Bank of Mobile v. P. & M. Bank

ORMOND, J. The law of this case was settled when it was last here. [Cullum v. Erwin, 4 Ala. Rep. 452.] It was then held, in reference to this very controversy, that where several notes secured by the same mortgage, are assigned at different times, if the fund arising from the sale of the mortgaged premises is not sufficient to pay all the notes, the assignees will be entitled to priority of payment, in the order in which the assignments were made, and not according to the time of the falling due of the notes, unless the assignee, at the time of the assignment, gave a preference to one or more over the rest, It is now contended, that this right will not pass with the note to a second assignee, but we can perceive no reason whatever for thus limiting it. The right to satisfaction out of the mortgaged property, in preference to a subsequent assignee, having attached to the note by the prior assignment, will follow the note in the hands of a succeeding assignee. The assignment transfers all the rights of the assignor, and by necessary consequence, transfers the right of prior satisfaction. A court of equity will always give effect to an assignment, and regards the assignee as standing in the place of the assignor, succeeding to all his rights, and exposed to all his disabilities. Priority of right of satisfaction, results as a legal inference from priority of assignment, and can only be repelled by showing affirmatively, that no such priority of right was intended to be conferred. The facts of this case do not repel this legal inference. They show conclusively that the assignor had a much deeper interest in effecting the arrangement with the P. M. Bank, than with the Bank of Mobile; as by the former they were to be released from the payment of $69,000, and were to obtain five years for the payment of the residue of the debt; and it was not until this arrangement [649] .was effected, that the proposition was made to the Bank of Mobile. It is not however at all probable, that the question of priority was considered by any of the parties at the time, as there was then a valuable hotel on the premises, since destroyed by fire, the destruction of which, by reducing the value of the security, has given rise to this question; and assuming it to be entirely accidental, that the first transfer was made to the P. Sf M. Bank, the principle is not thereby varied. It is the established maxim of a Court of Chancery, that when equities are equal the oldest will prevail. Qui prior est in tempore, potior est in jure. It is further urged, that the transfer to the P. Sfx M. Bank of these notes, being as collateral security only, was not a transfer in the usual course of trade, and must be postponed to the Bank of Mobile, which received the notes transferred to them absolutely, in payment of a debt. Fontaine Sf Freeman being indebted to the P. & M. Bank, upon indorsements, in the sum of $138,000, made an arrangement with the Bank, to pay one half of this amount in five years, for which they executed their notes; the Bank releasing.them from the payment of the residue. To secure the Bank, F. & F. conveyed by deed, all their interest in a certain deed of trust, executed by S. Andrews, with authority to collect the rents, Sfc., and transferred to the Bank, the two notes in controversy, together with another note, to be held as collateral security; and with authority to the Bank to collect the money and apply it to the payment of their debt to the Bank, of $69,000. The Bank had no authority to sue F. & F. on their notes, until the expiration of five years from the date of the deed. No settlement has ever taken place between F. Sf F. and the Bank. Fontaine has taken the benefit'of the bankrupt law, and Freeman and Cullum, as well as the makers of the notes are insolvent. In our judgment, the doctrine here’relied on, does not apply to this case. It is certainly true, that when a negotiable security has not been taken in the usual course of trade, it is subject to all the equities existing between the original parties to it. [Bank of Mobile v. Hall, 6 Ala. Rep. 643.] No such question arises here, as none of the parties to the notes [650] have any defence against it. The only question here, is, which of the two contending parties has the prior right to satisfaction out of the fund provided for the payment of all the notes, and its solution depends upon priority of transfer, and right to collect and appropriate the proceeds. With the disposition of the proceeds when collected, the Bank of Mobile has no interest, or concern, unless, indeed, the money, when collected, was to be paid to Fontaine Sf Freeman. But by express stipulation between F. F. and the P. Sf M. Bank, it is to go in payment of the debt due by them to the Bank ; and although called in the agreemant a collateral security, yet, when collected by the Bank, it would clearly be a payment to that extent, of the debt of F. F. Nor is it possible, that any subsequent event, could revest in F. Sf F. the right to this money. There has been no settlement between them and the Bank, of this transaction; nor is there the remotest probability that there ever will be, as' Fontaine is a certified bankrupt, and all the other parties are admitted to be insolvent. But if this were not the fact, the P. Sf M. Bank has a clear right under the agreement by which it received the notes, to apply the proceeds in payment of the debt of F. 6f F.; and if the receipt of this money should' leave any other property conveyed by F. $"F. subject to their demand, although it might entitle the Bank of Mobile to be subrogated to their rights, it would not affect the right of the P. fy M. Bank to make the appropriation. No such contingency is hinted at, in any part of the case, as within the limits of probability, and this is evidently -a struggle for a plank in the general wreck of the fortunes of all the parties. This view of the case, which to our minds is perfectly conclusive, dispenses with the necessity of. our considering whether the transfer to the P. Sf' M. Bank was in the usual course of trade, so as to preclude the. maker from availing himself of an equity existing between him and the payee. Our conclusion is, that the decree of the Chancellor must be affirmed. ' ' ' '