11 N.Y. 494 | NY | 1874
We have carefully examined the questions involved, and have arrived at the conclusion that the judgment must be affirmed, and we concur substantially .with the views expressed in the prevailing -opinion of the General Term.
It is found, as a fact, that the two bonds and mortgages in question were executed and delivered to the bank on the 12th day of October, 1867, to hold as collateral security for the payment of the entire debt, then owing the bank by Clin
It is urged, with plausibility and considerable force, that the plaintiff could acquire no rights against the Leonards in the collaterals, by the wrongful act of the creditor in substituting securities. The answer to this is, that if the bank committed the wrongful act claimed against the Leonards, they were released from liability as sureties to the extent of the injury, by the change of collaterals, and they would have no occasion and no interest to litigate with the plaintiff, as their interests would not collide, and if such act was not committed, or if it has been waived, they have no reason to complain. The plaintiff claims through the bank in the sense of having a right, secured by an agreement which the latter had the power to make with his principal, but not in the sense of holding a title to such right, subject to any equities of the Leonards. The latter cannot insist upon their liability as sureties after being released by the act of the creditor, for the purpose of defeating the plaintiff’s rights. We think the transaction is in no respect different than if mortgages had been taken upon other property, or other securities taken under the new agreement.
It is made a question whether interest could be collected upon the mortgages and applied upon the principal debt.
The defendant Spalding cannot be protected as a purchaser, against the accumulated interest upon the large mortgage, for the reason that he is chargeable with notice of its con
The judgment must be affirmed.
All concur.
Judgment affirmed.