Case ID: wright_1/html/0646-01.html
Source: Caselaw Access Project
Author: {"author": "WOOD, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*IVES v. THE COMMISSIONER OF INSOLVENTS.
    Mortgage on equity — sale on application of vendee — assignment by an insolvent — priority enforced in chancery.
    A mortgage on an equitable interest in land will attach to it as a lien.
    A sale of the land by order of a Court of Chancery to complete the purchase, does take away the lien of the mortgagee, but transfers it from the land to the proceeds arising from its sale.
    If the mortgagee of the equity was not a party to the bill, under which the sale was decreed, he may file a bill against the commissioner, to secure his priority in the distribution of the proceeds of the trust fund arising from the sale.
    In chancery. The bill alleges that Titus Ives borrowed of the complainant $300. He afterwards purchased five town lots and nine acres of ground, for which he paid $400 down, including the $300 borrowed, gave his notes for $200, and took the covenant of the vendor to make him a deed on the 1st of May, 1830. Two hundred dollars of the borrowed money still remaining due to the complainant. Titus Ives gave him a mortgage on the equitable interest in the land, and filed a bill to compel the vendor to convey, but while the suit was pending, he became insolvent and assigned all his property to the defendant under the law for the benefit of insolvent debtors. The suit was further prosecuted by the assignee, and a decree had for a sale by the commissioner, by virtue of which he sold for $450. Out of this sum the court ordered $160 to be paid the vendor to complete the purchase, and that the remaining sum The retained for the creditors of Titus Ives. The complainant •claims to have his mortgage first satisfied out of the proceeds of the sale.
    The answer admits the bill true except the money alleged to be lent. There is a general replication and no proof.
   WOOD, J.

The first question presented is, can an equitable interest in land be the subject of a mortgage ? The respondent contends it cannot — we think it can. The next question urged is, whether the sale by order of chancery basso changed the subject •as to destroy the lien of the mortgagee ? The assignee takes the property as the insolvent held it — he stands in the debtor’s shoes. If the sale had been made by the insolvent, the question would hardly have been made. We are then asked if there be any remedy except by application to the chancellor under the decree of sale for a distribution ? Perhaps the chancellor would admit the complainant’s application for a distribution in that suit, but, be that as may, the complainant was not a party nor privy to that suit, and cannot be bound by that decree. He now applies to us in a matter of trust to direct the disposition of the trust fund.

Decree for the complainant.