Case Name: Cissna and Others v. Haines and Others
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1862-05
Citations: 18 Ind. 496
Docket Number: 
Parties: Cissna and Others v. Haines and Others.
Judges: 
Reporter: Indiana Reports
Volume: 18
Pages: 496–501

Head Matter:
Cissna and Others v. Haines and Others.
The taking of a new note and mortgage will not operate as an extinguishment of the debt evidenced by the former note and mortgage, nor as a satisfaction of the same, if said note and mortgage were received as mere collateral security for the pre-existing debts, unless superior equities have intervened.
Where a debt, evidenced by a note, and secured by a mortgage, is renewed by the amount of principal and interest being embraced in a new note, which is also secured by an additional mortgage, by way of further security, and a general judgment is recovered on the latter note, the legal effect is to merge both notes in said judgment, that being a higher security, and said judgment should be the foundation of any action for further relief on account of the same debt.
In a decree for the sale of various parcels of lands, incumbered by successive mortgages, and then transferred in fee to different purchasers, the first mortgagee is entitled to the speediest mode of collecting his money, and the Court should therefore direct that they should be offered for sale, not that they should be sold, in the order required by established rules of law or equity.
APPEAL from the Warren Circuit Court.

Opinion:
Hanna, J.
The record in this case is exceedingly volumin ous, but presents only three points upon which any question is here made, and will be no further noticed than may be necessary to an examination of those points.
By the record, it appears that, on the 10th day of August, 1852, Mary Benjamin sold to West &¡ Hunter about 400 acres of land, in Warren county, Indiana, and took a mortgage on the same to secure the unpaid purchase-money. West $ Hunter, on the 17th of March, 1857, sold a part of said land to one Gwinn, who agreed, as a part of the consideration, to pay 1,000 dollars still due of the purchase-money. Of the land so purchased by Gwinn, one Buell, on the 22d day of August, 1857, bought a portion at sheriff's sale on a judgment against said Gwinn, (the execution having become a lien on said land on the 23d of April, 1857), and, as he averred, without any notice of the agreement of said Gwinn to pay said mortgage 'debt. West $ Hunter, on the 16th day of November, 1853, had sold another part of said land to one Mitchell, who, to secure a debt, mortgaged the same to Haines £ Harmon, on the 7th day of January, 1857, and afterwards, on the 18th day of December, 1858, Oissna purchased the same at sheriff's sale on an execution against Hunter, on a judgment, the date of which is not given, the same having again passed into Ms hands in exchange for lands in Illinois, conveyed to Mitchell. The balance of said original tract was, on the 16th day of April, 1860, purchased by one Ohandler, on an execution against West Hunter, issued upon a judgment recovered at the April term, 1858, of the Common Pleas of said county.'
So the titles appear to have been at the commencement of proceedings herein, which were initiated by West Hunter, against Gwinn and others, to compel a payment of the original mortgage to Mary IS. Benjamin, and subject certain parts of said lands therein mentioned to the payment thereof. In the meantime, said Mary had died, and her debt had been transferred, until it was in the hands of said appellant, Oissna.
Such proceedings were had as resulted in a judgment against Gwinn, in favor of West $ Hunter, for the balance of the purchase-money due from him to them, for the part by him purchased, and which sum he had failed to pay on said Benjamin mortgage; and also an order, declaring it a lien, &c., on the part of said tract by Gwinn, purchased, and not then held, by said Buell.
During the progress of the proceedings, Haines $ Harmon, as junior incumbrancers, filed a pleading, based upon their original note and mortgage from Mitchell, and became parties; and, Chandler, appellant, also filed a complaint, as well as answers, setting up his rights under the original mortgage, and under the purchase at sheriff's sale.
Each party prayed that the said original mortgage debt might be made out of said lands, other than the part he held. The whole proceedings, if they could have been considered. distinct, were on motion consolidated.
It was set up in answer, by appellant, to Haines and Harmon's demand on this mortgage and note, that the same had been satisfied, discharged and merged, in this; that said Haines Harmon had taken from Mitchell a new note, and a mortgage on described lands in Illinois, in lieu and discharge of the note, &c., now set up; that the amount of principal and interest of the old debt had been calculated and included in the new note and security, together with other debts; that this second note and security was executed on the occasion of an exchange of lands between Mitchell and Hunter, by which the lands, formerly mortgaged by Mitchell, lying in Indiana, were transferred to Hunter, and those included in the second mortgage were transferred to Mitchell.
To this there was a reply, that the new note and mortgage, although'they included the old debt, were given and received only as collateral security, and not in lieu or discharge of the same; but were to operate as a satisfaction of the amount se cured by said second mortgage, "so far as they proved sufficient to pay said sum, with interest and costs;" and that - a' judgment had been recovered thereon in Illinois, and said lands there situate sold to Jacob Haines on said judgment of foreclosure, for, &c., a sum not sufficient to satisfy said debts; whereupon, &c. The record of said proceeding is made a part of the reply.
There was a demurrer to this reply overruled. Trial by the Court. Judgment for the appellant for the amount due on the original note and mortgage, .and that the equity, &c., in the lands described in the latter, be foreclosed. The equity of redemption of Mitchell, &e., in the land mortgaged to Haines § Harmon, was also foreclosed, and the sum on the same found due, &c.
The following order was also entered as a part of the finding of the Court, to-wit:
"It is further ordered, that for payment of the decree herein, in favor of the said William Cissna, said land be sold in parcels, in the order following, to-wit, till said decree and costs be paid."
Said order then designates, first, the lands sold to Cfwinn, except that purchased bjr Buell; second, that purchased by Chandler; third, that purchased by Buell; fourth, that sold to Mitchell, and afterwards mortgaged to Haines § Harmon, and subsequently purchased by said Cissna.
Three points are made upon this record. 1. Upon the ruling on demurrer. 2. On the admission of evidence. 8. On the order of sale.
It is urged that the appellees, by taking the new note and mortgage, extinguished their debt, and if not, certainly their lien, held by virtue of the mortgage first executed to them by Mitchell; and if in this appellant is mistaken, then, taking the judgment in Illinois on said note and mortgage last executed was a merger of the debt secured by the said Mitchell mortgage; and, consequently, no other suit could be maintained for that debt, unless based upon said judgment.
Tbe evidence is not in tbe record; but the question is presented on tbe demurrer to tbe reply. It may be true, as averred in tbe answer, that a new note and mortgage were taken; but they would not operate as an extinguishment of tbe debt, evidenced by tbe old note and mortgage; nor as a satisfaction of tbe same, if, as replied by tbe holders, said new note and mortgage were received as mere collateral, or additional security, for tbe due performance of tbe promise, unless superior equities intervened.
A somewhat more difficult inquiry is presented on tbe question of merger, in consequence of tbe form of judgment taken on tbe foreclosure of tbe mortgage in Illinois. Tbe judgment is general for tbe recovery from tbe defendants, Mitchell and wife, of tbe sum of, &c., damages, and that plaintiff should have a writ of special execution against tbe lands described in tbe mortgage as lying in Illinois.
It appears to us that tbe notes taken by Haines § Harmon of Mitchell, may be treated as evidences of tbe debt due ^rom him; and tbe several mortgages taken, were but securities for tbe payment of the sum • acknowledged to be due by said notes. Tbe mortgages may have been, as alleged, additional security, and could be proceeded upon as such. But wo think, that as the original sum due was carried forward from one note, tbe first,into tbe second, and judgment, in tbe form set forth, was recovered on said second note, it merged tbe right to proceed upon said second note in a subsequent suit, because the debt thereby evidenced bad assumed a record, or more solemn form. As tbe debt was thus evidenced, and car ried forward by these several notes, we are not able to per ceive but that tbe merger of the right of action on one, merged it as to both; and, consequently, if resort should be bad to other securities than tbe one named in that proceed ing, the judgment so obtained for said debt should be the foundation upon which to rest any additional proceedings, and not the original debt or note.
Joseph H. Proton and James Park, for the appellant.
Daniel Mace, for the appellees.
As to the question on the admission of evidence: The note offered in evidence on the trial, and that described in the complaint, of Haines $ Harmon, and of which a copy was' annexed thereto, differed in some particulars; but not in any thing so material, that an amendment would not have been permitted below on the trial, and will be considered here as having been made.
As to the third point, based upon the order of sale. It is manifest that, as a mere holder of a part of the lands affected by the order, Cissna has no cause of complaint in reference thereto. The lands he holds are the last resorted to for payment. Rut as holder of the original mortgage debt, he had a right to the speediest mode of making his money out of the fund, being the land, thus pledged as a security for the due performance of the promise, unless there were intervening equities.
If the order had directed the offer of the lands in designated parcels, it could not have been said that it interfered with the speedy collection of the debt; but as it requires the lands to be sold, in the order named, it might perhaps operate as a postponement of the day when said debt could be thus realized. Were there reasons for such order ? The equities existing between the various purchasers of said lands, it seems to us, required the lands to be offered in the manner designated by the order complained of, especially when we consider the form of the debt sought to be collected.
Per Curiam.
The judgment is reversed as to that part decreeing in' favor of Haines $ Harmon, and ordered back for further proceedings, not inconsistent with this opinion.