Hammond v. Barker

Upon the facts stated the plaintiffs are entitled to relief. The question is not whether the defendant administrators shall be deprived of the security obtained by the attachment of their intestate, but whether they shall be permitted to take an unconscionable advantage of the mistake of the plaintiffs, and thereby get not only payment of the mortgage debt on the Dunbar street place, but also hold it, discharged of the mortgage, to pay another debt not contracted in reference to that property, and which neither Joel and Joseph Hammond nor Aldrich were under any obligation to pay.

In our view the case falls within the rule, as well of equity as of law, that when a fact affecting the rights of parties is known to the one and not known to the other, it is the duty of him to whom it is known to give notice thereof to the other (Cooke v. Ludlow, 5 Bos. Pul. 119, Farwell v. Smith, 12 Pick. 88); and we think, moreover, that the rights of all the parties may be preserved without impairing or in any way lessening the value of the attachment of the equity of redemption in the property which, without justice, the defendants seek now to hold discharged of the prior incumbrances.

Joel and Joseph Hammond obviously had an interest in and security on the Dunbar street place to protect, and it being manifest that the discharge of their original mortgage was made through mistake, it may be set aside and the mortgage given its original priority as against the attachment. Jones Mort. (2d ed.) s. 971; Bruse v. Nelson, 35 Iowa 157; White v. Wilson, 6 Blackf. 448; Cansler v. Sallis, 54 Miss. 446; Skillman v. Teeple,1 N.J. Eq. 232; Dudley v. Bergen, 23 N. J. Eq. 397; McKenzie v. McKenzie,52 Vt. 271. And, moreover, the liability being the same, the taking of the second mortgage was not a waiver of the lien of the first, and did not extinguish it. Ladd v. Wiggin, 35 N.H. 421, 426, and cases cited. Cutter v. Emery, 37 N.H. 577.

Nor under the circumstances was the Barker mortgage discharged or extinguished by its payment through L. W. Hammond; but, on the contrary, it may well be held that the mortgage debt still subsists for the purpose of upholding the mortgage to the extent of the funds contributed by Aldrich, and that to this extent he is to be regarded as the equitable assignee of the mortgage, and therefore subrogated to the rights of the original mortgagee therein (Heath v. West, 26 N.H. 191); — for, where money due on a mortgage is paid, it will operate, as a discharge of the mortgage, or in the nature of an assignment of it, substituting him who pays in the place of the mortgagee, as may best serve the purposes of justice; and a mortgage is never to be considered as discharged, so long as it is necessary to consider it otherwise, in order to give those who have the estate of the mortgagee the full enjoyment of that estate. Stantons v. Thompson, 49 N.H. 272, 279, 280, and cases cited; Hatch v. Kimball, 16 Me. 146.

When an equitable assignment is effected, the person paying the mortgage is substituted in place of the mortgagee, and has the rights of the latter under the mortgage (Holt v. Baker, 58 N.H. 278, Briggs v. Hannowald,35 Mich. 474); and it is said that the right of subrogation applies in general in favor of any person, who, not being under any obligation to pay the mortgage debt, does so for the benefit of the debtor, as by furnishing money under an agreement to execute a new one. Jones Mort., s. 874, and cases cited; Snelling v. McIntyre, 6 Abb. N. Cas. 469; Lockwood v. Marsh, 3 Nev. 138; Swift v. Kraemer, 13 Cal. 526. But however this may be, we think, under the circumstances of this case, that the equity of Aldrich is superior to that of the defendants, and that, as against them at least, he is entitled to the right of subrogation. But as payment of the mortgage debt from the funds of the debtor ordinarily extinguishes the mortgage (Kinley v. Hill, 4 Watts Serg. 426, Perkins v. Dibble, 10 Ohio 434, Shepherd v. McClain, 18 N. J. Eq. 128), and as payment of part of a mortgage debt is a satisfaction and release of the mortgage pro tanto (Howard v. Gresham, 27 Ga. 347, Ins. Co. v. Howard, 2 Sandf. Ch. 183, Briggs v. Seymour, 17 Wis. 263, 264, Champney v. Coope, 32 N.Y. 543), the amount paid by L. W. Hammond from his own funds is to be deducted, and the mortgage is therefore upheld only for the amount actually contributed by Aldrich.

The result is, to make the Dunbar street property subject to the claims of Aldrich and Joel and Joseph Hammond under the mortgages of June 13 and 24, 1874, and consequently the defendants can only levy their execution upon the equity of L. W. Hammond in that property.

Decree accordingly.

ALLEN, J., did not sit: the others concurred.