Baring & Willing v. Moore

| New York Court of Chancery | Jul 16, 1833

The Chancellor.

As the payment of the judgment due to Knower was provided for in the order which was made upon the argument of this motion, it is only necessary to refer to his rights so far as to say I am satisfied that the assignment to him of Whitney’s bond and mortgage, although absolute, was only intended as a security for the payment of that judgment; by having the amount of the Whitney debt applied towards the satisfaction of the mortgage to the complainants, so as to give Knower the benefit of the lien of his judgment on lot No. 13, discharged of the complainants’ mortgage to that extent. And that order having also provided for the payment by Whitney of the whole of his mortgage, except so much as had been arranged between him and Moore before the recovery of any of the judgments subsequent to that of Knower, the only question now to be disposed of is, as to the disposition of the surplus proceeds of the sale of lot number 13. The Mathers, or rather Whitney through them, he having paid their debt, claims the amount of such surplus as the substitute for Whitney’s bond and mortgage, which was assigned to the Mathers in July, 1832. And the defendant Whipple! as the holder of the oldest judgment, which is a lien on the last mentioned lot, claims that he had a right to have Whitney’s debt applied to the complainants’ mortgage, in exoneration of lot No. 13, on which he had such lien. As this was a contest among creditors to obtain satisfaction of pre-existing demands, and with full knowledge of all the facts on which their several equitable rights depended, none of them are to be considered in the light of bona fide purchasers without notice. It is, therefore, a question of priority of equities.

By the terms of the mortgage from Whitney to Moore, the purchase money of lot No. 12 was to be paid directly to the complainants, in part satisfaction of their mortgage. This was a specific appropriation of the fund for that object; and a subsequent purchaser or encumbrancer of lot No. 13, would have an equitable right to insist that it should be thus applied, unless some new agreement was made between Whitney and Moore, or there had been some- new disposition made of the • funds, before that equitable right accrued. Such a new disposition was made of so much of the fund as was necessary to meet the advances made by Whitney; which have already been provided for in the former order. As to the residue of Whitney’s mortgage, the specific appropriation thereof remained in full force at the time Whipple’s equity arose by the docketing of the judgment which gave him a lien upon No. 13. Having then acquired an equitable right to have the Whitney debt applied in part payment of the complainants’ mortgage, which was a prior lien on the same lot, it was not competent for Moore to make an agreement with a junior judgment creditor to apply the fund in a different manner, and so as to destroy or impair that right. The residue of the fund must therefore be applied in satisfaction of the judgments docketed prior to the 24th of July, 1832, according to priority; the petitioners taxed costs, on this application, being first paid out of such surplus. If there is a dispute as to the time of docketing any of the judgments, so as to render such a proceeding necessary, there must be a reference to a master to ascertain the facts.