Jones v. Stienbergh

The Chancellor. It is now settled, by the decision of the court of dernier resort, that a person who advances money upon the sale of a bond and mortgage, or other chose in action, may secure to himself the right to the absolute return of his money and legal interest thereon from the vendor, without the possibility of loss, and the contingent right to recover a much larger sum, from the person who is primarily liable for the payment of the bond and mortgage, or chose in action purchased, 252 without violating the statute of usury. It therefore becomes necessary to determine the question, whether the vendor who sells a bond and mortgage for a sum which is less than the amount due thereon, and actually guaranties the payment of the whole debt, is liable to be made a party to a bill of foreclosure in this court; and to have a decreeover against him for the deficiency, or for any part thereof. The statute provides, that where the mortgage debt is sesecured to be paid by the obligation, or other evidence of debt, of any other person besides the mortgagor, the complainant may make such person a party to the bill; and that the court may decree payment of the balance of the debt remaining unsatisfied, after a sale of the mortgaged premises, as well against such other person as the mortgagor, and may enforce such decree as in other cases. (2 R. iS. 191, § 154.) And under this statute it has been settled that the assignor.of the bond and mortgage, who has guarantied the payment thereof to the assignee, may be made a defendant in a foreclosure suit, commenced by the latter; and may be decreed to pay the deficiency, as a person who, by his obligation, has secured the payment of the mortgage debt. (Bristol v. Morgan and Wilkes, 3 Edw. Ch. Rep. 142.) Irr the case under consideration, the defendants who assigned the bond and mortgage, did, in terms, covenant to guaranty the payment of the whole amount of the mortgage money with interest; though for the purpose of taking the case out of the statute of usury, the court for the correction of errors holds that they are not legally bound, by their guaranty, to pay the whole amount which they covenanted should be paid. Still, that court holds that they are liable as guarantors, for the payment of the bond and mortgage, to the extent of the money advanced to them by the assignee, with the legal interest thereon. And a person who has secured the payment of a part of the mortgage debt, by his personal obligation, is clearly within the equity of the statute; and may be decreed to pay the deficiency, if the mortgaged premises do not sell for sufficient to pay so much of the debt as he has guarantied the payment of, with the costs of foreclosure and sale. The proper decree, where the mortgagor is himself a party to 253 the suit, and is primarily liable for the payment of the deficiency, and a third person is made a party defendant who is only secondarily liable, is to decree the payment of the deficiency by the principal debtor in the first instance; and to decree payment of the amount of such deficiency against his co-defendant who stands in the situation of his surety merely, only in case it cannot be collected of the principal debtor, after the return of an execution against such principal debtor unsatisfied. The decree in such cases should also direct that, in case the amount of the deficiency is paid by the defendant who is only secondarily liable for such deficiency, he shall have the benefit of the decree: for the purpose of obtaining satisfaction for the same amount, with the interest thereon, from the defendant who is primarily liable. In the present case the bill does not state when the assignment of the bond and mortgage was made and the $2800 received, by the assignees, as the consideration thereof. The only thing admitted by the assignors, by suffering the bill to be take'n as confessed, is that the assignment was made, and the consideration thereof paid, before the commencement of this suit. The time of the filing of the complainant’s bill must therefore be ascertained from the bill on file, and inserted in the decree, as the time of such assignment. And nothing must be deducted from the liability of the assignors, under their guaranty, on account of the interest paid in November, 1844; as that does not appear to have been paid subsequent to the assignment, or to have been received by the complainant. After the usual decree for the foreclosure and sale of the mortgaged premises, and the payment of the debt and costs out of the proceeds of such sale, and a decree over against the mortgagor personally for the deficiency, if any, the decree must further direct, that if the complainant is not able to collect the amount of such deficiency out of the estate of the mortgagor, upon the issuing of an execution, against his property, to the sheriff of the county in which he resides, or of the county where he last resided in this state, the defendants, John G. Fellers and George Fellers, upon the return of such execution unsatisfied, pay so much of such deficiency as 254 the proceeds of the master’s sale, and the amount if any which shall have been collected of the mortgagor personally, subsequent to the assignment to the complainant, exclusive of the costs and expenses of the foreclosure and sale, shall be less than the §2800, and the interest thereon from the time of the filing of the bill in this cause to the time of such sale; with the interest on that part of the deficiency, from the time of the master’s sale until it shall he so paid by them.' The decree must further direct, that if they pay the amount thus decreed against them personally, or if the same is collected out of their property, they shall have the benefit of the decree against the mortgagor. For the purpose of enabling them to obtain remuneration from him to the same extent, with interest; either by a new execution against his property, or by filing a creditor’s bill, as they may think proper. But after they have obtained a remuneration for what they shall have been compelled to pay under this decree, the residue of the decree against the mortgagor, for the deficiency, will belong to the complainant, under the decision of the court for the correction of errors in the case of Rapelye v. Anderson, (4 Hill’s Rep. 472;) as a part of his contingent profits, upon the purchase of the bond and mortgage, beyond the amount advanced by him to the assignors, and the legal interest thereon.