Case ID: sand-ch_4/html/0510-01.html
Source: Caselaw Access Project
Author: {"author": "The Vice-Chancellor.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

E. and M. Hunt v. Townsend and others.
    Feb. 23 ;
    March 22, 1847.
    Where a prior mortgagee, having a lien on two funds, on one of which there is a mortgage, exhausts the latter for the payment of his debt; the junior mortgagee is entitled to be substituted in his place in respect of the other fund.
    This equity was enforced, where the prior mortgagee held a pledge of the rent of the mortgaged premises as further security for his debt, and on foreclosure, his debt was satisfied out of the proceeds of the sale ; in favor of a junior mortgagee, against one, who, after the sale, received for a precedent debt, an assignment of the lease and rent from the mortgagor.
    The suit was brought to foreclose a mortgage, executed by Townsend to the complainants. M. L. Voorhis was a junior mortgagee. Pending the suit, the mortgagor demised a part of the premises to Mrs. Sedgwick, and the rent was made payable to the complainants solicitor, as a further security for the debt due to them. The premises were ultimately sold on the decree in the suit, and the proceeds sufficed to pay off the complainants, without resorting to the rent. After the sale, the mortgagor assigned the rent in question, to E. Terry, Esq., to pay a debt theretofore accrued to him. The mortgage of Miss Voorhis remaining unpaid, she claimed the rent by way of substitution to the complainants security. The tenant was ready to pay the rent, on being discharged. The matter was brought before the court on a petition and affidavits.
    
      H. Wilson, for M. L. Voorhis.
    
      E. Terry, in person.
   The Vice-Chancellor.

The reservation of the rent, payable to Mr. Griffin as complainants solicitor, was equivalent to the taking of so much additional security for the mortgage debt. It was a pledge of the rent, in addition to the previous pledge of the land out of which it issued.

Thus, when the decree for the sale was made, Miss Voorhis, as the next incumbrancer, was in equity entitled, on paying the complainant’s mortgage debt, to be subrogated to the rent as a portion of their security. And when, by means of the sale of the land, the complainants whole debt was discharged without resorting to the rent, Miss Yoorhis had an equity to be substituted in their place in respect of the rent; because, by their omitting to resort to the same, they had withdrawn from the proceeds of the sale, $125, which she would otherwise have received. In other words, the complainants having two funds to go upon for the $125, on one of which, Miss Yoorhis had a junior lien, exhausted the latter, instead of applying the one upon which she had no lien, and she therefore became entitled to a substitution in respect of the latter. (See 1 Story’s Eq. Jur. § 633 to 637, and notes.) These rights were fixed and vested before Mr. Terry became the assignee of the lease. He received the transfer for a precedent debt; and of course, subject to all the equities respecting it which existed against his assignor, one of which was Miss Yoorhis’s right to be substituted in the place of the complainants.

I am satisfied that she is entitled to receive the rent; and it must be paid to her accordingly.

No costs to either party, as against the other.