EMERY, V. C.
Bill by Henry H. Longstreet, as administrator de bonis non of the estate of Emeline Smock, deceased, against Warren Brown and others, to foreclose a mortgage. Heard on bill, answers, replication, and oral proofs. Decree for complainant.
W. H. Vredenburgh, for complainant.
John S. Applegate, for defendants.
EMERY, V. C. The mortgage sought to be foreclosed in this suit was given by Warren Brown and wife to the defendant Henry S. Little, upon a tract of land in Matawan township, Monmouth county, containing about 12 acres, and to secure payment of $2,793.88 in five years from date, with interest, payable annually on April 1st of each year. The mortgage and accompanying bond are dated January 27, 1868, and by a written guaranty under seal indorsed on the bond Dr. Alfred B. Dayton guarantied its payment. The mortgage was given to secure the purchase money of the premises which were conveyed to Brown by Mr. Little, and Dr. Dayton, the guarantor, was, as appears by the evidence, interested with Brown in the purchase. The purchase of the tract was made for the purpose of division into parcels for sale as building lots. Several lots were sold before the mortgage became due; and after it became due, and on June 19, 1873, Brown and wife conveyed to the New York & Long Branch Railroad Company a portion of the premises, containing about two acres, and this portion has since shortly after that time been occupied by this company and its lessee, the Central Railroad Company, for the purposes of their railroad and station. No release from the mortgage was given at the time, or has since been executed; and at the time of this conveyance the amount due upon the mortgage was $2,680.96 of principal, besides interest from April 1,1872. On April 1, 1874, Warren Brown, being still the owner of the remainder of the property, paid the interest due to that date, $377.72, besides $860 on account of the principal. This payment of April 1, 1874, was the last payment of interest or principal made directly by Brown. In the meantime, and in 1870, before the bond became due, Dr. Alfred B. Dayton, the guarantor, had died, and his son, R. W. Dayton, Esq., with two others, were appointed his executors. On April 15, 1879, Mr. R. W. Dayton received a sheriff's deed for Warren Brown's interest in the mortgaged premises, the sale being made by virtue of a judgment obtained against Brown, April 6, 1877, and levied upon the premises. After this conveyance, and on about April 15, 1879, Mr. R. W. Dayton conveyed to one Lichenstein a portion of the premises conveyed to him by the sheriff's deed, and containing about one acre, at the price of $325. Warren Brown and wife, for the purpose of perfecting title to this lot, executed a deed to Lichenstein for the nominal consideration of one dollar, but the whole consideration received for the purchase was, by agreement of the parties, paid over to Mr. Dayton, to be applied on the mortgage, which was thereupon to be released. Mr. Little still held the legal title to the mortgage, but it was in fact held by him in trust for the testatrix, Emeline Smock, under a written deed of trust; and Mr. Little, as Mrs. Smock's trustee and agent, collected the interest and principal of the mortgage. The $325 was paid to Mr. Little, who afterwards paid it to Mrs. Smock, and she released from her mortgage the premises sold to Lichenstein for the consideration of $325, stated in the release, which is dated April 1, 1879. The release recites the description of the lands released, and in the description the lands of the New York & Long Branch Railroad Company are referred to as having been conveyed by Brown to the company on June 19, 1873. Mr. Little did not execute any release, and a formal assignment by him of the bond and mortgage was not made until after the death of Mrs. Smock, and until April 6, 1889, when he formally assigned it to her executor. After this payment upon the mortgage, made April 1, 1879, by Mr. R. W. Dayton, as the full proceeds of sale of the portion released by the equitable owner of the mortgage, further payments of interest were made; all of these payments being made by Mr. Dayton, who at the time still appears to have been the owner of a portion of the premises covered by the mortgage, as well as executor of his father, Dr. Dayton, the guarantor of the bond. No indorsement upon the bond was made of any of these subsequent payments or of the payment of $325 made on the sale to Lichenstein, the indorsement being withheld by Mr. Little at the request of Mr. Dayton. The precise date of these subsequent payments is, on this account, only approximately fixed, and is as follows: $741.39 interest to the year ending April 1, 1884, paid between April 1 and November 29, 1884; $329.55 interest on April 1, 1886, paid after that date, and before April 1, 1887. These pay ments were all made to Mr. Little by Mr. Dayton, and either from his own property or the property of his father's estate. Brown made no payments directly on the mortgage after April 1, 1874, the date of the last indorsement on the bond. The bill to foreclose was filed by Mrs. Smock's executor on April 8, 1896.
The substantial defenses are raised by the answer of the New York & Long Branch Railroad Company and its lessee, the Central Railroad Company, viz.: First. Adverse possession of the premises conveyed to them for over 20 years before the filing of the bill, without any payment on account of either principal or interest by them, or any one claiming under them, or any acknowledgment of the mortgage, and the statute of limitations is formally pleaded. The second defense is that the release of the Lichenstein lot was made with notice of their conveyance; and, if the mortgage is a lien at all, the complainant is chargeable with the value of that lot, to be credited on the bond; and that this value exceeded $325, the price at which it was sold.
As to the second ground, my opinion on the facts is that the sale seems to have been made at a fair price, considering the circumstances of the case; and that the defendant has failed to show that the complainant, on account of the release, is to be charged with more than was received. The release of Mrs. Smock recites the company's deed as previously made, and is, therefore, sufficient proof of actual notice of that deed at the time of executing the release; and therefore she was, upon the release, chargeable, in equity, with the value of this lot in reduction of the liability on the mortgage. But this application of the value of the lot to the reduction of the mortgage, is the only equity the defendant had, or now has; and, inasmuch as the whole price of the lot was in fact applied by the mortgagor as a payment on the mortgage, the entire equity of the defendant was, therefore, satisfied. If this price had not been paid on the mortgage, it would now be credited; but there is no basis of equity for crediting it twice. Vanorden v. Johnson, 14 N. J. Eq. 376 (Green, Ch.; 1862); Patty v. Pease, 8 Paige, 277, 284 (Walworth, Ch.; 1840).
Second. Nor do I think that the defense of the statute of limitations can be sustained. Whether the possession of a mortgagor or his grantees for 20 years after default is to be considered a possession adverse to the mortgagee, so as to deprive the latter of the equitable remedy of foreclosure, has not been decided by our courts. Under the English statute from which the sixteenth section of our statute limiting the right of entry to 20 years was substantially taken, it was held by the English courts, both at law and in equity, that the possession of the mortgagor was the possession of the mortgagee, and therefore the344; New Jersey Building, Loan & investment Co. v. Cumberland Land & Improvement Co., 53 N. J. Eq. 644, 33 Atl. 964. If he is so subrogated, then the payment by the guarantor may not be considered as a payment made by the assignee of the equity of redemption, or in relief of his lands, or at his request. The assignee's rights are rather adverse to the payment, and, so far as the assignee of the principal is concerned, the guarantor may stand only as the obligor would without his payment; that is, as subject to the statute. It is manifest that, as between the guarantor of the bond and subsequent purchasers of the equity of redemption, the circumstances of each case might vary the equities; and in the present case I shall not undertake to decide as to the effect of this payment upon the running of the statute of limitations. Such decision is not necessary, inasmuch as, in my view, the payment of April 1, 1879, was a payment effective against the defendant to stop the running of the statute. Being made within 20 years before the filing of the bill, the statute runs only from that time of payment. Barned v. Barned, 21 N. J. Eq. 245. No further equities are set up on the record in relation to these payments, and, inasmuch as the complainant has proved and given credit for the payments made up to April 1, 1887, by Mr. Dayton, and no reason has been alleged or shown for treating them otherwise than as payments for the benefit of all the lands, decree will therefore go for the principal unpaid, with interest from that date.