Yelverton v. Shelden

The Assistant Vice-Chancellor.

The complainants by their purchase at the sheriff’s sale, became vested with all the title which Miner had to the mortgaged premises on the day the judgment was docketed, unaffected by any subsequent acts or agreements of either Miner or Gowdy. (Kellogg v. Wood, 4 Paige, 578 ; and see Brinckerhoff v. Marvin, 5 J. C. R. 326.) .

When the defendants took the assignment of Gowdy’s mortgage, it is not pretended that there were more than three claims which Gowdy could enforce by virtue of the mortgage, as against the complainants judgment. Those were, the liability of $700 to Sterling; the liability to Wilson, Mills & Co., amounting to about §175; and the small debt of §16.

The defendants had a debt against Miner of nearly a year’s standing, which was in suit, and which they were anxious to secure..

According to their own account of the transaction as given in their answer, Miner proposed to them that if they would advance the Sterling debt to Gowdy, he, Miner, would satisfy to Gowdy the balance of the mortgage, procure it to be assigned to them, and give to them security for their costs and for $300 of their debt. The defendants agreed to this proposition, and it was carried out

They paid the amount of the Sterling debt to Gowdy. Miner paid or satisfied to Gowdy, the Wilson, Mills & Co. debt, and the note of §16. He gave to the defendants the stipulated security for the $300 and the costs; and Gowdy assigned to them Miner’s mortgage. I have no doubt but that they supposed they could enforce this mortgage for the whole amount for which Gowdy held it, previous to their arrangement with Miner. But this was entirely a mistake.

The mortgage in their hands was valid for all for which Gowdy held it, at the moment he assigned it, and for nothing more. Before he assigned the security, he took care to see that Miner discharged the Wilson debt, and satisfied him for the note ; and on assigning it, he received the Sterling debt.

The smaller debts were thus extinguished, before the mortgage was assigned to the defendants. They were satisfied by the debtor himself, and not by any money, property or other valuable consideration proceeding from the defendants.

This distinguishes the transaction from the cases cited by the defendant’s counsel, where in substance, the party taking the assignment or becoming entitled to it, paid the money or property to the holder of the security or for his benefit. In this case, it . was an attempt to substitute a part of the defendant’s debt, for that of Gowdy, and thus to give it a priority over the complainant’s judgment.

The mode pursued, was precisely the same in legal effect, as if the mortgage had been conditioned to pay to Gowdy $891, and Miner had paid to him $191, the defendants had paid the residue, and Gowdy had thereupon assigned the mortgage to the defendants.

It is perfectly clear that they can enforce the mortgage for no more than the $700 and interest paid by them to Gowdy.

The complainants offered to pay this amount to the defendants, in order to redeem the mortgage. But they insist farther, that Gowdy had in his hands as security for the same liabilities, certain notes which also came to the possession of the defendants ; and that Gowdy was bound to use these notes in exoneration of his prior lien on the land, that being the only fund out of which the complainants could collect their debt.

Upon this point, I think the complainants are wrong.

The assignment of the notes of Miner was made to Gowdy and N. N. Harger jointly. It recites joint liabilities only, and it is those alone which the assignees were authorized to discharge from its proceeds.

The complainants appear to be entitled to a decree for redemption, on the merits of the controversy.

There is an objection for want of parties which remains to be considered.

I do not think that Gowdy is a necessary party to the suit. The defendants do not pretend that he was guilty of any fraud, deception or concealment, in making the assignment. The affair was not one of his seeking. On being discharged from his liabilities, he assigned the mortgage. The assignees or their agent, were cognizant of all the facts, and took such title as his transfer would give to them.

He has no interest in the matter, that I can discover.

It is otherwise as to Miner. The defendants, having failed to obtain the security by the mortgage, which he and they expected, for the payment of the balance of their clebt due from him, are entitled (as the case now appears,) to be reinstated as his creditor for that balance. The defendants remedy on their note was gone, because the note was given up, or remained in their attorney’s hands to be delivered up to Miner. It is therefore necessary that he should be made a defendant in the suit, to enable them to have a decree over against him.

The suit may stand over, with leave to the complainants to make Miner a party, by a supplemental bill, upon payment of the defendants costs of the hearing.

In regard to the points that the complainants judgment was , obtained by fraud, and' was satisfied by a levy on sufficient personal property for its payment; I do not find any such issues raised in the answer. The same may be said of the remedy being ample at law. I may add, that there is no doubt of the jurisdiction of the court, both to prevent the sale attempted by the defendants, and to direct a redemption.

Decree accordingly that the suit stand over, and reserving all further questions and directions.