Alden v. Pryal

McKee, J., dissenting:

I dissent. In an action to foreclose a purchase money mortgage, the mortgagor is entitled to set up as a defense, and to prove, fraud or misrepresentation in the sale and conveyance of the mortgage premises, without first averring and showing an eviction.

Unquestionably, it is true, as a general rule, that a mortgagor, in such a case, will not be allowed to interpose as a defense against foreclosure, want of title, or defect of title in the mortgagee. The rule of caveat emptor binds the mortgagor as vendee of the mortgage premises to see to the title which he acquires by his purchase, or to protect himself by covenants in his deed. Where his contract of purchase has been executed by a conveyance of the land, he must rely upon the covenants in his deed in case of eviction or loss. He can not, in an action to foreclose the mortgage given by him to secure payment of the purchase money, attack his grantor’s title, or show a defect in it, unless he has been evicted by paramount title. That is the general rule, but there are exceptions

*222to it as well defined and as firmly established, as the rule itself. Those exceptions are in cases of mistake, fraud, or misrepresentation. In such cases it is not necessary to show eviction. (Booth v. Ryan, 31 Wis. 45; Grant v. Tallman, 20 N. Y. 1915 Robards v. Cooper, 16 Ark. 288; Conwell v. Clifford, 45 Ind. 392.) The party is relievable in equity.

“ It would,” says Chancellor Kent, in Gillespie v. Moon, (2 John’s Ch. 596; S. C., 7 Am. Dec. 559), “be a great defect in what Lord Eldon terms ‘ the moral jurisdiction of the Court,’ if there was no relief for such a case. * * * I have looked into most, if not all, of the cases on this branch of equity jurisdiction, and it appears to me to be established, and on great and essential grounds of justice, that relief can be had against any deed or contract in writing founded in mistake or fraud.”

The general rule and its exceptions are thus stated by the Supreme Court of Ohio. {Hill v. Butler, 6 Ohio St. 217.) “ In general, where the title fails, in whole or in part, a Court will decree a return of the purchase money, even after the purchase money has been paid, and a delivery of the deed containing covenants of warranty, provided there had been a fraudulent misrepresentation as to the title. (Edwards v. McLeay, Cooper’s Eq. 308; Fenton v. Browne, 14 Yes. 144.) But if there be no ingredient of fraud, and the purchaser is not evicted, or something equivalent to an eviction has not transpired, the insufficiency of the title is no ground for relief against a security given for the purchase money, or for rescinding the purchase and claiming restitution of the money. The party is remitted to his remedies on his covenants to insure the title. (Abbott v. Allen, 2 Johns Ch. 519; S. C., 7 Am. Dec. 554; Edwards v. Bodine, 26 Wend. 109; Barkhamstead v. Case, 5 Conn. 528; S. C., 13 Am. Dec. 92; Maner v. Washington, 3 Strobh. Eq. 171.”

I think, therefore, that the Court below erred in excluding the evidence offered by the defendant to prove the defense of misrepresentation and fraud set up in the answer, and that the judgment ought to be reversed.