agreement, the mortgage becomes immediately due. It is also the general custom throughout the state to insert "insurance" and "interest" clauses in the mortgage, under which the mortgagor is required to keep the premises insured and pay the interest due on the mortgage within a specified time, for example, six months. In the one case, if default is made, the mortgagee may take out a policy of insurance and add the premium to the mortgage; in the other, the mortgage becomes due and may be foreclosed immediately.

A

It is usual for some instrument, generally a bond, to accompany the mortgage, indicating the existence of the debt. The statute of limitation runs against the bond in sixteen years. Under the law of 1881,* all proceedings to collect the debt "shall be, first, to fore close the mortgage, and if at the sale of the mortgaged premises under said foreclosure proceedings the said premises should not sell for a sum sufficient to satisfy said debt, interest and costs, then and in such case it shall be lawful to proceed on the bond for the deficiency, and that all suits on the bond shall be commenced within six months from the date of the sale of said mortgaged premises." With rare exceptions, a foreclosure proceeding is the course followed to obtain a sale of the mortgaged real estate. power to sell the premises for payment of the debt may be inserted in the mortgage. That is valid, and will do away with the necessity of a foreclosure, but it is not favored by the courts and will be jealously watched. Under the statute, also, when default is made in payment of the mortgage money, the property being subject only to one mortgage and no other persons but the mortgagor and mortgagee being necessarily interested thereto, it is lawful for the mortgagee at any time after the payment of the debt ought to have been made to sue out a writ of scire facias, requiring the mortgagor to show cause before the court of common pleas or Supreme Court, why the mortgaged premises should not be seized and sold for the debt; if there is no appearance on the return day of the writ, judgment is entered, execution issued and the property sold as under other executions for the sale of real estate.

*March 23, 1881.

13 C. E. Green, 358.

But the almost invariable practice is to proceed by a suit of foreclosure. Where all the real estate is situate in the same county, the circuit court, under the act of 1851, has the same jurisdiction as the Court of Chancery, where with but few exceptions these proceedings are had.* They are begun by issuing a subpoena and filing a bill of foreclosure, all incumbrancers subsequent to the foreclosing mortgagee being made parties defendant with the mortgagor. The object of a bill of foreclosure is to enable the mortgagee to have the mortgaged premises sold in order to get his mortgage money and interest, or that the mortgagor may redeem it without delay, and in default thereof, that the mortgagor and all persons claiming under him, or to claim from or under him, be forever barred of and from all equity of redemption in the mortgaged premises.† From the service of the subpoena up to the time of the final decree, authorizing the issuing of the execution (fi. fa.) to the sheriff or master in chancery, if there be no defence, generally four to five months are consumed; or about six months to the sale of the premises—a period, however, which varies with the circumstances of the case, causing delay.

Not all the suits begun proceed to execution, and the issuing of the execution is sometimes delayed; but such cases are the exception, although the sheriff's fees add a very appreciable amount to the sum total of the debt, as do also the various items of so-called "costs," which go to the solictor, clerk of the court, etc. These fees and costs are regulated by statute, but the totals vary in different suits. Combined with accumulated interest and the sacrifice of the property incident to forced sheriffs' sales, they seldom fail to more than wipe out any remaining equity of redemption of the mortgagor, who thus not only loses his property, but has an unsatisfied execution hanging over him. The following "sheriff's statement in foreclosure" will illustrate this. It is the return made by the sheriff of Burlington county of an execution in February, 1884. The final decree had been made in February, 1868, requiring the sheriff to satisfy out of the proceeds of the sale of the land of the defendant mortgagor, in the first place, the sum of $2,408, the prin

*In 1887 and 1888, for example, only 33 and 17 foreclosures proceedings, respectively, took place in the circuit courts, and 900 and 859, respectively, in chancery. More than half of the circuit foreclosures were in Cumberland and Passaic.

+Dickinson's Chancery Precedents, p. 383.

cipal and interest due on the complainants' mortgage, dated March 3, 1865; and in the second place, the sum of $1,300, the principal and interest of a second mortgage, dated in January, 1867, belongto the "defendant " (subsequent mortagee) mentioned in the statement below. No sale took place under the first execution, but a part payment was made on November 19, 1882, on the amount due on the complainant's decree. In November, 1883, an alias (second) execution was issued for the principal sum of $2,000, still due to complainant, the amount of interest thereon and costs, as well as the sum due to the defendant mortgagee. The property was sold in February, 1884, and the sheriff returned the following "state

ment:

Decree for complainant,

Interest from Nov. 19, 1882, to March 8, 1834,
Costs taxed at, .

Interest from Feb. 25, 1868, to March 8, 1884,
Taxed costs on petition,

Interest from Nov. 23, to March 8, 1884,

Decree for defendant [second mortgagee],

Interest from Nov. 15, 1875, to March 8, 1884.
Costs taxed at, .

Interest from Feb. 25, 1868, to March 8, 1884,

Sheriff's execution fees: Levy and return,

Advertising by hand-bills,

Advertising by newspapers,

Crying sale,

Report of sale,

Percentage on $1,500,

$2 12

3 50 16 68

I OO

1 00 25 00

Owing to the length of time elapsing between the decree and the sale of the premises, and the consequent accumulation of interest, the case can hardly be called an ordinary one. Subsequent incumbrances, whether mortgagees, judgment creditors, or the like, who come in for a share of the surplus moneys, are frequent, however; while the taxed costs and sheriff's fees, as stated, are about the average amount added to the sum authorized to be levied under the

decree. What the statement plainiy shows is the great sacrifice of property under these foreclosure proceedings. The real estate in question (town site, located in Beverly) brought only $1,500 in 1884, although nineteen years before it had been mortgaged (first and second mortgages) to about $3,500, a sum which probably was below its assessed value at the time. On farm property the margin on which a loan is made is considerably greater than on lots, and it is safe to assume that the sacrifice on a forced sale would be no less. In times of financial depression or of land depreciation, the value-destroying power of a mortgage debt, is equal, probably, to more than twice its volume. And whatever may be the effect on city real estate, the result of foreclosure of farming land in districts generally incumbered, cannot fail to be disastrous, not only to those directly involved, but to the other mortgage debtors, and even on the values of all unincumbered neighborhood property. The foreclosures of even an appreciable portion of existing mortgages would be a great calamity.

The Bureau has undertaken as extensive an investigation in this direction, as its rescources have warranted. For reasons already stated, it was found inadvisable to take up the subject of recorded indebtedness in New Jersey, but the number of real estate mortgages recorded in the several counties in 1870, 1875 and 1880 to 1888 inclusive have been collated; being supplemented, for Essex county, by the amounts of the mortgages recorded during several years. These data in detail, as well as the statistics showing the number, nature and amount of the real estate foreclosures issued during a series of years, will be found at the end of the chapter. The years covered by this latter inquiry are 1856, 1870, 1875 and 1880 to 1888 inclusive, twelve as representative years as it was practicable to select. The nine last years include the period immediately following the recovery from the financial depression which began in 1873. In 1875, we were in the midst of that depression, while 1870 was a year of very considerable business activity. The preceding decade was an abnormal one, with the exception of the year 1860, into which, however, it was found that the foreclosure proceedings of 1859 had been crowded, owing to the dispute be

*

It is universally admitted that the years immediately precedent to 1873-i. e., from 1867 to 1872-constituted a period of most extraordinary and almost universal inflation of prices, credits and business''-Wells, "Recent Economic Changes," p. 3.

tween the Governor and State Senate over the nomination to the office of Chancellor. The Court of Chancery was closed during the greater portion of the latter year, and hence during that period the only foreclosures suits instituted were those in the circuit courts. Previous to this occurred the industrial depression of 1857-8; but 1856 was a free and prosperous year.

In 18×8, exclusive of those against corporations, which comprise but little over one per cent. of the total number, there were 844 real estate foreclosure executions issued in this state against individual mortgagors, the aggregate amount of the decrees for the principal and interest due on the complainants' mortgages being $2, 768,178. This is, by at least $600,000, short of the total levy on the executions, which include the taxed costs and sheriffs' fees, as well as the amounts decreed to the subsequent incumbrancers. In 1856, the number of executions issued against individual mortgagors was only 330, with an aggregate amount of $762,482 decreed for the principal and interest owing on the complainants' mortgages. These figures had increased, in 1870, to 592 and $1,724,821, or 80 and 126 per cent. respectively. From 1870 to 1888, the increase was 42 and 60 per cent. respectively. Of the twelve years for which the records were collected for the Bureau, that of 1880 is the maximum, showing the highest figures in number and amount of executions, or 2,174 and $7,447,054, respectively, which by 1888 had decreased 61 and 63 per cent. respectively. Generally speaking, there has been a decrease year by year, within the past nine years, during which time 10,422 executions on foreclosed mortgages have been issued, the amount of the levy on the real estate foreclosed approximating $43,000,000. Taking the average for the twelve years enumerated as the basis of calculation, the total number of executions on the foreclosed mortgages of individual mortgagors since 1855, covering a period of less than a generation, must have exceeded 36,000; and the amount of the executions, $150,000,000. In addition to this, there were the foreclosurer executions against corporation mortgagors, which comprised about one per cent. of the total in number and eight per cent. in amount. There is a striking contrast between the foreclosure movement and that of recorded mortgages. There has been a constant increase in the total number of recorded mortgages in this State