Washburn v. Tisdale , 143 Mass. 376 ( 1887 )

Field, J.

The first mortgagee rightfully sold the mortgaged land, and conveyed it to the purchaser. The plaintiff’s second mortgage was thereby converted into an equitable lien upon the proceeds of the sale, after the payment of the amount due under the first mortgage. The surplus, which amounted to $337.43, was rightfully paid to the plaintiff. While she held a mortgage upon the property of the insolvent debtor, she could proceed only in accordance with the Pub. Sts. e. 157, § 28, but her equitable lien upon the surplus of the proceeds of the sale while it was in the hands of the first mortgagee was not, we think, such a lien as is described in that section; and the provisions in the section for a sale of the property held as security, or the delivery of it to the assignee, are not applicable to an equitable right to receive or to recover this surplus. She has not disposed of any property of the debtor on which she held security, or of her security, in violation of that section, and her case is thus distinguishable from Smith v. Warner, 133 Mass. 71. She could not prevent the first mortgagee from selling the land, except by redeeming it from the first mortgage, and it was not her duty to do this. She was not required to prove her claim at the first meeting, or before she offered it for proof, and then she held no security. Her rights must be determined by those equitable considerations which have been acted upon in cases not within the statute; and we think that these require that she should be allowed to prove her debt, after deducting what she has received. Wilson v. Bryant, 134 Mass. 291. Franklin County Bank v. Greenfield Bank, 138 Mass. 515.

Exceptions sustained.