Case Name: Milton Fithian v. John A. Corwin et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1866-12
Citations: 17 Ohio St. 118
Docket Number: 
Parties: Milton Fithian v. John A. Corwin et al.
Judges: Day, C J., and White, Brinkerhoee, and Soott, JJ., concurred.
Reporter: Ohio State Reports, New Service
Volume: 17
Pages: 109–115

Head Matter:
Milton Fithian v. John A. Corwin et al.
1. Where a bill in chancery alleges that the defendant gave his consent to an act of the plaintiff, and the answer does not deny the allegation, but the cross-bill charges that the act in question was done without the defendant’s consent, and the answer to the cross-bill does not deny the charge: Held, that the fact of consent is not admitted by the pleadings.
2. When the owner of a mortgage debt assigns it to a third person, guaranteeing. its payment, and takes from the assignee a note for part of the amount of the debt, payable when the debt is collected, the assignor may be regarded as having an interest in the mortgage, similar tp that of a junior mortgagee.
*3. A binding contract between such assignee and the mortgagor, to extend the time for payment of the mortgage debt, discharges the assignor from his guaranty.
4. Such assignee taking from the mortgagor a deed for part of the mortgage property at less than its full value, in part payment of the mortgage debt, is liable to account to the assignor for its full value, if necessary to the payment of the mortgage.
.5. Where the assignee in such a case caused an execution, issued upon a judgment obtained for part of the debt, to be levied upon part of the mortgage property, and himself became the purchaser thereunder, he acquired only the equity of redemption in the property sold.
6. But the purchase money arising from such sale, and applied in payment of the mortgage, with interest there’on, will first be refunded to him out of the proceeds of the sale of the premises under the mortgage.
Appeal. Reserved in the district court of Logan county.
This is a bill in chancery, filed in the common pleas of Logan county on the 30th of December, 1852.
From the papers in the case, these facts appear:
In October, 1841, Otho Johnson sold and conveyed to Jacob Keely the following lands:
E. W. qr. of sec. 34, T. 3, R. 14.
S. W. “ “ 35, “ 3, “ 14.
On the 1st of November, 1841, Keely mortgaged the lands to John A. Corwin, to secure the payments of notes as follows :
Due 1st November, 1842................................................ $468
“ “ 1843................................................ 358
“ “ 1844................................................ 358
“ “ 1845................................................ 358
“ “ 1846................................................ 358
“ “ 1847............................... 358
“ “ 1848................................................ 358
“ “ 1849................................................ 352
$2,968
On the 26th of March, 1842, Corwin assigned the mortgage to Johnson, in these words: “ For value received, I assign to Otho Johnson all my right and interest in this deed of mortgage, except ■eighty dollars, which I am to receive on the 1st of November, 1844, without recourse on me.”
On the 10th of May, 1842, Johnson assigned an interest in the note of $468, to R. S. Gardner.
On the 15th of June, 1843, Johnson assigned the mortgage to Jesse Collins, in these words; “ I assign to Jesse Collins *all my right and interest in this deed of mortgage, except eighty dollars, which J. A. Corwin is to receive on the 1st of November, 1844.”
The interest thus conveyed to Collins was $2,420; the whole interest of the remaining unpaid portions of the note of $468 being then the property of Gardner, in fact, though still in the joint name of Gardner and Johnson.
On the 4th of November, 1843, Corwin, for the use of Gardner and Johnson, recovered judgment against Keely for the balance ■of $283.60 on the note of $468 not assigned to Collins, and caused the same to be levied on said N.'W. qr. of sec. 34.
On the 26th of July, 1844, Collins assigned the interest in the mortgage which he had acquired from Johnson, amounting to $2,420, to Corwin and Milton Fithian, in these words: “ For value received, I assign this mortgage, and all my right and interest in it, to Milton Fithian and John A. Corwin, and guarantee its payment.” And on the same day, Corwin and Fithian gave their note to Collins, in these words: “For value received, we promise to pay to Jesse Collins six hundred dollars, as soon as a mortgage of Jacob Keely’s, of $2,420, this day assigned to us by said Collins, is collected.”
On the 29th of July, 1844, Corwin and Fithian, fearing that the mortgage was invalid for the alleged want of a proper acknowledgment, made an arrangement with Keely, by which he conveyed to them said southwest quarter of section 35, at about $1,316, in part payment of the mortgage, and gave them new notes, with a new mortgage on the other quarter-section, for the remainder. A memorandum of this arrangement was indorsed on the mortgage, as follows: “ July 29, 1844. We have received ail the amount of this mortgage except $1,200, for which $1,200 we have this day received Jacob Keely’s notes — one payable 25th December, 1845, for $300, and nine notes of $100 each, payable on each succeeding 25th December, until December 25, 1854, inclusive; all, except the first, on 3 per cent, interest, secured by his mortgage on N. W. quarter of section 34, T. 3, R. 14, M.- Rs., 'which, when paid,, will be in full satisfaction of this mortgage and the notes secured by it. We have retained *$1,200 of the notes secured by this mortgage, which we promise to deliver to said Keely upon the payment of said $1,200 first above' mentioned.”
On the 2d of August, 1844, Collins assigned the $600 note to W. & D. McDonald, and guaranteed its payment in five years.
On the 4th of September, 1844, the judgment for $283.60 was assigned by Gardner and Johnson to Corwin.
On the 26th of August, 1845, Eeely put Corwin and Fithian into possession of said northwest .quarter of section 34, and executed- and delivered to them the following contract: “ For value received, I hereby give to Milton Fithian and John A. Corwin, and their assigns, the free and full right to the possession of the northwest quarter of section 34, town 3, range 14 (the same one levied-on), to keep- and use for their own benefit, they being mortgagees of said premises under me, and now having paid me an additional consideration, for the possession thereof until said mortgage is satisfied.”
On the 26th of September, 1845, Corwin assigned all his interest in the mortgage, notes, judgment, and right of possession to Fithian,. who has continued in possession of the said northwest quarter ever since.
On the 26th of September, 1852, Fithian caused an execution to be issued upon the judgment for $283.60, and levied upon said northwest quarter, and on the 2d of November, 1852, became the purchaser thereof at sheriff’s sale, for the sum of $960. Of this sum, $467.29 was applied in satisfaction of the judgment, and the remaining $492.71 was, by order of court, applied as payment upon the mortgage.
Fithian made valuable improvements on the southwest quarter,, and afterward sold and conveyed the same to one Kalor, who paid, a full price therefor without notice of defendants’ rights or claims.
On the 30th of December, 1852, Fithian filed his original bill against Collins and Keely, and W. &D. McDonald were subsequently made defendants thereto.
The petition alleges, that Fithian had, by the means aforesaid, become the owner in fee of both quarter-sections of land, and it prays that he may be quieted in his title and possession *thereto, and that he may recover of Eeely a large balance alleged to be still unpaid on the mortgage; and in default of such payment, that the- $600 note may be surrendered and canceled, and Collins, as guarantor, adjudged liable to pay the balance due on the mortgage, less the amount of the note.
The answers of W. & D. McDonald claim that the mortgage was paid in full by the transaction of July 29,1844, and that Fithian is therefore bound to pay them the amount of the $600 note. But if the mortgage is not to be regarded as paid in full, then they claim that Fithian shall be compelled to account for the full value of said southwest quarter, which they say he obtained for much less than it was worth, and shall account also for the rents and profits of the northwest quarter. They also claim that the said northwest quarter shall be sold for the payment of the mortgage debt, on the ground that Fithian only acquired the equity of redemption therein, by the sale on execution; and defendants file with their answers cross-petitions, asking relief accordingly.
The plaintiff’s petition charges that Collins and McDonalds assented to the arrangement with Keely, indorsed on the mortgage, and the answers do not deny the charge. But the cross-petition charges that the arrangement was made without the consent of Collins or the McDonalds, and the plaintiff’s answer to the cross-petition does not deny this charge.
Keely and Collins are insolvent.
W. S. West, for complainant.
. John H. James, for defendants.

Opinion:
Welch, J.
The real controversy is between the plaintiff and W. & D. McDonald; and the ultimate question is, whether the plaintiff is released from his obligation to pay the $600 note, or from further accounting for the mortgage property.
The plaintiff says he has exausted the mortgage property; that there is still more than the amount of the $600 note due from Keely upon the mortgage, and that Collins is liable upon his guaranty for the excess of the amount so due over and above the $600 note.. But as Keely and Collins are both insolvent, the plaintiff does not press his claim for the balance *gc> claimed to be due, and is content to be quieted in his title to the land, and protected against the payment of the note to W. & D. McDonald.
Under the existing state of the pleadings, we think it must be assumed that the arrangement for part payment and for further time, indorsed on the old mortgage, was entered into without the consent of OolJins or the McDonalds. There is no proof upon that point, and it being charged both negatively and affirmatively, without any answer to either Charge, it seems to us the burden of proof rests on the party asserting the affirmative. One effect, therefore, of this arrangement was to release Collins from his guaranty, by giving further time to ELeely without his consent. The mere giving of further time, however, would not necessarily fix the liability of Fithian to pay the note. The note was payable when the mortgage should be collected, and unless the transaction amounted to a payment or satisfaction of the mortgage, Fithian did not thereby become liable to pay the note. Such, we think, was not the character of the transaction. It was a mere payment of part of the debt, and a substitution of new securities for the balance. It seems to have been entered into in good faith, and to be no more than a reasonable use of the discretion which Fithian might be allowed to exercise, as collector of the claim for the benefit of both parties.
The remaining question is, whether the mortgage property has been exhausted, so that the McDonalds are not entitled to any amount thereof.. There can be no doubt that their interest in the subject-matter is of a nature to entitle them to make the inquiry. In effect, they stand as the owners of the last $600 of the mortgage debt, and have the rights of junior mortgagees, with the additional right to look to Fithian as their collecting agent, for an .account- of his doings in the premises. Fithian has brought the matter before a court of chancery, and the defendants have a right to ask that the court, having once taken jurisdiction of it, shall administer full relief to all the parties. The mortgaged property was the common fund set apart for the payment of both parties, and its management for that purpose was intrusted to Fithian. He has so managed as to become the apparent owner of *it all, without consultation-with the other party. If there was enough of injudiciously managed, to pay both parties, or to reach and partly pay the note, then he ought either to pay the note, or to account for the full value of the property, so far at least as to indemnify the owners of the $600 note. He should have consulted the owners of the note at the time he made the arrangement with Keely. Not having done so, he can not complain if they exercise the option to affirm or disaffirm the same, at least so far as regards the price allowed for the southwest quarter. He ought also to account for rents and profits of the northwest quarter.
In our opinion, the sale of said northwest quarter on execution, passed only the equity of redemption to Eithian, and not an absolute title. The case is not like that of Fosdick v. Rich', 15 Ohio, 84, where a third person was the .purchaser, and where all the parties interested in the mortgage were parties to the judgment upon which the sale was made. Here the assignee of the mortgagee was purchaser, and the other parties in interest, W. & D. McDonald, were no parties, either to the judgment or the sale; and the case is only made stronger against Eithian, by the fact that he was acting as their agent in the matter. But as the purchase money paid by Eithian, the $960, was in fact applied upon the mortgage, that amount of the purchase money arising from a resale, with interest from the time it was paid, will first be refunded to him, and only the balance applied upon the mortgage.
A decree may, therefore, be entered quieting plaintiffs title, on condition that he pay the amount due on the $600 note in-days; and in default of such payment, the decree will direct the sale of the northwest quarter. It will also require Fithian to account for the full value of the southwest quarter, as of the time it was pur. chased of Keely, less the price paid or allowed; and for the rents and profits of the northwest quarter, less taxes and improvements, from the time Keely was liable to be ejected under the old mortgage. The net amount of funds arising from these three sources, after refunding the $960 and interest, to Fithian, will be applied: 1. In payment of the costs ; 2. In payment to Fithian of the balance due on *the mortgage, less the amount of the $600 note and interest; and, 3. In payment of the amount due on the $600 note.
Decree accordingly, and cause remanded for proceedings thereunder.
Day, C J., and White, Brinkerhoee, and Soott, JJ., concurred.