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Decisions of the Superior Courts of New South Wales, 1788-1899

Cummings v. MacKenzie [1848] NSWSupC 14

equity - mortgage - lis pendens

Supreme Court of New South Wales

Stephen C.J. and Manning J., 27 December 1848

Source: Sydney Morning Herald, 30 December 1848, in Supreme Court Collection, Vol. 2, p. 153 [1]

IN EQUITY.---ON APPEAL.

BEFORE their Honors the CHIEF JUSTICE and Mr. Justice MANNING.

CUMMINGS v. MACKENZIE.

Sir ALFRED STEPHEN, Chief Justice, pronounced the judgment of the Court in this case, as follows:---

This suit arose out of a purchase of cattle from the defendant, several years ago, at a long credit; for the payment of which, the plaintiff gave a mortgage over certain land, as also of personal property. Disputes having arisen, as to an alleged deficient delivery of the cattle, and the consequent state of accounts between the parties, the plaintiff filed his bill for an account, and for re-conveyance to him of the mortgaged property; and, failing that, for redemption of the same on payment of what should be found due.

The Decree in the cause, by Mr. Justice Therry, declared that the defendant had performed his part of the contract; and directed accounts to be taken of all sums paid to or received by him, since a particular date --- at which his Honor decreed that a given amount should be taken as due; by reason of a then stated and settled account between the parties. All further directions, and costs, were reserved. The Decree omitted to direct any account to be taken, however, of the principal and interest due on the mortgage. The Master has long since made his report under the Decree; and several exceptions which were taken to it, have been overruled.

Afterwards, it appears, under a power of sale in the mortgage deed, the defendant sold part of the mortgaged property, in liquidation of the balance alleged to be still due to him. The defendant claims a right, under that clause, to make any such sale at his discretion; subject, only, to the power of the Court to restrain it for cause shown --- the plaintiff of course having credit given him for the proceeds. The plaintiff, on the other hand, denies the existence of that right, pending a suit for redemption. That question is the main point at present for decision; though, as will be seen, there are others.

On the cause coming in for further directions, at the instance of the plaintiff, before Mr. Justice Manning, a petition was presented by the defendant, setting forth that since the making of the Decree, he had completed a contract entered into, under the power of sale, for the sale of a portion of the lands comprised in the mortgage, by executing a conveyance thereof in fee; and praying that the land so sold might be excluded from the operation of any Order, to be made on further directions, for reconveyance of the mortgaged premises.

It was objected, that this petition was an irregular mode of bringing the mater before the Court; and that, even if a sale by the mortgagee, pending a suit to redeem, could be held valid, no enquiry could be gone into touching the sale in question, because the purchaser was not a party. His Honor overruled the objection; and directed the Master to inquire, whether any and what part of the mortgaged premises had been sold by the defendant; and to charge the defendant with the purchase money, of such part as was properly sold, and with what he might have received for such part of the premises as was improperly sold. And his Honor directed, that upon payment within a certain time, of what should be the balance due the defendant, for principal and interest, the defendant should re-convey the mortgaged premises, or such part thereof as may remain unsold.

These directions, as well as others respecting interest and costs to which we shall advert presently, were appealed from by the plaintiff, on the several grounds which will be collected from what follows.

The appeal was argued before us by Mr. Broadhurst for the plaintiff, and the Solicitor General and Mr. Donnelly for the defendant, when the following cases were cited:---Foster v. Deacon, 6 Madd. 59; Bishop of Winchester, v. Paine, 11 Vesey, 194; Worsley v. Scarborough, 3 Atk. 392; Girth v. Ward, 2 Atk. 175; Gaskell v. Durdin, 2 Bell and B. 187; Anon. 6 Madd. 101; Walker v. Smallwood, 2 Anstr. 676; Rex v. Edington, 1 East, 294; Metcalfe v. Pulvertoft, 1 V. and B. 180; and 2 V. and B. 200; Landon v. Morris, 5 Sim., 247; Sugden's V. and P. 1046; Webb v. Rorke, 2 Sch. and Lef. 676; Price v. M. of Penzance, 4 Hare, 506; and passages in 2 Dan. Pr. 1245, and 1250.

We see no ground, on any of the points urged before us, for reversing or altering the Decree complained of. First, as to the direction for computing interest on the mortgage debt; and for the allowance of the defendant's costs. It is clear, that interest was payable; and, as the original reference to the Master, by some oversight, contained no direction on that head, it was properly made the subject of reference, we think, on further directions. As to the costs, the common rule is that the mortgagee, in a suit to redeem, is entitled to his costs; and we discover no ground for depriving the defendant of them in this suit. Then, as to the mode of bringing the fact of the sale before the Court, on further directions. It was said, that a petition was improper. We are by no means prepared to say that it was so; although, perhaps, a petition was unnecessary. (See 4 Hare, 511.) But, the fact of the sale being before the Court, we are clearly of opinion that His Honor rightly directed inquiry on the point, and that the reconveyance should be restricted accordingly. The next objection was, the absence of the purchaser as a party. We think, that there was no occasion whatever for his being a party. All the questions in this case, between the mortgagor and the mortgagee, can be decided without him; and, if the lis pendens affects his purchase, he will be equally bound by the Decree, whether he be a party or not.

We now come to the question, upon which alone we reserve our judgment; namely, whether under the mortgage in this case the defendant had power, pending this suit, to sell and convey any part of the mortgaged premises, in satisfaction of his debt. We are clearly of opinion, that he had that power. Certain other claims for relief, which the plaintiff sought by his bill, having been finally disposed of at the original hearing, the suit stood at the time of the sale as a mere suit for redemption, upon payment of the balance of the mortgage debt, which was then due to an extent certainly exceeding the amount obtained by the sale.

The question then is, whether the suit constituted a lis pendens, destroying the power of sale. By the mortgage deed, certain properties were conveyed to the defendant, subject to a proviso for reconveyance upon payment of a large sum, with interest, by instalments; with a further proviso, that on default in any of the payments, it should be lawful for the defendant, at any time after three months' notice, so long as any part of the money should remain unpaid, to sell and convey the mortgaged premises, or any part if them, in satisfaction of the debt --- without the plaintiff's concurrence or consent. Now, at the time of the institution of the suit, default had been made; and consequently the defendant's tight to sell on notice was complete. Notice, also, would seem to have been given; but this we need not consider, in discussing the question.

The bill to redeem is founded upon the rule of equity, to great the conveyance as a pledge notwithstanding the default. That rule enables a mortgagor to pay off the debt, and demand a reconveyance, at any time while the property remains in the mortgagee's hands without foreclosure. It leaves untouched, however, any right which may be in the mortgagee, to pay himself by exercising the power of sale. It is as if the proviso for reconveyance contained in the deed had been general, instead of being limited in point of time. But it is clear, that the effect of such a proviso would only be, to entitle the mortgagor to redeem at any time such portions (if any) of the premises, as should not be sold before payment. The suit brought by the mortgagor to assert that right, cannot operate to enlarge it, nor can the judgment to be pronounced by the Court do more, than affirm and give effect to it. The lis pendens, therefore, cannot defeat the power of sale;--- for the equity sought to be enforced is contingent on the non-exercise of that power.

"The effect" --- it is said --- "of the maxim pendent elite nihil innovetur, has reference only to the relative rights of the parties, in the suit which is pending; and does not extend to avoid a conveyance, further than as affecting those relative rights." --- (2. Ambler, 677, note 3.)

It would be any thing but equitable if such an effect were given to it, as would make any mortgagor who had made a default, by which he was barred at law, to come into this Court for the purpose of suspending the power of sale, created by himself, and thereby of postponing payment of his debt, to the last day to which he may protract the suit. If the argument so much pressed for the plaintiff were correct, a mortgagor in default might always defeat his own deed, and set his creditors at defiance, by filing a bill to redeem.

A mortgagor, however, will not be without remedy, against injustice on the part of the mortgagee. If he desires to prevent the sale of the property, his course is to extinguish the power by paying the debt. In default of payment, the exercise of the power of sale is only what he originally consented to, in consideration of the loan. But, should there be ground for apprehending that the mortgagee may, notwithstanding actual payment, (or such uncertainty respecting payments as renders the taking of an account in Equity necessary,) avail himself of the power of sale, and the irresponsibility of the purchaser, to commit a fraud, the mortgagor may apply for an injunction to restrain the sale. In the present case, however, the power had certainly not been extinguished, at the time of the sale; and, as certainly, no ground has been disclosed, upon which the Court could have granted an injunction, if applied for. On sufficient ground laid, the Court would restrain a sale;---but the mere pendency of a suit cannot operate as an injunction. This, however, is what the plaintiff's argument really amounts to.

But, finally, if there were in this case a lis pendens, affecting the power of sale, such as a controversy whether the mortgagee had not repaid himself by the rents and profits, the sale could not now be pronounced void. In Landon v. Morris, (5. Sim. 263,) the general doctrine is noticed as being, as to its effect, this --- that "a purchaser pendent elite is bound by the Decree, made against the person from whom he purchases."

So that, if the controversy respecting the state of accounts should be determined in favour of the mortgagee, the sale would hold good; and it is only, we conceive, in the event of a previous actual redemption being established, that the sale would be avoided. In this case, it is impossible that the final Decree can adjudicate, that the power was at an end before the sale; and the purchaser cannot be injured, inasmuch as a reconveyance is directed, of such portion only of the mortgaged premises as remain unsold under the power.

All the grounds taken in this case, therefore, have in our opinion failed; and the Appeal is consequently dismissed, with costs.

Notes

[1] See Cummings v. MacKenzie (No. 2), 1847; and see Cummings v. MacKenzie (No. 1), 1847; and MacKenzie v. Cummings, 1847.

Published by the Division of Law, Macquarie University