Remsen v. Hay

The Vice-Chancellor: The bill proceeds mainly upon the ground of Scott and Legget’s holding a lease, by way •of mortgage or security, for a debt due to them ; and that there is an equity of redemption or some interest remaining in Hay and wife or in one of them, which renders the property liable to be sold and the proceeds, after satisfying Scott and Legget’s debt, subject, inequity, to the complainants judgment. The question then is : whether Scott and Legget stand as mortgagees or as the absolute and Iona fide owners of the leasehold premises. The answer is positive in denying that the relation of mortgagor and mortgagee existed after the assignment or [542] that the defendants, Hay and wife, continued to have any legal or equitable right or interest in the property. It is, ° , , , , ... f, r : , nevertheless, contended that the parties could not, by such a purchase, extinguish the redeemable quality of the estate which was before in Hay7 and wife—that, “ once a mortgage, always a mortgage,” is an axiom applying to the present case. I think, however, it does not hold good here. Even regarding Scott and Leggct .as mortgagees, by the mere deposit of the lease, it was certainly competent for them to become the purchasers of the equity of redemption. There is nothing in the policy of the law to prevent a mortgagee from acquiring an absolute ownership, by purchase, from a mortgagor, at any time subsequent to the taking of the mortgage and by a fresh contract to be made between them. Courts view with jealousy and suspicion any dealing between mortgagor and mortgagee to extinguish the equity of redemption ; but if it be fair and honest, on the part of the mortgagee, the purchase will not be disturbed. The Jaw only prohibits a mortgagee from availing himself of a stipulation contained in the mortgage deed or in a separate instrument made at the same time, or of some covenant or agreement, forming a part of the same transaction with the loan and the taking of the security, by which he shall attempt, upon the happening of some event or contingency, to render the estate irredeemable and obtain an absolute ownership. In such cases, the maxim applies of “ once a mortgage always a mortgage Henry v. Davis, 7 J. C. R. 40 , Clark v. Henry, 2 Cowen’s R. 332. But it cannot interfere with the right to foreclose, when the mortgage has become forfeited, nor with any fresh contract which the mortgagor may choose to make with his mortgagee for a sale or relinquishment of the equity of redemption and the vesting the latter with an irredeemable estate: 1 Powell on Mort. 117, 122, and notes. Such a contract will be as valid and binding as any other when it is fair in all its parts and free from fraud. In the present case, as between the parties to the sale and assignment of the lease, there is no ground for imputing unfairness to Scott and Legget or for holding that any equity of redemption remains. The circumstance of their being [543] Willing to re-eonvey to Mrs. Hay, provided their original amount were paid and she could hold the property securely tor her separate use, must be deemed gratuitous and as conferring no legal or equitable right to demand it. Neither Hay nor his wife seek to get back the property ; nor do they assert any right thereto upon any ground of fraud, inadequacy of consideration in the assignment or that it was intended as a security merely and not a payment and satisfaction of the debt. If there be no right of redemption in Hay and his wife —and, according to the answer, there is none—then the complainants, as creditors, can have no such right. •Whether the assignment was fraudulent as to creditors, is another question. The complainants have not attempted, by this bill, directly to impeach it for fraud. It is not expressly charged, nor does the pleading pray that the agreement should be set aside on account of fraud. The equity o.f the bill is made to rest more particularly on the ground which has been considered ; and I feel great difficulty, from the state of the pleadings, in entering into the consideration of fraud with respect to third persons. There are circumstances disclosed by the answer which may serve as indicia of fraud: such as selling the property in payment of an antecedent debt of four hundred dollars and without any advance, while the premises were at the time worth seven hundred dollars—the purchasers knowing of embarrassment from other debts and particularly the complainant’s demand, which was then progressing towards a judgment—also, leaving Mrs. Hay, after the sale, in the enjoyment of a part of the premises free from rent. If these circumstances were distinctly charged as evidences of fraud, perhaps they might be explained away ; and in the absence of direct allegation, I am not warranted in assuming them to be conclusive perse of fraud: see, Cunningham v. Freeborn, 11 Wend. 240. Besides, there is a further difficulty. William Legget,. who is interested as one of the owners of the lease, has not been made a party. He was absent for a time ; and is alleged to have been abroad when the bill was filed. Still, [544] the answer of his partner shows his return to the city of ^ew-York and his residence there ever since. He should, then, have been made a party: the bill, if it would upset their title, being defective without him. If it were, in other respects, sufficient to raise the question of fraud, this objection might still be obviated by the cause standing over for amendment; but, as it is, I consider, upon the whole case as now presented, the bill must be dismissed as to the defendant Scott, with costs : yet, without prejudice to a new bill to be filed for the purpose of setting aside the assignment of the lease to Scott and Legget for fraud, provided the complainants shall think proper to pursue it. With respect to the defendants, Hay and wife, as to whom this bill stands confessed, it may be retained for such a decree as the complainants can properly claim.