31 Barb. 164 | N.Y. Sup. Ct. | 1857
Ho question was raised upon the trial before the justice, or upon the argument, that the mortgage was not valid as against creditors. The simple question for examination is whether it was discharged by the payment of the original note with the proceeds of the new note. If the new note had been discounted by the same bank that held the old one, it is clear, upon abundant authority, that the mortgage would not be discharged. When new securities are given for the mortgage debt, the mortgage will not be deemed discharged, unless there be an express agreement to that effect.' (3 Kernan, 556. 1 Comst. 500. 20 Wend. 17.) And the principle of the rule has been extended to indorsers. Thus, in Pond v. Clark and others, (14 Conn. R. 334,) it was held that “when a mortgage was given conditioned to save the mortgagee harmless from his indorsement of specified notes, and
In the case at bar the justice was authorized to find from the testimony that the second note was, in substance, as between Hutchins and his indorsers, simply aii extension of the first note, and that it was made and discounted for the express purpose of taking up the first note. Premising thus much, I think a correct, conclusion is by no means difficult to be arrived at. Crandall signed and Chapman indorsed the note of November 10th, for the accommodation of Hutchins, the mortgagor. To secure the payment of the note, and to indemnify his sureties against the obligations which they had assumed for him, Hutchins executed and delivered to them the mortgage in question. The úoté was hot paid when due, but was protested and the sureties duly charged. The mortgage thereby became absolute, and vested in the plaintiffs the entire legal title in the property. All that was left in the mortgagor was the equitable title to redeem. There was no interest left in him that could be sold, even upon execution.
How have the plaintiffs been divested of this title? A tender of the amount due would not divest it. Nothing short of actual payment of the amount due, and acceptance by them, would divest it. Has there been any such payment ? Has their liability been in any manner discharged ? This cannot be contended. There has at most been a substitution of one liability for another. Suppose the plaintiffs themselves had
A point was taken that the plaintiffs had not paid the new note, but I do not see how that is material. The mortgage became absolute as soon as the indorsers become fixed, when the mortgagor failed to pay the first note at maturity, and the property became vested in them. It could only be divested, therefore, by their discharge from such liability; and having the legal title, they have the right to maintain an action for its conversion. The parol evidence, showing the relation of the parties to each other and to the mortgage and the original note, was perfectly competent. The understanding between themselves must necessarily be proved, in order to show such relation—to show which party to the note was principal and which sureties. It was proper to show that the payment of the first note with the proceeds of the second was not designed to extinguish the mortgage.
Judgment of the county court reversed, and that of the justice affirmed.
Hubbard, Pratt, Bacon and W. F. Allen, Justices.]