Kendall v. . Woodruff

Folger, Ch. J. The facts, as they appear of record in the register’s office, arc as follows. Kendall conveyed the premises, being eleven lots, to Niebuhr. Niebuhr gave a mortgage to the insurance company for $44,000. He then gave a mortgage to Kendall for $11,220. He then gave a deed to the defendants for one of the eleven lots. When this deed was given to them, they had constructive notice of the two mortgages, and that they were upon the eleven lots, and consequently took the lot conveyed to them with a contingent liability upon it for the payment of the whole of those mortgages. This condition of the matter is somewhat altered as between them and Niebuhr by what took place in fact. For they also had actual notice of these mortgages, and though in the deed to them they are spoken of as amounting to $5,000 in the aggregate, they have admitted in their answer that they knew that that statement referred to the insurance company’s mortgage of $44,000, and the plaintiff’s mortgage of $11,220; and it is a plain inference that they understood that the lot conveyed to them was to take equally with the other ten lots the burden of the two mortgages. The most that can be claimed for them, from the facts so far stated, is, that as between them and Niebuhr, and as between them and the other grantees of Niebuhr, their lot was equitably liable for but one-eleventh of the whole amount of the principal and interest of those two mortgages. But nothing yet appears to affect Kendall in that way. So far, he appears entitled to collect his whole mortgage from the lot of the defendants, if he fails to get it elsewhere. *6 There are some facts arising subsequently, on which the defendants rely to free their lot from some of that burden. After the sale to them, Niebuhr sold seven other of the lots, and took mortgages from the purchasers, and assigned them to Kendall. Niebuhr gave mortgages upon other three of the lots to Kendall. Each of these mortgages was for an equal eleventh part of the $11,220 mortgage, and an equal eleventh part of $8,250, moneys advanced by Kendall to Niebuhr, under the building contract cotemporaneous with the deed to Niebuhr. Niebuhr and Kendall applied these mortgages, first to the payment of that advance, and the residue upon the $11,220 mortgagé. Kendall released thé ten lots from the lien of his mortgage. The de-. fendants urge that thereby he relieved their lot from any liability to him for more than $1,020 of the principal of his mortgage and the accrued interest on that sum. The fact alone of the releases would not have that effect. A mortgagor who has not actual notice of equities among owners of the premises or others, arising subsequent to his mortgage, is not affected by them to his harm. In this case, however, Kendall had notice in fact of the conveyance to the defendants. At first sight, it would seem that doing that act with that knowledge, he had-disregarded the equitable rights of the defendants, and should himself bear any consequent loss. But here other facts come in, to raise counter equities, and to put them in the balance against those of the defendants. When Kendall conveyed to Niebuhr, he made a contract cognate in time and subject-matter, by which he agreed to advance moneys to Niebuhr for putting up buildings on all the lots. He made all the advances agreed for, some of them after the deed of Niebuhr to the defendants. He was not obliged so to do by his contract, as one of the conditions in it would have excused. But it was prudential for him to do so, and for the best interests of all concerned. The money advanced went into the houses on the lots; as we infer, some of it into the house on the defendants’ lot, as well as into the others. Thus the value of each lot was increased, that of the defendants with the rest. All were better enabled to bear the burden of the two mortgages upon them all alike, and the *7 likelihood of any one failing" to meet its portion of the liens was put further off, if not entirely removed. Here is a consideration for Equity, when it comes to weigh the equities of the defendants and to put other equities in counterpoise with them, as it may do. Suppose that Kendall had refused to carry out his contract with Niebuhr, and for want of the advance of money, the latter had been, unable to finish the block of buildings. There would have been embarrassment upon all parties, and, it is not unlikely, greater damage to the defendants than that which they now assert. The advance was made in good faith. The several mortgages were taken from Niebuhr, and the releases given in good faith and to attain a result beneficial to all. It is not always that a release of a part of mortgaged premises, given with knowledge of a prior conveyance of another part that remains unreleased, is held inequitable. It is not a technical discharge of that part ; nor is it an equitable release or discharge, unless upon the principles of natural equity and justice it ought thus to operate against the mortgagee giving the release. (Per Walworth, Ch., Patty v. Pease, 8 Paige, 277.) As the defendants have directly and indirectly had the benefit of the advance of money made by Kendall, as it was beneficial to all interested to make the advance and to take the mortgages, which he could not do save by releasing, it is not natural equity and justice that the defendants have their lot relieved from a proportionate share of the sum left due on the mortgage after applying enough of the ten several mortgages to the debt for the last advance to satisfy it. Ho other reason is put forward in this court for a reversal of the judgment than the releases and their effect. The judgment should be affirmed. All concur. Judgment affirmed.