyce on November 11, 1899, the sum of $1,040, which he also appropriated to his own use. Murphy canceled his mortgage for $1,000, and took a new mortgage for $1,000, which was expressly made subject to the loan association mortgage; but in the meantime Murphy continued to hold as security for his indorsement the mortgage assigned by complainant. This assignment had never been recorded, and on the record the title to the mortgage was still in complainant. The loan association had an abstract of the title, but this abstract has not been put in evidence. The advance of $1,040 by the loan association was made without any inquiries of either the bank, Murphy, or complainant, and was made entirely in reliance on the statements and credit of Joyce. He was then in good standing and reputation, and occupied a responsible position. The note given by Joyce to the bank was not taken up, and subsequently, and on July 12, 1900, Murphy wrote the loan association, requesting them to pay Joyce's note of $2,000 according to their arrangement made, as he understood, with Joyce. He further states that the note is covered by a mortgage prior to the loan association mortgage, and unless the note is paid the first mortgage ($2,000) will be foreclosed. The loan association then had the note renewed, they becoming indorsers on it before Murphy. Subsequently they paid the bank $1,000 on account of the note which they originally Indorsed, or the renewal of it, and, upon making this payment, gave their own note to the bank for the balance remaining due, and which is still unpaid. Murphy, upon being released from obligation to the bank by the payment of the note upon which he was the indorser, assigned the mortgage to the association by a written assignment, reciting, among other things, that he held the mortgage as collateral...