Court Opinion

ID: 6558464
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:05:18.686077+00
Date Added: 2024-06-11T15:56:25.733895
License: Public Domain

The Chancellor:—
Let us consider in the first instance the complainant’s claim to be reimbursed the $500 ; collected under the mortgage given by him.
The bill claims that, in giving the $r 500 mortgage, Schock became, according to the true construction of the agreement and power of attorney which accompanied the transaction, a surety to Lesley for the first three instalments of the Fleming bond and mortgage, and, upon payment of them, was entitled to be subrogated to Lesley’s right to collect them and was even authorized under the power to collect them in advance. On the other hand, the construction, insisted upon by Lesley, has been, that Schock’s mortgage was given as a collateral security for the whole debt under Fleming’s mortgage, entitling Lesley to collect the first three installments of $1500 out of Schock, and to hold the land mortgaged by Fleming for *102the balance, so as in effect to make the two mortgages, taken together, a security for the debt of $4500.
The latter is the construction which has already been given to this transaction, by the Court of Appeals, in the former suits between the same parties. Those suits arose out of the attempt made by Schock to use the power of attorney for collecting by legal process the first three installments under the Fleming mortgage. The Court of Appeals restrained Schock from such proceeding, even though, before the final decree was reached Schock, had paid the $1500; and the ground assigned for their opinion was that Schock’s mortgage stood as an additional security for the whole Fleming debt of $4500, so that, in effect, Lesley held Schock’s mortgage as a security for the first three installments of the Fleming debt and held the Fleming farm for the balance. The controversy in those cases turned much upon the effect of the word “collect” in the power of attorney given by Lesley to Schock, which Schock’s counsel insisted included any legal process of collection, and, in effect, entitled Schock absolutely to those installments, whatever might be the effect upon the ultimate security-of the whole $4500 debt. But the Court held that, on a fair construction, the power to collect applied only to the receipt of voluntary payments by Fleming and did not warrant any legal process, on the bond or mortgage, which might prejudice Lesley’s ultimate security for the whole debt of $4500, to ■ which end the Court considered the Schock mortgage and the power of attorney subordinate.
This is the substance of the opinion of the Court of Appeals as delivered by Judge Wootten. I am bound by the construction thus given to this transaction, and accordingly must hold that Lesley was entitled to receive out of the proceeds of sale of the Fleming farm the whole balance unpaid of the $4500 and its interest before *103Schock would be reimbursed the $1500 he had paid Lesley. Now it appears that the proceeds of sale of the Fleming farm ($3994,66) are insufficient to pay the balance due Lesley, even over and above the $1500 received upon Schock’s mortgage. He is therefore not bound, under the decision of the Court of Appeals to refund to Schock the $1500.
Schock had under the arrangement, two chances of being reimbursed the $1500 paid by him. One was by obtaining voluntary payments from Fleming under the power of attorney. The other was the chance that the Fleming farm might sell for enough to pay Lesley the whole debt of $4,500 which would have entitled Schock to receive back the $1,500. Both these chances are gone and no remedy remains to Schock except upon Fleming’s personal responsibility. We pass now to the other object of the bill.
It appears that, at the date of Lesley’s sale to Schock, and the agreement to transfer to him the Fleming mortgage, 22 August, 1859, there was interest in arrear upon that to the amount of $405, which interest was collected as part of the proceeds of the sale of the Fleming farm under the mortgage, and came to the hands of Lesley. The Sheriff paid to Lesley $3,994.66 as the net proceeds of the sale. It is true that this sum did not pay Lesley the whole of the debt and interest, but it must be considered as applicable to the interest in the order of time in which it accrued to the $405 originally due in preference to interest subsequently accruing. The complainant claims that this $405 of interest in arrear at the date of the agreement to assign the Fleming mortgage, was, by the terms of the agreement, reserved to him absolutely— that it was not. at all subject to the arrangement for securing the $4,500 to Lesley—no more so than if the accrued interest had not been assigned at all; and that therefore, Lesley having received it, is bound to pay it to Schock.
*104I am of opinion that this position is well taken. Upon a fair construction of the agreement and power of attorney, Lesley accepted the Fleming mortgage as a sufficient security to the amount of $3000, with Schock’s mortgage for $1500, to make good the whole debt, $4500. He took the risk of the Fleming farm being worth $3000 and the interest subsequently accruing, and agreed that Schock should reserve for his own use, absolutely and in all events, the previously accrued interest,—the $405. I cannot read the agreement of August, 22,1859 and the power in any other intelligible sense. The agreement, after providing for the assignment by Schock of the Fleming mortgage and for his giving his own mortgage for $1500 collaterally, proceeds to stipulate on Lesley’s part that he shall give to Schock a power of attorney authorizing him to collect “the install- “ ments due on the said assigned mortgage,” i. <?., the Fleming mortgage, which, as explained by the agreement must be taken to refer to the first three installments :—and also, “the interest due and to become due thereon,” which includes the $405. The agreement then proceeds to direct how the installments and interest, so to be collected, shall be applied, in these words; “and to appropriate the same to “ the payment of the aforesaid mortgage of $1500, until the “ whole sum of $1500, and the interest as aforesaid, is fully “paid and satisfied.”
There is a manifest inaccuracy of language here, in including the interest in arrear in the appropriation to the payment of the $1500 ; for the power covered enough exclusive of the interest in arrear, to pay the $1500 and its interest. The first three installments of the Fleming mortgage, and the interest to grow due, exactly covered the $1500 mortgage and its interest. And besides, the interest in arrear is in the next clause expressly and absolutely reserved to Schock. The words are, “and that the said “ Schock shall retain and receive and take for his own use “ all the interest now due upon the aforesaid mortgage of *105“ John Fleming from the date of said mortgage until the “ date of the said instrument of writing,” i. e., the power.
The power is still more explicit and conclusive. It thus describes the installments and interest which Schock is authorized to collect and the mode of their application. They are sums of money “which are due or will become due “ on a certain mortgage, &c.,” i. e., the Fleming mortgage “as follows, to wit: $500 the principal and $450 the interest, “$45 of which said interest to be paid to the said Lesley, “ with the aforesaid $500 principal, on or before the “ 1st day of March, A. D. i860.” Here it appears that, by the 1st day of March, A. D. i860, the March next following the agreement, there would be interest due to the amount of $450 which included the $405 in arrear at the date of the agreement and $45 to accrue after the date of the agreement. Now observe how carefully the power divides this $450 of interest between Lesley and Schock, “ $45.00 of which said interest to be paid to “ the said Lesley ” is its direction, and then after referring to the two following installments payable in March .1861 and March 1862 with their interest and directing that the sums thus authorized to be collected by Schock, he shall apply in paying the $1500 mortgage given by him, the power excepts the $405, that part of the interest accrued before the agreement, in these words, “ except the “ sum of $405 interest which the said Schock is hereby au- .'' thorized to appropriate and apply to his own use!’ It is difficult to see how the intent of the parties could have been more clearly manifested that this interest was not to pass to Lesley in any event. I say not in any event, because, clearly, if this $405 of interest in arrear was in any contingency to be applied to make up the $4500 debt, he would not, by the power of attorney, have authorized Schock to collect it without some security for its due application, such as he was so careful to take for the $1500,the amount of the three installments and the future interest on them.
*106It was argued that Schock was to take the $405 only-in the event of its being obtained from Fleming by a voluntary payment under the power ; that the reservation of the accrued interest was to have no effect as to money raised by sale under the mortgage. But, upon a fair construction of the agreement, the reservation of the accrued interest was absolute and Schock was to take it however it might be raised, whether by voluntary payment or by sale under the mortgage. The terms of the reservation in the agreement are general and not specially connected to the power of attorney. It is in a distinct paragraph running thus : “ And that the said Schock “ shall retain and receive and take for his own use all the “ interest now due upon the aforesaid mortgage, &c.” There could be no sensible reason why the disposal of the accrued interest as between Schock and Lesley should depend upon the mode in which it should happen to be paid.
Another argument still more earnestly pressed was that the primary object of this whole arrangement was to secure to Lesley the $4500, to effect which object, it was insisted, he must be allowed to retain the $405 towards making up the deficiency of the Fleming farm, to raise the $3000 and its interest, remaining after Schock’s paying $1500 and its interest. But the answer to this is, that Lesley took the risk of the sufficiency of the Fleming farm as a security for the $3000, with the interest after the date the agreement. Doubtless it was the object of the arrangement to secure to Lesley the $4500"; but it is clear that he considered the Fleming farm at $3000, and future interest, with the Schock mortgage for $1500, ample security, and was willing to rely upon it and to relinquish-as he most expressly did the interest in arrear. Having done so he must abide the consequences.
Again the decision of the Court of Appeals, in the former suits, was relied on as affirming Lesley’s right to *107the entire fruit of this mortgage, including the interest in arrear, if needed, to make up his whole claim the $4500 and its interest. I cannot so read that decision.
The controversy in those cases did not touch the accrued interest or the $405. No allusion is made to it in the decision of the Court nor was any point ruled which covers it. What the Court, decided was (1) that Schock should not use the power to collect the first three installments of the Fleming mortgage by execution, but that Schock should use the power only to obtain voluntary payments ; and (2) the construction, which the Court gave to the agreement, was, in effect, that, should the mortgage be ultimately collected, Shock could receive nothing back of the $1500 he had paid, except such surplus as there might be after satisfying Lesley’s whole claim. But this ruling applied only to the $1500. The Court had before them no question as to the $405, and their statement in general terms that the whole debt and interest must be satisfied to Lesley, before Schock’s claim, must be taken to refer to the claim then before them, which was for the $1500.
I do not feel the slightest doubt that, under the true construction of the agreement and the understanding of the parties, this accrued interest of $405 was to remain Schock’s as fully as if no assignment had been made, and such must be the decree. There are, however, some credits against it for sums which Schock has heretofore received. It appears from the bill that Schock received from Fleming $150 of this interest in October 1859. He was also credited, under the Chancellor’s decree of March, i860, with $96 which Lesley had collected from Fleming, making $246, and leaving a balance of $159. These two payments were credited to Fleming in the scire facias oh his mortgage ; and the balance $159 was included in the judgment, as Lesley in his answer admits. This sum is therefore in his hands, and Schock is entitled to receive *108it' with interest from the settlement of the Sheriff to Lesley. A claim was made for Lesley to be allowed against this $159 the costs of the former suits alleged to have been unpaid by Schock. What part of those costs are unpaid was left in doubt, but if any part remain unpaid I will on a proper application stay the collection of a like amount of the decree in this cause until the costs in the other causes shall be settled.