Packard v. Kingman, 11 Iowa 219

Packard v. Kingman

11 Iowa 219 | Iowa | 1860

Wright, J.

Appellants present two questions: Krst. Will a court of equity, under the circumstances disclosed in this case, entertain a bill to foreclose a chattel mortgage? Second. Who has the prior lien on the property, Packard, by virtue of the mortgages, or Young, as landlord?

Without entering into a discussion of the first question, upon the general principles governing equity jurisdiction, we are very clear that the power is fully conferred by the Code. It has already been held by this court that a proceeding to foreclose a mortgage upon real property, -was properly cognizable in equity rather than at law. Kramer v. Rebman, 9 Iowa 114. Chapter 118 of the Code refers to mortgages upon both real and personal property. Ey the provisions of this chapter, section 2083, the holder of any mortgage, may in all cases, proceed by civil action in the District Court where he wishes to foreclose the same. And if the instrument shall be a deed of trust, or a mortgage with a power of sale, then by section 2096, it may be treated like a mortgage and foreclosed by action in the District Court. That the mortgagee might proceed to foreclose by notice and sale, as contemplated by section 2071 and those following, is not denied. But he is not confined to this course, but may proceed by bill in equity, which is, within the meaning of the Code, a civil action to foreclose the equity of redemption. And especially may he do so; and it is appropriate that he should do so, where, as in this case, a third party claims an interest in the mortgaged property, which he insists is paramount to that, of the mortgagee.

We come then to the second question made in this case. And here the argument on either side assumes that the priority of lien depends upon the effect of the transaction of December 24th, 1858, upon the mortgage made to Horner. Young, the landlord, claims that the surrender of the old notes and the taking of new ones with a mortgage to secure the same, *225had the effect of discharging and satisfying the old mortgage, in such a sense that complainant can claim ho benefit or advantage from it; but that his lien dates from the last mortgage, on the 24th of December, 1858, or two days subsequent to the lien under the lease. The complainant insists that he holds under successive mortgages; that the indebtedness evidenced by the notes of December 24th, 1858, was a balance which remained unpaid on the notes secured by the Horner mortgage; that the first mortgage was never satisfied, nor was the property therein named ever released therefrom; that the surrender of the old notes .and taking new ones for the same debt, did not waive any lien or right which existed or had been acquired by the transfer of the Horner mortgage.

We think the law of the case is with the complainant, and that the court below did not err in awarding him priority of lien. A mortgage is security for the payment of a debt. As a general rule, whatever extinguishes the latter, at the same time puts an end to the former. A mortgage treated as a conveyance, as it is for some purposes, (under the recording acts and perhaps others) it would, in the language of Mr. Hilliard, (1 Mort. 807) “ be more technically accurate to speak of it as discharged or released when paid-, but when viewed in the light of a mere accompaniment to the debt, it is a correct as well as a familiar use of language, to say that the mortgage, as well as the' debt, is paid.” But, as the mortgage is given as security for the debt, the general rule is that nothing but the actual payment of the debt, or an express release will operate as a discharge of the mortgage. The lien is said to last as long as the debt, if there is no release.

The authorities apply this principle in various ways and have gone very far in upholding the lien until the debt is extinguished. Thus, in one case it is said: “ Taking a sec*226ond mortgage is no waiver of a first one, made for the same debt. Neither is the taking of personal security for the debt a waiver of the mortgage.” (Burdett v. Clay, 8 B. Mun. 287.) So again, unless there is an intention to the contrary, a mortgage made to secure a note will remain security for any new note given in payment of the former one. (Haddock v. Bulfinch, 31 Maine 246; and see Morse v. Clayton, 13 Smed. & M. 373; Bank, &c., v. Finch, 3 Barb. 293; McCormick v. Digby, 8 Blackf. 99; Leed v. Caruthers, 2 Y. & C. 31; Hugunin v. Starkweather, 5 Gilm. 492.) Where a mortgage was given to secure a note, and the assignee of the mortgagor took a new note from the mortgagor, in exchange for the old, it not being intended as payment, it was held that the mortgage debt was not thereby paid, but that the mortgage remained good and stood as security for the amount due on the new note. Watkins v. Hill, 8 Pick. 522. And see the rule applied as against the grantee of the mortgagor, Pomroy v. Rice, 16 Pick. 22. Certainly Young stands in no better position than would an intervening grantee. And see 4 Johns. Chancery 66, and Gregory v. Thomas, 20 Wend. 17. In this latter case it was expressly held that a second mortgage for the same debt does not extinguish the first; and that to render the second security a bar to the first, there must be a release express, or at least implied from a covenant not to sue. And see further, Story’s Eq. Jur. 1035 c, Crosby v. Chase, 5 Shep. 369; 1 Hill, on Mort. section 3078.

Decree affirmed.