Crosby v. Wood et al.

Crosby v. Wood et al. Conditional'discharge of judgment. — Void consideration. The discharge of a judgment, upon an unperformed condition, the possession of which is obtained by the debtor, but not filed with the clerk, will not let in a subsequent mortgage, which was not contracted on the faith of it. A promise, in consideration of the surrender of an instrument, wrongfully withheld, is not binding on the promissor. Appeal from a decree of the late Court of Chancery, where that of the vice-chancellor of the eighth circuit had been reversed, and the plaintiff's bill dismissed, with costs, as to one of the defendants. This was a bill in equity to foreclose a mortgage for $2000, dated the 1st August 1837, given by Nathaniel Crosby to the plaintiff and Charles Crosby, since deceased ; and to have the said mortgage declared a prior lien to an older judgment obtained by the defendant, Bradford R Wood, against the mortgagor. On the 11th May 1837, the defendant Wood was the holder of a judgment against Nathaniel Crosby and others, docketed in the supreme court, on the 11th of December 1835, to secure him as indorser for the defendants therein, to the extent of $2700. This judgment being a lien upon the lands of Nathaniel Crosby, in Chautauque county, the latter, on the said 11th May 1837, applied to Wood, who resided in Albany, for a discharge of the judgment, to enable him, Nathaniel Crosby, to raise money, by way of mortgage, upon his real estate. A stipulation was, thereupon, *given by Wood, f ^ „„ which provided as follows: “To enable Mr. Crosby to raise the sum of $3000, $4000, $5000 or $6000, on his own estate, I hereby agree to discharge the above judgment of record.” At the same time, Crosby gave Wood a written engagement to pay a certain proportion of the debt secured by the judgment, and ten per cent, of the residue, every three months thereafter, provided he succeded in securing the contemplated amount on mortgage; reciting that, to enable him to do so, Wood was to discharge the judgment, and receive a new bond and warrant of attorney as security for the residue of his claim; and in case the arrangement should not be effected, the judgment should remain in force as a security. The contemplated loan on mortgage was not effected; but Crosby subsequently obtained possession of a discharge of the judgment, to enable him to borrow about $600 from the loan commissioners, as, without it, he could not take the oath prescribed by law. Crosby then executed the mortgage in suit, and another to the loan commissioners of Chautauque county of about $600. After various unsuccessful efforts, by letter, to regain possession of the satisfaction-piece, Wood, on the 5th January 1838, authorized James Mullett, in order to obtain it, to assure Crosby, that in case of its return, the mortgages would not be disturbed. Mullett, thereupon, wrote to Crosby, then in Illinois, stating that, if he would give up the discharge, Wood would assume the payment of the two mortgages; and promising that, if sent to him, he would keep the discharge, until Wood should secure the payment of the mortgages. On the receipt of this letter, Crosby sent the discharge to his brother Loring, who delivered it to Mullett, “to be safely kept for the benefit of both parties, and to be delivered to neither.’’ It still remained in the possession of Mullett, under this arrangement. ..Wood subsequently issued execution upon his judgment, and at a sheriff’s sale of the mortgaged premises, became thé purchaser thereof; whereupon, this bill was filed. Other facts are stated in the opinion. *The vice-chancellor made a decree in favor of .. the plaintiff, for the relief prayed in the bill, *- and directing a sale of the mortgaged premises; this, however, was reversed by the chancellor, on appeal, so far as the decree affected the rights of the defendant, Wood, and the bill was dismissed as to him with costs; the plaintiff, thereupon, appealed to this court. Tucker, for the appellant. Reynolds, for the respondent. [MAJORITY — Johnson, J.] Johnson, J. — This is an appeal by the complainant, from a decree of the chancellor, made in the late court of chancery, in favor of the defendant, Bradford R Wood, reversing a decree of the vice-chancellor of the eighth circuit, in favor of the complainant, against the said defendant and others. The single question in the cause is, whether the mortgage of Nathaniel Crosby and wife to the complainant, bearing date the 1st August 1837, is equitably entitled to priority over a judgment in favor of the defendant, Bradford B. Wood, against the said Nathaniel Crosby, and others, rendered in the supreme court, and docketed the 11th December 1835. . There is no grouhd, upon the evidence, to contend, that the complainant’s loan to Nathaniel Crosby was made upon the faith of the written memorandum given by Wood to Nathaniel Crosby, dated 11th May 1837, nor with a knowledge on the part of the complainant, dr Charles Crosby, of its existence; nor can it be claimed, that the mortgage to the complainant came within the meaning of the memorandum, either standing alone, or modified by the counter-memorandum signed by him, at the same time, and left with Wood. Not only is this so, but the subsequent acts of Nathaniel Crosby show, that he considered that proposed arrangement at an end. * 0,70 -i Nathaniel *Crosby’s letter to Wood, of 1st July J 1837, is conclusive evidence of this proposition. On the 1st and 3d of July 1837, Nathaniel Crosby wrote to Wood, asking.him to send.a discharge of the judgment, and suggesting that it might be sent to James Mullett, or Judge Walworth, to be used at the same time that a new judgment should be executed. The purpose for which this discharge was asked is specified: it was, to enable him to borrow about $600 on mortgage to the loan-commissioners. The reason is also given: that without it he could not take the oath prescribed by the law. It is, therefore, entirely clear, that the discharge of the judgment was applied for solely to give priority to the mortgage for about $600 to the loan-commissioners. On the 8th day of July 1837, the defendant Wood executed and acknowledged a satisfaction-piece for the judgment, and the same, afterwards, came into the hands of Nathaniel Crosby, but at what particular time does not appear. No actual satisfaction of the judgment was ever received by Wood, nor was satisfaction ever entered of record, nor is there any evidence, that the complainants, at the time when the mortgage to them was executed, supposed,, or were informed, that the judgment in question was satisfied, or that the premises were free from incumbrances; nor is it proved, that at the-time when the mortgage to the complainants was executed, the satisfaction-piece was in the hands of Nathaniel Crosby. The most which, I think, we can. infer from the testimony is, that Nathaniel Crosby had possession of it, at the time when the mortgage to the loan-commissioners was executed. The date of that mortgage does not appear; but. from Mullett’s letter of 15th August 1837 (if that letter is to be deemed evidence against the complainants), it is to be inferred, that it was not executed earlier than the 7th August, as it was during the week commencing on that day, that the loan-commissioners distributed the loans in Fredonia. Moreover, Nathaniel Crosby, in his letter of 23d March 1839, does not pretend to affirm, that he had in his possession the satisfaction-piece, at the time of the execution of the mortgage in suit. He only says, “ after the discharge was sent to Fredonia by Mr. Wood, I received” *the offer of a loan from the complainants. f Taking this statement in connection with the *- applications to Wood for the discharge, it may, in the absence of other evidence, be fairly inferred, that the discharge was sent in the manner in which it was requested that it should be sent. That, with the other papers, it was sent in a letter to Mullett, inclosed in one to Crosby, advising him of the contents of the letter to Mullett, and that upon this, he felt authorized to take the oath prescribed by § 25, c. 150,- Laws of 1837, that the premises proposed to be mortgaged were free from judgments; or else, that the oath was not required of him by the loan-commissioners; and that the satisfaction-piece did not come into his possession, until after the 15th August, when he delivered to Mullett the letter from Wood to Mullett, of 7th July, which inclosed the. papers. The judgment was, at the time of the execution of the mortgage, unsatisfied in fact of record, and a legal lien on the land, and no circumstances then existed, entitling the mortgagees to a priority in equity over this legal lien. The only remaining question is, whether the mortgagees have, by matters subsequently arising, acquired any right, which entitles them to be preferred in equity, over the judgment-creditor. To determine this question satisfactorily, it is to be borne in mind, that the conditions on which Wood had consented that the mortgage, to the loan-commissioners should take priority to his judgment, had not been performed by Crosby. From the testimony of Southwick, taken in connection with Crosby’s letter to Wood, of 1st July 1837, it appears, that in lieu of the old judgment, a bond and warrant of attorney to confess judgment to Wood, was to be executed by Nathaniel Crosby and Pearson Crosby, at the time when the discharge of the old judgment was to be put in Nathaniel Crosby’s possession. Pearson. Crosby never executed the new bond and warrant of attorney. The use of the discharge of the old judgment was, therefore, a fraud on the part of Nathaniel Crosby, even in respect to the mortgage to the loan-commissioners, and the retention of the discharge by Nathaniel Crosby was one continuing wrong. A court of equity would, as * 374 1 a§ains* Nathaniel Crosby, at any *time, have -* ordered it to be delivered up to Wood, or the supreme court would, on motion, have ordered the clerk not to enter the satisfaction on record: ' Under these circumstances, if Wood, upon the full consideration of the surrender to him by Nathaniel Crosby of the satisfaction-piece, had undertaken with him that the mortgage to the Crosbys should be preferred to his judgment, a court of equity would not have enforced that executory agreement in favor of the holders of the mortgage. The surrender of a paper, the retaining of which was unlawful, which a court of equity would have ordered to be' delivered up, is not such a consideration as will support an executory contract. The complainants in this suit, who are not parties to this agreement, and whose rights could in no degree be altered, by the preservation or surrender of the satisfaction-piece, are not, in respect to rights to be derived under this contract, in any better position than Nathaniel Crosby, and have not thereby acquired any equitable right, which entitles them to have their mortgage preferred over Wood’s judgment. The decree of the chancellor should be affirmed, with costs. Decree affirmed