Case Name: Serring P. Dunham and John Maxwell v. Henry K. Ramsey et al.
Court: New Jersey Court of Chancery
Jurisdiction: New Jersey
Decision Date: 1883-10
Citations: 37 N.J. Eq. 388
Docket Number: 
Parties: Serring P. Dunham and John Maxwell v. Henry K. Ramsey et al.
Judges: 
Reporter: New Jersey Equity Reports
Volume: 37
Pages: 388–389

Head Matter:
Serring P. Dunham and John Maxwell v. Henry K. Ramsey et al.
On a bill to set aside as fraudulent a mortgage given to indemnify the mortgagee against his liability as endorser on certain promissory notes—Held, that the holders of the notes are necessary parties.
Creditor’s bill. On general demurrer.
Mr. A. A. Glarh, for demurrants.
Mr. John Sohomp, for complainants.

Opinion:
The Chancellor.
The bill is filed by two of the creditors of Henry K. Ramsey to obtain, with other relief, a decree setting aside as fraudulent and a sham, a mortgage given by him upon his hotel property in Bound Brook to his father, Joseph Ramsey. The mortgage contains a proviso, for the payment to the mortgagee of $7,500, or to indemnify him against his liability as endorser upon certain promissory notes, amounting, in the aggregate, to that sum, of which $4,500 are in the Somerset County Bank " under discount ; " $900 in the Plainfield Bank; $1,000 held by Abraham Yan Doren, and $800 by Henry Yan Doren.
The defendants to the suit are Henry K. and Joseph Ramsey, Alvah A. Clark and George H. Large, assignee of Joseph Ramsey. The demurrer brings up the question whether the holders of the notes mentioned in the mortgage, the two banks and the Yan Dorens, are not necessary parties. Where an individual is in the actual enjoyment of the subject-matter of the suit, or has an interest in it, either in possession or expectancy, which is liable to be defeated or diminished by the complainant's claim, he has an immediate interest in resisting the demand, and is a necessary party to the suit. 1 Dan. Ch. Pr. 246. As a general rule, where a surety, or a person standing in the situation of a surety for the payment of a debt, receives a security for his indemnity and to discharge such indebtedness, the principal creditor is in equity entitled to the full benefit of that security, and it makes no difference that the principal creditor did not act upon the credit of such security in the first instance, or even know of its existence, and the right of the creditor is the same, where the security is a lien given after the principal and surety have both become bound, even though there may have been no previous agreement that indemnity should be given. Brandt on Surety-ship § £88. In this case, as before stated, the complainants attack and seek to annul the mortgage. , It appears by the statements of the bill that the Ramseys are both insolvent. The holders of the notes are in equity entitled to the benefit of the mortgage—to the benefit of the lien which it creates upon the mortgaged premises—for the payment of their debts. They therefore obviously have a direct and immediate interest in the subject-matter of the suit, so far as the mortgage is concerned. They are interested in maintaining the validity of the lien. They therefore are necessary parties. The demurrer will be allowed.