Court Opinion

ID: 3616490
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:59:27.850842+00
Date Added: 2024-06-11T14:07:34.092330
License: Public Domain

It was insisted that the equitable doctrine of marshalling securities affords the nearest analogies and best guide for the interpretation of the acts of the complainants in reference to the two securities in question. I am unable to perceive any analogy between the cases. The familiar principle, that if one party has a lien on two funds for a debt, and another party a lien on one of those funds for another debt, equity will compel the former to resort to the fund in which he has an exclusive interest in the first instance for satisfaction, has no application to these parties. To authorize the interference of a court of equity in the case supposed, the first creditor must have a lien upon, or interest in, each of the funds, with the right as between him and his debtor, to resort to both or either of them for satisfaction. But the complainants in interest in this cause, as we have seen, never had a lien upon both of these mortgages. They had an election which of the two they would take, and when that was determined, the exclusive and absolute right to the one chosen, and that only.
There is another, and to my mind an insuperable objection, to the maintenance of this suit. The equity by which the complainants would avoid the effect of their own deliberate acts in affirmance of the second mortgage and a ratification of the act of the clerk in discharging the first, is an equity in behalf of the Trust Company, and not in favor of the complainants.
The design of Jones and Graham and the clerk, as we have seen, was to substitute the second for the first mortgage. They failed in this, as the complainants allege, in consequence of not obtaining the sanction of the court. The appellants, who in good faith advanced their money, relying upon the validity of the discharge of the original mortgage executed by Walworth, must lose all, or be remitted to the second security. This is theirequity. It results from the election of the complainants to avail themselves of their legal right to the first mortgage. How can this equity be invoked by the complainants to sustain this suit? By what right did they constitute themselves the *Page 452 
guardian of the Trust Company, and undertake, by foreclosing the second mortgage, to determine for the latter the time and circumstances under which they shall enforce a claim implied in equity exclusively in their favor? The foreclosure of the second mortgage, without adopting the acts of the clerk in discharging the first, in virtue of the equity above mentioned, and without making the appellants parties to the suit, if not a fraud upon them, was without color of right.
The supposed trust in favor of the appellants, with which the complainants now claim they were affected, was not suggested or alluded to in that suit, but they foreclosed as the rightful and absolute owners of the second mortgage. I think they must be concluded by their election to accept the second security, made under the circumstances and with the knowledge disclosed by the pleadings and proofs in the cause.
The bill can be sustained only upon the assumption that the second mortgage was given as additional security for the same debt, an assumption without proof and entirely repugnant to the arrangement of the parties and the purpose for which it was executed. The decrees of the supreme court and of the assistant vice chancellor must be reversed.
And thereupon the decrees of the assistant vice chancellor and of the supreme court were reversed, and the bill ordered to be dismissed with costs in the courts below, but not on this appeal.