Court Opinion

ID: 7962057
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:46:44.935888+00
Date Added: 2024-06-11T16:34:31.211366
License: Public Domain

The Chancellor.
The assignment of a debt, secured by a mortgage, carries with it the mortgage as an incident to the debt, although there is no mention made of the mortgage in the assignment. So, the assignment of a part of a debt, or of one of several notes secured by a mortgage, carries with it a proportional interest in the mortgage, unless it is agreed between the parties, at the time, that no interest in the mortgage is to pass to the assignee. Green v. Hart, 1 J. R. 580; Pattison v. Hull, 9 Cow. R. 747.
The only question in the present case arises out of the inadequacy of the mortgaged premises for the payment of both complainant and Ulmann. Shall they be paid pro rata, or shall a preference be given to complainant’s debt, and he be paid first, leaving the balance to be applied on what is due to Ulmann? The mere fact that complainant’s note was the first to become due, will not, of itself, give it a preference over the other notes. It was so decided, and I think correctly, in Donley v. Hays, 17 Serg. & Rawle R. 400. In that case a mortgage, and seven accompanying bonds, payable at different periods, had been given to secure a debt of $5,036, and the mortgagee had assigned four of the bonds to different individuals, retaining three himself. The mortgaged premises were sold for $2,000, and the question was, whether the several bonds should be paid in the order in which they became due, or pro rata. The Court decided they should be paid pro rata. There was no guarantee, no promise or representation of priority of payment in the case. There is no conflict be*254tween this case and The Mechanics' Bank v. Bank of Niagara, 9 Wend. R. 410. On the contrary, this last case, so far as any inference can be drawn from 'it, would seem to be a confirmation of the principle decided in Donley v. Hays. The case was this: $1,933, part of a bond and mortgage for $2,250, was assigned to pay a debt; and the mortgaged premises being afterwards sold, brought $1,-350, only. The question was, whether the $1,350 belonged to the assignee, or must be divided, pro rata, between him and the mortgagee. The Superior Court of the city of New York decided in favor of a pro rata distribution of the money; but the judgment was afterwards reversed by the Supreme Court, on a writ of error. The reversal, however, was not upon the ground that an assignment of a part of a debt, secured by a mortgage, gives to the assignee a right to exhaust the mortgage security to satisfy his part of the debt; but that, from the very terms of the assignment itself, in that particular case, it appeared such must have been the intention of the parties, at the time of making the assignment. The assignor may, if he see fit, give the assignee a priority of payment; but the law gives no such priority, where there is no understanding or agreement between the parties, to that effect. The note, on its face, refers to the mortgage, and is payable to Ulmann or bearer. By the written assignment, it was to be received, not as security, but in payment of the debt due from Ulmann to complainant, as surviving partner of Zebulon H. Cooper, deceased; and Ulmann agreed liis liability to pay the debt should continue, if there was any prior encumbrance of the mortgaged premises. It is evident, from the assignment, the note was to be taken as absolute payment of the debt, unless it should turn out there was a prior encumbrance; but it is not so clear that its payment was to be prefarred to the other notes, in case *255it should be found necessary to resort to the mortgaged premises for their payment. The testimony of Hunt, however, who was present at the time, removes all difficulty on this point. He says he understood from both parties, that the mortgage, or so much of it as was necessary to secure to complainant the payment of his note, was assigned. He also says Ulmann afterwards told him complainant had a lien on the mortgaged premises, to the amount of the note.
There must be a reference to a Master’to compute the amount due complainant, for principal and interest, on the note held by him; and, on the coming in of the Master’s report, a decree must be entered, giving complainant a priority of payment out of the mortgaged premises.