The Hawaiian gazette., 1907-06-21
MORTGAGE
M0RTCACOR

The supreme Court yesterday rem
dered a decision which. when II was
first reported down town. created very
great interest and In some respects al
most CONSERVATION. II was a decision
in the case OF Samuel Noar. admins
traitor OF the estate OF Isaac Noar, vs.
G. Bosse. In this case the court held
that: I'm an action by a mortgagor
to recover from the mortgage the sur
plus arising from a statutory fore
closure of a first mortgage, the fact
! that third person holds second
mortgage on the same premises which
has not been satisfied is no defense"
decision shut out the rights of second
mortgage altogether, but a reading OF
the decision itself shows that this is
not so. The second mortgagee was
not before the court in this case at all.
The court passed on only the respective
rights of the mortgagor and the first
mortgage to the surplus arising from
a statutory foreclosure. The rights of
the second mortgage were not before
the court, nor did the court decide as
to the respective rights of the mort
gagor and the second MORTGAGE.
The opinion is written by Justice
Wilder and is as follows:
OPINION OF THE COURT BY
WILDER, ].
This was an action commenced In
the district court and brought by the
representative of deceased mortgagor
to recover the surplus money remain
ing in the hands of a mortgage after
a statutory foreclosure Of first mort
gage. At the time of the foreclosure
sale there was second mortgage out
standing of which the mortgage had
notice. The foreclosure sale took place
on January %, 1904, the mortgagor died
on August 4, 1905, and this action was
commenced on June 27, 1906. The dis
trict court gave judgment for defend
ant, and on appeal the circuit court
entered judgment for plaintiff, from
which court defendant brings excep-
tions.
The question to be decided is this, to
whom does the surplus belong as be-
tween the mortgagor and the mortga
gee with knowledge of a second mort
gagee, and It is not, as claimed by de-
fendant, to whom does the surplus be-
long as between the mortgagor and the
second mortgage? Defendant could
have made that the question by bring
ing into this action by interpleader
the second MORTGAGE. AS he has not
seen fit to do so, in order to prevail he
must show better right to the surplus
than the mortgagor.
If the mortgagor is entitled to the
surplus as against a second mortgage,
or course that would settle the Ques-
tion. But, for the purposes of this
case, we will assume that, as between
the mortgagor and the second mortga-
gee, the latter is entitled to the surplus
arising from a foreclosure of the first
mortgage. The defendant makes no
claim himself to the surplus money, but
contends that, because there was a Sec
ond mortgage in existence at the time
of the foreclosure sale, of which he had
notice, he is justified in refusing to pay
plaintiff the money. With this propo-
sition we can not agree. AS between
the mortgage and the mortgagor the
latter has the better right to the money,
and the fact that a second mortgage
is entitled at his option to claim it is
no defense in this action because he
may never claim it, preferring to rely
upon the personal responsibility of the
mortgagor and also upon other secu-
mortgage, which was not included in
the first mortgage. There is no ques-
ton but that the first mortgage is
not entitled to retain this money him
self, and. in the absence of claim
for it by the second mortgagee in this
action, the mortgagor is entitled to it
as against the first mortgagee.
In American Mortgage Co. VS.. Inzer,
l3 So. (Ala.) 507, it was held that in
an action by a mortgagor to recover
from a senior mortgage a surplus of
the proceeds arising from the sale of
the mortgaged premises, the fact that
a third person holds a second mort
gage on the premises which has not
been satisfied Is no defense; for. though
the second mortgage may maintain an
action against the defendant to have
the surplus applied to his mortgage, he
Is not compelled to do so, but may
collect the entire debt from plaintiff. |
To the same effect are Truesdale VS..
Sidle, Go MINI. 3l5, and Itasca Invest
ment co. vs. Dean, 81 MINI. 3SS.
Our statute (R. L., Sec. 2l65), pro-
viding that the surplus shall be paid
over to the "owner OF the mortgaged
property" is not applicable to this case
in the view we have taken OF IT,
Exceptions overruled.
C. w. Ashford for plaintiff.
c. IL. Olson (Holmes & Stanley on
the brief) for defendant.