Draper v. Mann

Endicott, J. The note upon which this controversy has arisen is dated January 2,1871, and is payable in instalments, falling due every successive six months after date. It was secured by a mortgage upon real estate, which contained a power to sell and dispose of the land upon default made in the payment of all or any part of the money due upon the note. On December 23, 1872, three instalments being then due and unpaid, the plaintiff brought his action at law for their recovery, and attached other property of the defendant, which action is now pending in this court. On June 23, 1873, another instalment being then du« and unpaid, the plaintiff, in pursuance of the power in the mort [441] gage, sold the land, and the proceeds of the sale, after deducting the necessary charges, were insufficient to pay the whole amount due upon the note. The plaintiff in his bill prays that he may be permitted to take judgment in his action at law for the difference between the whole amount of the note and the amount received from the sale. But we are of opinion that the plaintiff has his remedy in his action at law, and there is no reason for the interposition of a court of equity. The holder of a note secured by mortgage upon real estate is entitled to recover the full amount of his debt. If the security is not sufficient, he may recover the balance by an action on his note. He may proceed concurrently with actions on his note and to foreclose his mortgage, till the note is paid. Ely v. Ely, 6 Gray, 439. If after foreclosure the value of the land does not equal the amount of the debt, it enures by way of payment pro tanto, and an action may be maintained on the debt for what remains due. Gen. Sts. c. 140, § 36. Newall v. Wright, 3 Mass. 138, 150. Hedge v. Holmes, 10 Pick. 380. Where the mortgage contains a power of sale, the mortgagee may sue on the note, if due, and while that action is pending he may properly proceed to sell under the power contained in the mortgage. The value of the land as security is speedily and accurately ascertained by the sale. If the proceeds of the sale equal or exceed the amount due on the note, both principal and interest, he cannot have judgment in his action on the note, for the debt is paid; ■ if not enough to pay the whole debt, he may recover the balance found due after deducting the proceeds of the sale. We are of opinion that the same rule applies where the action is brought upon certain instalments of .the note, as in this case, which were actually due when the suit was commenced. The effect of the foreclosure by sale was to place in the plaintiff’s hand a fund, which he might lawfully apply to the payment of the whole mortgage debt, both principal and interest. As that fund was not sufficient to pay the whole, there is no principle of law which requires him to apply it to the payment of the instal- ‘ ments on the note first due, and sought to be recovered in the action at law. Undoubtedly he may do so at his option ; if he does so, the instalments are paid; but the law makes no such op« [442] plication. The rule in regard to items of debt and credit in a general account current does not apply to a case of this description. As out of the proceeds of the sale, by the terms of the mortgage, the plaintiff is to “ retain and pay the principal and interest then unpaid ” on the note, he has the right to appropriate the amount so received to either instalment. Of that right he may avail himself in his action at law. Bill dismissed.