De Martin v. Phelan
Before: Temple
Synopsis
Mortgagor and Mortgagee—Fiduciary Relation—Negotiation for Purchase.—Where a mortgagee does not give to the mortgagor control over the property mortgaged, or where there is a mere decree of foreclosure and sale, without possession by the mortgagee, or the appointment of a receiver, or any threatening of proceedings therefor, there is no fiduciary relation between the mortgagor and mortgagee, affecting the right of the mortgagee to negotiate a purchase of the rights of the mortgagor in the property mortgaged.
Id.—Advertisement of Sale—Purchase for Less than Value—Financial Distress of Mortgagor—Fraud or Oppression not Shown.— Where a mortgagee, having a mere decree of foreclosure and sale of the mortgaged property, after having advertised it for sale, postponed the sale for the purpose of negotiating a purchase of the mortgagor’s rights, and after a protracted negotiation and successively increasing offers, purchased the right of the mortgagor for much less than its real value, and at a much less price than he would have paid, if necessary to secure the property, which price was accepted by the mortgagor, the fact that it was accepted in ignorance that a greater price might have been obtained, and because of want of available means, and financial stringency, precluding the borrowing of more money upon the land, or the selling of it for more than the mortgage debt, and for fear of losing the property in case of a sale under the decree, it not appearing that the financial stringency was brought on by the mortgagee, or that he interfered to prevent a sale to another, or to prevent the obtaining of a loan, does not show fraud or oppression on the part of the mortgagee, for which the sale will be set aside.
Temple, J. This appeal is from a judgment upon demurrer to the complaint. The complaint contains averments to the effect that on the fourth day of FTovember} A. D. 1881, plaintiff owned a certain tract of land which was then subject to mortgage liens, then owned by James Phelan. The amount due on said mortgages was $196,-000. The real estate was worth $390,375. The plaintiff and her thirteen children were in indigent circumstances, destitute of available means of support, in great need, and unable to secure an additional loan upon said land or to sell the same, owing to financial stringency then prevailing, and were wholly dependent upon the charity of others. Said Phelan knew of her distressed condi[541]tion, and also that her equity of redemption was worth at least $45,500. Still, designing to take advantage of her distress and necessities, he first offered her $4,000, and then $10,000, and finally $19,000, for her equity of redemption. The offers were successively made on different days, and, in the mean time, said Phelan had her property advertised for sale, under execution, on a decree of foreclosure of said mortgages, and had the sale postponed repeatedly, for the purpose of securing her equity of redemption for a sum greatly disproportionate to its value, by taking an oppressive and unfair advantage of her necessities and distress.
Also that on the fourth day of November, 1881, decedent made her the offer of $19,000, and threatened to proceed with the sale unless she accepted it. Compelled by her distress and necessities she finally did accept said offer, and conveyed her equity to him for said sum. She did not know that decedent had taken such advantage, or that he knew of her necessities and distress at that time, but that she discovered such fact on the twenty-seventh day of December, 1887.
It is averred that when defendant falsely represented that he would sell said property, unless she accepted $19,000 for her equity, decedent did not intend to sell said property, but had in fact determined not to sell the same, unless he -was unable to procure plaintiff’s interest for $45,500. He fully intended to offer her $45,500 for her equity, if he could not procure it for less. This intention was concealed from plaintiff, and decedent knowingly and designedly took advantage of her said necessities and distress.
A great many objections are made to this complaint, but I do not deem it essential to consider any of them, except the general objection that it states no cause of action. That the complaint does not state a cause of action is quite obvious.
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