Morris v. Joyce.

to the mortgage until July, 1900, several months after the payment to Joyce, when he referred to it, in a letter, as a $2,000 mortgage. The payment in November, 1899, cannot be considered as made in reliance on any statement of Murphy's. Neither was this payment to Joyce in November, 1899, due to any act or negligence of complainant, in relation to her conduct or duty toward the association, upon which the association relied in making the payment. On the contrary, it relied solely on the statement of Joyce, the mortgagor, and failed, before making the payment, to make inquiries of the complainant, the mortgagee on the record, or of Murphy, the assignee, or of the bank. Such inquiry would have disclosed that Murphy held, or claimed to hold, the mortgage of $3,000 as collateral to secure his endorsement for $2,000, and that the balance of the mortgage was certainly due to the complainant, and had not been paid. The association, having failed in its duty to make this inquiry, must be charged with notice of the facts which would have been disclosed upon the proper inquiry, and as to this payment of $1,040 to Joyce in November, 1899, the association is not a bona fide purchaser or assignee. Joyce continued to pay or account to complainant for the interest on the mortgage until he absconded, in July, 1900, and she did not know until after that date that the mortgage was out of Joyce's possession. The complainant was in no way bound by Joyce's representation to the association as to the amount due on the mortgage. Nor did she, by any act or conduct on which the association relied, assist in making credible Joyce's misrepresentation as to the amount due on the mortgage. Had Murphy, on being applied to before the payment, shown the absolute assignment or informed the association that he owned the mortgage absolutely, and that only $2,000 were due on it, a different situation might have arisen. But there is no reason to believe that he would have made such statement, and, on the case as it stands upon the evidence, complainant is not estopped from claiming that, after receiving the $2,000 payment which Murphy, or the association as his assignee, has made, the amount due on the mortgage is payable to her. She is entitled to a decree for such payment.

Wilson v. American Palace Car Co.

WALLACE WILSON et al.

υ.

THE AMERICAN PALACE CAR COMPANY OF NEW JERSEY et al.

[Filed October 20th, 1902.]

Where a plea to the jurisdiction has been filed and has been duly noticed and set down for argument at the next term, as required by section 20 of the Chancery act of 1902, the complainant is not entitled to move to strike out the plea under Rule 213, providing that any objection to a pleading may be made and adjudicated on motion without the filing of a demurrer or exceptions, and that the making of a motion under the rule shall be deemed a waiver of the right to demur or except.

On motion to strike out plea.

Mr. Edward Q. Keasbey, for the motion.

Mr. Robert H. McCarter, contra.

EMERY, V. C.

Three of the defendants to the bill have filed a plea to the jurisdiction of the court, and the plea has been duly noticed and set down for argument at the next term, as required by section 20 of the Chancery act of 1902. Complainant now moves, under Rule 213, to strike out the plea. The reasons relied on for striking out the plea are reasons which would, if well founded, entitle the complainant to an order at the hearing overruling the plea. The present application is therefore, for all practical purposes, a hearing on the validity of the plea, taking place on complainant's motion. Defendant claims that Rule 213 does not authorize this motion on behalf of complainant. The rule reads:

"Any objections to any pleading or any part thereof may be made and adjudicated upon motion, without the filing of a demurrer or exceptions. The making of a motion under this rule shall be deemed a waiver of the right to demur or except."

***

63 557 г65 730 Wilson v. American Palace Car Co.

It has always been held that a motion to strike out a demurrer could not be made under this rule, as the motion under the rule was one made in lieu of demurrer or exception. Nolan v. Nolan (Chancellor McGill, manuscript conclusions), referred to in Stanbery v. Baker, 10 Dick. Ch. Rep. 270. It is also held that a motion to strike out an answer cannot be made under the rule, as such motion is substantially a demurrer to the answer, and no such demurrer is recognized. Doane, &c., Co. v. Essex Building and Land Co., 14 Dick. Ch. Rep. 142 (Vice-Chancellor Stevens, 1899); Brill v. Mary A. Riddle Co., 47 Atl. Rep. 223, 224 (Vice-Chancellor Grey, 1900); Haberman v. Kaufer, 15 Dick. Ch. Rep. 271, 275 (Vice-Chancellor Grey, 1900).

The present motion is, in effect, a demurrer to the plea or motion to overrule it for the reason that the plea sets up no defence, and the hearing of the motion is, in effect, as I have said, an argument of the plea. The only difference is that, on an argument of the plea, the defendant opens and closes (1 Dan. Ch. Pr. (6th Am. ed.) *694), while on this motion the complainant has this right. The decisions I have referred to settle that the right to object to a pleading by motion, given by the rule, was a privilege or choice given to the party who otherwise could only demur or except, and was in lieu of the demurrer or exception, and that it was not intended to introduce, for the benefit of the adverse party, a new right of demurrer or exception where no such previous right of demurrer or exception existed. The reason of these decisions govern this application, and I must hold that the complainant cannot, under Rule 213, substitute a motion to strike out a plea, for the hearing on the allowance of the plea, already noticed and set down by defendant, and the motion is denied for that reason, without considering the validity of the plea.

Tate v. Security Trust Co.

SAMUEL H. TATE

υ.

THE SECURITY TRUST COMPANY et al.

[Filed May 26th, 1902.]

1. A bona fide assignee for value of a mortgage takes it free from all latent equities existing in favor of third parties.

2. The president of a trust company, acting as attorney for other parties, negotiated the execution of a mortgage to his clients. The mortgage was subsequently assigned to the trust company, it not appearing who conducted this transaction on its behalf.-Held, that the company was not chargeable with any knowledge its president may have had in regard to the purpose for which the mortgage was given.

3. An assignee taking a mortgage as collateral security for pre-existing debts, without delivering up the evidence of such debts, was not a purchaser for value.

4. A mortgage of $4,000 was given to secure a note of $3,000. The mortgagee assigned the mortgage to a trust company as security for the note and other pre-existing debts.-Held, that the equity of the mortgagor to have the mortgage reassigned to him on payment of the note was superior to the equity of the trust company to hold it for the pre-existing debts..

On final hearing.

Mr. David J. Pancoast, for the complainant.

Mr. John F. Harned, for the defendants.

REED, V. C.

On February 2d, 1900, Charles S. and William Solomon entered into a written agreement with Samuel H. Tate, the terms of which were that the Solomons would sell the San Marcos Hotel, in Atlantic City, to Tate for $50,000, free of encumbrances, except a $15,000 mortgage. The consideration to be paid to the Solomons was in the shape of certain properties that were to be conveyed to them by Tate and a promissory note of $3,000

Tate v. Security Trust Co.

made by Tate. It was also agreed that, to enable the Solomons to raise money upon the $3,000 note, for the payment of taxes and for other payments, Mr. Tate was to make a second mortgage of $4,000 upon the hotel property sold, which mortgage was to be used by the Solomons to secure the said $3,000 note, and when this note was paid the mortgage was to be reassigned to Tate.

The agent who acted for Tate in the transaction was Charles B. Prettyman, a real estate broker, who signed the agreement for his principal.

After the agreement for the sale or exchange was signed, Mr. Prettyman sold the property to a Mr. Stehle, and a part of the consideration for such sale was a $4,000 mortgage to be executed by Mr. Stehle upon the said hotel property. By an arrangement between Prettyman and the Solomons this mortgage was made to the Solomons, instead of to Tate, for the purpose of being used by them to secure the $3,000 note, in accordance with the agreement already mentioned. It was made in this shape, according to the statement of Mr. Prettyman, to avoid the expense of two papers-first, a mortgage to Tate, and then an assignment from Tate to the Solomons. This mortgage, therefore, belonged to Mr. Tate, after the payment of the $3,000 note, for the security of which it was made to Solomon. William Solomon had the $3,000 note discounted by the defendant the Security Trust Company, of Camden, and the mortgage was delivered as security. Five hundred dollars were paid upon the note, and the trust company refused to redeliver the mortgage to Tate, in case the note should be paid, claiming to hold the mortgage as security for other indebtedness due to them from the Solomons. This bill is filed to compel such delivery.

It is thus perceived that the litigation arises by reason of the incapacity of the agent in conducting the transaction. Had the mortgage for $4,000 been made to Tate, and by him assigned to the Solomons, by an instrument stating the purpose of such assignment, there could not have been the least trouble. As the affair was conducted, the Solomons were invested with the power to make an absolute assignment of the instrument, and this they seem to have done.