Case ID: serg-rawl_17/html/0419-01.html
Source: Caselaw Access Project
Author: {"author": "Gibson, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

[Pittsburg,
    September 23, 1828.]
    IRWIN against TABB.
    IN ERROR.
    On a mortgage given to secure the payment of a sum of money to three absent, persons, in different 'proportions expressed in the mortgage, two of whom had then paid up the sum. expressed, and the third had not, but did so by advances soon after the mortgage, if they proceed, to a judgment and sale of the property by execution, and-the proceeds are not sufficient to pay all, they are to be distributed according to the sums expressed in the mortgage,
    Error to the.Court of Common Pleas of Fayette county.
    Issue agreed upon in the court below, in which tbe defendant in error, John Tabb-, was plaintiff below, and Matthew Irwin, the plaintiff in error, was defendant, to try the right of Tabb, the plaintiff, to the purchase money arising from the sale, by the sheriff, of the real estate of Zadock Walker, to the defendant, Irwin, under the circumstances, stated in the following charge, delivered to the jury by the president of the c.oürt below:
    
      “ It appears in evidence, that on the 20th of Jlpril, 1820, Zadock Walker executed a mortgage to Matthew Irwin, William Rogers, and Ruth Tabb, to secure the payment of eight thousand dollars, according to the following proportions, as expressed' in the mortgage:—
    
      “Matthew Irwin, ----- @3000
    “ William Rogers, ----- 3000
    ‘>Mrs. Tabb, - - - - - '- 2000
    “To March term, 1823, a scire facias was issued on. this mortgage, and subsequently, a judgment was confessed in writing by Mr. Walker, for seven thousand two hundred and twenty-eight dollars, and costs. At the time, and on the same paper, the respective interests of the mortgagees were adjusted and liquidated .by Mr..Rogers, and John Tabb. An execution was taken out, and the property was- sold to Matthew Irwin for -- — , a sum considerably less than the aniount of the debts, as thus ascertained. .A calculation was. made by the sheriff, taking the mortgage itself as the rule, and Mr. Irwin gave a receipt for his proportion, and the other shares were paid into court, and afterwards received by the attornies of Rogers and Tabb. The distribution thus made, would appear to be perfectly fair, if the amount stated in the mortgage had really been paid by the ihortgagees to Walker previous .to,its execution. But it is alleged on the part of Mr. Tabb, (who is the legal representative of Ruth Tabb,) that at the time the mortgage was given, the debt actually due by Walker to Irwin was considerably less than the amount stated as his share. Assuming this, to be the fact, the plaintiff presents a question for our legal determination. -Shall the rights of the mortgagees be adjusted according to the respective sums stated in the mortgage, or according to the actual state of their several credits with the mortgagor at the time? It is said, that the whole sum of three thousand dollars had not in.fact been received from Mr. Irwin, but that it was intended to include future advances, which Mr. Walker expected shortly to receive. Mr. Thomas Irwin, who drew the mortgage, stated, that this was- declared to him by Mr. Walker at the time. No one of the mortgagees, however, were present, nor does it appear, that any of them had any knowledge of the execution of the mortgages nor' have we any evidence, that Mrs. Tabb or Mr. Rogers were acquainted with the state of the account between Mr. Walker and Mr. Irwin.- The whole amount set forth in the mortgage as the shares-of Tabb and Rogers, had been previously advanced by them to Walker, and constituted an actúa) subsisting debt at the time. Mr. Irwin resided at Green Bay, and had, at different periods, forwarded drafts to Mr. Walker, in order to be vested in some productive fund, which Mr. Walker'h&A converted to his own use. He continued subsequently to remit in the same manner, until the total of' his credits, with Walker was beyond the amount secured to him in the mortgage. It is contended, however, by the plaintiff, that he cannot claim. from the mortgaged property more than the sum actually due to him at the time the mortgage was executed. I am of this opinion. If the mortgage had expressly stated that it was . given to Mr. Inoin to secure future advances, and Tabb and Rogers had afterwards paid money and accepted'of the same security, there would be some.reason to hold them to their bargain, however unwise. If they chose to participate on equal terms in such a security, it would be their own folly. But it seems that they'had actually paid their money. Mr. Irwin had not, as the plaintiff alleges.
    «In equity, then, in ,these circumstances, they would have a prior claim upon the resources of their debtor. If the mortgaged premises, therefore, were insufficient to satisfy all the.claims-, I think Mr. Irwin ought to be postponed as to any monies he may have advanced subsequently to the date of the mortgage, the other mortgagees having nO notice that it was intended to secure such further advances. The defendant contends, that ‘ he is entitled to cover by the mortgage any sum advanced by him, before actual notice of the interests of the other mortgagees, which was subsequently to the receipt of the drafts.’ -I do not think so. It was intended by Walker for the security of these creditors, by giving them a specific lien upon real estate. Their interest in the property (for the reimbursement of their money,) commenced with its date, and in case of a deficit in the proceeds, ought in equity to be adjusted according to the extent of their actual credits at the time. Having thus expressed our opinion upon the legal question presented, we have the fact to which it is referable for your decision: was the sum of three thousand dollars actually due from Walker to Mr. Irwin at the time the mortgage was given? By thé books of Mr. Walker, it seems, that more than this amount is owing by him to Mr. Irwin.
    
    “But, it is contended by the plaintiff, that .one thousand four hundred- and fifty dollars, then credited, were remitted in five drafts to Mr. Walker long subsequent to the date of ihe mortgage. On this subject there is some obscurity.' The credit for this sum is given in Mr. Walker’s book on the 24th of March, 1820, which is prior to the mortgage. If this entry is correct, it would follow, that Irwin was really a creditor to the full amount of his share in the mortgage. Mr. Walker swears positively, that it was made at the time it purports, and that he had received, or expected to receive the amount. Some of the drafts had come to hand, others miscarried, but all at length were received and cashed. If the money had been remitted in that mode for the use of Walker, and at his request, I think the debt ought to be dated from the time they were forwarded by Irwin, and not from the time they were actually received. But if they were sent to Walker, as an agent, to vest for the use of Irwin, he would only be a debtor from the time they came to his hands.’’
    The jury gave a Verdict for the plaintiff, and judgment was rendered thereon.
    
      Ewing, for the plaintiff in error,
    cited 3 Cra. 89. 4 Johns. Ch 
      65. 2 Serg. & Rawle, 138. 16 Johns. 135. 7 Cra. 31. 7 Cra. 34, 51. 5 Binn. 585. 2 Vern. 574. 2 Vern. 609. Amb. 439.
    Kennedy, contra,
    
    referred to 5 Conn. Rep. 442. 4 Conn. Rep. 158. 5 Johns. Ch. 326. 2 Kent’s Comm. 454.
   The opinion of the court (Huston, J. dissenting,) was delivered by

Gibson, C. J.

As against the mortgagor, the defendant below

would undoubtedly he entitled to his whole debt. The sum at which it was fixed in the mortgage, is due at law; and chancery would’relieve, from it,' only on doing complete justice by payment of whatever was received on'the credit of the mortgage without regard to date.. “ It is only where the rights of third persons are prejudiced by want of notice,” says Chancellor Kent, in James v. Johnston, (6 Johns. Ch. 429,) “that the extension of the security isprevented.” .And again, in Br inker ho ff v. Marvin, (5 Johns. Ch. 327,) “The limitation to this doctrine, I should think, would be, that when a subsequent judgment or mortgage intervened, further advances after that period, would not be covered.” And in Lyle v. Ducomb, (5 Binn. 585,) Chief Justice Tilghman maintains the. converse of the proposition, saying, that third persons,, who cannot be prejudiced, have nothing to do with the transactions Between the mortgagor' and mortgagee. Let us see, then, whether the plaintiff has.an equity distinct from that of the mortgagor, and superiqr to that of the defendant; for if it be only equal, the law must prevail.

The case is exactly th.is. To secure pre-existing debts, the debtor executes a mortgage to three creditors, who are not only absent, but ignorant of the whole transaction. The sum .secured is eight thousand dollars, to be paid in the proportion of two thousand dollars to the last named mortgagee, and to the first and second three thousand dollars each. At the date of the mortgage, the second and third had advanced the amount of their respective claims, but the first had not: he has since, however,'made up, the deficiency by further advances. The fund derived from the mortgaged premises falls short; and the question is, whether the first named mortgagee is entitled to participate in proportion to the sum ostensibly due to him by the mortgage, or only in proportion to his advances at the date of it.

It is not disputed, that the mortgagor might have covered further advances, by a stipulation inserted in the mortgage. But it is said, the omission of it was a fraud on the second and third named creditors, who are supposed to stand in the, relation of subsequent mortgagees. It is perfectly clear from the cases, that the office of such a stipulation is to give notice to third persons: consequently, no one can derive an equity from the absence of it but he who has been prejudiced by the want of it. In the first place, then, Mrs. Tabb, under whom the plaintiff claims, was not a subsequent morí» gagee, but the owner of an interest in common with the others, dan under the very same title. In the second, she did not become a party in consequence of being ignorant of any fact that lay.more within the knowledge of the defendant than of her; for all were profoundly ignorant of the whole transaction. ■ And in the third, she did not advance a shilling on the credit of the security; or give further time, or deliver up any preceding evidence of the debt. In Petrie v. Clarke, (11 Serg. & Rawle, 377,) it was held, that although the taking of a new security in discharge of the old debt, be a valuable consideration, the acceptance of a pledge unaccompanied with a stipulation for further time, is not. It is not easy to see, then, how she can have been prejudiced. - It has been said, she would perhaps have refused to become a party to. the mortgage, had she known it was intended to be a security for any thing that was not originally due. But the plaintiff may renounce the transaction now, and restore himself to the very Situation in which Mrs. Tabb would have been, had she renounced it then. The mortgage was not offered to her on terms of giving further time, or cancelling any previous security, or doing any other act-: it was purely gratuitous, and left her the right to pursue her claim as if it had never existed. She cannot have been defrauded by a transaction in which no right of hers was touched, nor any thing done but to benefit her. She, therefore, could derive no equity from want of notice, that can give the plaintiff a preference as a mortgagee.

But it is said, she may have been prevented from pursuing on her old security, by seeing the land apparently protected by this mortgage. That present’s considerations Which are-,distinct from those that arise out of’ her character of mortgagee.- It must, perhaps, be conceded, that a mortgage to secure future advances, which does not contain notice of the agreement, is void against creditors generally, because the land is apparently covered for more than it actually owes, and pursuit might thus be eluded, when a knowledge of the true state of the facts would invigorate exertion, -and render success certain. Had the plaintiff claimed as a'general creditor, the mortgage might not have entitled the others to a preference But, so far is he from having treated it as fraudulent, that he has elected to.claim under, it. Now, there is no-rule of equity more universal in its-application, or more just in its consequences, than that a party shall not claim in repugnant rights, and that, he who takes the benefit shall also bear the burden. It would be an affectation of learning to cite authorities for this. The books are full of cases which show, that a party shall not contest the validity of an instrument from which he draws a benefit,' or affirm it iu part and disaffirm it in part. Here the plaintiff, or Mrs. Tabb, under whom he claims, might -have repudiated the whole transaction, and stood on her former rights; but, claiming to participate 'in the benefit, she can be admitted only on the terms prescribed by ■the mortgagor-: and the only subject of inquiry is as -to the nature and extent of those terms. Ele had been in tlje practice of receiving periodical remittances from the defendant, which were continued for a considerable time after the execution of the mortgage; so that it cannot be doubted, that the. debt specified in the mortgage vvas put at a sum beyond the amount of the advances then made, with a particular view to future remittances. Nor can it be believed, that the ■ mortgagor would have preferred Mrs. Tabb at the expénse of the general creditors, on any other terms than having her assent to the mortgage as a security for those remittances; and to withhold that assent now, would be a fraud on him. , As against himself, and all others standing in his place, his right to make whatever disposition he pleased, will hardly be contested. In the creation of a trüst, 6r other security, a debtor, not in failing circumstances, may give a preference even to a gift. Here it seems the mortgagor was, in fact, in failing circumstances, but as no gift was intended, there can be no presumption of fraud on that ground. But if there were, the plaintiff having made himself a party to the instrument, and claiming under the mortgagor, would be estopped from alleging it.' It seems, therefore, the court erred in charging, ■that the defendant was not entitled to retain in proportion to the sum specified in thé mortgage.

Judgment reversed, and a venire facias de ndvo awarded.