Carpenter v. Gleason

The opinion of the court was delivered by Rowell, J. The case for the foreclosure of the first mortgage not being reported, we do not know the ground on which it was put; we only know that the answer therein was not regarded as a defence to that case. But that decree does not estop the defendant from setting up the same subject-matter as a defence to this case, which is for an entirely different cause of action. At the time the defendant purchased the equity of redemption, the orators owned a part of the notes secured by the mortgage sought to be foreclosed, and the defendant owned the rest of them, and so they were tenants in common of the mortgage interest. The defendant did not intend that his purchase of the equity of redemption should operate to merge his mortgage interest, but on the contrary he purchased the equity with the intention and for the purpose of benefiting all parties interested in said mortgage, and tried to have the orators step in and take that benefit, but they would not. In these circumstances there can be no merger. When a mortgagee holding the entire interest takes a conveyance of the land mortgaged, the question of merger depends in equity on his intention, actual or presumed. In the absence of an actual intention, it will be presumed to have been his intention to keep the mortgage on foot, if it appears from all the circumstances that that was for his interest. But when the intention against a merger is actual and expressed, as in this case, and the purpose is innocent and injurious to no one, that of itself, in most cases certainly, will control and prevent a merger, especially [248] when it is or may be inequitable that there should be one, as it might be in this case; for suppose the premises are not worth enough to pay this mortgage debt, then, if there is a merger of the defendant’s mortgage interest, the orators might get their pay in full while the defendant would not. Again, in order that the equity of redemption may drown the mortgage, the whole mortgage interest, that is, the whole legal estate, must meet the equity in the same person. Clark v. Clark, 56 N. H. 105. It follows then that the defendant’s interest as mortgagee was kept from blending with his interest in the equity of redemption, both by reason of his intention that it should not blend and by the fact that a part of the mortgage was outstanding in the orators; and hence the orators are not entitled to a decree of foreclosure. Decree reversed and cause remanded, with mandate that the bill be dismissed with costs.