Broderick v. Smith , 15 How. Pr. 434 ( 1858 )

Clerke, J.

This is an action to foreclose a mortgage under the following circumstancesffn September, 1855, the plaintiffs agreed with the defendant that they would convey certain premises to him on the second of November following, on receiving from him five hundred dollars, in addition to fifteen hundred dollars, which they had already received from him. It was also agreed, that he should give them his bond for four thousand dollars—the remainder of the purchase money—to be secured by a mortgage on the premises, payable on the 27th day of- June, 1860, with interest payable half yearly. The conveyance, bond and mortgage were to bear date 27th of June, 1855. The bond and mortgage contained a clause, that should any default be made in the payment of the interest, or any part thereof, on any day when the same was made payable, and should the same remain unpaid for twenty days, that then the principal sum ($4000) should, at the option of the plaintiffs, become payable immediately thereafter. On the 2d of November, 1855, the defendant was ready and offered to perform the agreement on his part; but the plaintiffs were unable to give an unincumbered title to the premises by reason of a judgment, which had been docketed against them in July previous; and which remained uncam» celed, and was a lien on the premises. The defendant con» sented, at the solicitation of the plaintiffs, to waive his right to rescind the agreement and receive hack the $1500, and was induced by them to accept a conveyance of the premises, to pay the additional $500, and to give his bond and mortgage for the $4000, containing the above mentioned clause. He, at the same time, received from them a written agreement^ that they would, within ninety days., cause the judgment to be canceled, or would deposit the amount of said judgment in his hands, until it should be discharged. This arrangement was made on the said 2d day of November, 1855. The first half year’s interest, according to the terms of the bond, be» came due on the 27th of December, 1855 ; the plaintiffs pro» cured the judgment against them to be canceled on the 31st of December, 1855, but no notice was given to the defendant of the cancelment, nor had he any knowledge of it until the 25th of January, 1856. The twenty days mentioned in the bond expired on the 17th of January, 1856; on the 24th of January, the defendant was required by the plaintiffs' attorneys, without, any previous intimation from the plaintiffs or any other person, to pay the principal and interest on his bond and mortgage. He, thereupon, caused the interest to the 27th of December, 1855, with interest upon that interest to date of tender, to he tendered to the plaintiffs and their attorneys. The tender was refused; and this action was commenced, to foreclose the equity of redemption in the premises.

It will be seen, from this statement, that the defendant allowed the twenty days for payment of interest to elapse, under the impression that the plaintiffs had not procured the judgment, which was a lien on the premises, to be canceled. When the interest became due, on the 27th of December, 1855, the judgment remained uncanceled; after it was canceled, no notification of it was given to the defendant; and no demand of interest was made, or the slightest intimation given, that payment of it would be required, according to the Strict terms of the bond. Usually, when no stratagem is intended, the obligee calls or sends for this interest. But, the plaintiffs allowed the twenty days to elapse without uttering a hint; when they supposed that the default was irrevocable, and that they were entitled to exact prompt payment of the whole principal and interest; and on failure of this, to foreclose the defendant’s equity of redemption. Nothing was more natural, under these circumstances, than for the defendant to suppose that the plaintiffs would not require the payment of the interest ($140) until the lien on his property (for $518.18) shotild be canceled; and, I think, it was contrary to all equitable dealing for the plaintiffs to take advantage of these circumstances, instead of apprising the defendants of the cancelment, and in due time, before the expiration of the twenty days, claiming the payment of the interest. This was oppressive and unreasonable conduct on the part of the plaintiffs ; and one of the principal and benign functions of a court of equity is to afford protection against such conduct, when a suitor attempts to avail himself of it by the instrumentality of a strict legal right. And more especially in a case like the present, when the plaintiffs seek the interposition of a court of equity to enforce a remedy, under circumstances which no court can avoid considering unconscionable, it will refuse to give its aid and countenance for such a purpose.

If there is any one action more than another pre-eminently the subject of jealous supervision by courts of equity, it is the action now under consideration. All transactions between mortgagor and mortgagee, have been always closely scrutinized by them; and, when the latter has taken advantage in any way of the former, or where there has been any detriment or hardship resulting from the inequality of their relative positions, and when there has been a mistake, injurious to the former, of which the latter ought in conscience to have apprised Mm, a court of equity so far from lending its assistance to consummate the wrong, will interpose to repair it. This is not an arbitrary interference with the substantial and essential provisions of a contract; it is shielding innocent or unfortunate persons against the unscrupulous perversion of them; it is interposing to prevent the employment of legal forms for purposes, which legal forms were never designed to promote. The action to foreclose an equity of 'redemption, and indeed permitting an equity of redemption to exist, by courts of equity, is a proof of this. It was instituted for the express purpose of mitigating the hardship of a strict legal right. By the terms of Ihe mortgage, if the day limited should pass without payment of the debt and interest, the estate, as we all know, would absolutely vest in the mortgagee, to the extent to which it is conveyed, free from the claims of the mortgagor. Courts of equity, seeing that it might perhaps be forfeited, according to the letter of the instrument, for a sum equivalent to a small portion of its actual value, interposed, and ordained that the mortgagor must have a further opportunity of paying what is due, and of redeeming the land. Now, this is sanctioned and regulated by statute; and the mortgagee so far from being entitled to the ownership of the land, as provided in the contract, is only entitled to have it sold after due notice, and a considerable lapse of time; and, if it bring more than the debt, the mortgagor is entitled to the surplus. If the court, then, has power to interpose, so as to change ■ the whole character and effect of the instrument, it assuredly has power to mollify the effect of a single clause of it, relating to the period limited for the payment of interest. All that the mortgagee in either case ought to require is, that he should be secured against injury, and that he should derive all the benefit, that natural justice demands.

The judgment of the special term should be affirmed with costs.

Davies, J., concurred,