Puffer v. Clark

Hoar, J.

The defence of want of consideration cannot be sustained. The defendant received the transfer of a promissory note for $2000, on which $1600 was due; and the assignment of a mortgage to secure it, made with full, covenants of warranty by the person in possession of the mortgaged estate. This was a consideration sufficient to support this note, in the absence of fraud, whether the title of the mortgagor proved to be good or otherwise.

But the defendant contends that the condition upon which *83his note was made payable has not been fulfilled. The promise wTas to pay $1600 in three years from date, with interest semiannually, provided that the title of the real estate in Butolph and South Russell Streets then be vested in me, my heirs or assigns, by a good title and indefeasible under foreclosure of a mortgage this day assigned to me by said Jones.” To ascertain the meaning of this condition, it is necessary to consider the circumstances under which the note was given, and the relation of the parties to the contract.

The plaintiff’s testator held by assignment a mortgage on the estate, made in 1843, which was a valid and unquestioned security for $500. Peirce, the owner of the equity of redemption under this mortgage, had in 1846 taken the benefit of the insolvent law, by which his title appears to have passed to his assignee. But he continued in possession; the assignee, for some reason which is not apparent, making no claim to the estate; and in 1847 made a second mortgage to the plaintiff’s testator for $2000, on which $1600 remained due in 1858. This second mortgage was with full covenants of warranty, and the interest was regularly paid. The value of the estate appears to have been such as made the security on both mortgages ample, and the validity of the second mortgage was not questioned by the assignee. The defendant then, in 1858, undertook to acquire a perfect title for himself. He first took a conveyance by quitclaim from the assignee of Peirce, dated April 11, 1858, for the consideration of $200. He then, on the 19th of June 1858, took from the plaintiff’s testator an assignment of both mortgages, possession for the purpose of foreclosure under the first having been taken on the 14th of June 1858; and it is agreed that these conveyances gave him a perfect title to the estate. He paid for the $500 mortgage the full amount due upon it, "and gave this conditional note for the rest of the conveyance.

What then could have been the meaning which the parties attached to the phrase, “ indefeasible under foreclosure of a mortgage,” in this condition ? It is evident that if the meaning simply was that the right of redemption of that mortgage should be barred, it was barred at the moment the mortgage *84was assigned, as completely as it is now, or ever could be. The whole equity of redemption being then vested in the defendant, the title of mortgagor and mortgagee merged in him, there being no intermediate estate to keep the mortgage alive as a separate estate. There seems to have been no reason why the defendant would be willing to pay $1600 in case some adverse claimant should appear, and, having the right to redeem the first mortgage, should yet neglect to do so ; and agree to pay nothing if the title proved perfect without any such claim appearing. The foreclosure of the first mortgage would add nothing to the value of the second.

But the defendant now contends that not only has the first mortgage not been “ foreclosed,” technically speaking, but that he has gained no title to the estate under it, because it has been paid and satisfied by the receipt of the rents and profits within three years after possession was taken. Whether, after possession taken for the purpose of foreclosure, and held without accounting for. three years under the statute, it is competent for any person owning the equity of redemption to show that the mortgage has been paid by the rents and profits, and to sustain a bill for redemption, is a question certainly not free from difficulty, and upon which we express no opinion. But if such a right would exist, then as the value of the estate was plainly sufficient to pay the first mortgage within three years, there was no possibility that a foreclosure of the mortgage could take place. The act of the defendant in taking the rents and profits has made the performance of the condition on which the note was payable impossible. The note would then amount, in substance, to a wager of $1600 by the defendant, that the profits of the estate would amount to $500 in three years.

We are of opinion that no such absurdity was contemplated by the parties. They considered the value of the second mortgage questionable. Possession had been taken under the first mortgage, and they supposed that at the end of three years, if it should not be redeemed, the title would be perfect. If at the expiration of that time the defendant should find himself in undisturbed possession of the land, and no person should then be *85found to have a right to redeem it from the first mortgage, he was willing to pay the remainder of the consideration of his purchase, and to pay interest upon it until the fact should be ascertained.

The three years have passed. The defendant holds the land by a good title and indefeasible. He holds it under his mortgage; that is, under the merger of the mortgage in the equity of redemption, uniting the two estates of mortgagee and mortgagor in his own person. The mortgage is “ foreclosed,” in the sense that no one has the right to redeem it, or to call him to account under it; and this was the only reasonable meaning which the parties could have attached to the word 11 foreclosure ” in the condition of the note.

Judgment for the plaintiff upon the facts agreed.