
    KORTRIGHT a. CADY.
    
      Supreme Court, First District;
    
      General Term, February, 1857.
    Tendee.—Lien of Mortgage.—Taxes.
    An answer to a bill for foreclosure, which avers tender of the principal, &e., due on the mortgage, but does not allege a readiness still to pay the same,—or that it is paid into court,—nor offers to pay it into court,—is defective.
    It is essential to a perfect tender that the party should not only once offer to pay the money, but that he should be always ready to pay it; and unless this readiness existed, and is pleaded, the tender is a nullity and does not protect the defendant even from the payment of subsequent costs and interest.
    
      The lien of a mortgage is not so far discharged by tender and refusal after the law-day, as to bar a foreclosure.
    The cases in this State, on this subject, reviewed.
    The mortgagee who, as such, pays taxes on the mortgaged premises has a lien on the land therefor.
    Appeal from a judgment of the special term.
    This action was commenced in 1847 in the Supreme Court in equity, by a bill for the foreclosure of a mortgage, by Nicholas G-. Kortright against Joseph Blunt, John Holmes Agnew and Emeline his wife, and Howard C. Cady.
    The action came on to be tried before Mr. Justice Cowles at special term, March 16, 1855, when the following facts were proved, and were found by the judge as his conclusions of fact.
    The mortgage in question, bearing date February 2,1846, was made by the defendant Joseph Blunt, then owner in fee of the mortgaged premises, to Jonathan Miller, to secure $2400, and was junior to a still larger one outstanding on the same premises, and then held by the Mutual Insurance Company.
    Both of these mortgages were upon premises known on the tax-rolls of the city of New York as Nos. 8486, 8487, 8488, 8488J, 8489, 1534, and 1533 of the Sixteenth Ward.
    In 1846 the Mutual Insurance Company obtained a decree for foreclosure and sale under the mortgage, and report of the sale was made on May 21, 1847. Meantime, and on March 20, 1847, the plaintiff Kortright had become assignee and holder of the second of Blunt’s mortgages, which was the one now in suit.
    At the master’s sale under the decree in favor of the Mutual Insurance Company, all the lots were put up for sale by the master and bid off, Kortright, the plaintiff, bidding in a portion of them, including No. 1533, which was the last sold. But on subsequently finding that the whole moneys directed by the decree to be paid had been raised without resorting to the avails of No. 1533, the master refused to give plaintiff a deed for that lot.
    On No. 1533, at the time of such foreclosure sale, there were outstanding unpaid taxes, for the year 1843, for the year 1845, for the year 1846.
    Kortright, as the next and oldest encumbrancer after the Mutual Insurance Company, became entitled to the whole of the surplus moneys under that sale.
    From the moneys retained under the foreclosure sale, the master paid the moneys provided for by the decree, and the whole of the taxes, including the assessments on lot 1533, but refused to refund the sums paid in for taxes on 1533, after he found it unnecessary to convey that lot. The surplus then remaining after such taxes had been paid were something over $300, and were paid over to Kortright; and thus he in effect paid the taxes on 1533, since such payment diminished, pro tanto, the surplus moneys.
    The equity of redemption of the mortgaged premises in question (lot 1533) was sold by Blunt to the defendant John H. Agnew, subject to the mortgage in question, and by Agnew was conveyed to the defendant H. C. Cady, in June, 1847.
    Cady took without knowledge or notice, constructive or otherwise, that Kortright claimed that the -taxes on lot 1533 above mentioned were a lien on the land; for by the tax-books they appeared to have been paid.
    In August, 1847, Cady tendered the plaintiff’s attorney the whole amount remaining unpaid on the mortgage, and the costs of suit up to that date, which the plaintiff’s attorney refused to receive unless he would also pay the aforesaid taxes on lot 1533, which the master had paid out of avails of the sale under the Mutual Insurance Company’s mortgage as above stated. This sum Cady refused to pay.
    The plaintiff was notin this city (his place of residence) when that tender was made, nor had his attorney any authority to receive the money further than was incident to his general powers as attorney.
    The mortgage in question was now charged on lot 1533 alone, the other lots which it covered originally having been sold under the Mutual Insurance Company’s foreclosure sale.
    There was no testimony to show that Blunt knew or was apprised, at the time, of the tender made by Cady to the plaintiff. After such tender, Cady was made a party defendant.
    Upon the foregoing facts, it was contended for the defendant Cady that the premises were, by his tender in August, 1847, discharged from the lien of the mortgage.
    It was contended for the plaintiff that this was not so, for two reasons: first, the tender did not embrace the taxes paid by Kortright, which were, it was claimed, a lien on the land; and, second, the tender was not in time, being after the law-day.
    The judge was of opinion that the tender was insufficient for the latter reason; and that the plaintiff was entitled to the usual judgment of foreclosure. The following opinion was rendered :—
    Cowles, J.—The lien of the taxes which had been charged upon lot 1533, was discharged by the payment made by the master out of the surplus moneys on foreclosure of the Mutual Insurance Company’s mortgage, and that lien could not be made to attach to the land again in favor of Kortright particularly, as against a subsequent and bona fide purchaser for value. Such was the case with Cady. This is not the case of a payment of taxes by the mortgagee voluntarily, in order to save the premises from a tax sale, and thus tacking such lien for taxes to his mortgage, and presenting it as a charge on the land in his own favor. It was a payment made by mistake on the part of the master, at a time when he supposed he would need the avails of lot Ho. 1533 to make up the amount to be raised under the decree.
    It is enough, however, so far as the defendant Cady is concerned, to say that he has purchased without knowledge or notice of the facts respecting such taxes, and they being extinguished of record, cannot be recharged as against him.
    The plaintiff, therefore, had no right to insist on the amount of those taxes being embraced in Cady’s tender.
    The next question is, did the tender made by Cady, in August, 1847, discharge the mortgaged premises from the lien of this mortgage ?
    The courts of law and equity, in this State, have not been agreed whether tender after law-day operated a discharge of the lien of the mortgage.
    The Court of Chancery has held that it did not (Merritt v. Lambert, 7 Paige, 344). The Supreme Court has held that it did (Jackson v. Crafts, 18 Johns., 110 ; Farmers’ Insurance & Loan Company v. Edmonds, 20 Wend., 541). The case of Post -y. Arnott (2 Den., 344), in the late Court of Errors, has left the question still in doubt.
    
      Under these circumstances, I feel inclined to follow the ruling of the former Court of Chancery upon this question.
    There are obvious reasons why a tender on the day the mortgage falls due shall be held to discharge the lien.
    That is the day of payment fixed by the security itself: Both parties are supposed to act in reference to it, and to know the exact amount then due. The mortgagor is then bound to pay, and the mortgagee to receive the money. ' Beither can be taken by surprise ;• and tender then by the mortgagor is equivalent to payment, so far as the right to a longer lien on the land is concerned.
    But if the mortgagor allows that day to pass, and becomes thus in default, it is hardly just that he should be at liberty, after the lapse of months, or years perhaps, also after partial payments of principal and interest, to select his own time and occasion for the making of a tender when the holder of the security may be very illy prepared to know whether the amount tendered is correct or not, and acquire by such a tender the same advantages he would had the tender been made on law-day. If’ he allows the stipulated time of payment to pass, it seems to me it is not equitable to allow a tender of the money to discharge the lien, unless the tender is kept good, and the money afterwards brought into court.
    It may be said that reasonable notice of the intention to make the tender, if made after law-day, would enable the mortgagee to ascertain the exact amount due, and that after such notice the mortgagee should be held to decline receiving the money tendered at the peril of losing the lien. There is no little force in this view of the case, and it might be conclusive, did it not leave it always as an open question whether such reasonable notice had been given.
    The more simple, and, as it seems to me, equitable rule, is to hold, that if tender is punctually made on law-day, it operates a discharge of the lien. But if not made until after law-day, that it does not discharge the lien unless the tender is kept good.
    The defendant Oady duly excepted to the finding, and among other things he excepted to so much thereof as held that the tender proved did not operate to discharge the lien of the mortgage.
    
      Judgment having been entered pursuant to the opinion of the court, the defendant Cady now appealed therefrom to the general term.
    
      J. M. Van Cott, for the appellant.
    —I. The tender to plaintiff’s attorney was a good tender. (Jackson v. Crafts, 18 Johns., 110; Goodland v. Blewith, 1 Campb., 478; Moffat v. Parsons, 5 Taunt., 307.)
    II. The tender discharged the land. It makes no difference that it was made after the law-day. The mortgage being a mere security upon the land, a chattel interest, the entire right of the mortgagee is to enforce payment of the debt by a sale of the land. Payment extinguishes that right. A tender on the law-day equally extinguishes it. A tender after the law-day has the same effect. And a reconveyance is not necessary. (4 Kent's Comm., 193, note.) In this State, the mortgagee’s judicial remedy is exclusively in equity; and equity helps him by a sale of the land, because the mortgagor will not pay. But, if the mortgagor has tendered payment, and the mortgagee refused to accept, the mortgagee cannot be permitted to say that the sale of the land has become necessary in consequence of a refusal to pay the debt, and especially to say this, before he makes a demand after having declined the tender.
    
    2. If the tender had been made on the law-day, clearly the , land would have been discharged. The law of New York does not make any substantial and practical distinction between a tender on and a tender after the law-day. (Jackson v. Crafts, 18 Johns., 110; Edwards v. Farmers’ Loan Company, 21 Wend., 467; aff’d, 26 Ib., 541; Arnot v. Post, 6 Hill, 68; S. C. in error, 2 Den., 344; Malins v. Brown, 4 Comst., 409; Waring v. Smith, 2 Barb. Ch. R., 135; Astor v. Turner, 11 Paige, 436.)
    3. The omission to pay on the law-day is a breach of the condition ; and the whole question turns upon the effect of that breach. Its effect is not to confer a new character upon the mortgagee, with new rights. Nor does it impose new disabilities or new burdens upon the mortgagor.
    
      Before breach of the condition, the estate is for all practical purposes in the mortgagor, and not in the mortgagee. (Malins v. Brown, 4 Comst., 409; Waring v. Smith, 2 Barb. Ch. R., 135; 4 Kent's Comm., 196, note; Ib., 194, note; Raymond v. Wilson, 6 Hill, 469; 2 Cruise’s Dig., 91.) The right of possession is still in the mortgagor, not in the mortgagee (2 Rev. Stats., 3 ed., 312). The mortgagor is entitled to have the land discharged of the mortgage on payment of (or doing what he is bound to do in order to pay) the mortgage. And the practical consequence of all this, at law and in equity) is, that the land is absolutely and forever exonerated, if the mortgagee do not take the money when offered. Such is the status of the parties before breach.
    
      After breach, but before foreclosure, the condition of the parties remains unchanged in either of these particulars. The estate still remains in the mortgagor. He can convey it or devise it, or can mortgage it. It descends to his heirs. A judgment attaches to it as a lien. It is taxed and assessed to him. The reverse of all this is true of the mortgagee.
    His personal representatives take the mere chattel interest in the mortgage. All his rights, as respects the debt and as respects the land, pass to an assignee by a mere parol transfer. And he executes no reconveyance on payment of debt. It is therefore an abuse of language to say that any change in the estate has resulted from the breach. The mortgagor’s right of possession remains unaffected by the breach, till after foreclosure (Astor v. Turner, 11 Paige, 436). The mortgagor’s right to pay, and discharge the land, is unaffected (and he owes the mortgagee no duty beyond that).
    III. A legal tender always stops interest and costs, and there is no rule, by statute or at common law, requiring the payment into court in mortgage cases; neither is there any necessity for the rule if the land be not discharged of the lien. (2 Rev. Stats., 3 ed., 640, §§ 21,22; Burtis v. Dodge, 1 Barb. Ch. R., 11; Farmers’ Loan Company v. Edwards, 26 Wend., 541.)
    
      Joseph Blunt, for the respondent.
    —I. Ho tender was ever made to plaintiff, nor to any person authorized to accept or refuse for him. The plaintiff w^s .out of the State, and the defendant should have paid the money into court.
    II. A tender, after the law-day, does not discharge the lien of a mortgage (Post v. Arnot, 2 Den., 344). This case was decided upon this very point, in the Court of Errors, reversing the judgment of the Supreme Court. In the case of Edwards 
      v. The Farmers’ Loan & Trust Company (26 Wend., 541), the law-day, or time for tender, was extended by the charter, so long as the property foreclosed belonged to the company.
    III. In this case there were due to plaintiff, beyond the amount tendered, the moneys paid from his funds by the master for taxes. These the defendant Cady refused to pay.
    IV. A mortgagee has a right to pay taxes, and they become a legal charge upon the estate (Hopkins, 283). He also has a right to redeem the mortgaged property when sold for taxes, and to make the amount paid a lien under his mortgage.
    V. The consequences of the doctrine insisted on by defendants are most alarming. They are, that it is competent for a party who has bought real estate subject to a mortgage, to watch for the absence of the mortgagee, and then, without previous notice, to tender to any clerk or agent of the mortgagee what he alleges to be the amount of the mortgage debt, and to require such agent to accept or refuse such sum, and to decide on its sufficiency or insufficiency, at'a moment’s notice, at the peril of his principal; and at the risk of divesting the lien of the mortgage, and losing the debt, if he refuse the tender and it should prove to have been sufficient in amount. The recognition of such a rule by the courts would destroy the value of all mortgage securities.
    VI. The mortgage being under seal, created a lien on the land, which could be divested or affected only by the act of the mortgagee, or his agent, appointed wader seal. In this case the agent could not have executed a satisfaction piece or release, which would have discharged the premises from the lien of the mortgage. It is impossible, therefore, that any loose dealings with him, in parol, can have that effect, and bar the rights of the plaintiff.
    VII. On the whole case, it is apparent that a lawyer was engaged, by the defendant who held the equity of redemption at the time of the alleged tender. That this lawyer, on behalf of his client, attempted to apply a piece of legal subtlety to the case, and to get rid of the mortgage {subject to which his client had bought the property), by a rule of law obscure and obsolete, even if it exist at all. And that immediately thereafter, the lawyer purchased the premises of his client, so that the benefit, if any, of the snare laid for the mortgagee, might enure to to him; and that he might acquire, for a nominal consideration, or more probably for no consideration whatever, the real estate affected by the mortgage, and, in violation of all equity, throw the mortgage debt on the party liable on the bond, and who had sold the premises, receiving therefor only the surplus of their value above the mortgage debt.
    VIII. The tender being made pending suit, and unaccompanied by any payment into court, or offer to pay on the pleadings, is a nullity.
   By the Court,—Mitchell, J.

—Blunt, owner of the lands in question, mortgaged them to Miller, who assigned the mortgage to the plaintiff. Blunt then conveyed to Agnew, expressly subject to the mortgage, and the latter in 1847 conveyed to Cady; but Cady does not set up in his answer that he paid any thing on the conveyance, or that he did not know of the mortgage, or was not to take subject to it. The deed to him purports to be for $3500, and contains full covenants, without any exceptions. This action was commenced in July, 1847, against all the defendants but Cady, under the old chancery system. The bill was amended by making Cady a party, in February, 1843, and he answered in that month. In his answer he alleges that he tendered to the plaintiff’s attorney on May 28, 1847, the principal, interest, and costs then due on the mortgage ; but does not allege a readiness still to pay the same, or that it is paid into court; nor does he offer to bring it into court; nor is that readiness found by the special term. This allegation is an essential part of the plea of tender. (3 Chitt. Pl., 923, note k; 1 Saund., 33, note 2; 8 East, 168 ; l Ld. Raym., 254.) It is also essential to a perfect tender that the party should not only once offer the money, but that he should be always ready to pay it; so that a prior or subsequent demand and refusal to pay is a good replication to the plea of tender, and makes the tender a nullity. (3 Chitt. Pl., 1155.) Williams, in note 2 to 1 Saunders, 33, says :—When the defendant has been at any time requested to pay, either before or after the tender, and has neglected or refused so to do, that avoids all tenders made both before and after such request.” See also Hume v. Tiploe (8 East, 168), where Lord Ellenborough asked the defendant’s counsel if he could show any case where an averment tout temps prist was holden not to be necessary in a plea of tender, and added, “ It was expressly decided to be necessary in Giles v. Hartis (1 Ld. Raym., 254), and it was one of those lamdmarks im pleading that ought not to he departed from.” The case of Sheridan v. Smith (2 Hill, 538) does not sustain the position that a replication waives' this defeat, but only that it waives what is a mere irregularity in practice—the omission to bring the money into court, and to produce the certificate or its being paid in.

This imperfection, both in the actual tender and in the plea of it, makes the imperfect tender a nullity, and it does not protect the defendant even from the payment of subsequent costs and interest.

It is said that the tender causes the lien of the mortgage to cease. That effect can arise only when the tender is complete; that is, when there is not only one offer to pay, but a continuing readiness to pay. In Jackson v. Crafts (18 Johns., 110), the person making the tender proved that immediately after the tender he deposited the money with a third person, who continued to hold it ready to pay over. In that case, and in Edwards v. The Farmers’ Fire Insurance & Loan Company (21 Wend., 467), the actions were ejectment, in which there were no special pleadings, but the plaintiff merely alleged his lawful possession of the premises in general terms, without setting out his title, and the defendant merely denied the unlawfulness of his own possession. In the latter case the question was not raised of the sufficiency of the tender, but only of its effect, conceding it to be good.

But in this the answer shows that the defendant claims that his tender exempts him from paying, and thus excludes the idea of an offer to pay or readiness to pay; and there is no proof of either.

The tender in this case was made long after the day on which the mortgage became payable, and after the action was commenced against the mortgagor, and all parties but the defendant Cady, and when there was a controversy as to the precise amount due. It has been argued that this discharges the lien of the mortgage. If the question is to be decided without regard to authority, there could be little doubt that justice and policy would be against the proposition. When payment is delayed beyond the day prescribed by the condition, any uncertainty that follows is the result of this neglect of the debtor; payments may have been made of interest and of principal irregularly; receipts would be in the possession of the debtor, but the creditor might not have full memoranda of them; or, as in this case, the creditor might actually have paid taxes on the land, and reasonably believe that he might charge the amount against the • mortgage, and yet that not be allowed to him on the trial. It would be very unjust in such a case to destroy his lien, and leave him only to a remedy against his original debtor, who would claim that when he sold subject to his mortgage, the lands became the principal debtor, and that as they were discharged by the fault of the creditor, he also should be discharged.

Decided cases are authority—first, in cases strictly similar, and secondly, as evidence of a pre-existing principle on which they were founded. The decision may be right, and the reasons assigned for it, or some of them, be wrong. Thus in'respect to the first case, in which it was said that a tender after the law-day discharged the lien of - the mortgage (Jackson v. Crafts, 26 Wend., 557), it is conceded that the authorities relied on by the learned judge applied only to a tender on the law-day. Laying aside, then, the dicta of the judges in the cases in this State, it is decided as follows. In Jackson v. Crafts, that after tender-made of the whole amount due on a mortgage, after the law-day, but while an advertisement is pending, the object of which is to compel payment of the mortgage, and when the tender is kept good by the money being kept ready for tire mortgagee, and it is refused, in order to defraud the mortgagor of his title, then the mortgagor may defend his possession against an action of ejectment brought by the mortgagee, or by the purchaser under the advertisement. It does not decide that he will not still hold subject to the mortgage, nor that the mortgagee might not foreclose if the tender was not kept good, and pleaded in the foreclosure suit, with a tout temps prist. In Edwards v. The Farmers’ Fire Insurance & Loan Company, there was no question raised as to the perfect and continued goodness of the tender. If the case turned on the question of tender, it was decided that a tender made after the law-day contained in the bond, but which was extended by the charter of the company to such indefinite period as the lands should remain unsold in the ownership of the company, entitled the mortgagor to recover the lands in an action of ejectment against th - company claiming to own the lands in fee, but not in possession, as they were vacant lands. Ho disputed principle of law would be involved in such result.

Kext, to proceed beyond the point necessarily involved in the cases. In the last case, Justice Cowen insists that a tender after the law-day is as effectual as on the law-day, and quotes Lord Coke, speaking of a condition that if it be refused the debtor may enter, and the land is freed from the condition (21 Wend., 488). And it may have been his opinion that a single tender after the law-day, or a refusal to accept it, although followed by an immediate offer afterwards to take the money, and a refusal then to pay it, or by an utter inability to pay it after-wards, discharged the lien, so that there could be no foreclosure in equity; but he never expressed that precise opinion. He follows up the quotation from Lord Coke, and the reference to Jackson v. Crafts, by a remark which seems to limit their effect. He says: “ Such tender and refusal were then received as sofa/r equivalent to payment, that they raised the lien and ha/rred am, ejectment. Did he mean more than that they raised the lien so far as to bar an ejectment ?” That was all that the case cited or the annotation from Lord Coke necessarily decided. Lord Coke was speaking only of the legal right to an entry on the land, not to the lien inferable in equity ; and that was all that was involved in Jackson v. Crafts. Edwards v. The Farmers’ Fire Insurance & Loan Company was affirmed in the Court for the Correction of Errors by a vote of eleven to eight; the- chancellor and seven others voting for a reversal, on the ground stated by him in Merritt v. Lambert (7 Paige, 344); and Senator Verplanck delivering the only opinion for affirmance, which corresponded with that of Justice Cowen. In the Supreme Court, Chief-justice Kelson “ concurred in the conclusion” of Justice Cowen, but is said not to have assented to the reasoning. Justice Bronson dissented. The same question had been before the vice-chancellor of the first circuit in Merritt v. Lambert on a bill to compel the performance of a contract to buy those lands after the tender by Edwards, and he concurred with the chancellor. The assistant vice-chancellor dismissed the bill, not on the ground that the tender was good, but that a contract by the company to sell the lands was not a sale of them within the meaning of their charter, and therefore Merritt, who had made such a contract before the tender, could not give a good title. (See 26 Wend., 551, note.)

The senators who voted to affirm, without assigning their reasons, may have done so for the same reason as the assistant vice-chancellor that dismissed the bill. That reason would probably be now approved. The parties cared comparatively little about the tender; ás Mr. George Wood, the counsel for the company, said, “ the only important question was, whether, after the contract with the Merritts, the property in question could be considered as still remaining in the hands of the defendants unsold that is, the question was not whether the company could enforce its lien as mortgagee, but whether it could claim the lands as owner in fee. Such also was the question in Jackson v. Crafts.

Afterwards came the case of Arnot v. Post (6 Will, 65). There the lands had been sold on the foreclosure of a mortgage by advertisement, and the defendant Post was in possession on such sale. Arnot, after the sale, tendered the principal and interest on the mortgage and the costs of foreclosure, which being refused, he brought ejectment to recover the lands, he having purchased at a sheriff’s sale on a judgment intermediate between the mortgage and the foreclosure sale. The Supreme Court held the tender good, though made after the law-day, and after the foreclosure, and that as the statute declared that the rights of such judgment creditors “ should not be prejudiced by any such sale” (2 Rev. Stats., 546, § 8), they could bring ejectment after a tender. The Court of Errors reversed their judgment (2 Den., 344) by a vote of eleven to nine; senators Bockee and Clark expressly holding that a tender after the law-day did not discharge the lien of the mortgage; senators Johnson and Sedgwick also agreeing in that view, and holding besides, that the remedy of the judgment creditor was only in equity to redeem. Senator Hard also was for reversal on both grounds, holding the doctrine of the Supreme Court as to tender, at least questionable, and placing the decision of Edwards v. The Farmers’ Fire Insurance & Loan Company on the charter of that company. Senator Porter, voting for a reversal, said nothing about the tender, but in an elaborate and able argument sustained the position that the only relief was to the judgment creditors, and was in equity only. The other senators voting for affirmance did so without stating their reasons. They may have done it on both grounds; and it is believed that the reversal has been generally understood as sanctioning the position that the lien of a mortgage was not so far discharged by a tender and refusal after the law-day as to bar a bill for foreclosure of the mortgage. Eo case has yet decided that such was the effect of a tender, and there is no reason for establishing such a rule now.

There is another point which was not argued, but on which also the judgment should be affirmed. The plaintiff while holding the mortgage paid the taxes due on this lot about the month of May, 1847. The taxes were a lien on the land, and when paid by the mortgagee cannot be deemed _to have been paid by the mortgagee merely on the personal liability of the owner of the lands, but in his character of mortgagee, and with a view to transfer the lien from the State to the mortgagee. In other words, the payment is made for the benefit of the land, and in reliance on it as liable therefor, and should be regarded as conferring a lien in favor of the mortgagee, and as adding to the mortgage debt. Both the State and the mortgagor are interested in having such a construction of the law; the State in having taxes promptly paid, without which the wheels of government must be stopped; the mortgagor in saving the extra interest claimed by the State where there is delay in paying taxes.

The judgment should be affirmed with costs. 
      
       Present, Mitchell, Davies, and. Roosevelt, JJ.
     