Bergman v. Fortescue , 74 N.J. Eq. 266 ( 1908 )

Leaming, V. C.

I am convinced that neither of the interest payments operated as a waiver of complainant’s rights to enforce the payment of the entire mortgage debt.

In accepting the interest payment of March 30th, the mortgagee cannot be said to have waived the benefit of the covenant touching the non-payment of the tax, for such non-payment was unknown to the mortgagee at that time. It would be unreasonable to hold that the non-production of the tax receipt operated to charge the mortgagee with knowledge that the tax was unpaid. It is entirely consistent with common experience in such cases for the mortgagors to neglect the formal production of tax receipts when the taxes have in fact been paid. I am unable to treat that transaction as in any sense operative to afford to defendant a license to continue in default. It was not so understood by either party. Had defendant continued in default by reason of such an understanding reasonably attributable to the mortgagee’s conduct, equity could properly relieve. Bell v. Romaine, 30 N. J. Eq. (3 Stew.) 24. But defendant’s own testimony discloses that the only reason for the non-payment of the tax prior to July was purely a matter of personal convenience to defendant. The decisions cited by counsel in landlord and tenant cases are of but little assistance. The right of forfeiture for failure to promptly pay rent is treated as a penalty for the landlord’s security and is properly relieved against if the landlord gets the rent with interest and costs. Fulton v. Greacen, 36 N. J. Eq. (9 Stew.) 216, 222; Fleming v. Fleming, 69 N. J. Eq. (3 Robb.) 715, 717. In landlord and tenant cases the effect given to the act of receiving rent which has accrued after a known breach, is based upon the fact that such a transaction manifests a mutual purpose of lessor and lessee to continue that relation. On the other hand, the stipulation in a mortgage for the whole debt to mature upon default in an interest payment is not treated as a forfeiture clause, but rather as a stipulation for a period of credit on condition. Breaches of such clauses are only relieved against when purely equitable grounds, incident to the individual case, are presented. Sprig v. Fisk, 21 N. J. Eq. (6 C. E. Gr.) 175, 178. A stipulation for the prompt payment of taxes cannot be regarded as differing essentially from a like stipulation touching the prompt payment of interest. I think nothing can be found in the decisions touching the effect of paying rent after default which may be said to be analogous to the situation here presented.

The interest payment of September 10th was not made with any understanding, express or implied, that it should operate to defeat the foreclosure proceeding then pending. Complainant had at that time lawfully elected to declare the mortgage due, and it was then defendant’s duty to pay it with interest and costs. The payment of a lesser amount could not be operative to defeat the right of complainant to enforce his security in the absence of some agreement upon his part to that effect. Defendant does not even claim that the interest payment was made by her with that understanding either upon her part or upon the part of complainant.

Complainant’s rights as assignee of the mortgage were the same as the rights of the original mortgagee, had the mortgage not been assigned.

I am unable to afford relief to defendant by reason of the interest payments.

Touching the relief sought by way of cross-bill, it may be said that if defendant was, contrary to the covenant in her deed, kept out of possession of a portion of the premises by reason of a title paramount emanating from the Columbia Real Estate Company, she is clearly entitled to be relieved against the mortgage to the amount of damages sustained by her by reason of the breach of covenant in the deed. The testimony touching the breach of covenant is in conflict; and should a breach be at this time ascertained it will.be necessary to take further testimony to adequately determine the amount of damages sustained by defendant which may be reasonably attributable to the breach. Under these circumstances, and in view of the fact that an action at law is now pending for the recovery of damages for the alleged breach of covenant, it seems manifest that the appropriate action of this court is to stay the foreclosure decree until a judgment can be rendered in the pending action at law. See cases collected in Kuhnen v. Parker, 56 N. J. Eq. (11 Dick.) 286. To entitle defendant to the stay complainant should be indemnified against any loss arising by reason of it.

I will advise an order to that effect.