Blair v. White

Tl\e opinion of the court was delivered by Rowell, J. The defendant Worthen’s answer is not precise as to the ground of defense. There are statements in it which, if taken by themselves, would indicate a claim that the notes he passed over to the testatrix, Miss Henderson, were by the transaction between them, paid and extinguished as to the maker as well as to him. But taken all together, the fair scope of the answer is considered to be, not that these notes were thereby extinguished as to the maker, but that as to this defendant they were thereby postponed to the defendant’s remaining notes in respect of the right to share in the mortgage security. The fact that the notes were indorsed by the defendant supports this con. struction of the answer, as it tends strongly to show that he did not understand that they were extinguished as to the maker. The defense must stand upon, the answer, and standing thus, the case is the commdn one of the assignment of a part of the notes secured by a mortgage, without any agreement as to whether the interest in the security should follow or not; in which case a proportionate share of the security follows as matter of law. Keyes v. Wood, 21 Vt. 331. The defendant seeks to avail himself of the legacy that the. testatrix gave to the maker of the notes, as payment of.them. It; is objected that his answer as to payment is not sufficient to [115] enable him to do that, which is true, even though the legacy could be availed of as payment. But it cannot be, for it is not operative as payment until it is made so by being applied as such, which has not been done, although the executor has the 'right' to do it. Courtney v. Williams, 3 Hare 539; Brokaw w. Hudson's Executors, 27 N. J. Eq. 135; 1 Pomeroy’s Eq. sec. 541. In Tinkham v. Smith, 56 Vt. 187, application of the plaintiff’s distributive share in part payment of his debt was actually made by the administrator, and then pleaded as payment, and the plea was held good. But inasmuch as the mortgage security is inadequate, and the ■orator has in his hands another fund to which he can legally .resort for payment or part payment of his mortgage notes, equity requires that he should resort to that fund before resorting to' the mortgage security to the damage of the defendant ,* for this course works no injury to .either creditor, but does jusitice to- both. But the orator is not bound to resort to that fund .•to the detriment of the estate in respect of the unsecured debts that the debtor owes it. But aside from those debts, the legáey .should in some way be made to vantage the defendant in respect .-•of his security. But this cannot be decreed as the case now stands; and although we find no error in the decree, yet at the request of the ■defendant Worthen, it is reversed jpro forma, with costs to the mrator up to this time in this court and in the Court of Chancery, and the cause remanded, that said defendant may apply below for leave to take such steps or institute such proceedings.in respect of this matter as he may be advised. In default of such application, let a decree be entered for the orator like the one •appealed from.