134 Mass. 291 | Mass. | 1883
The purchaser of an equity of redemption of land mortgaged it to his vendor to secure a part of the purchase money, and then conveyed his interest in the land to a stranger;
We have recently held, in Smith v. Warner, 133 Mass. 71, that a creditor holding a mortgage of real estate of the debtor, who made a sale of the mortgaged property with the concurrence of the assignee, but without an order of court, could not be allowed to prove the balance of his debt. In that case, the creditor held two mortgages, and the equity of redemption was in the debtor at the time of his insolvency, and vested in the assignee. The question here is, whether the creditor in the present case was to be considered as having a mortgage of real estate “of the debtor.” He originally received his mortgage from the debtor, but the debtor had parted with his equity of redemption five years and six months prior to the commencement of the proceedings in insolvency, and since that time had had no interest in the land.
In the first place, there is a difficulty in complying with the requirement for a sale of the property, under an order of the judge. The equity of redemption is held by a stranger, who is not subject to the jurisdiction of the court. The provision is that “ the property ” shall be sold. This can be done where the equity of redemption is owned by the assignee, as succeeding to the rights of the debtor; but it cannot be done where the equity is owned by a stranger, unless indeed the sale is limited to the interest in the property which is held by the creditor. But here, again, the practical difficulty is met, that in such case it would be necessary to make sale of the mortgage, without including the debt secured thereby. The creditor is to retain his debt, and make proof thereof, after applying the proceeds of the sale. There is a difficulty in separating the debt from the security in such a case, which apparently the statute was not intended to deal with.
In the next place, it is provided that “the creditor and assignee respectively ” shall execute all deeds and papers necessary or proper for effecting the conveyance. This seems to assume that deeds and papers executed by the creditor and assignee will be sufficient to effect the conveyance. These parties are within the control of the court, and subject to its order. But, in a case like the present, their deed will not effect a conveyance of the property. It is further provided that, if the creditor does not require such sale, he may release and deliver up to the assignee the premises held as security, and be admitted as a creditor for the whole of the debt. This again contemplates that, by such release and delivery, the assignee will acquire a full title to the property; it does not contemplate that the creditor shall merely assign a mortgage, which is to be kept up as an independent security, while he himself retains and proves the debt secured thereby. Unless one of the foregoing methods is adopted, the statute provides that the creditor, if he falls within the class
No one of the numerous decisions to which our attention has been called
In Richardson v. Wyman, the creditor held a mortgage from three tenants in common, one of whom was in insolvency. It was recognized that it was impossible for the creditor to make sale of his whole security under an order of court, or to surrender it to the assignees; but it was held that the value of the whole security should be ascertained and deducted, before proof of the claim should be made. This rule was considered to be within the spirit, if not within the letter, of the statute. That decision is not a strict precedent governing the present case, because here the creditor has made sale of the mortgaged premises under the power of sale, and applied the proceeds, and so,
It has been strongly urged upon us that the creditor’s security, in the case before us, was originally given by the insolvent debtor, and diminished his general assets, and therefore ought to be deducted before proof of the debt is allowed. There are two answers to this. In the first place, it is not an argument which is founded directly upon the language of the statute, and therefore of controlling force, independently of equitable considerations ; but it rests merely upon equitable considerations, and is well answered if it is found on the whole that they do not exist. In this case, the creditor has in fact made a sale of the mortgaged premises, under the power of sale, and appropriated the proceeds upon his debt, so that he only seeks to prove for the surplus. It is indeed said that the full value of the premises was not realized at the sale; but, on the other hand, it appears that the creditor exercised good faith, and got the most that he could. The sale was repeatedly adjourned; the assignee had knowledge enough to put him on inquiry at least; and there is no reason to suppose that the creditor was careless or negligent in the execution of his trust.
But, in the second place, we do not think it can in any just sense be said that the debtor’s general assets were diminished by the giving of this security. If, at the time of his insolvency, he owned the land, subject to the mortgage, then it would be true that his general assets would have been more, but for the existence of the incumbrance. But, inasmuch as the equity is owned by a stranger, the existence of the mortgage does not diminish any assets to which creditors could resort. There, is no evidence and no presumption that the debtor diminished his general assets by the conveyance of the equity. He must, in the absence of anything to the contrary, be presumed to have received its equivalent in money or other property. Nor can we see that he diminished his general assets by the fact of giving the mortgage in the first place. This was not given for the purpose of securing any preexisting debt, and so of withdrawing
On the whole, therefore, we are of opinion that. the creditor is entitled to prove the balance of his claim.
Judgment accordingly.
The distinction between an agreement or covenant of indemnity against a mortgage or other incumbrance, and an agreement to assume and pay the debt of another which is secured by mortgage, has been recognized and defined in recent cases. Locke v. Homer, 131 Mass. 93. Furnas v. Durgin, 119 Mass. 500, 506. In the former case, no recovery can be had until the obligee has been actually damnified. In the latter case, it has been held that, as soon as there is a breach of the contract, he may recover the full amount agreed to be paid.
In the present case, Wilson seeks to prove a claim against the estate of Williams, the insolvent debtor, which is founded upon the provision in the deed from Wilson to Williams, by which the latter assumed and promised to pay one half of the debt of Wilson, secured by a mortgage theretofore given by Wilson to Amory and others. If this could be treated as a mere contract or promise of indemnity, no claim is provable, and no recovery of substantial damages could be had in an action at law, because as yet Wilson has not been damnified. The fact, if it exists, that Wilson’s property is subject to a mortgage, is not sufficient, because the right to recover, or to prove a claim, depends upon
The mortgage which the debtor agreed to assume and pay was transferred to Wilson’s wife, and the mortgage note was indorsed in blank by the original mortgagees and delivered to her. It has been held, and must be considered as now established, that a married woman cannot enforce a note held by her against her husband. Roby v. Phelon, 118 Mass. 541. As a promise to pay, the note is no longer valid. The fact that it was originally made to another person will not enable her to enforce it against her husband, either at law or in equity, as a personal obligation. He therefore no longer has a right of action against the debtor, or a claim provable against his estate in insolvency, upon the promise to pay that debt. For this reason, the proof of the claim should be expunged, and the claim disallowed.
Judgment accordingly.
This section is as follows: “ When a creditor has a mortgage or pledge of real or personal estate of the debtor, or a lien thereon, for securing the payment of a debt claimed by him, the property so held as security shall, if he requires it, be sold, and the proceeds applied towards the payment of his debt, and he shall be admitted as a creditor for the residue. The sale shall be made in such manner as the judge orders, and the creditor and assignee respectively shall execute all deeds and papers necessary or proper for effecting the conveyance. If the creditor does not require such sale and join in effecting the conveyance, he may release and deliver up to the assignee the premises held as security and be admitted as a creditor for the whole of his debt. If the property is not so sold, or released and delivered up, the creditor shall not be allowed to prove any part of his debt.”
The counsel for the assignee cited, on this point, In re Plummer, 1 Phil. 56; Kellock’s case, L. R. 3 Ch. 769; Mason v. Bogg, 2 Myl. & C. 443, 446, 448; Ex parte Geller, 2 Madd. 262; Ex parte Rolfe, 3 Mont. & Ayr. 305; In re Babcock, 3 Story, 393, 399; In re Holbrook, 2 Lowell, 259; In re Cram, 1 N. B. R. 504.
See In re Babcock, 3 Story, 393; In re Alexander, 1 Lowell, 470; In re Holbrook, 2 Lowell, 259; In re Cram, 1 N. B. R. 504; In re Dunkerson, 4 Biss. 253, 259; In re Anderson, 12 N. B. R. 502; In re Broich, 15 N. B. R. 11, 14.
See Ex parte Parr, 1 Rose, 76; Ex parte Shepherd, 2 Mont. D. & DeG. 204; Ex parte Bowden, 1 Deac. & Ch. 135; Ex parte Peacock, 2 Glyn & J. 27; Ex parte Goodman, 3 Madd. 373; Ex parte English & American Bank, L. R. 4 Ch. 49; Ex parte Hedderly, 2 Mont. D. & DeG. 487; Ex parte Groom, 3 Mont. & Ayr. 157, 164.