Case ID: cow_5/html/0380-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Curia, per Savage, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Globe Insurance Company against Lansing.
    After a foreclosure and sale upon a mortgage, for a less sum than -will sat-' isfy tho: amount of tho mortgage debt the mortgagee may prosecute at law, on his bond, for the balance.
    On demurrer to the plaintiff’s replication. The declaration was in debt on bond; to which the defendant pleaded, that the bond was executed concurrently with, and as collateral security to a mortgage; that the mortgage was foreclosed in chancery; and the mortgaged premises sold, whereby the debt, was satisfied and the plaintiff replied that the premises did not sell for sufficient to satisfy the bond and mortgage ; and showed that more than $4000 were unpaid by the sale or otherwise,
    General demurrer and joinder.
    
      J. Lansing, junior, in support of the demurrer, said the question was, whether after a foreclosure and sale of mortgaged premises, the mortgagee could prosecute on the bond. I do not find any adjudged case upon this question ; nor is it determined by any statute. At common law, if the money was not paid at or before 'the day, the mortgage estate became absolute. (Pow. on Mortg. 7 to 10. id. 438.) This was esteemed a harsh consequence, and chancery interposed, but the mortgage and bond being both executed at the same time, were deemed but one instrument; and all the- mortgagee could do was to make his election, either to take the land, or proceed at law for the money. Chancery would not allow him to do both. The law would not allow this. If he took the land it was a satisfaction; and if he obtained the money, it discharged the land; If he went to the land, he was bound to take the whole or none. The money was divisible, but not the land. This is the course of the court of chancery in England. (1 Eq. Cas. Abr. 317. 2 Br. C.' C. 155. 6. id. 107. 13 Yes. 198, 200. 2 Dickens, 551. 785. 8 Yes. 527.) The action there opens the foreclosure; but in this state it can do no such thing, after a sale upon the statute. The estate is gone into the hands of a purchaser. The party has put it out of his power ever to restore it. The declaration of Kent, late Chancellor, (3 John. Ch. Rep. 331,) that the bond may be sued after foreclosure, was merely obiter; and Story’s opinion there cited, went much on the local law of Massachusetts.
    
      J. L. Wendell, contra,
    should rely upon the opinion of Kent, late chancellor, and the authorities cited by him in Dunkley v. Van Buren, (3 John. Ch. Rep. 330.) That opinion, he said, will be found to be very ably supported by Story, J. in Hatch v. White, (2 Goll. 152.)
   Curia, per Savage, Ch. J.

The question presented is, whether a foreclosure and sale of the premises mortgaged as a collateral security, is an extinguishment of the debt .due on the bond. It most clearly is not, any further than to the extent of the money produced by the sale of the mortgaged premises. In the case of Dunkley v. Van Buren, (3 John. Ch. Rep. 331,) the late chancellor Kent says, 11 It seems to be generally admitted in the books, that the mortgagee may proceed at law on his bond or covenant, at the same time that he is prosecuting on his mortgage in chancery ; and that after foreclosure here, he may sue at law on his bond for the deficiency. He cites many of the cases cited at the bar; and those cases certainly support the doctrine.

In Aylet v. Hill, (2 Dick. 551, A. D. 1779,) Lord Thur-low held that a mortgage might proceed on his bond, notwithstanding he had obtained a decree of foreclosure; and denied an injunction to stay proceedings at law. Afterwards, in Took v.-, id. 785, A. D. 1784, the same question came before him ; and he decided, that so long as the mortgagee, after foreclosure, remained in possession of the mortgaged premises, he must take the pledge as a satisfaction ; but if he sold the estate fairly, and it did not produce sufficient to pay the debt, he had a right to bring an action against the mortgagor, to recover the deficiency Two years afterwards, he adhered to the same opinion in the case of Tooke v Hartley, (2 Br. C. C. 125.) In the case of Perry v. Barker, (13 Ves. 204, 5.) Lord Erskine decreed a perpetual injunction, where a mortgagee had taken possession under a foreclosure, though he had after-wards sold the -estate at auction, for less than the amount due. Yet he seems to admit, that had the decree been for a sale instead of a foreclosure, as practiced in Ireland, the proper course would be if the sale produced more than the debt, to decree the surplus to the mortgagor; and if less, then to allow the mortgagee to proceed on his bond for the difference.

The whole subject has been very fully and ably discussed by Mr. Justice Story, in the case of Hatch v. White, (2 Gall. 152); where the principle is established that the mortgagee is entitled to recover, on the accompanying security, the deficiency of the mortgaged property to pay the debt, calculating its value at the time of the actual extinction of the -equity of redemption. In that ease, there had been no actual sale; but the creditor had taken possession. In Amory v. Fairbanks, (3 Mass. Rep. 562,) the plaintiff had execution for the balance due on the bond, deducting the value of the land after foreclosure, according to appraisement.

The plaintiffs are entitled to judgment; with leave to the defendant to withdraw his demurrer,-and rejoin in 20 days, on payment of costs.

Sutherland, J. being related to the defendant, gave no opinion.

Judgment lor the plaintiffs.