Case ID: ohio_7/html/0227-01.html
Source: Caselaw Access Project
Author: {"author": "Judge Dane", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*John Patterson et al., Administrators of Martin, v. Johnston et al.
    
      A lien on land sold for the purchase money, is preferred to the lien of judgment creditors, without notice.
    A mortgage to secure indorsers upon a note contemplated to be discounted at a particular bank, and so expressed in the deed, is valid to secure the same indorsers, though the discount took place in a different bank from the one named, and was subsequently transferred to a third bank, with the same indorsers.
    .This is a suit in chancery, reserved from the county of Belmont. It is brought to settle priorities of lien, to a sum of money, made upon a sale of land under judgment, which by agreement was bought by plaintiffs, to remain in their hands, subject to this adjustment.
    In 1806, Posey bought and received a conveyance of one hundred and twenty acres of land froA Martin, for which he paid a part, and gave his notes for the residue. Shortly after, Posey became security for Martin, on an injunction bond, and Martin placed the unpaid notes in Jenning’s hands, for his indemnity. In 1808, Posey and Martin formed a partnership, to erect and carry on a mill upon the land, one of the terms of which was, that Posey should reconvey one-half the land, and Martin was to indorse the proportional part of the purchase money upon such note. Posey was compelled to pay five hundred dollars on the injunction bond for Martin. He never made a conveyance of the land. In June, 1811, a suit was instituted by Posey against Martin, to adjust the partnership and other matters between them, which was terminated by a decree in 1819, by which two hundred and twenty-seven dollars was found to. be due from Posey to Martin, and made a charge upon the land, to be paid in preference to other claims.
    In January, 1810, Posey mortgaged the land to Johnston and Hammond, to indemnify them for their indorsement of his note for five hundred dollars. It was the condition of this mortgage to be void on the payment by Posey of “ a note for the sum of five hundred dollars, indorsed.by them, payable at the Washington Branch of the Bank of Philadelphia.” The note, described in the mortgage, was presented at the branch at Washington, but not discounted. Another note made by the same parties, for the same sum, was presented and discounted at the Bank of Steubenville, which, being unpaid, was prosecuted to judgment in 1816. To pay this judgment, the parties, in 1816, procured the discount of another note, at the Belmont Bank of St. Clairsville, for the amount of principal, interest, and costs; this note was not paid, and a judgment was obtained in 1819, for six hundred and forty-six dollars and fifty-four cents.
    In 1815, Caldwell recovered judgment against Posey; the Hand was sold in 1823, by the agreement of all parties to this suit, and without prejudice to any rights, and this bill is brought to determine who has the right to the money.
    Goodenow, for Patterson and executors of Martin.
    Genin, for Caldwell.
    Peck and Hammond, for Johnston and Hammond.
    Hubbard and Cowan, for bank.
   Judge Dane

delivered the opinion of the court:

Four distinct liens upon the land are presented upon this suit: 1. The lien for the purchase money in the sale in 1808, found due and charged upon the land by the decree of a court of chancery, rendered in 1819, in a suit instituted in 1811. 2. The mortgage to Johnston and Hammond, in 1810. 1. The lien of Caldwell, judgment rendered in 1815. 4. The lien of the judgment in favor of the Belmont Bank of St. Clairsville, rendered in 1818.

The lien for the purchase money is well established against the parties and their representatives, and all claiming under them with notice. The decree charging it upon the land is not necessary for its validity; all who are bound by it in this ease are bound from the time of the sale. 5 Ohio, 39; 4 Wheat. 255 ; Wr. S. O. 356. Although it is a lien in equity only, yet being specific, attaching to certain property, it is entitled to a preference over subsequently accruing general liens at law. Bank of Muskingum v. Adm’rs of Carpenter et al., decided this term. The judgments, therefore, of Caldwell, and of the Bank of St. Clairsville, must be postponed to this; and it is entitled to a preference over all later rights, except those of a purchaser for a valuable consideration without notice.

The mortgage by Posey to Johnston and Hammond was intended to possess this character. It conveyed the legal estate to a mortgagee, who has the privileges of a purchaser. No-actual notice of the equitable lien is shown ; no constructive notice arises before the pendency of suit in 1811.

An attempt is made to invalidate the mortgages by denying the right of the mortgagee to apply it to a purpose different from that expressed on its face, viz : to secure the payment *of a note at the bank at Washington, which was never incurred. If a person had been misled by this description, and after due inquiry had advanced money upon, or acquired an interest in this specific land, in the confidence of the non-existence of such a lien, perhaps his rights might be preferred; but a mere general incumbrancer, if he acquires no paramount legal right, occupies the position of the debtor, and holds his interests subject to all the equities which may be exacted against him. It is evident, in this case, that the grantor of this deed intended it as a protection to his indorsers for their responsibility, upon a contemplated loan for five hundred dollars; it is permitted in equity to trace this debt in favor of securities wherever contracted, and under any form it may assume in the usages of business, and attach the security to it. 4 Johns. Ch. 55. The judgment creditor has no reason to complain of rights infringed by this rule, for the mortgage transferred the the legal estate and defined the extent of the burden it imposed upon the land, differing from the case in the New York Reports,, where a mortgage for three thousand dollars was recorded as for three hundred dollars, and held to incumber the estate no farther; it was, then, of no moment to the later incumbrancers who held this lien, so long as it did not transcend the original amount. Since then it is shown that the debt contracted at the Bank of Steubenville, and afterward transferred under bank usages to the-Belmont Bank, was intended by the parties to be secured by the mortgage, and that the mortgage was taken by the grantees without notice of the non-payment of the purchase money; it is the preferable item. The lien for the purchase money is to be next satisfied; lastly, the liens by judgment in the order of their dates.