Case ID: ohio-st_10/html/0269-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Samuel B. Bushfield v. Arnold H. Meyer and Springer and Whiteman.
    M. executed to B. a mortgage to secure the payment of four promissory notes,, payable at different times. The mortgage contained a stipulation that a default to pay any one of said notes at maturity should operate as a forfeiture of the mortgage, and all the notes should be considered due and payable. Before the maturity of either of the notes, B., by indorsement in-blank, transferred to S. & "W. all said notes, except the one first falling due, and, at the same time, transferred said mortgage to them, by indorsing thereon an assignment of all his, interest in the mortgaged premises, and the several sums of money thereby secured to be paid, excepting and reserving therefrom the amount of the note retained by himself, and assigning all his estate, right, title, and interest in said premises, “ except as aforesaid.” None of the notes having been paid, the premises were sold in a proceeding to foreclose the mortgage, and the proceeds being insufficient to-discharge the mortgage debt: Held, that a pro rata distribution of the fund must be made between B. and S. & W.
    Petition for a rehearing. Reserved in the district court of Hamilton county.
    On the 6th day of April, 1850, Arnold H. Meyer and wife executed and delivered to Samuel B. Bushfield a mortgage upon certain real estate, to secure the payment of four several promissory' notes of even date with the mortgage: one for seven hundred and sixty-eight dollars and sixty-four cents, payable to' the order of Isaac C. Winans, six months after date, with interest, and by him indorsed; one for four hundred and twenty-seven dollars and forty-four cents, payable to the order of said Bushfield, twelve months-from date, with interest; and two notes for five hundred and one-dollars each, payable to the order of said Bushfield, with interest— one of them at .eighteen, and the other at twenty-four months-from date.
    The mortgage contains this stipulation, that “ a default to pay any one or all of” said notes, “shall operate and be treated as a forfeiture of this mortgage, and all shall be considered due and' payable.”
    *On the 23d day of August, 1850, Bushfield indorsed in blank, and delivered to Springer & Whiteman, the three notes payable to his order, and executed an assignment of the mortgage, in■dorsed thereon^ and delivered the same with the mortgage to them, assigning to them “ the within indenture of mortgage and all that messuage and premises therein described and mentioned, together with all and singular the sums of money thereby secured to be paid or intended' so to be, excepting and reserving therefrom and there-■out the sum of seven hundred and sixty-eight dollars and sixty-four ■cents ($768.64)', with the interest accrued and to accrue thereon, ■being the amount of a certain note recited in said mortgage, as made by the said mortgagor, payable to the order of Isaac C. Winans, six months after date, with interest from date; together ■with the rights, members, and appurtenances to the within mentioned and described lot of land and premises belonging, and all ■my estate, right, title, and interest therein, except as aforesaid; to :have and to hold,” etc.
    The mortgaged premises were sold under a decree had in another •.suit in favor of a prior mortgagee. Of the proceeds of the sale, after paying off the prior mortgage, there remained in court about six hundred dollars, to be applied on the mortgage to Bushfield.
    The claimants of this fund are Bushfield, and Springer & White-man. The district court directed this money, after payment of ■ costs, to be paid to Springer & Whiteman, on the notes assigned by Bushfield to them, holding that said notes had priority over the •note retained by Bushfield. Thereupon he filed a petition for a rehearing, and his petition was reserved to this court for disposition.
    
      Corwine, Says & Rodgers, for Bushfield, insisted:
    1. That the fund in court should be applied upon the note for V$768.64, retained by him; that under a proper construction of the assignment, Springer & Whiteman were *not to participate in the fund arising from the mortgaged premises, until that note -was fully paid.
    2. That, at any rate, Springer & Whiteman were not entitled to more than a pro rata share of the fund in court. 13 Ohio, 240; 8 Blackf. 447
    
      Bates & Scarborough, for Springer & Whiteman, insisted:
    The fair and natural construction of the assignment is, that Springer & Whiteman were to have the mortgage and the full benefit of it, as a security for the payment of their three notes, until the ¡same should be and that the note indorsed •well as any remaining interest in the mortgage, was excepted and' reserved by the assignor. Mechanics’ Bank v. Bank of Niagara, 9 Wend. 410; Bank of England v. Tarleton, Cushman, 173. See also Langdon v. Keith, 9 Vt. 299.
    The words “except as aforesaid,” in the assignment, do not broaden the exception as previously made, or in any way affect the interpretation to be given to the instrument. The interest in the mortgaged premises resulting, from, or attendant upon, this reservation of the larger note, is also reserved. What is this interest? It ¡seems to us that, in the language of Chief Justice Gibson, in his dissenting opinion in Donly v. McKean, the assignment of a particular part of the debt was an assignment of the mortgage, not pro rata, but pro tanto. 17 S. & R. 406. This we believe to be the true rule, .and to be-fully sustained by the authorities. In addition to the •cases already cited, we refer to Cullum v. Erwin, 4 Ala. 452; Van Rensselaer v. Stafford, 1 Hop. C. 569; Pattison v. Hall, 9 Cow. 747; Belding v. Manly, 21 Vt. 550; Salzman v. His Creditors, 2 Rob. (1 Ba.) 243.
   Scott, J.

By the terms of the mortgage, in this case, the notes which it was intended to secure all became due upon the first default, at the same time. It seems therefore ^conceded by ■counsel on both sides, that under the ruling in the case of The Bank of the United States v. Covert, 13 Ohio, 240, the fund arising from the sale of the mortgaged premises being insufficient to discharge .all the notes, must be distributed among them pro rata, unless the terms of the assignment, or the circumstances under which it was made, show a different intention of the parties. There is no evidence •outside of the written contract of assignment, and the rights of the parties must therefore depend on the proper construction of its terms. The fund is insufficient to discharge the portion of the debt •owned by either of the parties, and the whole of it is claimed by the assignor and the assignees, respectively.

We think it clear from the language of the assignment, that all the mortgage debt Was thereby transferred to the assignees, except that portion of it which was evidenced by the note for $768.64, payable to Winans six months after date; and it is equally clear that the proceeds of that note, and its accruing interest, were excepted from the operation of the assignment, and reserved or retained by the mortgagee.

This assignment was indorsed upon the mortgage, which was-also transferred, but with a corresponding exception. The mortgagee assigns “ the within indenture of mortgage and premises therein described, . . . together with the rights, members, and appurtenances, to the within-mentioned and described lot of land and premises belonging, and all my estate, right, title, and interest therein, except as aforesaid." It is manifest from this language that the mortgagee did not intend to part with all his interest in the' mortgaged premises, for in the grant of that interest he makes an express exception, which we are not to disregard. Had there been no express assignment of the mortgage, by retaining one of the notes and transferring the other three (the whole four notes falling' due at the same time), the mortgagee would at least- retain a prorata interest in the security, in the absence of any agreement to* *the contrary. And we think the assignment of the mortgage, with an express exception of the interest in the mortgaged premises resulting from the reservation of one of the notes, places-the mortgagee in no worse condition. By the clause “ except as aforesaid,” he must be understood as making an exception in the transfer of the security, corresponding with that already made in assignment of the debt.

On the other hand, we find nothing in the assignment of a portion of the debt, and a correspondent interest in the security, with-an express reservation of the residue, both of debt and security,, which can give the assignor a preference, in respect to the security, over the assignees. There is nothing in the natural import of the-terms of the assignment indicating an intention either to postpone or prefer the sums assigned, and the security for their payment, to-the sum excepted from the operation of the assignment, and its security. It is probable that the insufficiency of the security was not anticipated by the parties; at least they have failed to provide-for it. And in such a case equality is the rule of equity.

A pro rata distribution of the fund will therefore be ordered, according to the proportions of the mortgage debt held by the respective parties.

Brinkerhoee, C. J., and Sutliee, Peck, and G-holson, JJ., concurred.