U.S. Supreme Court
Peltz. v. Clarke, 30 U.S. 5 Pet. 481 481 (1831)
Peltz. v. Clarke
30 U.S. (5 Pet.) 481
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 chanroblesvirtualawlibrary
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.