It is undoubtedly well settled as a general rule that a court of
law will not permit an outstanding satisfied mortgage to be set up
against the mortgagor. Yet the legal title is not technically
released by receiving the money. This rule must then be founded on
an equitable exercise by courts of law over parties in ejectments.
It would be contrary to the plainest principles of equity and
justice to permit a stranger who had no interest in the mortgage to
set it up when it had been satisfied by the mortgagor himself, to
defeat his title. But if this stranger had himself paid it off, if
this mortgage had been bought in by him, he would be considered as
an assignee and might certainly use it for his protection.
The defendant is the circuit court is the owner of the equitable
estate, and has paid off the mortgage on his own account, and for
his own benefit. The encumbrance, under these circumstances, is the
property of him to whom the estate belongs in equity. The reason of
the rule does not apply to such a case.
In the circuit court, the plaintiffs in error instituted an
action of ejectment for the recovery of a lot of ground in the
District of Columbia. It appeared in evidence that under a decree
of the Circuit Court for the County of Washington, the estate of
John Peltz, deceased, had been sold by Charles Glover and John
Davis, trustees, appointed for the purpose of making sale of the
same, for the payment of his debts, and that the defendant in error
had purchased at the sale the property in controversy. No deed had
been made by the trustees to the purchaser, in consequence of the
loss of some title papers, but he had paid the greater portion of
the purchase money.
John Peltz, the ancestor of the plaintiffs in error, had,
previous to his decease, mortgaged the estate in controversy to
Frederick Gammar, who proceeded on the mortgage in chancery against
the trustees, Charles Glover and John Davis, and against Alexander
and Michael Peltz, as heirs of John Peltz, and obtained a decree of
foreclosure and for a sale of the mortgaged premises. The defendant
in error, after the decree, having been so advised by the mortgage,
paid to
Page 30 U. S. 482
him, with the consent and approbation and in the presence of Mr.
Glover, one of the trustees, the whole amount due upon the
mortgage, the sum paid being considered as part of the purchase
money due under the purchase from the trustees. On this payment's
being made, the mortgagor gave to the defendant in error a receipt
for the amount of the mortgage and an order to enter the suit on
the mortgage "settled." On the docket of the court, an entry was
made in the mortgage suit, "Settled says complainant. See
order."
The plaintiffs claimed the property as the heirs at law of John
Peltz.
The plaintiffs prayed the court to instruct the jury that the
mortgage so paid was not outstanding and subsisting so as to bar
the plaintiff's right to recover, which the court refused to do, to
which the counsel for the plaintiff excepted, and judgment having
been entered on the verdict for the defendant, the plaintiffs
prosecuted this writ of error.
MR. CHIEF JUSTICE MARSHALL delivered the opinion of the
Court.
This was an ejectment brought by the plaintiffs in error against
the defendant in the Circuit Court of the United States for the
District of Columbia.
Page 30 U. S. 483
The plaintiffs, who are the heirs of John Peltz, gave the title
of their ancestor in evidence.
The defendant then proved that the land for which this ejectment
was brought was sold under a decree of the Circuit Court for the
District of Columbia and purchased by him, he being the highest
bidder. That he gave his notes to Charles Glover and John Davis,
the trustees appointed to make the sale under the decree, was put
into possession of the premises by them, had paid nearly all the
purchase money, and declared his readiness to pay the residue on
receiving a title. He also gave in evidence a deed of mortgage
executed by John Peltz in his lifetime conveying the premises to
Frederick Gammar.
The plaintiffs then proved that a decree for the foreclosure and
sale of the mortgaged premises had been obtained by the
representatives of the mortgagee. The defendant, acting under the
advice of one of the trustees appointed to execute this decree,
paid in part for his purchase the money due upon the mortgage, and
the return showed the admission of the mortgagee that it was
settled.
The plaintiffs prayed the court to instruct the jury that this
mortgage was not an outstanding title which could bar the
plaintiffs' right to recover. The court refused to give this
instruction, and the plaintiffs excepted to its opinion. The jury
found a verdict for the defendant, and the judgment rendered on
that verdict has been removed into this Court by writ of error.
It is undoubtedly well settled as a general principle that a
court of law will not permit an outstanding satisfied mortgage to
be set up against the mortgagor. This is fully proved by the cases
cited in argument by the counsel for the plaintiffs. Yet the legal
title is not technically released by receiving the money. This rule
must then be founded on an equitable control exercised by courts of
law over parties in ejectment. It would be contrary to the plainest
principles of equity and justice to permit a stranger who had no
interest in the mortgage to set it up when it had been satisfied by
the mortgagor himself to defeat his title. But if this stranger had
himself paid it off, if this mortgage had been bought in by him, he
would be considered as an assignee, and might certainly use it for
his protection.
Page 30 U. S. 484
In the case at bar, the defendant is the owner of the equitable
estate, and has paid off the mortgage on his own account and for
his own benefit. This encumbrance, under these circumstances, is
the property of him to whom the estate belongs in equity. The
reason of the rule does not apply to the case. We do not think that
the mortgagor, his interest having been sold under a decree of
court, could demand a reconveyance from the mortgagee to himself,
the mortgage being satisfied by the purchase under that decree.
There is no error in the judgment of the circuit court, and it
is
Affirmed with costs.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Columbia holden in and for the County of Washington and was argued
by counsel, on consideration whereof it is considered ordered and
adjudged by this Court that the judgment of the said circuit court
in this cause be and the same is hereby affirmed with costs.