New Iersey Title Guarantee & Trust Co. v. Jersey Co-Op. Realty Co.
| Decision Date | 09 May 1919 |
| Docket Number | No. 20.,20. |
| Citation | 110 A. 109 |
| Parties | NEW IERSEY TITLE GUARANTEE & TRUST CO. v. JERSEY CO-OP. REALTY CO. et al. |
| Court | New Jersey Supreme Court |
Appeal from Court of Chancery.
Action by the New Jersey Title Guarantee & Trust Company against the Jersey Co-operative Realty Company and others. Judgment for plaintiff, and defendants appeal. Affirmed.
On appeal from a decree of the Court of Chancery advised by Hon. James F. Fielder, advisory master, who filed the following opinion:
The defendant Jersey Co-operative Realty Company was the owner of two tracts of land in Union county; the one known as the El Mora tract, and the other as the Elizabeth Heights tract. Through an agent it applied for and was granted a loan by complainant on bond and mortgage in the sum of $20,000, which mortgage was dated June 30, 1913, and recorded July 5, 1913. The mortgaged land was part of larger tracts owned by the mortgagor and its predecessors in title, and was covered by three mortgages—one held by the Mutual Life Insurance Company, on the Elizabeth Heights tract; the second held by the estate of Phebe O. Earl, covering the EI Mora tract; and the third held by Myra W. Woodley, covering both tracts. The complainant applied its $20,000 loan to pay off these three mortgages; the first being canceled of record and the Earl and Woodley mortgages being assigned to complainant. The expenses of the loan, including the assignments, added to the amount of the three mortgages, left a balance of $3,416.80, which was paid to the mortgagor. Certain parts of the tracts covered by the assigned mortgages had been sold by the mortgagor prior to the loan, and, the mortgagor specifying lots or plots which it desired excepted from the mortgage lien, they were not included in the new mortgage, and were also, as part of the transaction, released by complainant as assignee of the two prior mortgages; such releases being given without consideration. This suit is brought to foreclose the three mortgages.
The Jersey Co-operative Realty Company was a land company, and had made maps of both tracts, showing streets, blocks, and lots thereon. Deeds and contracts had been given and recorded for lots it had sold prior to the execution of complainant's mortgage, while for others there were unrecorded contracts. When application was made for the $20,000 loan, copies of the maps were furnished the complainant, with a list of the lots which were to be included in the mortgage, and complainant's title examination was made against the listed lots, and, so far as the record disclosed, title to all the lots mortgaged to complainant was in the mortgagor free and clear of any contract to convey, or other interest or lien in any other person. As a matter of fact, there were outstanding contracts of which complainant claims it bad no notice; but some of the answering defendants contend that complainant was actually informed that unrecorded contracts existed, or that its rights must be held to be subject thereto, because it knew that the mortgagor's business was selling lots, and it was therefore charged with notice of all sales made by it. After the mortgage was recorded, contracts purporting to antedate the mortgage and deeds under such contracts were placed on record for lots in the mortgaged tracts.
The complainant's mortgage contained a clause whereby it agreed to release lots in either tract on payment of $5 per front foot, but the Earl mortgage contained no release clause, and the Woodley mortgage contained a provision for releases on the basis of an acreage value. From the Earl and Woodley mortgages the complainant, as has been stated, gave releases without consideration for property not included in its third mortgage, and it further released various lots from all three mortgages on the basis of the front-foot rate specified in the third mortgage. Some of these releases were given before and others after the answering defendants' interest were made matter of record; but, again contending that complainant had actual or constructive notice of their rights, they say that complainant under the Earl mortgage could release only for an adequate consideration, and under the Woodley mortgage for a consideration based on an acreage rate, and that the consideration received was inadequate.
The determination of the two points raised by the defendants turns upon the question of notice to complainant...
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