Semon v. Terhune

• Decision Date: 28 October 1885
• Citation: 40 N.J.E. 364,2 A. 18
• Parties: SEMON v. TERHUNE and others.
• Court: New Jersey Court of Chancery

2 A. 18

40 N.J.E. 364

SEMON

v. TERHUNE and others.¹

Court of Chancery of New Jersey.

Filed October 28, 1885.

Final hearing on bill to foreclose and answer.

E. A. & W. T. Day, for complainant.

J. Garrick, for defendant.

RUNYON, C. This suit is brought to foreclose a mortgage dated and acknowledged September 17, 1880, and recorded on the fifteenth of October following, given by the defendants John G. Semon and wife to Richard M. Johnson, upon lands in Jersey City, to secure the payment of $750, and interest, according to the condition of Semon's bond to Johnson. The bill states that the mortgage was given for purchase money on the sale of the mortgaged premises by Johnson to Semon, but the fact is not admitted by the answer. The deed to Semon was dated September 30, 1880, was acknowledged October 1, 1880, and recorded on the twenty-fourth day of November following. The bill states that while the date of the mortgage is prior to that of the deed, the mortgage was not delivered until the time of the delivery of the deed; but this is not admitted by the answer. Johnson assigned the mortgage February 9, 1881, to James M. Connor by assignment of that date, recorded February 16, 1881. On the second of June, 1884, James M. Connor assigned it to James P. Connor, executor, etc., of William C. Connor, deceased, and he assigned it September 4, 1884, to the complainant. When John G. Semon bought the property of Johnson it was incumbered by a mortgage for $1,000, given September 10, 1866, by William Nattrass who then owned the premises, to Jane C. Vreeland. That mortgage came to the hands of Jacob C. Terhune by assignment. He died June 15, 1882. His executors were the defendant John V. H. Terhune and Peter Schoonmaker. September 27, 1882, they filed a bill in this court to foreclose that mortgage. The only defendants to that suit were John G. Semon and his wife. There was a final decree in that suit by default. It was entered February 5, 1883, and the execution was issued thereon for the sale of mortgaged premises, which under it were sold May 3, 1883, to John V. H. Terhune for $500, and a deed therefor was given to him by the sheriff. He took possession under his deed, and has been in possession ever since. The bill asks that an account be had with him, and that the property be sold to pay in the first place to him the amount which may be found to be due to him in respect of the first mortgage, and then to pay the complainant what may be found to be due to him on his mortgage, with costs, and that any balance of the proceeds of the sale be paid to Terhune. Terhune, by the answer, admits the making and recording of the complainant's mortgage, and states that the omission to make the holder thereof a party to the foreclosure suit upon the first mortgage was due to the fact that the record of the complainant's mortgage was indexed in a wrong place. The answer further alleges that in 1884 the then holder of the complainant's mortgage threatened to sue John G. Semon for the money due upon the bond, and that the latter then paid it, and took an assignment of the bond and mortgaged to the complainant, who has no interest in them, but holds them for the use and benefit of John G. Semon, and subject to his control. The complainant filed no replication, and the cause comes in for hearing upon bill and answers.

The foreclosure proceedings upon the first mortgage were a nullity as to the holders of the second mortgage. By his purchase at the sheriff's sale under them, Terhune obtained the title of the holders of the first mortgage, and the equity of redemption of John G. Semon and his wife, but that equity of redemption was subject to the payment of the second mortgage, if that mortgage was a valid lien, of which the purchaser at the sheriff's sale had notice, upon the property; and if that mortgage were such a lien, and Terhune had taken an assignment of it after his purchase, equity would not have permitted him to enforce payment from Semon of the bond which it was given to secure, without giving Semon the benefit of a resort to the proceeds of the sale of the premises after satisfying the first mortgage therefrom. Vanderkemp v. Shelton, 11 Paige, 28. The only question on this point in this case is whether the purchaser had notice; that is whether he had constructive notice from the records. Had he consulted the record, (the index is no part of it,) he would have discovered that the title to the mortgaged premises remained in Richard M. Johnson up to September 30, 1880, and that, by a deed of that date, Johnson conveyed them to John G. Semon, who, by a mortgage recorded after, although dated before, that date, mortgaged them to Johnson. The fact that the mortgage bears date prior to the date of the deed would not, under the circumstances, have justified the purchaser in concluding that it was given before Semon acquired title, for it might have been due to a mistake in the date of the one instrument or the other. There was at least enough upon the record to put him as a prudent man upon inquiry. He had notice of the mortgage from the record; for, in searching for mortgages by Semon from the date of his deed, September 30, 1880, he would have found the mortgage. The doctrine of the cases of Losey v. Simpson, 11 N. J. Eq. 246, and Spielmann v. Kliest, 36 N. J. Eq. 199, is not at variance with that now enunciated. The doctrine of those cases is that one who proposed to purchase land, or to take a mortgage upon it, is not bound to take notice of the record of a conveyance or mortgage made by one whose title deed has not been recorded, and the reason is that he has no clue to guide him in searching the record. But here the record showed the searcher the deed to Semon, and his mortgage to his grantor. The mortgage was indeed dated before the date of the deed, but it was recorded after the latter date, and the deed itself was on record. It is urged that, according to the record, it appears that after Semon gave the mortgage to Johnson the latter conveyed the property to him by deed of a subsequent date, and so extinguished the mortgage; for, according to the dates of the instruments, Semon had no title when he mortgaged to Johnson, and, having no title, he mortgaged the property to the person who owned it. The inference from the condition of the record would be that there was some mistake in the dates, and that in fact Johnson conveyed to Semon and then Semon mortgaged to him; or that Semon mortgaged to Johnson before he acquired title, and, having acquired title, afterwards might be estopped from denying that the mortgage was valid. The record was notice of the mortgage. But it is urged that if Terhune is chargeable with notice, Semon is entitled to no relief, because, according to the answer which is to be taken as true upon this hearing, he himself paid off the bond, the payment of which the mortgage was given to secure, and the bond was his own. But if the land had, as between him and the purchaser at the foreclosure sale, become the primary fund for the payment of that mortgage, he is...