Devereaux & Meserve v. Fairbanks

The opinion of the court was delivered by Ross, J. From the facts found by the County Court it appears that the notes on which recovery is sought, were secured by the Mower mortgage. The plaintiffs attached and levied upon the premises covered by that mortgage, and, to protect the attachment and levy, paid the notes, and then brought a bill to foreclose the mortgage. In the premises covered by the mortgage the defendant had a homestead, to protect which against the foreclosure, he [590] brought a cross-bill to have the debt secured by the mortgage apportioned between the homestead and the balance of the premises, and it was so apportioned. He thereupon redeemed the homestead, and the plaintiffs took the remainder of the premises by the foreclosure. This operated as a payment of the debt secured by the Mower mortgage, if the value of the remainder of the premises was sufficient to pay the balance due upon the mortgage. In 2 Hilliard Mortgages, 202, it is said: “ The principle is well settled upon this subject, that foreclosure pays or extinguishes the mortgage debt to the extent of the value of the property.” To the same effect are the decisions of this court. Lovell v. Leland, 3 Vt. 581; Thomas v. Warner, 15 Vt. 110, 113 ; Woodstock Bank v. Lamson, 36 Vt. 118, 122; Emerson v. Washburn, 8 Vt. 9, 14 ; Paris v. Hulett, 26 Vt. 308. It appears, and is conceded, that the residue of the premises above the homestead was of greater value than the residue due on the Mower mortgage above what was received for the redemption of the homestead ; but it is claimed, that the residue of the premises was not of sufficient value to pay the balance due on the Mower mortgage, and what was then due on the Merrill mortgage. The debt secured by the Mower mortgage, as against the Merrill mortgage, had the prior right of payment, even to the exhaustion of the entire mortgage security. Hence, the debt secured by the Mower mortgage, on its foreclosure becoming absolute, must be held to be paid and satisfied in full, whatever may be the result as to the debt secured by the Merrill mortgage. Such being the legal effect of the foreclosure of the Mower mortgage by the plaintiffs, the defendant is no longer indebted to them on the notes in suit, and they furnish no cause of action against him. On this ground alone, without considering whether the debt secured by the Mower mortgage is barred by the Statute of Limitations, the judgment of the County Court must be reversed, and judgment rendered for the defendant. The facts of the case as stated in the exceptions also furnish another complete defense to the action, whether predicated upon the notes secured by the Mower mortgage or the Merrill mortgage. When the plaintiffs levied upon and set off the defendant’s equity of redemption in the premises covered by the mortgages, [591] in satisfaction, in whole or in part, of his judgment at law, in accordance with the provisions of the statute, to ascertain the value of such equity of redemption the premises were appraised at their value in money, the amount due on the mortgages ascertained and taken from such appraised value, and only the balance set off and applied in satisfaction of the judgment. By such levy and set-off the plaintiffs became the legal owners of the equity of redemption in the premises at such appraisal. In legal effect, they became the purchasers of the premises at the appraised value, and were allowed for paying the mortgages thereon. As between the plaintiffs and the defendant, the mortgage debts appraised as resting on the premises, belonged to the plaintiffs to pay. The defendant thereafter was divested of all right or interest in the premises. If the premises rose in value, the defendant could not avail himself of it, nor, if they depreciated and their value became less than the amount due on the mortgages, did the defendant thereby become indebted to the plaintiffs for such difference. If the plaintiffs elected to pay the mortgage debts, rather than allow the premises to go in satisfaction of them, they paid their own debt, as between them and defendant; and such payment did not make the defendant their debtor. It is said their levy and set-off of the premises has been set aside for informality or irregularity, but this does not appear from the exceptions. If the levy and set-off have been vacated, it is not apparent how that fact could change the payment of the mortgages under and in protection of the levy and set-off, which, at the time it was made, created no debt in their favor against the defendant, into such a debt, so long as they continue to hold the premises set-off under the mortgages. No doubt, if the defendant, on the vacation of the levy and set-off, should attempt to regain possession of the premises, equity would keep the mortgage debts thus paid on foot; and he would be compelled to redeem the mortgages, before he would be allowed to avail himself of such equity of redemption. But as the exceptions do not show the vacation of the levy and set-off, it is premature to decide what would be its effect in the premises. On the facts stated in the exceptions the payment of the debts [592] secured by the Mower and by the Merrill mortgage created no debt against the defendant. Whether the payment of a portion of the debt secured by the Mower mortgage by the defendant for the sole and special purpose of saving his homestead from being foreclosed, can be considered an acknowledgment of, and a willingness on his part to pay, the balance of that debt, is, to say the least, extremely doubtful. See Aldrich v. Morse, 28 Vt. 642; Slack v. Norwich, 32 Vt. 818; Bowker v. Harris, 30 Vt. 424; Goodwin v. Buzzell, 35 Vt. 9. On the other grounds already stated, the judgment of the County Court is reversed, and judgment rendered for the defendant to recover his costs.