Globe Insurance v. Lansing

Curia, per Savage, Ch. J. The question presented is, whether a foreclosure and sale of the premises mortgaged as a collateral security, is an extinguishment of the debt .due on the bond. It most clearly is not, any further than to the extent of the money produced by the sale of the mortgaged premises. In the case of Dunkley v. Van Buren, (3 John. Ch. Rep. 331,) the late chancellor Kent says, 11 It seems to be generally admitted in the books, that the mortgagee may proceed at law on his bond or covenant, at the same time that he is prosecuting on his mortgage in chancery ; and that after foreclosure here, he may sue at law on his bond for the deficiency. He cites many of the cases cited at the bar; and those cases certainly support the doctrine. In Aylet v. Hill, (2 Dick. 551, A. D. 1779,) Lord Thur-low held that a mortgage might proceed on his bond, notwithstanding he had obtained a decree of foreclosure; and denied an injunction to stay proceedings at law. Afterwards, in Took v.-, id. 785, A. D. 1784, the same question came before him ; and he decided, that so long as the mortgagee, after foreclosure, remained in possession of the mortgaged premises, he must take the pledge as a satisfaction ; but if he sold the estate fairly, and it did not produce sufficient to pay the debt, he had a right to bring an action against the mortgagor, to recover the deficiency [382] Two years afterwards, he adhered to the same opinion in the case of Tooke v Hartley, (2 Br. C. C. 125.) In the case of Perry v. Barker, (13 Ves. 204, 5.) Lord Erskine decreed a perpetual injunction, where a mortgagee had taken possession under a foreclosure, though he had after-wards sold the -estate at auction, for less than the amount due. Yet he seems to admit, that had the decree been for a sale instead of a foreclosure, as practiced in Ireland, the proper course would be if the sale produced more than the debt, to decree the surplus to the mortgagor; and if less, then to allow the mortgagee to proceed on his bond for the difference. The whole subject has been very fully and ably discussed by Mr. Justice Story, in the case of Hatch v. White, (2 Gall. 152); where the principle is established that the mortgagee is entitled to recover, on the accompanying security, the deficiency of the mortgaged property to pay the debt, calculating its value at the time of the actual extinction of the -equity of redemption. In that ease, there had been no actual sale; but the creditor had taken possession. In Amory v. Fairbanks, (3 Mass. Rep. 562,) the plaintiff had execution for the balance due on the bond, deducting the value of the land after foreclosure, according to appraisement. The plaintiffs are entitled to judgment; with leave to the defendant to withdraw his demurrer,-and rejoin in 20 days, on payment of costs. Sutherland, J. being related to the defendant, gave no opinion. Judgment lor the plaintiffs.