Court Opinion

ID: 5550762
Source: CourtListenerOpinion
Date Created: 2022-01-10 21:35:17.074491+00
Date Added: 2024-06-11T08:35:05.390504
License: Public Domain

The Assistant Vice-Chancellor.
This case must be determined on the equities subsisting between the complainants and Holmes, when the mortgage from the Wilber’s was executed to the latter. His subsequent voluntary assignment for the benefit of creditors, does not affect the question. ,
Thus limited, the case is simple and plain. Holmes was standing in the situation of a surety for the payment of the Wilber’s debt to the complainants, and he took from the Wilber’s a mortgage in which the sum of $500, was inserted for the express purpose of securing to himself the payment of that debt. The complainants, as the principal creditors, were in equity entitled" to the benefit of that security. This principle was settled a century and a half ago, and for a recent instance of its application, I refer to Curtis v. Tyler and Allen, (9 Paige, 432.)
I do not perceive how this equity can be impaired by the circumstance that Holmes was a creditor of the Wilber’s, and the mortgage was executed for the purpose of securing that indebtedness, as well as to indemnify him against the liability to the complainants.
As the debtor of the complainants, it was the duty of Holmes to discharge the liability,' out of any means which he could make available for the purpose.- In addition to this obligation, he became as it were, a trustee for them in respect of the mortgage* so far as it provided for discharging their demand against Wilber’s, *430On receiving $500, or any less sum, on the mortgage, Holmes would have been bound equitably to pay over the same to the complainants, in preference to paying it to any of his other creditors, by reason of this quasi fiduciary relation. And by assigning the whole mortgage, he conferred on his assignees no other or greater control over its proceeds, than he could have exercised himself.
The mortgage was for the absolute payment of the money to Holmes, and not merely to indemnify him against his indorsement. And the terms of payment, placing the $500, first in order, leads to the inference that the parties actually had in view, the effect which the law attaches to the transaction, viz. the discharge of the complainants debt, out of the first moneys received on the mortgage.
Without reference however, to this indication of the actual intention, I think the complainants were entitled to the first receipts from the mortgage, to the extent of their debt and interest against the Wilber’s, not exceeding however the $500, with interest, included in the mortgage in respect of that debt.
And as the assignees knew of the nature of this provision in the mortgage, they would have been subjected to costs, for resisting the bill, were it not for the complainants attack upon the assignment itself. The bill having failed in that portion of it, neither party is entitled to costs against the other.
Holmes having assigned the mortgage without providing for the complainants equity, and joined in resisting it, is not entitled to costs.