Wilson v. Stevens

• Decision Date: 10 December 1929
• Citation: 148 A. 392
• Parties: WILSON v. STEVENS et al.
• Court: New Jersey Court of Chancery

148 A. 392

WILSON

v. STEVENS et al.

Court of Chancery of New Jersey.

Dec. 10, 1929.

(Syllabus by the Court.)

Suit by Howard S. Wilson, administrator of James Y. Wilson, deceased, against Edna T. B. Stevens and others. Decree for complainant.

Freeman Woodbridge, of New Brunswick, for complainant.

Homan, Buchanan & Smith, of Trenton, for defendants.

BUCHANAN, Vice Chancellor. One portion of a tract of land is owned by defendant Edna Stevens, to whom it was conveyed by deed in 1909. The other portion is owned by defendant Robert Stevens, to whom it was conveyed by deed in 1923. The entire tract is incumbered by a mortgage for $1,000 covering an undivided one-ninth interest therein, which mortgage was made by Charles M. Meeker to James Y. Wilson in 1908 and duly recorded. The mortgage debt matured in three years from the date.

In 1918 Meeker, the mortgagor, died. In 1925 Wilson, the mortgagee, died, and his administrator subsequently filed this bill to foreclose, some 19 years after the date of the mortgage.

The bill alleges (in the usual form) that Meeker, being indebted to the mortgagee on August 17, 1908, in the sum of $1,000, on that day executed bond for that amount, and mortgage as security for the payment of the bond; also that the principal of the bond, with interest from its date, is due to complainant, as the administrator of the deceased mortgagee.

The answer denies the indebtedness and the making of the bond and mortgage; denies that the principal and interest is due. It also alleges that the bond and mortgage are forgeries and void, but no attempt was made to prove this at the trial.

At the hearing, the recorded mortgage was produced, and its execution and delivery thereby duly proven, also the death of the mortgagee and the qualification of complainant as administrator. The bond was not produced; complainant testified he had diligently searched but had not been able to find it. No real attempt was made by defendants to prove that no bond was executed or that no indebtedness existed at the date of the mortgage.

Under the circumstances, the existence of the indebtedness and the execution and delivery of the bond must be found as facts, since they are admitted by the mortgagor in a recital in the mortgage which he executed and delivered. There was also corroborative testimony by a son of the deceased mortgagee as to the indebtedness and the execution of the mortgage. This son, who had kept his father's books and made out his income tax reports during the period in question, also testified that he did not know of any payment of principal or interest to his father before the latter's death; that he believed he would have known if any such payment had been made. The administrator testified that no payments had been made to him since the father's death. No evidence was offered by defendants to show any payment or any discharge or release or assignment of the bond or mortgage.

It is not necessary, in order for the mortgagee or subsequent holder of a bond and mortgage to make out a prima facie case in a foreclosure suit, to offer satisfactory prima facie evidence that no payment has been made on account of the mortgage indebtedness. In a suit on a bond, the bond being produced by the plaintiff and duly proven or admitted, a prima facie case is made; payment or discharge are affirmative defenses to be set up and proven by defendant. Fein v. Meier, 71 N. J. Law, 12, 58 A. 114; Conlon v. Hornstra, 82 N. J. Law, 355, 83 A. 183.

It is logical to apply the same rule in a suit to foreclose a mortgage. The mortgage is a conveyance, with a provision that it shall become void on performance of a condition subsequent. It is for the defendant to assert and prove the performance of that condition, or any other affirmative defense which would avoid the conveyance. So, if the mortgagee produce and prove the bond and mortgage, he establishes his prima facie case; he need not offer evidence that no payment has been made. If the suit is by a subsequent holder of the bond and mortgage he must of course allege and prove the assignments or other steps in the devolution to himself of title to the bond and mortgage. Cornelius v. Halsey, 11 N. J. Eq. 27; Flemming v. Iuliano, 92 N. J. Eq. 685, 114 A. 786. This was done in the instant case by proof of the death of the mortgagee and qualification of complainant as administrator.

Defendants contend that, the bond being not produced, complainant must introduce evidence to negative the possibility that it was assigned to another party or was destroyed or given back to the obligor by way of discharge or release, citing the text in 42 C. J. 115, § 1674, and cases in the subjoined note. It is there stated as the general rule that, in the absence of the production of the bond, such failure must be "satisfactorily accounted for." If that means that the burden of proof is cast on complainant to show that the bond has not been assigned or given back or intentionally destroyed (and some of the cases cited in the note go to that extent; it has not been deemed necessary to examine all of them), this court cannot concur therein.

The basis assigned for the rule, as slated, is the possibility that the bond may have been paid or otherwise discharged, or assigned, and hence that, if recovery were permitted without disproof of these possibilities, injustice might be done. Rut protection against such possibility of injustice, if defendant is entitled to such protection, can be given by requiring complainant to give indemnifying security. It is much more likely that the adoption of such a rule as that stated would work injustice to the complainant than that the absence of the rule would work injustice to the defendant. Moreover, it is not perceived that such a rule can be rested upon any logical basis.

As has been seen, it is essential to complainant's cause of action that he establish the making and delivery of the bond and mortgage, and that he is either the person to whom they were made and delivered or the legal successor in title to such person. Having done that, his prima facie case is complete. Payment, satisfaction and discharge, assignment, are all affirmative defenses to be alleged and proved by defendant.

Production of the bond and mortgage and proof of the signatures is one way of establishing complainant's right of action, but it is not the only way. It may be established by defendant's admissions, or by other evidence. Suppose the suit to be against the original mortgagor and that defendant admits the making of the bond and mortgage, sets up no allegation of payment or discharge, but simply denies that complainant is the administrator of the deceased mortgagee, and that complainant's evidence on this, the sole issue, is complete and conclusive. The absurdity of denying complainant decree because he did not produce the bond and mortgage would be apparent.

So also in a suit by the original mortgagee against the original mortgagor, suppose the defendant in his answer denies the making of the bond and mortgage, and sets up no other defense, and that complainant, although unable to produce the bond and mortgage because of temporarily having mislaid them, establishes by overwhelming and Incontrovertible evidence that defendant did execute and deliver them, and defendant offers no evidence whatever to the contrary. Would it not be equally absurd to deny complainant decree?

The only argument which could be advanced in support of such a ruling, in either of these supposititious cases, would be the protection of defendant against the possibility of having to pay a second time in case the bond and mortgage had been assigned to some third party. This protection, if necessary, could be afforded by requiring complainant to give indemnifying security. I say "if necessary," because it would seem that it would not be necessary; that any such assignee who had failed to give notice to the defendant or to record his assignment would be estopped from receiving against defendant after the latter, in ignorance of any such assignment, had paid or satisfied the original mortgagee. Weinberger v. Brumberg, 69 N. J. Eq. 669, 61 A. 732; Fritz v. Simpson, 34 N. J. Eq. 436.

All that is necessary, then, when the making of the bond and mortgage is in dispute, and that is the sole issue, and the bond and mortgage, or either of them, are lost and not produced, is that complainant shall establish by evidence satisfactory to the mind of the court that the bond and mortgage were in fact made and delivered. That being the sole issue, and the court being satisfied that complainant has established it, complainant clearly will be entitled to decree.

The bond is not the debt, but only evidence of the debt. Its loss or non-production cannot per se defeat complainant's right to foreclose the mortgage, Stimis v. Stimis, 60 N. J. Eq. 313, at page 321, 47 A. 20, although it might of course be a material fact to be considered, with all the other evidence, if there were a claim that the mortgage debt had been paid or satisfied.

In the instant case the original parties to the instrument are both dead. The administrator of the mortgagee sues; the defendants are subsequent grantees of the mortgaged premises. The defendants set up in their answer only two defenses: (1) They deny the making of the bond and mortgage; and (2) they deny that the mortgagor was indebted to the mortgagee.

On the first issue, the burden is on complainant. He produces and proves the mortgage. He does not produce the bond, admits that he has not been able to find it, after thorough search. The solemn written admission of the mortgagor, over his signature and seal, in the recital in the mortgage, as to the making of the bond and the terms thereof, plus the corroborative testimony of the mortgagee's son who knew that the transaction was had as a settlement on a balancing of the mortgagor's indebtedness to the mortgagee, is evidence satisfactory...