Christie v. Herrick

1 Barb. Ch. 254 | New York Court of Chancery | 1845

The Chancellor.

The bill in this case does not show that the original mortgagee has such an interest in the bond and mortgage as to make him a necessary party to the bill of foreclosure. Where the mortgage is assigned as a mere security for the payment of a debt, as in the cases of Hobart v. Abbot, (2 P. Wms. 643,) and Johnson v. Hart, (3 John. Cas. 322,) cited by the defendant’s counsel, or where but a part of the mortgage debt is assigned to the complainant, the assignor is a necessary party to a bill filed to foreclose the mortgage; so that a perfect decree may be made which will protect the mortgagor, and the purchaser of the mortgaged premises under the decree to be made in the suit, from any future claims which the assignor may make notwithstanding his assignment. But where there is an absolute and unconditional assignment of a bond and mortgage, to the 'complainant who subsequently files a bill to foreclose the same, it is not necessary to make the assignor a party to such suit. For, although the fact of the assignment may be contested in a subsequent suit by the assignor,- the, mortgagor must sot up..that defence, if it actually exists, in the.suit- brought against him by the assignee to foreclose the .mortgage. Or, at least, the defendant must show by his "answer, and by the .proofs in the cause if .the allegation in the-answer is put- in issue,, that the assignor claims an interest" in the mortgage adverse to the assignment, before he can compel the .complainant to make the assignor, a party.to the suit. And the same principle appears to be applicable to the case of an absolute assignment of a bond and mortgage to a third person, in trust,-to collect the amount due thereon and apply' the same to the payment of the debts of. the assignor. Such assignments are frequently made; and it would Be unjust and, oppressive to the mortgagor to charge him with the useless ex pense of making all the cestuis que trust-parties, to a bill of fore-., closure filed by the trustee, Yet there would be more propriety in requiring the complainant to make Seward, and the other creditors of the assignor,.to whom the moneys collected on this-, bond and mortgage are, by the terms of the assignment, to be-paid parties to this suit, than the assignor himself; who has only a contingent interest ill the surplus, if any there should-be, after the- payment of those creditors. Again; from the terms-of-the assignment, as stated in the bill, I think it may fairly be presumed that the debts for which-the complainant was liable-as surety, and.to the payment of which he is directed to apply-the mortgage moneys when collected, are more than sufficient to-exhaust all.of- the proceeds of the bond and-mortgage when' collected.

The-general rule, .unquestionably is, that all persons materially, interested in the subject matter of the suit ought to be made,-, parties; and that the cestui que trust, as well as the trustees, should be brought before the court, so as-to make the performance of-the decree safe-to those who are compelled to obey it, and to prevent, the-necessity, of-the defendants litigating the same question again ■with other parties. But the case of assignees, or other trustees of a fund for the benefit of creditors, who are suing, for the protection. of- the, fiind, or to collect moneys due to the fund-from third persons, appears to be an exception to the general rule that the cestui que trust must be made a party to a suit brought by a trustee. Lord Redesdale says,' trustees of real estate, for the payment of debts or legacies, may sustain a suit either as plaintiffs or defendants, without bringing the creditors or legatees before the court, which in many cases would be almost impossible; and the rights of the creditors or legatees will be bound by the decision of the court against the trustees. (Mitf. PL 4 Land. ed. 174.) And in Franco v. Franco, (3 Ves. Rep. 76,) where one trustee filed a bill against another, to compel him to replace stock, belonging to the trust fund, which he had improperly sold, Lord Rossiyn overruled a demurrer, which had been filed by the defendant, upon the ground that the cestuis que trust, to whom the proceeds of the trust fund were ultimately to be paid, were not made parties. So in the case of Bifield v. Taylor, (1 Moll. Rep. 193, Beat, Ch. Rep, 91, C.) Where a bill was filed by the trustee, to raise the arrears of an annuity which had been granted to him in trust for himself and four other persons, Lord Chancellor Hart overruled the objection of the defendant that the cestuis que trust were not made parties to the suit; it appearing to have been the intention, of the parties creating the trust, to give to the trustee the power to collect and receive the. annuity, for himself and the other parties interested therein with him, without the necessity of their interference. The case under consideration comes directly within the principle decided in Bfield v. Taylor. For it was evidently the intention of "the assignor of this bond and mortgage, to give to the assignee the right to receive the moneys due thereon, or to foreclose the same in his own name; and to apply the proceeds to the payment of the creditors to whom the complainant was holden as the surety for the assignor. 1 think, therefore, a decree in this case will be a perfect protection to the defendants, and to those who may become purchasers of the mortgaged premises under the decree, against any claim of the assignor or of those creditors, arising out of the assignment in trust; and that it was unnecessary to make the assignor or the creditors forties.

Another objection was raised upon the argument of the demurrer, which was not stated in the demurrer itself; that it does not sufficiently appear upon the bill that there was $100 due and payable, or how much was in fact due upon the bond and mortgage, exclusive of what had been collected by the execution at law, or upon the creditor’s bill founded on the judgment and execution upon the bond. The complainant has undoubtedly made a mistake in the insertion of dates in his bill; probably by leaving out the word four, after the words “ one thousand eight hundred and forty,” in stating the amount of the principal, $1232,85, due upon the mortgage, exclusive of the last instalment; and by omitting the word three, in stating the year when the interest on that amount commenced. By the statement in the bill, the $1232,85 is alleged to have been due on the day of the date of the mortgage, one year before any part of the mortgage moneys became payable by the terms of the bond and mortgage, and that the interest on that amount is due from the 14th day of May, 1840, which is six months before the bond and mortgage were executed. But as it is alleged that the whole of this amount remains due and unpaid, and the bill shows that the whole amount collected upon the judgment, and under the creditor’s bill, was two or three hundred dollars less than the sum which had become due and was unpaid at the time of the recovery of the judgment, it does not appear from the bill that the amount in controversy does not exceed $100. A general demurrer to the bill cannot therefore be sustained. And the complainant can correct these errors, by stating the amount which was actually due at the time of the commencement of the suit, in an amendment of his bill, before the defendant puts in his answer.

The demurrer must be overruled, with costs. And the defendant must pay those costs, and put in his answer, within twenty days; or in case the complainant amends his bill, he must answer the same within forty days after the service of the amended bill and the order to answer, or the bill will be taken as confessed.