Flagg v. Thurber

By the Court, Welles, J. It is contended on the part of the defendant Hunger, that the plaintiff has no proper title to sustain the action, on the ground that the mortgage in question was assigned to and held by him as comptroller, under the act entitled “ An act to authorize the business of banking,” passed April 18,1838, (Laws of 1838, ch. 260, p. 245,) in pursuance of the 9th section of that act; there being no provision in the act, or in any of its amendments, authorizing or requiring the comptroller in any event to institute proceedings for the foreclosure or collection of the mortgage. And that even if an action can in any event be sustained by the comptroller for the collection of the mortgage, it cannot be done consistently with the 12th section of the act; until after a failure of the Bank of Central New-York to redeem its circulating notes; which is not proved in this case. This position, I think, cannot be maintained. The mortgage was absolutely transferred to the comptroller, and he had no [200] right to surrender it to the bank for any purpose, unless upon receiving other approved bonds and mortgages of equal amount, (t 9.) The proposition contended for might operate to secure a mortgage debtor against paying his debt during the whole time of the existence of the banking association, which, in some cases, is 1000 years, notwithstanding any necessity which might exist to collect, growing out of the depreciation of the security, in any respect, and might thereby involve the loss of a large portion of it. I think the right to collect by the comptroller, moneys due upon such securities, is necessarily incidental to his position and relations, although the statute contains no specific directions to that effect. The next and principal point of the defendant Hunger is, that he is not personally liable as charged in the bill, nor as adjudged in the decree. The decree directed a sale of the mortgaged premises in the following order: 1st. That portion not sold to any of the defendants ; 2d. The twenty lots embraced in the mortgage which were contained in the sale by Thurber to Hunger ; 3d. That portion of the premises conveyed by Tliaddeus Spencer and wife and the heirs of William Gay to Harvey Bissell, which were included in the mortgage in question, (the same having been, after the execution of the mortgage in question, conveyed by Thurber to Gay in his lifetime;) and, 4th. The residue of the mortgaged premises, and which had been conveyed to. the other defendants by Thurber, in the inverse order of alienation. The decree also ordered that the defendant Hunger should pay the plaintiff, or his solicitors, any balance of the sum of $1700, with interest from the first day of July, 1842, not realized from the sale of the twenty lots conveyed to him, and constituting the second class in the order of sale, or so much of such balance as should be equal to any sum remaining unpaid of the debt, interest and costs of the plaintiff, after the completion of the sale therein ordered. And finally, that if the proceeds of the sales, together with the amount directed to be paid by Hunger, should be in [201] sufficient to pay the plaintiff’s debt, interest and costs, the deficiency should be paid by the said Philip Thurber. It is the foregoing provision of the decree which charges the defendant Hunger with personal liability of which he complains. Without going into a discussion of the evidence on the question of the time of the delivery of the deed by Thurber to Hunger, I shall assume that it was accepted by Hunger, upon the former executing to him the instrument of the 21st of November, 1842, and not before. The testimony satisfies me that the purchase by Hunger was not completed until that time; and I think his personal liability to pay any portion of the mortgage debt must depend very much, if not entirely, upon the deed which he received from Thurber, regarding it delivered at that time, in connection with the said instrument of the 21st November. By the former, Hunger assumed the payment of one half of the mortgage debt, and by the latter, his liability was in substance reduced to $1700, with interest from the first day of July, 1842. It is a general principle that where the owner of land mortgages it to secure the payment of a debt, and afterwards sells the equity of redemption subject to the lien of the mortgage, and the purchaser assumes the payment of the mortgage, as a portion of the purchase money, the latter becomes personally liable for the payment of the debt of the former to the holder of the mortgage in the first instance, and if the mortgagor is compelled to pay it, he can recover it from the purchaser of the equity of redemption. In such case the mortgagor and purchaser stand in the relation of principal and surety, the latter as surety for the former, to the extent of the mortgage debt. (Halsey v. Reed, 9 Paige, 446. Marsh v. Pike, 10 Id. 595, 597. Cornell v. Prescott, 2 Barb. S. C. R. 16. Blyer v. Monholland, 2 Sandf. Ch. Rep. 478. Ferris v. Crawford, 2 Denio, 595.) I am not able to discover any thing in this case to take it out of the above rule. Looking at the deed alone, Hunger would be liable personally to the extent of one half of the mortgage, but that liability was reduced by the instrument of November, 1842, to $1700 and interest. The provision in that instrument that if Thurber did not pay the $1550, Hunger should be ex [202] onerated from the whole, was purely penal, and it would not he according to equity to enforce it. [Monroe General Term, September 2, 1851. Welles, Selden and Johnson, Justices.] The claim of the defendant Hunger to recover the.costs of his defense, I think must fail, in consequence of the view above taken of his personal liability. Assuming the decree in that respect to be correct, I can see no ground for the claim to costs. It was necessary and proper to make him a party, and although he has been necessarily subjected to the expense of the defense in order to reduce his personal liability, yet it no where appears that he ever offered to pay what is now and by the decree adjudged against him, or admitted his liability to that extent. He chose to litigate the whole claim, and it is no ground for allowing him costs, that he he has succeeded partially but not wholly in his defense. I think the decree is substantially right, and should be affirmed.