McClaughry v. McClaughry

Opinion, Mr. Justice Williams : There is but a single question presented on this record. In 1878, M. M. McClaughry took a bond and mortgage from his son, R. B. McClaughry, in the sum of ten thousand dollars, conditioned for the payment to himself during his natural life of the. sum of four hundred dollars per annum, and after his decease for the payment to his wife, C. F. McClaughry, of the sum of one hundred and fifty dollars per annum during her fife. In December, 1881, he caused satisfaction to be entered on the mortgage, and in March, 1882, died. The son, treating the satisfaction so entered as an extinguishment of the mortgage, declined to make any payment to the widow, and she thereupon caused the writ of scire facias in this case to be issued on the mortgage. The mortgagor filed an affidavit of defence, in. which he recited the giving of the mortgage to his father, and then alleged “that the deponent made an arrangement with his father, the mortgagee, for a valuable consideration to satisfy and extinguish the mortgage above referred to, and the said M. M. McClaughry did, on December 1, 1881, sat isfy and extinguish said mortgage as fully appears upon the records.” This affidavit was held to be insufficient, and judgment was accordingly entered against the mortgagor. This action of the court is here assigned for error, and the same question is for consideration, viz., does the affidavit disclose a defence good against C. F. McClaughry, the widow? This depends upon the power of the mortgagee to release the mortgagor from the covenant to pay money to another. There was a provision in the mortgage that upon the payment by the mortgagor to his father of the full sum of ten thousand dollars, '“then and from thenceforth these presents and every matter [483] and thing therein contained shall cease and be utterly null and void.” If the affidavit had contained an averment that the mortgagor had paid to his father, in compliance with this provision, the full sum of ten thousand dollars, and that his father had thereupon satisfied the mortgage, a very different question would have been presented. The affidavit however does not rest upon this provision; on the contrary, it alleges that the affiant “made an arrangement with his father” to satisfy the mortgage. The penal sum fixed upon to secure the payment of the annual sums to the mortgagee and his wife was not paid, and the sufficiency of the affidavit piust depend on the power of the father to release his son from his obligation to pay C. F. McClaughry the annual sum he had bound himself by the terms of the mortgage to pay to her. It is contended that he had this power, because he was the mortgagee named in the instrument while his wife was not a party to it. But the conclusion does not follow from the fact stated. The covenant to pay C. F. McClaughry after his death, was not for his benefit, but for hers. The object of the arrangement was to make provision for his last years and for those of his wife. It is not important to inquire whether the consideration of the mortgage was the conveyance of real estate by the father to the son or the surrender to him of personal property. The mortgage is under seal and imports a consideration for all its covenants. Upon a sufficient consideration, therefore, the son undertakes to pay four hundred dollars per annum to his father while he lives, and after his decease to pay one hundred and fifty dollars per annum to his wife. So much as -was to be paid to the father under this mortgage he could release, but so much as was payable to another after his decease he had no power over. As mortgagee, he was a trustee for the benefit of any other person or persons interested in the mortgage, and his name, or that of his personal representatives, could be used to enforce payment to them. So far as performance of the covenants in the mortgage were to be made to the wife, she was the person beneficially interested, and the only person who could release or compel performance. This was so held in Peterson v. Lothrop, 34 Pa. 223, and in Roberts v. Halstead, 9 Pa. 32. So far as the mort [484] gage was payable to him, M. M. McOlaughry was the absolute owner, but so far as it was payable to another he was a mere trustee without interest. His satisfaction of the mortgage is operative only to the extent of his interest, and all others interested may disregard the entry of satisfaction and proceed by scire facias to call upon the mortgagor for the performance of his covenants made for their benefit. There is no hardship in this. The record of the mortgage shows the extent of the personal interest of the mortgagee and the limits within which his release is effective to extinguish the liability of the mortgagor. The recent case of Adams v. Kuehn, 119 Pa. 76, is cited as an authority for a contrary doctrine, but an examination of that case will show it to be in entire harmony with the rule here laid down. There the promise was not under seal, and the proofs showed, the consideration to have moved wholly from the Weaver Brothers. The promise was to paya debt for which the Weaver Brothers remained liable, and was for their benefit and made to them. Here the promise is under seal, importing a consideration to support -it; is to pay to C. F. MeClaughry as an original undertaking for her own use, and to be payable only after the decease of the mortgagee. There the right of action was in the promisee and not in his creditor, for the latter was a stranger to the contract and the consideration on which it was founded. Here the right of action is in the party beneficially interested, because the instrument imports a consideration, and because its performance depends upon the' survival by the beneficiary of her trustee. The general principle that one who holds a security in trust for others cannot destroy the interests of his cestuis que trustent, is too familiar to require the citation of authorities in its support. Mortgages are often made to one to secure a series of debts in a prescribed order, or the payment of bonds that are to be sold in the market. The mortgagee may not be a creditor or the holder of a single bond, but he is the holder of the mortgage for the benefit of all who are interested in the debts secured by it. The mere fact that he is named as the mortgagee does not clothe him with the power to extinguish the mortgage regardless of the rights of the real creditors or bondholders, but makes him a trustee for the use and benefit of all persons interested in the debts secured thereby. Such [485] was the position of M. M. MeOlaughiy as to all the covenants in the mortgage not personal to himself, and his release was operative only to relieve his son from the payments to be made to himself. The court below was right, therefore, in entering judgment, and The judgment is affirmed.