Case ID: wend_25/html/0501-01.html
Source: Caselaw Access Project
Author: {"author": "Nelson, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

*Sterling vs. Rogers and Burdick.
    The acceptance of a mortgage of chattel property, with power to sell on default of payment, taken on the sale of chattels, does not destroy the right of action to recover the purchase money; the simple contract is not merged in the mortgage, it being deemed to be collateral only.
    This was an action of debt, tried at the Madison circuit in September, 1839, before the Hon. Philo Gridley, one of the circuit judges.
    The plaintiff, Q-eorge Sterling, declared in debt, claiming $300 for a scow boat sold to the defendants, and $300 for money lent. The defendants pleaded nil debent. On the trial the following facts appeared: On the 13th of Febuary, 1838, the plaintiff sold to the defendants a scow boat for the sum of $450. The defendants paid the plaintiff $150, and executed to him an instrument in writing, under seal, whereby they conveyed to him the boat, upon condition that if they should pay to him $300 with interest, in instalments as specified in the instrument, the last falling due on the first day of June, 1839, “ then the above sale and transfer, to be void, otherwise of force. And if the above named mortgagee shall at any time hereafter have reasonable cause to deem himself unsafe, he may take immediate possession of said property, and after twenty days public notice sell the same at auction, for the best price he can obtain therfor, rendering the surplus money, if any, to the above named mortgagors.” On the first day of June, 1838, Greorge Sterling assigned the mortgage to Henry H. Sterling, for whose benefit this suit was commenced. Upon these facts the defendants asked for a nonsuit, which was granted by the circuit judge; who subsequently, however, made an order for a new trial; from which order the defendants appealed. The motion for a new trial was accordingly made in this court.
    
      J. A. Spencer, for the motion.
    
      T. Jenkins, for the defendants,
    insisted that a new trial should [ *659 ] not be granted. He contended that the acceptance *of the mortgage precluded the raising of an implied obligation, upon which either the action of assumpsit or debt could be maintained. The legal presumption is, that the parties intended that the original consideration should be merged in the mortgage, and that the remedy of the vendor should be limited to that created by that instrument. 2 Johns. R. 214. 3 Johns. Cas. 180. 2 Esp. N. P. 507. The taking of a specialty upon the sale of goods for the purchase money extinguishes the remedy upon the simple contract. At all events, the plaintiff should be required to exhaust the remedy under the mortgage, before he is permitted to proceed against the purchasers personally. Upon the non-payment of the mortgage the property became revested in the vendor. 11 Wendell, 106. Nor can the mortgage avail -the plaintiff under the count for money lent; it contains no covenant to pay, or even an acknowledgment of indebtedness.
    
      J. A. Spencer, in reply, said that the legal presumption is, that a mortgage is taken as collateral security, though the debt rests in simple contract. Jackson, ex dem. Sackett v. Sackett, 7 Wendell, 94. A collateral security of a higher nature does not extinguish the original contract, as long as" it remains unsatisfied. 14 Johns. R. 404. The plaintiff here cannot be limited tothe remedy under the mortgage, unless it be shown that on its forfeiture he took possession of the boat.
   By the Court,

Nelson, C. J.

The learned judge was right in granting a new trial. The purchase money of the boat constituted a debt for the recovery of which the vendor had his remedy by action, when it fell due. It was not necessary that a note or bond should have been given to preserve the debt; it existed and continued in full force, without such personal security. The mortgage was given as collateral security, and did not merge the demand. The one is the principal, the other the incident, and the latter can never merge the former.

New trial granted.