11 F. Cas. 810 | U.S. Circuit Court for the District of New Hampshire | 1814
There is no averment in the plea of the value of the mortgaged estate; nor that it was taken in full satisfaction of the debt; nor that the equity of redemption of the mortgagor was fore-
It is contended by the defendant, that the foreclosure is either an absolute purchase of, or an election to take, the land in full satisfaction of the debt; and by the plaintiff, that it amounts to a satisfaction of so much only of the debt, as equals the value of the land. If the doctrine asserted by the defendant be true, it will be found in many instances to work great injustice. Where the value of the property mortgaged, whether real or personal, is less than the debt, no foreclosure of the equity of redemption, and no absolute ownership of such property, can ever be acquired, but upon the absolute ex-tinguishment of the whole debt. Under such •circumstances, the value of the pledge in the hands of the mortgagee would be materially diminished, and it would frequently prove, in literal exactness of language, mortuum vadium, a dead and worthless security. If the mortgagee be compellable to make an election, the pursuit of a personal remedy on the attendant bond is as much an abandonment of the pledge, as the appropriation of the latter is an abandonment of the debt. In a ease therefore of suspected insolvency he would be encircled with perils on every side; and, instead of a double security for his debt, would be left with scarcely a single plank to save himself in the shipwreck. The argument, which would lead to such consequences, is not easily admissible, and if it stand at all, it must be upon technical principles, or authorities, which cannot now be questioned. A mortgage is but a mere security’"for the debt, and collateral to it. The debt has an independent existence, and remains with all its original validity notwithstanding a release of the mortgage. The former is the principal, and the latter an incident, though not an indispensable incident. An assignment of the debt will, in equity, if not at law. carry the mortgaged property along with it; and a release of the debt will relieve the property from all farther claims of the mortgagee. Martin v. Mowlin, 2 Burrows, 969; Green v. Hart, 1 Johns. 580. Where the contract executed between the parties is, strictly speaking, a mortgage, that is, a conditional conveyance of the property subject to be divested by a performance of the condition, by nonperformance the conveyance becomes absolute, according to the express stipulations of the parties. Where the contract amounts but to a pledge, that is, a mere deposit as security, redeemable on payment of the debt, the creditor acquires a lien or qualified property to that extent; but the stipulations of the parties in no event import a conveyance of the absolute property to the creditor. If he can acquire it, it can only be by an appropriation recognized and enforced by law, in aid of his right, upon the default of the debtor; as seems to have been the case by the ancient writ transmitted to us by Glanville. Lib. 10, c. 6; Mores v. Conhan, Owen, 123. But an absolute property in the pledge acquired either way, by the stipulations of the party or by the course of the law, upon the default of the debtor, would not seem of itself to operate an extinguishment of the debt secured by a covenant or agreement independent of such pledge. The parties have not agreed to an extinguishment of the debt in such an event, and it is difficult to perceive, how the law should found a peremptory bar, upon the default of the very party who pleads it, against another to whom no laches can be imputed. If, indeed, during the time of redemption, the pledge be injured or lost, or wrongfully detained, there seems reason to hold, as in the ancient law, that a proportionate value should be deducted from the debt, unless a restoration or satisfaction were otherwise made. Glanv. lib. 10, c. 8. But where there is no such ingredient in the-case, the debt ought to retain its original validity; and if equity should interfere to enlarge the time of redemption, or to prevent a double satisfaction, it is the utmost exercise of its authority, which justice or good conscience would seem to require. To deprive the creditor even of a single satisfaction of his debt, in favor of a negligent or fraudulent debtor, would not comport with the maxims, which usually govern courts acting ex aequo et bono. Upon principle then, there would seem no reason to restrain the mortgagee from every remedy in rem and in. personam, until he has obtained a full satisfaction of his debt.
Let us now examine the point with a view to authorities. No case has been cited from the English reports, and as far as a diligent search could enable us to pronounce, no case exists at law, in which the point has been solemnly presented for adjudication. This universal silence, in a case of so frequent occurrence, affords, a pretty strong argument, that at law such a plea has never been held a sound defence. Yet, even at law, the incidental expressions of learned judges show •the general understanding of the profession on the subject; and the frequent applications to chancery for injunctions, to restrain the-
As little can we comprehend the ground, on which, as in Dashwood v. Blythway, courts of equity have held that a suit on the attendant bond opens the foreclosure, and lets in the equity of redemption. By such foreclosure the mortgagee obtains an absolute estate, which perhaps may well be deemed a purchase at the full value of the land, if less than the debt, and if greater, at the amount of the debt But why a personal suit to recover the deficiency of the land to pay the debt should change the nature or effect of a foreclosure, has not yet been satisfactorily explained. It is rarely that a foreclosure can take place, where the estate much exceeds the debt in value. Another purchaser is usually found, and a non-redemption therefore affords a pretty strong evidence of an inferiority in value. Besides, is it no inconvenience to the creditor to take
To return; whatever may be the differences of opinion among tne learned chancellors on other points, the foregoing examination abundantly shows, that they all proceed upon the supposition, that at law a foreclosure of the mortgage is no bar to an action on the attendant bond; and that equity alone can afford relief by acting on the conscience of the creditor, and decreeing a perpetual injunction. Sitting then in a court of law, we should have no difficulty, even if this were a case primae impressionis, in holding, that the plea is bad, and that the demurrer must be sustained. Our judgment would be, that upon principle the mortgagee must be entitled to recover on the note in damages the deficiency of the mortgaged property to pay the debt, calculating its value at the time of the actual extinction of the equity of redemption; and that, even admitting the foreclosure to be a purchase of the property, in no event could the purchase-money be deemed to exceed the debt. But this question has been solemnly adjudged in the state, where this contract of mortgage was made and to be executed. In Amory v. Fairbanks, in 1793, the supreme court of Massachusetts decided, upon a special plea like-the present, that tho bar was bad, and the mortgagee entitled to recover the deficiency of his debt, notwithstanding the foreclosure. 3 Mass. 562. At the distance of fourteen years, this decision was cited and approved ,by the same court, and may now be considered as the settled law of that state. Id. 154. Such an authority, even if not binding on this court, is so conformable with principle and so highly respectable in itself, that it is not easy to shake its force.
It has been argued, that the creditor might in Massachusetts have first sued his note, and levied his execution on the mortgaged estate at its appraised value, and thereby have avoided the ill effects of a foreclosure, if the estate was of less value than the debt, and that therefore there is less reason to hold him entitled to recover, when he elects a foreclosure in the first instance. But is it quite certain that the mortgagee would in • equity be allowed in this way to avoid the mortgage? And even if he might, still it might well admit of doubt, how far such a proceeding extinguished his mortgage, so as to let in other intermediate incumbrances and attachments on the estate. If the defendant’s argument be correct, the election of a personal suit would amount to a waiver of the mortgage, whether the execution were levied on the mortgaged property, or remained unsatisfied. Yet authority does not seem to countenance such a principle. See Bantleon v. Smith, 2 Bin. 146.
There are some other views of this case, which, if the principal point admitted of doubt, might deserve consideration. The suit is upon a judgment of another state, and must have all the validity and conclusiveness here, that it has there. See [Griffith v. Frazier], 8 Cranch [12 U. S.] 29. If the plaintiff was bound by his election to foreclose the mortgage, that election had been made previous to the original suit, and might have been pleaded in bar to it; and the neglect so to do cannot now be helped. If, on the other hand, the bar did not arise until after the election so made and an actual extin-guishment of the equity of redemption, then, by the law of Massachusetts, it was no-defence against a suit on the judgment. On the whole, we are of opinion, .that the demurrer is well taken, and that judgment on this plea must pass for the plaintiff. Plea adjudged bad.