74 Mass. 135 | Mass. | 1857
The statute of limitations being pleaded in bar, the question arises, At what period of time may it properly be said that Mrs. Kinsley paid, on account of the defendants, the money demanded in this action ? If it be held that the foreclosure of the mortgage, transferred to the People’s Bank by Mrs. Kinsley as collateral security for the debt of the defendants, was a payment by her as of that date, then the present claim is barred by the statute of limitations; but if the payment • is to be considered as having been made at the period of the sale of the foreclosed premises, two years later, then it is conceded that the action was instituted in due time by her administrator.
The facts stated show that Mrs. Kinsley, at the request of the defendants, or of some of them, who were indebted to the People’s Bank on a note for four thousand dollars, agreed to transfer to the People’s Bank, as collateral security for such note, a moilgage which she held against one of the defendants, taking back a written stipulation from the People’s Bank that the mortgage was received by them for the purpose aforesaid, and that, upon payment of the note of the defendants, her assignment of the mortgage was to be void, and the notes and mortgage securing the same were to be reconveyed to her.
The case turns wholly upon the question what was the effect of the foreclosure of this mortgage thus transferred as collateral security for the debt of a third person. Is the debt of such third person, to the amount of the notes secured by the mortgage, or the value of the land, if less than the notes, at once paid; or does the party, holding such mortgage as collateral, hold the land after foreclosure, as he held the mortgage before, as assets to be applied whenever they can be made available ? •
Now, while we fully assent to the doctrine contended for on
In the opinion of a majority of the court, the foreclosure of the mortgage, by the party holding the same as collateral for the debts of a third person, did not, as respects himself and the • party placing it in his hands, necessarily operate as a payment of the debt for which it was thus pledged. Such foreclosure was only one step in the process required to render available the pledge. The property, as well after foreclosure as before, was equally held in trust for the benefit of both pledgor and pledgee, and was to be disposed of for the benefit of all parties. On the one hand, the assignee, who held the same as collateral security, was not, in consequence of the foreclosure, required to take the
New trial ordered.