Neslor v. Grove

• Decision Date: 20 June 1919
• Docket Number: No. 18.,18.
• Citation: 107 A. 281
• Parties: NESLOR v. GROVE et al.
• Court: New Jersey Supreme Court

107 A. 281

NESLOR

v. GROVE et al.

No. 18.

Court of Errors and Appeals of New Jersey.

June 20, 1919.

Appeal from Court of Chancery.

Bill by Charles F. Neslor against William K. Grove and others for foreclosure of a mortgage. From the decree, the Second National Bank of Hoboken, which held a second mortgage, appeals. Reversed, and remitted for further proceedings.

Julius Lichtenstein, of Hoboken (Frederick N. Eberhard, of Hoboken, on the brief), for appellant.

William M. Seufert, of Englewood, and Robert H. Southard, of New York City, for respondent Grove.

John M. Enright, of Jersey City, for respondent Globe Tire Co.

SWAYZE, J. This is a foreclosure bill. There is no question as to the complainant's mortgage, and he is entitled to a decree of foreclosure. The controversy relates to a second mortgage held by the Second National Bank of Hoboken and a judgment in attachment in favor 6f the Globe Tire Company. We may pass for the present the question as to the priority between these two liens and deal with the claim of the defendant Mary B. Grove that the mortgaged premises, the title to which is in her, have been discharged from the lien of the bank's mortgage. The situation is this:

Prior to July 28, 1913, the Grove Hat Manufacturing Company was indebted to the bank on notes aggregating $45,000. These notes had been outstanding some time, one certainly since 1911. They were indorsed by William K. Grove, who was the principal man in the Hat Company. On that day he and his wife, Mary B. Grove, executed the mortgage for $45,000 now in question to Allen N. Terbell, who immediately assigned it to the bank. The mortgage is in the ordinary form. The debt secured thereby is in fact the same debt represented by two notes of the same date, one given by the Hat Company for $35,000 and one given by Grove for $10,000. These notes took the place of earlier notes of the Hat Company amounting to $45,000, and it is evident that the object was to make an appearance which would indicate that the bank had not loaned the Hat Company more than the act of Congress permitted. The mortgage contains a covenant which recites that William K. Grove is the owner of the mortgaged premises; it is executed by him and his wife, the defendant Mary B. Grove. Mrs. Grove claims that in equity the property was hers, that was mortgaged for her husband's debt, and that she occupied the position of a surety and has been released by the conduct of the bank.

The history of the title so far as material to this case is as follows: Grove bought the land in 1909 with his own money. He is said to have made an oral gift to his wife by way of a Christmas present in 1909, but the title remained in him until March 8, 1917, when the land was conveyed to his wife. In the fall of 1911 Mrs. Grove built an expensive house on the land with her own money. At that time her husband was obligated to the bank for indorsements of the Hat Company paper. One note for $10,000 was then outstanding, dated February 3, 1911. When in 1913 the Hat Company became financially embarrassed, Mrs. Grove with the advice of her brother and of her private counsel, who bad been concerned in the settlement of her father's estate, joined in executing the mortgage to Terbell now held by the bank. Her counsel advised Her of the situation with the care demanded. He wrote her that, as the property stood in her husband's name, the bank could reach it if it were to enforce the notes; that the mortgage did not materially change the situation so far as she and her husband were concerned; that she was not giving them a mortgage on anything which they could not already reach by their claim if disposed to do so; that in consideration of the mortgage the bank was willing to wait a reasonable period for the payment of the notes, but otherwise would press for payment at once; that it would be necessary for her to join in the mortgage in order to release her dower; and that he advised the making of the bond and mortgage. This was an accurate statement of the legal situation.

Mrs. Grove's claim of an equitable estate rests upon the parol gift of Christmas 1909. If her husband was then indebted to the bank on his indorsements of the Hat Company notes, the predecessors of the present notes, a gift of the land to his wife was fraudulent as to the bank. If he was not then indebted, his wife was estopped to deny his title, since she permitted him a false show of credit by leaving the record title in him. In either event, she was estopped by having executed the mortgage representing the property as his for the purpose of securing an extension of time for him, and having thereby secured that extension. The estoppel itself is enough to protect the bank against her present; claim of an anterior equitable estate; but the case is stronger against her, since the letter of her own counsel and the terms of the mortgage make it clear that she claimed no equitable estate and merely intended to join for the purpose of releasing her inchoate right of dower. We need not consider whether she has any equity by reason of her inchoate right of dower. That right merged in the fee when the deed of March 8, 1917, was delivered, and no claim by reason thereof is made an issue by the pleadings. Nor could it be made an issue; since the bank is certainly entitled to the security of the mortgaged premises, it is entitled on this foreclosure of the prior mortgage to surplus money on the sale, and the right of the dowress if any she have, can only be ascertained and protected in an application for surplus money. Vreeland v. Jacobus, 19 N. J. Eq. 231, Mrs. Grove has no standing as the owner of an equitable...