Case Name: Hardin vs. Hyde & Everitt
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1863-12-22
Citations: 40 Barb. 435
Docket Number: 
Parties: Hardin vs. Hyde & Everitt.
Judges: 
Reporter: Barbour's Supreme Court Reports
Volume: 40
Pages: 435–441

Head Matter:
Hardin vs. Hyde & Everitt.
A subsequent mortgagee, who takes Ms mortgage expressly subject to a prior mortgage wMch is liable to be defeated by the mortgagor, as invalid, as contravening a public statute, cannot avoid it for Ms own benefit and thus acquire a better lien than he contracted for. Allen, J. dissented.
THIS action was commenced to foreclose a mortgage made by John G. Pitt, November 4th, 1857, to Albert G. Story, upon certain premises in Herkimer county, to secure the payment of $9409.11 and interest. The condition stated that it was intended as security for the payment of that sum to Albert G. Story, in trust, to collect, receive and apply the same or so much thereof as might be necessary, to the full payment and satisfaction of the sum of $3000 and interest, to the Herkimer County Bank, and of the further sum of $1000 and interest thereon to the Mohawk Valley Bank, and the further sum of $1000 to the Montgomery County Bank, and of the further sum of $1000 and interest to the Pulaski Bank. The condition further stated that the above sum was on account of liabilities which said John G. Pitt had incurred to each of said banks respectively.-
The defendants, Hyde & Everitt, were made parties as claiming an interest as subsequent incumbrancers; and they interposed an answer, alleging, among other things, that the mortgage to Story was illegal and void, as being taken in contravention of the statute, which provides as follows: “Ho conveyance, assignment or transfer of any effects for the use, benefit or security of any such corporation, shall be valid in law unless it be made to the corporation directly by name ; but the provisions of this section shall not be construed to apply to a conveyance or assignment for the benefit of creditors, in which such corporation shall be included, or to a conveyance or assignment of the effects of a debtor under the laws of this state, or of any other state or country.” (2 B. S. 5th ed. p. 519, § 7.) It appeared upon the trial, before Justice Mullih, that the mortgage had been duly assigned to the plaintiff, subject to the execution of the and that there was due and unpaid thereon $4646.78; and that $2730 of that sum, besides interest, was due to the Herkimer County Bank, which was a safety fund bank and within the provision of the above statute.
The defendants were subsequent mortgagees, and their mortgage contained the following clause: “The foregoing described lands are subject to a mortgage to A. G-. Story, upon which there is unpaid about five thousand dollars.” It was admitted that there was due upon this mortgage at least the sum of $1000.
It was proved upon the trial that there was personally due from the mortgagor, John C. Pitt, $2730, besides interest, to the Herkimer County Bank, on account of his note of the date of December 17th, 1861. That note was for $2730, and was made payable to the order of Albert Gr. Story. Pitt made a general assignment for the benefit of creditors, January 2d, 1862.
The judge held, as a matter of law, that although the Herkimer County Bank is a moneyed corporation within the intent and meaning of the statute above cited, the defendants Hyde & Everitt could not avail themselves of the illegality in the mortgage from Pitt to Story, in trust for the security of Pitt’s indebtedness to that bank, for the reason that the mortgage of said Hyde & Everitt was made, by its terms, subject to the said Story mortgage. To this ruling the defendants excepted. Judgment of foreclosure having been entered up for the whole amount, including the sum due to the Herkimer County Bank, the defendants appealed from the decision of the judge to the general term.
Ward Hunt, for the appellant.
George A. Hardin, plaintiff, in person.

Opinion:
Morgan, J.
The defendants took their mortgage expressly subject to the prior mortgage. It may be admitted that the mortgagor could defeat the prior mortgage, quoad the Herkimer County Bank as invalid. (2 R. S. 519, § 7, 5th ed.) But the question is a different one when the defendants propose to intervene between the mortgagor and the bank. It cannot be distinguished in principle from the case of a usurious mortgage which the statute declares to be void, but which a purchaser of the land, who takes it subject to the usurious mortgage, cannot avoid for that reason. (Post v. Dart, 8 Paige, 639. Cole v. Savage, 10 id. 583.) It can be avoided only by the party who made it, or by some one standing in legal privity with him, and not by a mere stranger to the transaction. (Dix v. Van Wyck, 2 Hill, 522) A purchaser of the equity of redemption cannot, nor can a subsequent mortgagee, set up the defense. (Sands v. Church, 2 Seld. 347.) The defendants having taken their mortgage subject to the prior mortgage, now come into court and claim to violate their own agreement by setting up a defense, in which the debtor alone has an interest. In this I think they are mere volunteers, and equity in general is remedial only to those who come in upon actual consideration. (1 Fonbl. Eq. 348.) In a bill for relief, the want of title in the plaintiff is fatal. (Story's Eq. Pl. § 512.) And when the defendants have precluded themselves from questioning the plaintiff's title, but have agreed to take subject to it, there is no ground upon which they can invoke the aid of a court of equity to put them in a better position than they contracted for. If they succeed, they take a lien larger than they contracted for, and leave the debtor still liable to pay the debt which they agreed should be a prior charge upon the mortgaged premises. I think the judgment should be affirmed.
Hardin v. Hyde.
Mullin, J. and Bacon, J. concurred.