62 N.H. 551 | N.H. | 1883
A mortgage taken by a surety from the principal for the security of the debt creates a trust and equitable lien for the *553
creditor; and chancery will compel the execution of the trust for the benefit of the creditor. Savings Bank v. Herrick,
The creditor has an equitable claim to the security as well when the mortgage is given for mere indemnity as when the condition is added that the principal shall pay the debt. New Bedford Inst. for Sav. v. Fairhaven Bank, 9 Allen 175; Sheld. Sub., ss. 162, 163, and authorities cited. In Sumner v. Bachelder,
In this case the controversy is between two creditors, — holders of the notes for which the surety obtained security. He has not released the security, nor attempted to defeat the rights of creditors. The assignment to the defendants declares that the mortgage shall be held by them "for the same purposes and to secure the same debts and liabilities for which the same was made," and for which it had been held by the mortgagee. The defendants had actual notice from the mortgage that the claim of the plaintiff was secured by it. Their acceptance of the assignment was an agreement upon their part to hold the mortgage for the joint benefit of themselves and the plaintiff. The right of a creditor to such security rests upon equitable grounds, and not upon contract. The principal debtors having become insolvent, it would seem that even under the authority of the Connecticut cases (which modify somewhat the rule followed in other jurisdictions), the plaintiff can stand as well in regard to this security as the defendants. Jones v. Bank,
The fact that the defendants have foreclosed the mortgage against the mortgagors cannot affect the right of the plaintiff to have the property applied in payment of the debts secured by it. The defendants, as between themselves and other creditors secured by the mortgage, still hold the property, or its proceeds, in trust for the purposes for which the mortgage was given. The record of the mortgage is constructive notice of the trust, and creditors of the mortgagors, and subsequent purchasers from them, or from the defendants as assignees of the mortgagee, even after foreclosure, cannot, by means of an attachment or conveyance of the property, take it discharged of the trust. Eastman v. Foster, 8 Met. 19.
The plaintiff is entitled to a decree for such proportionate share in the mortgaged premises as his debt bears to the whole amount of the unpaid debts secured by the mortgage, or to such proportion of the proceeds of the same as his debt bears to the whole amount of the unpaid debts. If an accounting is necessary, the facts will be found at the trial term, where an equitable decree will be made.
Case discharged.
ALLEN, J., did not sit: the others concurred. *555