Champney v. Coope

By the Court, Hogeboom, J.

Payment of a bond and mortgage extinguishes it. If the payment be of the whole amount secured by the instrument, it extinguishes it altogether ; if of only a part, it extinguishes it pro tanto. I know of no exception to this rule as between the debtor and the creditor, although the security may sometimes, for equitable purposes, be kept alive as between the principal debtor and his surety, where the payment has been made by the latter. (Cameron v. Irwin, 5 Hill, 272, 276. Wood v. Colvin, 2 id. 566. Fitch v. Cotheal, 2 Sandf. Ch. 29. James v. Morey, 2 Cowen, 246.)

Whether a sum of money received by the creditor, upon the bond and mortgage, amounts to a payment, depends ordinarily upon the intent of the party paying or advancing the same. If intended and declared to apply on the instrument at the time, and so received at the time, in total or partial satisfaction thereof, it has that effect; and no subsequent change of intent by the debtor can retroact or renew the security, without the consent of the parties interested, and without prejudice to third persons. (Truscott v. King, 2 Seld. 147. Mead v. York, Id. 449. Marvin v. Vedder, 5 Cowen, 671.)

t has been held, however, that if the payment be made by the debtor himself, no intent on his part, though existing at the time, to have it operate otherwise than as a satisfaction, will be permitted to have effect. If he supplies the money, and it is applied upon the instrument, though with the intent to have it subsequently assigned and continued as a valid security, such intent, it is held, is unavailing, and incapable of being effectuated. (Harbeck v. Vanderbilt, 20 N. Y. Rep. 395.)

In this case a payment by David Coope is equivalent, in its effect upon the. bond and mortgage, to a payment by Jane Coope. David Coope was the real debtor. A payment by him is a payment by Jane Coope. If she had paid the debt, in whole or in part, there can be no doubt it would have been so far extinguished. If he paid, as he was in fact, as between them, bound to pay, it must be deemed a payment for her benefit and by her direction, and to its extent was an ex-tinguishment of the mortgage. As I have before stated, the rule is universal, except as between principal and surety; and here no question arises between them, for they both desire and claim the extinguishment of the mortgage.

I do not think that under the circumstances the plaintiff can claim that David Coope was the agent of Jane Coope, and that his representations as to the validity and sufficiency of the mortgage bind or estop Jane Coope. Jane Coope had died in the spring of 1849, and this fact was known to the plaintiff. Her death terminated the agency, if one there was. It could not be presumed that after that period he had any authority from her to negotiate the mortgage or make representations in regard thereto. (Megary v. Funtis, 5 Sand. 376.) Mor do I think his executorship of the will of Jane Coope gave him such authority. It was not in the line of his duty, express or implied. It was not an act for the benefit of the estate of Jane Coope, but the contrary. He did not hold the mortgage as a representative of the estate; nor in that capacity was he qualified in any respect to transfer it. So far as it affected the estate of Jane Coope, it affected, primarily at least, her real estate, which was devised not to him but to the children of his sister, Mary Carpenter—and he is not pretended to have been their agent. He had no title under the will, whatever. I see nothing, therefore, in his situation, to make his representations obligatory upon Jane Coope’s estate.

On the contrary, his very possession of the bond and mortgage was a circumstance of some suspicion, tending to discredit his authority for negotiating the same. He was not the mortgagee, nor the assignee of the mortgagee. He was the debtor—the actual debtor, in fact; and if not known to the plaintiff to be the principal debtor, still known to her by his guaranty on the bond, to be one of the debtors—one of the parties bound to pay. The possession of the bond and mortgage by him, was some evidence that it was paid. In other respects, whatever may be her equities as against David Coope, she does not present herself with any special equities against Jane Coope. She took the mortgage, in part, at least, for a precedent debt; with knowledge that it was long overdue; that the mortgagor was dead; that David, as executor, had no power to mortgage; that he was himself considerably embarrassed, and was employing this mode of redeeming his promise to secure her debt, by means of a mortgage which he did not own, and the very possession of which, by him, was calculated to inspire doubt whether it continued to be a valid and subsisting security.

As to the first payments, of $1000 and $200, the report cannot be sustained. The payment was absolute and unqualified, and the bond and mortgage were pro tanto extinguished. Jane Coope never in any way consented to its resuscitation, and the representations of David Coope to the plaintiff, six or seven years after her death, could have no effect as against her or her estate.

As to the balance of $3800, there is more difficulty. It is very apparent that David Coope did not, when he paid the $1000 on the 4th' of October, 1855, and gave his notes for the $2800, intend to extinguish the bond and mortgage. On the contrary, the proof is quite satisfactory that he intended to keep it alive. He designed to have it assigned to some third person. And it is quite clear that until the notes were paid, in February, 1856, it remained a valid security, at least for the $2800 in the hands of Mrs. Owen. The notes were not received in absolute payment.

And yet, on the 4th of October, 1855, $1000 was in fact paid by the real debtor, David Ooope, and by the 7th of February, 1856, the remaining $2800 was also paid. It was paid from the funds of David Coope—the real debtor—who had no right, especially as he stood in a trust relation to the estate of Mrs. Coope, to keep up an incumbrance against her estate after it was in fact extinguished. He was paid without any distinct understanding—indeed, without any understanding—that the money was to remain as a deposit. Could the mortgagee, after the final receipt of the money, have foreclosed the mortgage ? Could David Coope, tó whom, pursuant to a stipulation in the paper of October 4th, 1855, the bond and mortgage were delivered up, (as if paid,) on the payment of the notes, have foreclosed the same, or enforced them as a subsisting security against the estate of Mrs. Coope ? It is true, Mrs. Owen agreed to assign them to whomsoever David Coope should name; but that is consistent with the idea that he anticipated the money might be advanced to the mortgagee by some one else than himself. And if this stipulation referred to the case of money advanced by himself, it has been adjudged that a payment by a party himself, •though accompanied with a' stipulation 'and an intent to assign, is ineffectual to keep up the mortgage as a subsisting and valid security. (Harbeck v. Vanderbilt, 20 N. Y. Rep. 395.)

I am inclined to think that, assuming all the facts in the case to be as the referee has found them, and all others which are deducible from the evidence, the plaintiff cannot sustain her action; and that no possible state of the proof can be presented, which, upon the undisputed facts of the case, will entitle the plaintiff to recover.

[Albany General Term, March 4, 1861.

If this be so, it seems to be almost useless to subject the parties to the expense of any farther litigation; and perhaps it would not be inappropriate for us to reverse the judgment of the special term, and to dismiss the plaintiff’s complaint, with costs.

But perhaps it is more judicious to give the plaintiff an opportunity to put the facts in a more favorable aspect to her claim, and to bring forward further evidence, if she is able to do so. I am inclined, on the whole, to give her this opportunity, and with that view to reverse the judgment of the special term, and to order a new trial, with costs to abide the event; which costs may be finally disposed of, as equity shall require.

Hew trial granted.

Gould, Hogeboom and Peckham, Justices.]