Edson v. . Dillaye

Strong, J. The order appealed from reverses the order at a special term of the Supreme Court, denying a motion to vacate the judgment of that court in the action, and sets aside the judgment. It is apparent, from the case on the appeal, that the ground of the order appealed from was, that the note on which this action was brought was collateral to the mortgage mentioned in the case, and that intermediate the striking out of the answer of the defendant and the judgment, the note became satisfied by the sale of the mortgaged premises under the mortgage. The order is a decision that the plaintiff was not, after the sale, entitled to a judgment; that, upon the merits of the case, as they then existed, the plaintiff had not a cause of action and virtually directs a *161 perpetual stay of all further proceedings in the action. It is, therefore, an order affecting a substantial right, made in the action, which determines the action and prevents a judgment therein; and we think it belongs to a class of orders specified in section eleven of the code, from which an appeal to this court will lie. That section (subd. 2) authorizes a review by this court, upon appeal, of “an order affecting a substantial right made in such action, when such order in effect determines the action and prevents a judgment from which an appeal might be taken.” An order deciding the merits of the action, and preventing a judgment in that action, we think is such an order. Since this appeal was brought, section eleven of the Code has been amended, but not in respect to that part of it above stated. Upon the merits, we think the order under review is erroneous. The mortgage was executed by Stephen D. Dillaye to Freeman M. Edson, who assigned it to the plaintiff. Subsequently, the mortgagor sold and conveyed the mortgaged premises to John H. Johnson, the deed containing a covenant of warranty. Still later, the defendants executed to the plaintiff the note which is the subject of the action, as collateral to the mortgage. It is not stated in the case whether Henry A. and Frederick C. Dillaye were, as between them and Stephen D. Dillaye, principals in the note, or were sureties of the latter. . In the absence of any allegation or statement in the case to the contrary, it must be assumed that all the makers were, in respect to each other, principals. Upon these facts, Johnson, on payment by him of the mortgage debt, would have been equitably entitled to be subrogated to the right of the plaintiff to the note, on the principle that a surety, paying the debt, is entitled in equity to all collateral securities held by the creditor. By the covenant in his deed, Johnson was indemnified against the mortgage debt; the land, as between him and his grantor, being mere security for the payment of the debt; and the grantor, with the securities given by him to *162 the creditor, being primarily liable for its payment. Assuming, then, that the mortgage was satisfied by the sale under it, it was competent for Johnson and the plaintiff to make the arrangement which was made, that the plaintiff should take a note of Johnson, on his bid at the mortgage sale, equal to the note in suit, and proceed and enforce the latter. As Johnson might have exacted the no.te of the defendants and enforced it, he might equally agree with the plaintiff that the plaintiff should hold and seek to collect it for the balance due the plaintiff on the bid. Whether the defendants knew of the arrangement or not is not material; their consent to it was not necessary to its validity. The order appealed from must therefore be reversed, and that of the special term affirmed. Comstock, J., did not sit in the case; Selden, J., expressed no opinion, and Pratt, J., dissented; all the other judges concurred in the judgment without stating the grounds of their concurrence in respect to the merits. Ordered accordingly.