Merchants' National Bank v. Greene

Knowlton, J. The Thayer and Judd Paraffine Corporation, an insolvent debtor, is indebted to each of the plaintiffs on promissory notes to the respective amounts stated in the bill, for the payment of which its bonds, secured by a mortgage on its real and personal estate, are held as collateral security. The bonds, apart from their relation to the mortgage, are mere promises to pay, and are no better than the notes which they were given to secure. But they carry with them an equitable interest in the mortgaged property, to be made available through the intervention of the trustee who holds the mortgage, and their value as security depends upon that property. The principal question in the case is whether the plaintiffs are, respectively, creditors having “ a mortgage or pledge of real or personal estate of the debtor, or a lien thereon,” within the meaning of the Pub. Sts. c. 157, § 28. That statute contemplates a title in the creditor such that the property can be sold by order of the Court of Insolvency if he requires it, and the whole transferred by him and the assignee. It also provides that he may release and deliver up to the assignee the premises held as security if he chooses, which necessarily implies a right to control the property subject to a right of redemption in the assignee. In the present case, the plaintiffs have no such right. Their title in the property is only equitable, and they can do nothing with it except as they may be able to move the mortgagee. He is a trustee representing the interests of others besides the [320] plaintiffs, and the Court of Insolvency has no jurisdiction over him. We are of opinion that this is not a case to which the section referred to applies, and that therefore the rights of the parties must be enforced through the broader jurisdiction of this court sitting in equity. Barnard v. Eaton, 2 Cush. 294, 301. Dickinson v. Metacomet Bank, 130 Mass. 132, 135. Wilson v. Bryant, 134 Mass. 291, 295. Bristol County Bank v. Woodward, 137 Mass. 412, 415. Franklin County Bank v. Greenfield Bank, 138 Mass. 515, 517. Pub. Sts. c. 157, § 15. It is questionable whether the court can properly order a sale otherwise than in accordance with the terms of the power contained in the mortgage, and the decree may be modified so as to make it conform to the mortgage in that particular. Decree accordingly.