Court Opinion

ID: 3633210
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:12:09.016201+00
Date Added: 2024-06-11T13:34:04.858931
License: Public Domain

The premises conveyed to the defendant were, in terms, made subject to the payment of a mortgage of $4,000 to the Home Insurance Company. The amount of $4,000 as represented by this mortgage, was deducted from the purchase-money to be paid by the defendant. In making the first conveyance, Allen and Stevens, the original owners and the mortgagors, deducted the sum of $4,000, as represented by this mortgage, which mortgage was declared to be a lien on the premises, and was expressly agreed to be paid *Page 55 
by their immediate grantees. The plaintiff by assignment has succeeded to their rights. The purchase by the defendant was made with a full knowledge of all the facts in the case. To allow the defendant to hold these premises upon paying the sum of $2,000 only, as the price of their release from the mortgage, would be putting into his pocket $2,000 of the plaintiffs' money, or the money of Allen and Stevens, without a pretence of right. The original grantors would lose $2,000, expressly agreed to be paid by the defendants' grantors, which sum the defendant would unjustly obtain. This result would subject the law to a scandal, to which it is not justly liable.
The premises were purchased by the defendant, and conveyed to him "subject, nevertheless, to certain mortgages now a lien on said premises; one made to the Home Insurance Company, to secure the sum of $4,000, with interest, and the other made to Ira A. Allen to secure the sum of $1,000." In receiving his conveyance upon these terms, the defendant admitted and agreed, that this $4,000 mortgage was a lien upon the premises. He cannot now deny it. If the conveyance had contained the further words, "which the said grantee hereby assumes and promises to pay," a personal liability would also have existed, by which he could have been compelled actually to pay the mortgage, although the deed was not signed by him. (Lawrence v. Fox, 20 N.Y., 268; Ricard v.Sanderson, 41 N.Y.R., 179.)
Such a clause would, however, have no greater effect in subjecting the premises, than is imposed by the clause as it stands. This subjecting of the premises is a mode of payment. Four thousand dollars of the purchase-money, it is agreed, shall be paid to the party holding this mortgage, and to the full amount of its face. The mortgage is by the new agreement made a lien to its face, and its payment in full is to be in discharge of a like amount of the purchase-money.
Two objections are mainly relied upon as justifying the judgment below: 1st. That the insurance company advanced only the sum of $2,000; that they could have enforced the mortgage for no greater amount against Allen and Stevens, *Page 56 
and that they could transfer to their assignee no greater rights than they possessed. 2d. That if Allen and Stevens, or the insurance company as their trustee, could have recovered the whole amount, that it was as a lien or equitable claim, and that the simple transfer of the mortgage did not carry with it such lien or claim.
1st. I look upon the insurance company as holding this mortgage in a double capacity, as owners to one-half of the amount, and as trustees for Allen and Stevens for the residue. The latter wished to impose a mortgage of $4,000 upon the lot. The insurance company did not wish to advance the whole amount, and the mortgagees were willing to accept a reduced amount, allowing the mortgage to stand for its face. It is quite true, that in a controversy between the mortgagees and the company, the latter could not have compelled the payment of the full amount. It is equally true, that where there is no such controversy, where the makers desire it to be enforced to its nominal amount, where the holders of the property have consented and agreed that it should be so enforced, and have had a deduction of $2,000 from their purchase-money based upon the payment by them, or the subjecting the premises to the full amount of the mortgage, that the payment in full should be enforced. The insurance company may collect the full sum. They hold it for their own benefit to the amount advanced by them, as trustees for Allen and Stevens for the amount not advanced. (Parish v. Wheeler, 22 N.Y.R., 511, 515.) This is precisely what the defendant agreed should be the state and liability of the premises. It is an agreement made by each of his previous grantees, and which it would greatly injure the grantors to allow them now to repudiate. Upon the principle I have laid down, exact and equal justice to all, is measured out. It may also be likened to a lien for unpaid purchase-money, which will be enforced against the vendee, volunteers, and all claiming under him with notice, although the deed contains a formal acknowledgment of the payment of the money. (Stafford v. VanRensselaer, 9 Cow., 316.) *Page 57 
The second objection has no merit. It is a general rule in regard to contracts, that the assignment of the principal subject carries with it all the collaterals. Thus the assignment of a bond carries with it the mortgage to which it is collateral. (Jackson v. Blodgett, 5 Cowen, 202.) So the assignment of a judgment for a debt carries the debt, and if the latter be secured by a mortgage, it carries the mortgage interest. If the assignment be only of a part of the judgment, it carries a corresponding interest in the mortgage, and it cannot be shown by parol that it was intended that the mortgage should not pass. (Pattison v. Hull, 9 Cow., 747.) This is true also in the case of a chattel mortgage, and whether the assignment is made before or after forfeiture. (Langdon v. Buel, 9 Wend., 80.)
So where a party advanced $5,000 to a bank, receiving a time draft, which was discounted for the holder by another bank. In an action by the latter bank against the former it was held, that the draft was illegal, and no action could be maintained upon it. It was further held, that the party receiving it might maintain an action for money had and received against the bank issuing it, and that this right of action passed to the latter bank by the transfer to it of the invalid draft. (The Oneida Bank v.Ontario Bank, 21 N.Y.R., 490.) See also Tracy v. Talmadge
(14 N.Y.R., 192), where the transfer of certain invalid post notes was held also to transfer the consideration upon which they were issued, and to allow the transferee to recover its amount.
In White and Todd's Leading Cases in Equity (65 Law Library, 245), in regard to a vendor's lien for the unpaid purchase-money, it is laid down as the settled law, that if the debt is secured by an express lien, as a mortgage, or an agreement for a lien which creates an equitable mortgage, or where the vendor has not parted with the legal title, an assignment of the debt entitles the assignee to the benefit of the pledge.
Considered either as a lien or as an express security, the formal title in the mortgage to its nominal amount passed to *Page 58 
the plaintiff. The judgment should have directed the collection of the full amount of $4,000 and interest.
For reversal, GRAY, HUNT, LEONARD and EARL, C.C. For affirmance, LOTT, Ch. C.
Judgment reversed, with costs, and judgment of foreclosure for the sum of $4,000 and interest from July 1st, 1859, with costs, ordered for the plaintiff.