3 Paige Ch. 614 | New York Court of Chancery | 1831
Previous to the examination of the . main question in this cause, which is, whether the estate of Mrs. Gahn in the mortgaged premises is exonerated from the payment of the arrears of interest included in the note of April, 1825, it may be proper to dispose of an objection which is made to the decree even on the supposition that the main question might have been rightly decided' in favor of Mrs. Gahn. It is urged by the appellant’s counsel that if the wife is to be considered a surety merely, and if her estate in the mortgaged premises was discharged from the-arrears of interest included in the note, still the decree is erroneous in not permitting the complainant to sell the husband’s life estate in the whole mortgaged premises, in the first place, to satisfy those arrears of interest; leaving her estate to be sold to satisfy the principal and that part of the interest which is declared to be a valid lien thereon. There may be a slight mistake in this part of the decree ; but the error, if any, is not of the kind supposed by the appellant’s counsel. And I am inclined to think such mistake is in favor of, rather than against the complainant. If the lien for the whole mortgage money and interest still remained as a charge upon the wife’s estate in the premises, there would be a plain and manifest equity, in her favor, to have her husband’s estate in the mortgaged premises first sold, and the proceeds thereof applied, towards the payment of the debt, for which the property of the principal debtor is first liable, in equity. And even subsequent incumbrancers upon the estate of the husband, by judgment or decree, could not object to this disposition of the property; as the prior equitable claim of the surety, to have the mortgage satisfied out of the property mortgaged by the principal debtor, would be paramount to the claim of a judgment creditor who had only a general lien upon the estate of his debtor, and which in this court is not permitted to prevail as against a prior equity. (Howe’s case, 1 Paige’s Rep. 125. 1 Atkinson on Conv. 512. 2 Har. & John. Rep. 64.). The application of this equitable rule, of throwing the charge upon the property of the principal debtor and extinguishing that fund in the first place in exoneration of the estate of the surety, is of every day’s occurrence. And the only difficulty in understanding and applying it here, ari
The general principle that a surety is discharged, where the creditor, without the consent of the surety, makes a binding agreement with the principal debtor to extend the time of payment, is not disputed. But it is insisted by the complainant’s counsel that this'principle is only applicable to the case of a surety who becomes personally bound for the payment of the debt; and that it cannot be extended to a person who merely mortgages or pledges his property by way of security for the debt of another person. It is also contended that the wife, who pledges her property for the security of her husband’s debt, is not entitled to the benefit of those equitable rules which are constantly applied for the protection of other sureties ; and that she will not be discharged by an act of the creditor which would be sufficient to bar his remedy against other persons standing in the situation of sureties.
Although I have not been referred to any case where this precise question has arisen, I am unable to discover any reason for the distinction between those cases where the surety pledges his personal responsibility for the payment of the debt, either with or without the additional pledge of his property, and the case of a simple pledge of his property as security, without any remedy over against him, personally, if the property pledged should prove insufficient. The reason of the rule, as laid down in the books, is, that by extending the time" of payment, the risk of the surety is increased; or at least, that the nature of his liability is altered without his consent, and he is deprived of the power of an immediate resort to the principal debtor to compel him to pay the debt, for which the surety is liable to the creditor. And certainly, a person who has pledged his property to the full value of the debt, as security for another, will sustain the same injury by the giving of time to the principal debtor, as if his personal re
By the common law, the wife was permitted to mortgage her inheritance for the security of her husband’s debt, by a particular mode of conveyance. And, in this state, she is permitted to do it by the more simple process of joining with her husband in the mortgage, and acknowledging it before the proper officer. If the fact that she executed the mortgage merely as a surety for her husband, and as a guaranty for the payment of his debt in case of his default, was distinctly expressed upon the face of the instrument, no one could doubt that she was in truth a mere surety for the husband, to the extent of her interest in the mortgaged premises. And if the fact of suretyship does not appear upon the face of the instrument, it is always competent for the surety, in this court, to establish it by proof aliunde. It is insisted, however, by the appellant’s counsel that when the wife has joined with the husband in a mortgage upon her inheritance to secure the payment of his debt, she is not entitled to the same protection which is extended to sureties in other cases. And in this position they are sustained by the written opinion of a most distinguished jurist, to whom the complainant submitted her case soon after the commencement of this suit. It is due to that gentleman, however, to say that it was an ex parte opinion, given as counsel, probably without adverting to what
The first case I have been able to find in the English reports on this subject is Rayson v. Sacheverel, before Lord Nottingham, in 1682, (1 Vernon’s Rep. 41.) In that case, as originally reported by Vernon, it appeared that manifest injus
Where the wife does, in fact, mortgage her estate merely as a surety for her husband, with a clear and explicit understanding between them that he is to pay off and satisfy the mortgage money and interest out of his own property, there can be no good reason, especially after the death of the husband, why she should not be entitled to all the rights of a surely in other cases, and be substituted in the place of the creditor, as to all his remedies against the principal debtor for the recovery of his demand. But it is said that if the wife is to be considered as. a surety, as between her and the husband, she has no claim to be considered as such in regard to the creditor ; or, in other words, that she cannot be permitted to object to the creditor’s claim upon her estate, on the ground that he has by his own act incapacitated himself from ceding to the surety his rights and remedies, against the principal debtor and his estate, as they originally existed. Let us see what would be the effect of the adoption of such a principle, in a case like the present. The husband and wife, in the right of the wife, own an estate worth $20,000, in which the husband’s estate for life, as' tenant by the curtesy initiate, is worth $6000. The husband and wife join in a mortgage to a creditor of the former, to secure a debt of $5000, payable in one year ; the wife joining in the mortgage and pledging her estate in the premises merely as a surefy for the husband. If she is entitled to be considered in that character as against him, upon a bill of fore
The principles upon which the claim of the wife, standing-in the situation of security for her husband, rest being settled, it only remains to apply those principles to the case under consideration. I have already stated that I was not disposed to extend the principle of discharging sureties beyond the adjudged cases upon a mere extension of credit and where the surety has sustained no injury by the delay. By the civil law the ex-ceptwnem cedendamm actionem did not reach such a case. If by
Without intending, however, to express any definitive opinion upon this question, I am satisfied, upon another ground, that the claim of Mrs. Gahn, to have her estate relieved from any part of the principal or interest due on this mortgage, must be disallowed. As there were no proofs taken in the cause va
The decree of the vice chancellor must therefore be reversed, with costs to be paid out of the proceeds of the mortgaged premises. And there must be a reference to a master, in the usual form, "to ascertain and report the amount due on the mortgage, including the arrears of the interest contained in the note ; and for a sale of the mortgaged premises on the coming in and confirmation of the report; and directing the master who sells, to pay the amount reported due, with interest and costs, out of the proceeds of the sale, and to bring the residue into court to abide the further order of the chancellor in the premises. As it is evident from the pleadings that the wife has a residuary interest in the property mortgaged, and may be entitled to have the whole mortgage money satisfied out of her husband’s interest in the premises, she may elect to have his interest in the premises sold separately, for the purpose of ascertaining its value, and having her equitable ■rights provided for in the distribution of the surplus monies. Or she may have the estates of both, in the whole premises, sold together, by lots or otherwise as will be deemed most for the interest of the parties ; and may have the value of the husband’s estate in the proceeds of the sale estimated upon the principle of life annuities.
Since my opinion in this case was reduced to writing and prepared for delivery, I have seen a recent decision of the late Loid Chancellor Hart, in the case of Lord Harberton v. Bennett and others, (Beatty’s Ch. R. 386,) where it was held that the mortgagor who had mortgaged his property, merely, as a security for the debt of a third person, without pleading his personal responsibility, was entitled to the ordinary rights of a surety ; and that the lien of the mortgage was discharged in consequence of a relinquishment by the creditor of a subsidiary security against the principal debtor, whereby the surety’s right of substitution was at an end.