Court Opinion

ID: 6237266
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:35:32.66439+00
Date Added: 2024-06-11T08:58:05.254500
License: Public Domain

Mr. Justice Gordon
delivered the opinion of the court, January 2d 1883.
Erom the Auditor’s report, and the papers of this ease, we gather the following facts : On the 14th of February 1878, W. G. Stoughton executed a mortgage, in the sum of $4,850 to Charles McCandless, on four several tracts of land situated in the county of Butler, among which was the one undivided third part of a tract of one hundred and twenty acres in tire township of Oakland.
On the same day, and as part of the same transaction, McCandless executed and delivered to Stoughton a paper in which was set forth, among other things, that the mortgage was given to secure him (McCandless) against any loss he might sustain by reason of his endorsements of certain notes of Stoughton, in the Parker Savings Bank, the Butler Savings Bank, the First National Bank of Butler, the German National Bank of Millerstown, and the Third National Bank of Pittsburgh, and if the notes were paid by Stoughton, or, if McCandless was otherwise released from their payment, then, and in that case, the mortgage was to be satisfied.
Previously to this time, however, W. II. II. Riddle, had become endorser for Stoughton, on a note of some five thousand dollars which was discounted by the Harmony National Bank, and as part security for this endorsement, Stoughton had executed a deed to Riddle for the one-third part of the one hundred and twenty acre tract of land in Oakland Township, afterwards included in the mortgage above mentioned.
This deed was not recorded, but deposited for safe-keeping in the bank last named. We need hardly stop to say that this *437deed, given, as it was, as security for Biddle’s endorsements, was equitably a mortgage, the defeasance resting in parol, though the auditor seemed to think that the fee was thereby vested in the grantee. This was a mistake ; a mistake which, perhaps, led to the erroneous disposition of this case. Then, when Stoughton came to execute his mortgage to McCandless, he refused to put into it the land thus deeded, unless McCandless would first agree to assign to Biddle two thousand dollars thereof, a sum deemed equivalent to the value of the land. This, McCandless agreed to do, and this agreement was consummated by the assignment of the 26th or 27th of May 1878, and which Biddle, in turn, assigned to the appellant. It will thus be seen that so far from there being no consideration passing from Biddle to Stoughton and McCandless for the assignment, as the Master assumed, there was a full and adequate one, for Biddle’s acceptance thereof operated to release his prior lien upon the land ; a lien, of which, though not of record, McCandless had notice, hence binding as to him. Now, McCandless and Stoughton both being insolvent, there is no doubt or dispute about the position assumed by the learned auditor, that equitably the payees of the unpaid notes were subrogated to the rights of the endorser in the mortgage which was given to secure him. But they cannot bo subrogated to any other right than that which he had. They but stand in his place; they cannot deprive Biddle of a right which was contemporary with that of McCandless. The mortgage was executed as well for the use and security of the latter as of the former, hence the creditors of the one cannot interfere with that which in equity and good faith belongs to the other. It follows, that there should have been a pro rata distribution between the appellant, as assignee of Biddle, and the creditors of Stoughton and McCandless, in the proportion that two thousand bears to twenty-eight hundred and fifty.
We may say further, that we do not concur in the position assumed by the counsel for the appellant, that Biddle’s assignment, because of his superior equity, was first entitled to payment even to the exhaustion of the fund. Riddle’s equity was not superior to that of McCandless. It is true his lien upon the premises was the earlier of the two, but the very foundation of his right in and to the subsequent mortgage, and in the fund now in court, rests upon the fact that he voluntarily relinquished that lien in consideration of the interest which he obtained in that mortgage. Such being the case, it is obvious, that he cannot now go back to that which he, for a valuable consideration, abandoned.
We think the auditor’s charges are out of proportion to the *438York necessary to the disposition of a case of this kind, hence direct their reduction to the sum of one hundred dollars.
The decree of the court below is reversed at the costs of the appellees, and it is ordered that redistribution be made in accordance with the above and foregoing opinion.