Schnebly v. Ragan , 7 G. & J. 120 ( 1835 )

Stephen, Judge

delivered the opinion of the court.

We think, that the court below committed no error in dismissing the complainant’s bill in this case.

The appeal taken from the decree of the chancellor presents but a single question for the consideration and decision of this court That question is, whether the assignee of a chose in action, given to the vendor for the payment of the purchase money of a tract of land, and by him assigned, is entitled to the benefit of the equitable lien of the vendor, against his vendee, or persons claiming under him with notice, there being an express stipulation at the time of the assignment, that in no event should the assignor be held responsible by the assignee for the payment of the money secured by the said notes. The notes in this case, were given by Hall to Lewis, to secure the. payment of the purchase money of the land sold by him to Hall. Lewis was closed only with the equitable title, and whether he was entitled to the benefit of the lien for his purchase money (the complete equitable title being in him, he having paid for the said land) is a question not free from difficulty. In 1th Wheaton 46, it appears that the right to such a lien was considered doubtful by the Supreme Court of the United States; at least, a difference of opinion appears to have prevailed among the members of that court upon the question. But we do not deem it necessary to decide the right to such a lien in this case ; because, whether it exists or not, we do not think the appellant entitled to the benefit of it. In the case referred to in 7th Wheaton, C. J. Marshall says, e£ It is contended for the defendants, that as the legal title to the estate was never in Baily, he never had a lien upon it for the purchase money. Upon this point some difference of opinion exists in the court, and we pass it over without positively deciding it.” A vendor parting with the legal title, still retains his lien, as a security for the payment of the purchase money, and the vendee holds the land as trustee of the vendor. Prima facie, the equitable lien exists, and it lies upon the purchaser to shev/ a waiver of it. Carson vs. Green, 1 J. C. R. 308. So, on the other band, if the purchaser of an estate, prematurely pays the purchase money, before the estate is conveyed to him, the money will be considered as a lien on the estate in the hands of the vendor, for the vendee, or in case of his death for his personal representatives. 2 Mad. Ch. 104 — 5. In 1 Ohio Reports 318, we find a decision upon the question involved in this case; and the court there decided that the lien does not exist in favor of the assignee. They say, it is an equity between the vendor and vendee, which the notes cannot, effect, but which exists in the same character, whether a note be given or not. This equity arises to the vendor for his own safety, but it cannot be transferred to another.”

We are not, however, prepared to go to the full extent of this decision, i^the court meant to say, that the assignee could not obtain the benefit of this lien by express contract. In 1 Paige Ch. R. 502, the chancellor seems to hold a different doctrine, and intimates his opinion to be, that although the lien does not pass by implication, or construction, still that it may pass by express agreement. But we do not intend, nor do we deem it necessary to go further, than to decide, that under the particular circumstances of this case, the assignee of the notes, is not entitled to the benefit of the vendor’s lien, if such lien exists. We think, that when the notes were assigned by Lewis to Schnebly, with an express stipulation, that he was in no event to be responsible for the payment of them, the effect and operation of the agreement produced an. extinguishment of the vendor’s lien, because so far as he was concerned, it amounted to a payment and satisfaction of his claim. The lien was intended to secure the payment of the purchase money to the vendor; and the assignment of the notes without responsibility for their ultimate payment, it is to be presumed, was equally as beneficial to him, as if he had received the amount of them in money. In the case from New York before referred to, the chancellor, in speaking of the rights of the assignee of a chose in action, given for the payment of the purchase money of land sold, holds the following language. “ The claim of the complainant for a specific lien on the premises, upon the ground that his judgment was obtained on a note given for a part of the purchase money, cannot be sustained. At the time he bought the note of Kingsbury, (who was the vendor) the latter unquestionably had such a lien; but it. is not pretended, there was any agreement that such a lien should be transferred to the complainant. If Kingsbury could be considered as still retaining any such claim, after the transfer of the note, it must be on account of his liability as endorser thereof. But there is no evidence, or even allegation, that any steps were taken to charge him as endorser. In a recent case, where the vendor had negotiated the note, but was obliged to take it up himself when it fell due, Ld. Eldon, sustained the claim of the original vendor to a lien on the land, Ex parte Loaring, 2d Roses cases 791. But I am not aware of any case, where the assignee of the note, or other security has been permitted to sustain such a claim, on an implied agreement to assign the lien.”

We therefore think, that, as by the terms of the assignment, the vendor was released from all responsibility for the payment of the notes, his specific lien on the land for the purchase money was extinguished, and cannot be available for his assignee. It is true, the benefit of the vendor’s lien, has been extended to a legatee, where, upon the death of the purchaser, without payment of the purchase money, the vendor has resorted to the personal assets for the satisfaction of his claim, and has thereby exhausted the fund out of which the legacy was to be paid. But this has been done upon the principle of substitution, and is also founded upon the common, and familiar doctrine of the court, that where one party has a right of resorting to two funds, and another only a right of resorting to one, for the payment of his claim, the exercise of the right of election, by him who has it in his power to resort to another fund, shall not operate to the disappointment, or prejudice of him, who has only a right of resorting to one. And moreover, the authorities are conflicting even as to such a right of a legatee, though the weight of authority seems to be in favor of the right. 1 Rop. on Leg. 634, 635. We are therefore of opinion, that the decree of the Chancellor is correct, and ought to be affirmed.

decree affirmed.