Harris v. Jex , 66 Barb. 232 ( 1873 )

By the Court,

Learned, J.

This is an action for the foreclosure of two mortgages executed in March, 1858, by the defendant Poillon. The defendant Poillon subsequently conveyed the premises to defendant Jex. The' conveyance was expressly subject to the mortgages; but Jex did not personally assume them.

Jex and wife alone defended. The defence proved was that on the 1st day of October, 1870, and before the commencement of the action, the defendant Jex tendered the amount due them in legal tender notes.

Judgment was rendered in favor of the plaintiff adjudging that he was entitled to the amount of the mortgages in gold coin, and directing a sale of the premises to raise enough to pay the gold coin and premium. Subsequently the plaintiff remitted that part of the judgment which gave the premium, and consented to a reduction thereof accordingly.

In the case of Kortright v. Cady, (21 N. Y. 343,) it was held that a tender of the money due on a mortgage discharged the lien ; although the tender was not subsequently kept good. It is plain that this is a somewhat harsh principle; .and it should not be pressed beyond its strict limits. It rests upon the familiar doctrine that the bond is the principal, and the mortgage is the collateral. Now while this is the legal principle, yet in modern times and in the common understanding of men, a contrary view prevails. It is the security on the land, and not the responsibility of the debtor, to which men look in taking mortgages. The facility of transferring- real estate and mortgages results, frequently, in ignoring the original mortgagor, and treating the lien on the land as the only thing of real value. To hold, then, that a mere tender, without actual payment, is a discharge of the lien may sometimes operate very unjustly.

It is important, then, to inquire who has the right to make a tender which shall have this very serious effect. To ascertain this, it may be well to examine the authorities cited in Kortright v. Cady.

The first is that of Jackson v. Crafts, (18 John. 110.) In that case the party who made the tender, on its refusal, deposited the money tendered with another person, to be delivered to the mortgagee ; so that there was more than a mere tender. In Merritt v. Lambert, (7 Paige, 344,) the tender was made by the mortgagor; but the chancellor held that the lien was not discharged. In Edwards v. Farmers' Fire Insurance and Loan Co., (21 Wend. 467, and 26 id. 541), the tender was by the mortgagor. The case of Arnot v. Post, (6 Hill, 65,) in which the tender was made by a purchaser under a sheriff’s deed, was reversed in 2 Denio, 344.

In the case of Kortright v. Cady the tender was made by the holder of the equity of redemption. Whether or not he had assumed a personal liability to pay the debt does not appear. But the" reasoning in that case is throughout, based on the right of the mortgagor to pay his debt. And the court constantly speak of the right to make a tender as belonging to the debtor. Thus, at page 366, “The mortgagor has the same right after as before a default to pay his debt and so clear his estate from incumbrances.” “Tender is equivalent to payment as to all things which are incidental and accessorial to the debt. ’ ’

How certainly it would not be claimed that a mere stranger to the contract could make a tender of the debt to the creditor which would have any validity. And such a tender, that is, a tender made by a mere stranger, if refused, could not have the effect of “payment as to all things which are incidental and accessorial to the debt.” It is important to keep this in view; that is, that a tender cannot be made by a mere stranger to the contract, so as to oblige the creditor to accept it.

What right then has the owner of the equity-of redemption who has not assumed the debt personally? He has just what the name which designates him implies : the equity of redemption. That is, he has the right to redeem the land from the lien. But how is the land to be redeemed from the lien of the mortgage ? Hot, I suppose, by a mere tender which is not kept good, but by actual payment, or by bringing the money into court for the purpose of payment. The mere owner of the equity of redemption owes no debt. It cannot be said in respect to him as it is said in Kortright v. Cady, at p. 366, “The creditor by refusing to accept does not forfeit his right to the very thing tendered, but he does lose all collateral benefits and securities.” For .the creditor, if he refuses to take the money from the owner of the equity "of redemption, cannot recover it from him. It is the redemption of a lien, not the payment of a debt, which his tender is to accomplish. There is no debt, at least from him, and therefore, as it seems to me, his mere tender does not discharge the mortgage lien. He has the right to redeem; but he must redeem by actual payment.

But there is a further consideration. The equity of redemption was in this case conveyed subject to the payment of the mortgages. The land was thereby made the primary fund for payment. The original debter has become a quasi surety, having a right to insist on the enforcement of the debt out of the land. The holder of the equity of redemption cannot even dispute the validity of the mortgage. (Freeman v. Auld, 44 N. Y. 50.) The land, or so much as is necessary is (as it were) appropriated to the payment of the mortgages. If therefore, under such circumstances, the owner of the equity of redemption were permitted to discharge the lien by a mere tender without payment, great injury would be done. For instance, in the present case, Jex took the land subject to the mortgages. It is reasonable to suppose that in so doing he deducted their amount from the value of the land agreed upon. The land then is primarily liable for the debt. That is, Poillon has a right to insist upon the collection of the debt first out of the land. Now if by a mere tender Jex has discharged the lien, then all the rights of the mortgagee seem to have gone. He cannot sue Jex; for Jex never assumed the debt. He cannot enforce the lien; for that, by the supposition, is discharged. He cannot sue Poillon; for by the discharge of the primary fund Poillon, who has become a quasi surety, must be released. The result is, that Jex retains the whole of the mortgage for which he has paid nothing, and the mortgagees loses his debt.

Unless the clearest principles of law require it we ought not to work out such injustice.

There is another view of this case.

When the tender was made, the plaintiff refused it, for the reason that it was not made in gold.

At that time, as is well known, by the decision of the highest court in this country, such a contract as that in question was payable in gold. As the law therefore was then declared, the plaintiff was not obliged to accept the tender which was made. We should be very reluctant to visit on the plaintiff any injurious consequences for following the law as the' Supreme Court of the United States had declared it to be.

[First Department, General Term, at New York, January, 1873.

If that tribunal has since laid down a different principle it would be very unjust in us to require that the plaintiff should have had sufficient foresight to know what the decisions would be in 1872. At the most, parties are only required to know the law as it exists at the time, not as it may be declared afterwards.

We think, therefore, that the judgment should be affirmed.

Judgment affirmed.

Ingraham, Brady and Learned, Justices.]