Court Opinion

ID: 7962107
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:46:58.401681+00
Date Added: 2024-06-11T16:34:31.301376
License: Public Domain

The Chancellor.
I shall first dispose of the cross bill; for, if that can be sustained, there is an end of the original bill.
The release does not in terms discharge the debt. The personal liability of Miller on the note, and on the covenant in the mortgage for the payment of the debt, is released, while the right to collect the debt by a foreclosure of the mortgage, at law, or in equity, is in express *482terms reserved. Nothing is more clear than the intention of the parties to the release, that Bailey should look to the mortgaged premises alone for payment. But it is said Gould, as subsequent mortgagee, (and as to the cross bill he must be considered in that light, or rather in the light of a purchaser under a foreclosure of a second mortgage with notice of the first,) should be regarded as standing in the place of a surety. That on redeeming the prior mortgage, he would by the rights of subrogation, be entitled to the note as well as the first mortgage; and that the release would cut off his personal remedy against the mortgagor on the note.
Any thing done by a first mortgagee to the prejudice of a second mortgagee, with a knowledge of the second mortgage, should, to the extent of such injury, postpone the first to the second mortgage.
If Gould were a surety so far as regarded his mortgage, in the strict sense of the word, he would not be discharged by the release; because the remedy against him, that is the land, is expressly reserved. It was decided, in Clagett v. Salmon, 5 Gill & John. R. 314, a creditor might extend the time for his debtor to pay in, without releasing the sureties, if he, by the same agreement, in express terms, reserves his remedy against them. The case was appealed, and the appellate Court, in affirming the decree of the Chancellor, say, “But if the creditor reserves his remedy against the sureties, in the contract he makes with the principal debtor, the debtor thereby tacitly consents to forego, or waive, the benefit of such contract, in case the creditor should afterwards find it necessary to resort to the sureties, for the full and complete extinguishment of his debt.”
But there is another view of the case. Gould had foreclosed his mortgage at law, before the release was given. *483He was not at that time a subsequent mortgagee. He had previously changed his character of mortgagee for that of purchaser at the mortgage sale. Now, if, when he took his mortgage, he had notice of the Whitney mortgage, although his mortgage was first recorded, that can avail him nothing, and he stands in the place of a purchaser of the equity of redemption under the second mortgage, subject to the first mortgage; and the premises in his hands, as such purchaser with notice, are the primary fund for the payment of the first mortgage. Coxe v. Wheeler, 7 Paige R. 248. The release, therefore, could work no injury to him. The cross bill must be dismissed with costs.
As to the original bill. It is insisted Miller is an interested witness, notwithstanding the release, as the mortgage to Mrs. Whitney contains a covenant of warranty, from which he is not released. The question is not one of title in the mortgagor, for both parties admit his title, and claim under him, but of priority under the registry laws, with which the covenant of warranty has nothing to do.
The bill was clearly demurrable, in not stating that any thing was due on the note executed with the mortgage, or whether any proceedings had been had at law for the recovery of the debt, as required by the statute. Nor is this all. Aside from the question of notice or no notice, complainant has not made out such a case as to entitle Mm to a decree. The promissory note is not in evidence, and, for aught that appears from the testimony, it may have been paid. The law does not raise a presumption of non-payment, but of payment when due, unless the contrary is shown by the production of the note, or other evidence repelling the presumption of law, when the note itself cannot be produced. Nor is there any evidence of an assignment of the note or debt to complainant. The assignment is of “ all my right, title and interest, or claim, *484to the within mortgage.” No mention whatever is made of the debt or note. The assignment set forth in the bill is altogether different from the one proved. The assignment of a mortgage, without the debt which it is given to secure, carries no beneficial interest in the mortgage to the assignee, who would hold it subject to the will and disposal of the creditor. 4 J. C. R. 43.
As to the question of notice, the evidence is conflicting, so much so, that I have not been able to satisfy myself on which side the truth lies. If this were the only point in the case, I should be disposed to award an issue and have the witnesses orally examined in the presence of a jury, that more light might, if possible, be elicited. As it is, the original bill, as well as the cross bill, must be dismissed with costs, but without prejudice.