U.S. Supreme Court Peltz. v. Clarke, 30 U.S. 5 Pet. 481 481 (1831)
Peltz. v. Clarke
30 U.S. (5 Pet.) 481
ERROR TO THE CIRCUIT COURT OF THE UNITED STATES IN
THE DISTRICT OF COLUMBIA FOR THE COUNTY OF WASHINGTON
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
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.
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.
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.