Court Opinion

ID: 5215068
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:21:08.324815+00
Date Added: 2024-06-11T08:27:25.729466
License: Public Domain

Scott, J. (dissenting):
The action is for the foreclosure of a mortgage. The complaint alleges the recovery of two judgments by John Peirce against John M. Cornell on which there was due on June 13, 1907, the sum of $100,977.20; that on said date an agreement was entered into betweén said Péirce and said Cornell wherein and whereby it was-agreed -that “ as collateral security ” for the payment of said judgments Peirce would accept thirty certain promissory notes, aggregating the amount then due upon the judgménts, to be made and executed by a corporation known as J. B. & J. M. Cornell Company, to bear date June 12, 1907, and to.be payable to the order of said John M. Cornell and by him to be indorsed to said Peirce, and to be payable consecutively from one to thirty months after said date; that it was further provided by said agreement that upon the failure or default of the said John M. Cornell to pay any one of said promissory notes when and at the time the same became due, unless payment thereof was duly extended in writing, the remaining notes then unpaid, and each and everyone of them, together with the bond and mortgage in said agreement mentioned, should, at the election of said Peircé, immediately become due and payable. -
The complaint further alleges that on said 13th day of June, 1907, the said John M. Cornell was indebted to said Peirce in the sum of $100,977.20 “as aforesaid” (i. <?., by virtue of the two judgments)* and “ for the purpose of further securing the payment thereof to the said Peirce and as f urther collateral security therefor,” the said Cornell executed and delivered to said Peirce his bond, under hi? hand and seal, for the sum of $50,000, bearing date March 18,1907, *801payable March 18,1910, with interest at five per cent, payable semiannually, and that as “collateral security for the payment of the bond given to secure the payment of said judgments as aforesaid,” the said John M. Cornell and his wife executed and delivered to said Peirce the mortgage which is sought to be foreclosed in this action. The complaint further alleges the payment of the notes above mentioned to the extent of $56,000; the failure of Cornell to pay some of the notes when due, and the election of plaintiff, as Peirce’s assignee, to consider them all due and payable.
The plaintiff’s right to prosecute this action rests upon an assignment to him from Peirce as to which it is alleged that Peirce “ duly assigned said agreement, notes, bond and mortgage, together with the moneys due and to grow due thereon or thereunder.” There is no allegation that Peirce ever assigned to plaintiff the two judgments as collateral security for which it is alleged that the agreement, notes and bond and mortgage were given, and, for aught that appears in the complaint, Peirce may still hold the judgments or may- have assigned them to some one other than the plaintiff. Thus there is set forth an original and principal indebtedness for which, as is alleged, a certain agreement, promissory notes and mortgage were given as collateral security, these words being used with respect to all of them. The collateral securities have been assigned to plaintiff, but, so far as appears by the complaint, the principal obligation has not been assigned to him. It is clear under the decisions in this State that the plaintiff fails to show that he took anything under the assignment from Peirce, as he pleads it, for an assignment of the security, without a transfer of the principal debt is inoperative. . ( Wanzer v. Cary, 76 N. Y. 526.) The legal rule is that the incident shall pass by the grant of the principal, but not the pi’incipal by the grant of the incident, and the mortgage sought to be foreclosed in this action. is but an incident to the principal debt which it is intended to secure. (Merritt v. Bartholick, 36 N. Y. 44; Manne v. Carlsan, 49 App. Div. 276 ; Smith v. Thompson, 118 id. 6.) The plaintiff, not questioning this general rule, seeks to avoid its effect by contending that the language of the assignment as pleaded, imports an intention to include an assignment of the principal debt. . This argument is based upon the fact that the *802assignment is of the agreement, notes and bond and mortgage, “ together with the moneys due and to grow due thereon or thereunder.” This, however, does not help the plaintiff. The moneys assigned to him were the moneys “ due and to grow due ” under the collateral securities, and. whether or not any moneys would ever become due under them must depend upon whether or not any moneys became due to. plaintiff under the principal debt, for it is only in default of payment of the principal debt that anything may.be collected from the security. Unless, therefore, the plaintiff became the owner of the principal debt and entitled to collect it, he can have no claim upon the collateral security or the “ moneys due and to grow due thereon or thereunder.” The cases cited by plaintiff in support of his contention are not in point. In Fitts v. Beardsley (28 N. Y. St. Repr. 658; affd. without opinion, 126 N. Y. 645) the assignment was of-a mortgage alone “ with all sums of money, due and to grow due thereon,” but it appeared that there was no bond or other obligation; that the mortgage itself recited that it was given “ in consideration of the sum of $40,000,” and as security for that sum. . The court “ for the purposes of this litigation,” as it expressly said, treated the mortgage as representing both the debt and the security, and affirmed the validity of the assignment. In Baldwin v. Raplee (2 Fed. Cas. 521) the assignment transferred a mortgage with the bond accompanying it. It appeared that the debt was evidenced by a note, instead of a bond, and the court held that' there -was an evident intention to transfer the debt as well as the security. In Larned v. Donovan (31 Abb. N. C. 308 ; affd., 84 Hun, 533) the mortgage was unaccompanied by any bond, note or other obligation,. but the mortgage itself recited that it -was given in consideration of an “ agreed-indebtedness then recently incurred of $1,130.” Again the court treated the mortgage as representing -both the evidence of indebtedness and the security for it, and held that the assignment of the mortgage carried with it a transfer of the debt. Campbell v. Birch (60 N. Y. 214) related to the transfer of á chattel mortgage, which was overdue when assigned. It was. held that the assignor, in consequence of the default, had acquired a defeasible title to the chattels, and that the mortgage-stood as a muniment of her title, and its assignment carried her title to the assignee. If in. fact- the judgments in the present case *803were assigned to the plaintiff nothing could he easier than to have so alleged. If the judgments were not assigned to him, but still belong to Peirce or some third party, Cornell might, if this complaint were to be sustained, be Subject to a double liability. (Bloomingdale v. Bowman, 21 N. Y. St. Repr. 247; less fully reported in 51 Hun, 639.) Other objections are suggested to the form of the complaint which require no extended comment further than to say that they are not well founded.
For the reasons stated the interlocutory decree should-be reversed, with costs, and the demurrers sustained, with costs, with leave to plaintiff to amend within twenty days upon payment of costs in this court and the court below.
Miller, J., concurred.
Judgment affirmed,-with costs, with leave to defendants to Withdraw demurrers and to answer on payment of costs.