Court Opinion

ID: 8504816
Source: CourtListenerOpinion
Date Created: 2022-11-23 01:26:04.945321+00
Date Added: 2024-06-11T16:50:50.379752
License: Public Domain

Woods, J.
This plaintiff is not such a bond fide holder of the note upon which the action is brought, as to preclude any defence which the defendant may set up as founded upon a want or failure of the consideration for which it was given, or any other defence in fact which might be interposed if the action were prosecuted in the name and in behalf of the original payee. The note was indorsed and transferred merely as collateral security, and as such is still held. The suit, therefore, is maintained for the benefit of him who so indorsed it, and who in the event of a recovery will be entitled to have its avails applied to the payment of his debt to the plaintiff. That a note thus holden is subject to such defence, has been too often asserted and too conclusively settled, to be deemed and treated at this time as questionable doctrine. Williams v. Little, 11 N. H. 66.
The real question which the case presents is, whether there has been a total failure of the consideration for which the note was given, or a partial failure only; for if total, the action can not be maintained, but if partial only, such failure does not constitute a defence, and the plaintiff must prevail, and the defendant be left to resort to his action upon his covenants for his indemnity; an action whose precise aim is to ascertain and award the quantum of damages sustained by the breach of the cove*41nants, and whose form enables the parties to go into a liquidation of them.
This doctrine is well settled. It is that of the ease of Chase v. Weston, 12 N. H. 413, and was also held by the Supreme Court of the United States in Greenleaf v. Cook, 2 Wheat. 13. In that case Chief Justice Marshall, in delivering the opinion of the court said, “ To make a good defence in any ease, the failure must be total.”
On the 15th day of February 1836, Stiles conveyed to Jameson in mortgage, to secure the payment of $1350, a large tract of land. On the 30th of May following he conveyed a small part of the land which he had so mortgaged to the defendant, who paid him part of the price in money, and for the remainder gave him the note in suit.
It is conceded that this sum of $1350, for which Stiles . gave the mortgage to Jameson, exceeds the value of the land which he afterward conveyed, or assumed to convey, to this defendant. If, therefore, that mortgage embraced no more land than the parcel thus conveyed, the total failure of the consideration of the note might be considered as clearly made out, because, in order to obtain the land he would be obliged to remove an incumbrance greater than its value. The mere right to redeem a tract of land incumbered to a greater amount than its value, can not be assumed to be worth any thing ; and in a case like the present, in which the land itself has been attempted to be conveyed, and has formed the consideration for which the note has been given, it can not upon any sound principle be held that the promise is other than merely nude.
But this incumbrance of $1350, did not rest wholly upon the small parcel of land of which the conveyance formed the consideration of this note. It embraced, as the case states, a much larger tract than that. How much larger and of what value the case indeed does not state; *42but we are not bound by any thing that it does state, to presume that its value is less than the incumbrance that is upon it. Nor are we bound to presume any thing in relation to its value that should exonerate the defendant from the burden of proving the defence that he has set up.
It is a well settled and familiar principle, that he who acquires an interest in an estate that is subject to a-mort'gage or other charge, acquires at the same time the right to pay off such mortgage, or to exonerate the estate in the same manner that he would have been entitled who created the incumbrance ; and that in so doing, he becomes substituted in the place of him to whom he has paid the money, in all cases in which it is necessary for his protection that the incumbrance should be kept alive; and he will, in all cases of making such payment, be deemed the assignee, if an assignment will better subserve the ends of justice than payment and extinction would do. This is the doctrine of Robinson v. Leavitt, 7 N. H. 100, in - which the Chief Justice remarked : “ The true principle, I apprehend, is that where money due on a mortgage is paid, it shall operate as a discharge of the mortgage, or in the nature of an assignment of it, substituting him who pays in the place of the mortgagee, as may best secure the purposes of justice and the rights of the parties.”
The principle thus stated is fully sustained by the case of Starr v. Ellis, 6 Johns. Ch. 395, and is recognized in Scott v. Hancock, 13 Mass. 168.
,Nor does it make any difference as regards the right to redeem, whether the interest of the party embraces the whole of the land which is burdened with the prior inpumbrance, or only a part of it. The common case of a widow entitled to dower in an equity of redemption, is an apt illustration of this. She is entitled to pay off' the whole of the mortgage, and by that payment to become substituted in the place of the mortgagee for her protection and indemnity, until the heirs shall pay their equita*43ole proportion, and so entitle themselves to all that is not comprehended in her claim of dower. Gibson v. Crehore, 5 Pick. 156 ; Rossiter v. Cossitt, 15 N. H. 88.
A case can not easily be proposed in which the doctrine stated would be more strictly applicable, or in which equitable considerations would more manifestly demand its application, than the present case.
The defendant purchased the land of Stiles, who gave him a deed of it with the usual covenants of seizin and warranty, and against incumbrances. It turns out that there was an incumbrance upon the land by which it must become wholly lost to him, if he has not the power of redeeming it; which he can not do but by redeeming at the same time an additional tract comprised in the same mortgage. If he could do this in no other manner than by simply discharging and extinguishing that mortgage, then, however valuable the land not embraced in his own deed might be, he would be without any remedy, except the covenants in his deeds, for the money so paid out for the benefit of a stranger. We have no doubt that this case is one in which, by the principles of equitable substitution, the mortgage would be kept on foot for the benefit of the party who should pay it for the protection of the interest ho had acquired in a part of the land mortgaged. So that the defendant took by his deed, not only the right of redeeming the land described in it, by paying off a mortgage for a sum exceeding the value of the land so described, but the right of becoming substituted by such payment to the position of the mortgagee in the whole of the land mortgaged.
What the value of the land so mortgaged was, does not appear from the case ; nor whether it was, with the incumbrance upon it, worth any thing at all. But, as has already been said, we are not called upon to presume that it was worthless. Wo are not to presume that Stiles had incumbered the land to the extent of its whole value *44before he sold to the defendant. On the contrary, the burden is upon the defendant who interposes this answer to the action upon the note, to show that the incumbrance was so great in comparison with the value of the land, that this right of redemption and substitution was worth absolutely nothing.
It is said that the mortgage has been foreclosed, and the right of the defendant to redeem wholly lost. But it had not been foreclosed when he purchased, and if such an event has since occurred, it has been through his own negligence that he has omitted seasonably to avail himself of his rights. His position has not been materially different from the position of an owner, of an equity of redemption generally.
But, in fact there has, as against him, been no foreclosure. Whatever effect the entry of the mortgagee and his subsequent possession might have had upon the rights of Stiles, those proceedings have not impaired the rights of third persons. The publication in a newspaper was omitted, and consequently the defendant was not affected.
The verdict must be set aside and a

New trial granted.