8 Paige Ch. 277 | New York Court of Chancery | 1840
The bill in this cause was filed to foreclose a mortgage, under the following circumstances : On the 10th December, 1810, Erastus Pease executed the mortgage described in the bill to John Patty and Robert Patty, upon a village lot in the village of Auburn, to secure the payment of $755,75, according to the condition of a bond of even date therewith, and the interest. On the 14th day of March, 1827, Pease the mortgagor, sold a portion of the premises covered by the mortgage, to William Maxwell, who afterwards paid the whole consideration for the sale of this portion to Pease. On the 18th day of March, 1827, Pease sold the residue of the said premises to Palmer Holley, with whom an arrangement was made, in virtue of which Holley paid the whole of the consideration for this purchase to Patty ; and it was applied and endorsed upon the bond and mortgage. Patty at that time executed an instrument declaring that portion of the premises sold by Pease to Holley released and discharged from the lien created by .the mortgage from Pease to him. On the 31st day of July, 1830, Maxwell sold and conveyed that portion of the lot which was deeded to him by Pease, to James S. Seymour, the defendant in this suit, who still owns and is in possession of the same. A balance is yet claimed to be due upon the bond and mortgage. Robert Patty died in 1832, and the bill is filed by John Patty as the survivor. Pease has became insolvent.
Upon these facts, the complainant insists that he has a right to enforce the lien, originally created by the mortgage, upon that portion of the premises now held by Seymour, though it] was conveyed by the mortgagor first in the order of time, to Maxwell. The leading principle applicable to the rights between those parties undoubtedly is, that when lands incumbered by a mortgage or judgment against the owner are subdivided and conveyed to different persons at different periods of time, that portion, which is conveyed last by the incumbrancer is to be first called upon to contribute for its full value towards satisfying the incumbrance ; and thus each portion is thus.to bear its pro
It may be difficult to illustrate or define the rule in any language more explicit than that in which it is declared. But its meaning would have been understood, and no doubt was so between the parties in their application of it when they learned that Pease by his deed to Maxwell of the 14th December transferred the whole, or so much of the lien created by his mortgage, to the other portion of the lot as to require its whole value to be applied in payment of the mortgage debt. Admonished by this rule, Holley was bound to see that upon the receipt of a deed from Pease on the 16th of the same month, for the other portion of the lot, he gave the full value of it; and that all the purchase money was applied upon the bond from Pease to Patty. If this was done, Holley might well have supposed that good faith had been maintained towards Maxwell. And this is believed to be the object and ' extent of the rule. If we carry our views back to the period of the transaction, it will be sufficient to see what now should have been advised to be done by the parties. But it is contended by the counsel for the defendant Seymour, that nothing short of a judicial sale of the second half of the lot, and an application of its proceeds under the direction of a decree, could satisfy the rule, I cannot admit the force of the objection. Natural justice was all that was required; and it purely can only be necessary to resort to a court of com
On recurring to the testimony and comparing the estimate made by the witnesses of the value of that portion of the lot sold by Pease to Holley, on the 16th March, 1837, I cannot resist the conclusion that it was not only a fair sale and at its full value, but that it also may be deemed to have been a beneficial one at that period for the interest of the first purchaser j who stood in the character of a surety for the mortgage debt, by reason of the application of the proceeds of the sale upon that debt without any expense to him in effecting it. It was in all probability as much as Maxwell himself could at that time have made out of it if he had then the control of it. The manner in which the negotiation for its purchase was commenced and consummated in the purchase by Holley of Pease does not appear to have been unfair. Maxwell if he had been consulted would not have possessed the right to require a sale upon credit at an enhanced price. The creditor himself holding the incumbrance required payment - and after a diligent canvass of the subject a gale was agreed upon at the price of eight hundred dollars, with the understanding that the proceeds should be applied upon the bond and mortgage. Both parties went to Patty and saw the application of the money.
If I have not taken an erroneous view of the weight of the testimony, the equities between the parties in this cause do not require that the sale from Pease to Holley should be disturbed. It appears to have been made in good faith between the parties to it, for a fair cash value. And, what is unusual, the purchase money was agreed to be paid upon
I have therefore come to the conclusion that the balance which upon reference to a master shall be found due upon the bond of Erastus Pease to John Patty and Robert Patty, and mentioned in the pleadings, remains a charge upon that portion of the premises mentioned in the pleadings, and which were conveyed by Maxwell to Seymour, on the 14th of March, 1827; and that upon the non-payment of such balance and the costs of this suit, within thirty days after the same shall have been reported to this court and the report confirmed, the premises be sold under the direction of a master in this court.
From this decision of the vice chancellor, the defendant Seymour appealed to the chancellor.
The Chancellor. This is an appeal by the defendants from a decree of the vice chancellor of the seventh circuit for the foreclosure of a mortgage. And the only question
This rule of charging the lands in the inverse order of their alienation is a mere rule of equity. The release to a subsequent purchaser, therefore, is not a technical discharge of the lands previously conveyed from the lien of the incumbrance. Neither is it an equitable release or discharge, unless upon the principles of natural equity and justice it ought thus to operate against the party making the release to the subsequent grantee. And as I am satisfied from the evidence that the vice chancellor arrived at the correct conclusion as to the actual cash value of the land conveyed to Holley at the time the mortgagee executed the release to him, I think he has applied the principle of the rule correctly to the facts of this case. For the whole value of the lands which remained unsold after Maxwell purchased having been actually applied to the reduction of the amount due on the mortgage, he was not prejudiced by the sale of those lands to Holley under the stipulation that they should be released from the lien of the mortgage. And it was carelessness that he did not see that his own lot was discharged from the mortgage also, before he paid over the purchase money to Pease; which purchase money does not appear to have been paid down when the deed to him was given, on the 14th of March, or to have been applied on the mortgage.
The decision of the vice chancellor was therefore right, and the decree appealed from must be affirmed with costs.