Spartan Realty Co. v. Engel , 1924 N.J. Ch. LEXIS 125 ( 1924 )

Foster, V. C.

About June 25th, 1920, complainant sold and conveyed to the defendant Miriam Engel for $27,500 a certain hotel property ón the corner of Grand and Piftli avenues, in Asbury Park, in this state.

This conveyance was made subject to a first mortgage for $15,000, made by the defendants Henry W. Denton and wife to the defendant Camden Safe Deposit and Trust Company, and dated April 1st, 1920. By the terms of this mortgage animal installments of $500 each were to be paid for five years from its date, and interest was to be paid at the rate of five and one-half per cent. Mrs. Engel and husband, under date of July 10th, 1920. gave their bond and mortgage to complainant for $12,500, in payment of the balance of the purchase price.

The first mortgage held by the Safe Deposit and Trust Company covered, in addition to the property conveyed to Mrs. Engel, other property belonging to complainant.

This additional property complainant later, in 1920, sold to one Hertsberg and, in, order to convey the same freed and released from the first mortgage lien, complainant was obliged to pay the Safe Deposit and Trust Company $6,000 on account of the $15,000 mortgage.

In June or July, 1920, Frank L. Ferguson, who is in fact the owner of complainant company, informed Mr. and Mrs. Engel that he was obliged to pay this $6,000 m order to obtain the release of the first mortgage, and they consented that he should do so; and, as the trust company refused to grant the release without the Engels’ 'consent, this consent was given by the Engels joining in the execution of the release.

Itv the $6,000 payment made by complainant, and hv installments aggregating $1,500, paid by Mrs. Engel, the amount due on the mortgage held by the Safe Deposit and Trust Company has now been reduced to $7,500, with interest to he added.

These facts are not disputed by the Engels, except that they claim the payment of $6,000 made by complainant to the trust company was a volutarv one, made solely for complainant’s benefit, in order to enable it to make an advantageous and profitable sale of its lot to Hertsberg, and that complainant is therefore not entitled to che relief it seeks, to have this $6,000 made a lien upon this hotel property as part of. or in place of part of, the $15,000 mortgage.

From what lias been said, it is apparent that the complainant and the Engels in July, 1920, agreed that the hotel property conveyed by complainant to Mrs. Engel was worth $27,-500. That this amount was to he paid by them by the coneyanee to them being made subject to the first mortgage of $15,000 and by their second mortgage of $12,500 to complainant, and while it is true that there is no agreement of assumption of the first mortgage, and a-lso that there is no agreement on the part of Mrs. Engel to pay the principal of the first mortgage beyond the five annual installments of $500 each, together with interest thereon, yet it clearly appears that she agreed to pay in some form $27,500 as the purchase price of the hotel property. To allow her present contention to stand, that complainant should lose the benefit of the $6,000 paid on account of the first mortgage, would, in effect, reduce the purchase price of the property to- $21,500, and would give Mrs. Engel the benefit of this $6,000, to which she is not entitled. It is, under the circumstances, impossible to grant the complainant the relief it seeks for the reformation of the mortgage. Under the amended pleadings complainant can, however, have a vendor’s lien or an equitable mortgage, upon the premises conveyed to Mrs. Engel, to secure the payment of the sum of '$6,000, with interest at the rate and upon the terms and ‘conditions stated in the mortgage to the trust company. And this vendor’s lien, or equitable mortgage for $6,000, will take the place of and be entitled to all the rights and subject to- the like defenses as was the $6,000 paid by complainant to- the trust company. But this lien or mortgage will, of course, be subject to the prior lien of the Safe Deposit and Trust Company’s mortgage for the balance due of $7,500, and interest.