Court Opinion

ID: 6431695
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:08:49.457763+00
Date Added: 2024-06-11T15:52:13.189138
License: Public Domain

Morton, J.
The contract provided that “the builder shall have full right to assign said mortgage [as] collateral security, or as a direct assignment for the purpose of enabling the builder to obtain the necessary work, labor and materials, by him to be performed and supplied.” The agreed facts show that Cohen, the builder, made an assignment of the note and mortgage to the defendants Gove as security for a note for $4,000 given by him to them, on which they advanced him $3,900. Subsequently Cohen made a second assignment of the note and mortgage to the claimant Thurston to secure a note of $1,000 given by him to her, and she advanced on account of said note and security for the payment of lumber and materials which were used to complete the building referred to in the contract, $925, which sum was used to pay for said lumber and materials. When Miss Thurston took the assignment the note and mortgage were overdue. She knew nothing about the terms of the contract between the plaintiff and Cohen. The mortgage was foreclosed by the defendants Gove and there remains in their hands the sum of $586 over and above *121the amount of their note and the expenses of foreclosure. Cohen failed to perform his contract and the plaintiff contends that the note and mortgage are subject in Miss Thurston’s hands to any equitable defenses which he might have had in an action by Cohen against him on the note, and that inasmuch as the trial judge has found against Cohen in his favor for breach of contract in the srnn of $1,050 he is entitled to the balance in the hands of the defendants Gove.
The lien of the mortgage attached to the balance in the hands of the defendants Gove and passed to the claimant by virtue of the second assignment of the mortgage to her which Cohen had authority to make by the express terms of the building contract. There was nothing in that contract limiting the time within which an assignment could be made, and the claimant took the assignment in good faith for value. As against the claimant it is immaterial, therefore, what defenses the plaintiff might have had in an action by Cohen against him on the note and mortgage. If he wanted to save the right to such defenses he should have reserved it in the building contract; but it is manifest that such a reservation would have destroyed the value of the mortgage for use by Cohen as collateral security, and would have been inconsistent with the right of assignment that was given him to enable him “to obtain the necessary work, labor and materials,” and for that reason was no doubt omitted.

Decree affirmed with costs.