Court Opinion

ID: 4926789
Source: CourtListenerOpinion
Date Created: 2021-09-24 00:57:56.985165+00
Date Added: 2024-06-11T08:14:22.378998
License: Public Domain

Tire case was continued, for advisement, and the opinion of the Court was afterwards prepared by
Weston C. J.
While the President, Directors and Company of the Atlantic Bank, were the assignees of the mortgage, given by Richard Cutís to the plaintiff, if the defendants, the owners of the equity, would redeem, payment was to be made to tbe Bank; and all negotiations in relation to that mortgage, were to be made with them. In July or August, '1832, the defendants, having paid, the money due to the Bank, acquired virtually and substantially the interest of the latter. They did not apply the moneys paid to the extinguishment of the mortgage, made by Richard Cutis, nor did they in point of form become the assignees of tbe mortgage, made by the plaintiff; but the Bank became tbe trustees of that title for their benefit, by the express terms of the instrument of July, 1832. The Bank ceased to have any beneficial interest in the principal debt, or the collateral security.
It would seem from tbe case, as it is presented to us, that from some community of interest, between the defendants and certain of the stockholders and influential directors of tbe Bank, the latter were disposed to mould their remedies and proceedings, in a manner best calculated to promote tbe views and interest of the former. Tbe defendants were disposed to make the most of the liabilities of the plaintiff, in the hope, probably, of collecting part of the money due from him to the Bank, keeping on foot for this purpose the suit brought, and the attachment made in their name, and intending also to hold the land, against any claim he might set up, by a foreclosure of the mortgage, executed by him. How far these measures might liave been successful, it is unnecessary to inquire; for they were defeated by the payment made by the plaintiff, before the foreclosure against him bad been perfected.
From the character of tbe controversy between these parties, the land must be understood to be of greater value, than the amount due upon the mortgage made by Richard Cutis, or than the amount for which the plaintiff was liable to the Atlantic Bank. *332If then, the defendants, upon tire suit in the name of the Bank, had collected part of the sum due to them from the plaintiff, and had also foreclosed the mortgage against him, he would have been subjected to the loss of all, that might have been thus obtained in the action upon his personal security. Having baffled them in this attempt, the plaintiff now turns round upon the defendants, and endeavors to defeat their equity under Richard Cutts, which he insists he has a right to do, from the manner in which the business was transacted by the defendants and the Bank. And if such should be the legal result, although the defendants now claim the favor due to mortgagors, who would redeem their pledge, upon a proffer- of full payment, there is nothing in their case, which calls for special sympathy.
At any time, prior to the eighteenth of jDecember, 1833, they had an undoubted right to have made the land their own, by paying to the Bank the amount due on the mortgage, made by Richard Cutts; and this sum thus received, the Bank were bound to apply to the extinguishment of the debt due to them from the plaintiff; and thus both would have been discharged, being about equal in amount. But there is much reason to believe that the defendants and their allies in these transactions, the Bank, combined to collect from him a sum of money for the use of the defendants, and in addition thereto to make the land mortgaged their own, by a foreclosure against him.
The parties stand upon their legal and equitable rights; and we are called upon to determine whether the mortgage of Richard Cutts has been foreclosed. Until foreclosure, the mortgagee holds the pledge first, for himself, to the extent of his lien, and secondly, in trust for the mortgagor. And he is bound to ordinary pare and diligence, in the preservation and management of the property. The pledge which the Bank received, was' subject to a paramount right of redemption in Richard Cutts and his assigns. They had a right to receive the money and discharge the first mortgage. If they had abused the trust, and had cancelled the bond and the first mortgage, without payment, what would have been the measure of their liability ? They would .undoubtedly have been holden, not for the value of the land pledged, but for - the amount due, as if they had actually received the money. And this would have *333been the whole value of the plaintiff’s interest in the pledge. As assignees of the mortgage, they had the control of the remedies provided by law, either to compel payment or to effect a foreclosure. If they might discharge the mortgage before foreclosure, of which we think there can be no doubt, we perceive no sufficient reason why they had not the power to waive and relinquish possession, or any other remedy, which they were at liberty to pursue. They might be liable for the unfaithful management of their trust. Indeed, the Bank had conducted the business, with so little regard to the interest of the plaintiff’ that we doubt not he might have held them answerable to him for the whole amount due on Richard Cutís’ bond, and have required that it should be applied in payment of his notes, if he had not chosen to redeem his mortgage by paying the notes himself.
But when he took back the pledge, he received it in the condition in which it actually remained in their hands. They had waived in favor of the defendants, the assignees of Richard, Quits, the foreclosure which had been in a train for consummation. Nor do we think that before the foreclosure had been perfected, the consent of the plaintiff was essential to the validity of the waiver. In the first place, the Bank were the mortgagees in possession, with whom, therefore, the original mortgagor had a right to negotiate. Secondly, they had a right to determine for themselves, whether they would receive the pledge in payment, and thus convert their money into real estate, or whether they would suffer it to remain as collateral to their personal security, the bond. The plaintiff by declining to redeem, so far as he was concerned, might have thrown the mortgage upon them in payment of liis own debt, but they would have been left to deal with the first mortgagor at their own discretion.
The entry against the assignees of Richard Cutis for condition broken was their act. Their attorney entered by authority from them, and the widow and heirs of 'Thornton were notified, that the Bank would hold for the purpose of foreclosure. The attorney testified, that the plaintiff consented to what was done; hut this was by no means necessary to give it validity, nor was it the less their act. They did not profess to do it by the request, or for the benefit of the plaintiff. We are not aware of any reason *334■why they might not be permitted to waive it, with the assent of the assignees of Richard Cutís upon whom it was to bear. Suppose the attorney, the next day after he had taken possession, had, in pursuance of instructions, written to the assignees of Richard, that upon further consideration the Bank had concluded to waive their entry for the purpose of foreclosure, might not the assignees have confided in the second notice, as a relinquishment of the first ? We think they might. The Bank, while the mortgage was in their hands, represented the plaintiff, the first mortgagee. They were clothed with full power, as his substitute, to treat with the mortgagor. Much more had they authority to determine the continuance, quality and intention of their own acts.
We cannot consider the waiver of the foreclosure a fraud upon the plaintiff. His security, to the amount of his debt, remained unimpaired. The lien continued on the land; and he was at liberty to pursue his personal remedy on the bond. Much of the argument of the counsel for the plaintiff, turns upon the assumption, that the entry against the widow and heirs of Thornton was made for him. While he held, he had no desire to foreclose. Why ? He would not injure his brother. How does it appear, that he had less sympathy for his widowed sister and her children ? He consented to what was done by the Bank against them as well as against himself. He acquiesced in what he could not prevent. When he came to redeem, he paid part of the expense, incurred on account of the mortgage. Rents are credited in the same account ; and we see not why a part of the expense necessarily incurred, is not a fair charge in offset. But if the foreclosure had been waived, as we hold that it was, it could not be set up by the act of the plaintiff, in making the payment, or by the Bank in receiving it. We cannot regard the entry to foreclose as his act when done, and it could not be made his by relation, to the prejudice of third persons. Before the payment relied upon as an adoption, had been made, the act had been waived and vacated by those by and for whom it was done.
We have examined the authorities cited for the plaintiff, but are not satisfied that they conflict with the right or competency of the Bank, under the facts in the case to waive their entry to foreclose, against Richard Cutis and his assigns. To determine otherwise, *335would be giving an undue advantage to the plaintiff over the defendants, who had been thrown off their guard, by confiding in the waiver by his assignees of their own act. If the law however had accorded him this advantage, we should have recognized it with the less reluctance, as experiments were tried by them, which might have subjected him to loss. As upon the facts, we are of opinion, that the equity of the defendants is not foreclosed, the verdict is set aside, and a new trial granted. And we come to this result, with the more satisfaction, as full justice may be done to the plaintiff, by holding the land charged with the full amount of his incumbrance.