Wood v. Trask

By the Court, Cole, J. The statement of the facts in this case sufficiently shows the relations and rights of the parties. From this it appears that Royal Wood, one of the joint mortgagees, sold and transferred unto one Gibbs, his interest in the second note secured by said mortgage, being one-half thereof, reserving his interest in the first note to become due, of like amount, secured by the same mortgage, that Gibbs refused to join in the foreclosure suit, and had assigned his interest in said second note to the defendant Bailey. But one note had become due at the time of the decree. Upon report of the referee it appeared that the mortgaged premises could not be sold in parcels, and the whole were ordered to be sold, and out of the proceeds the plaintiffs to be paid the amount of the first note or installment then due, together with interest and costs, and the surplus moneys, if any, to be brought into court The attorney for the defendants, on behalf of Bailey, requested the court to order that the judgment in the action should direct and require the sheriff, out of the proceeds of the sale of the mortgaged premises, to pay to Bailey a pro rata proportion of the proceeds upon the amount which was secured to him in and by said notes and mortgage, so that he would receive a pro rata proportion thereof with the plaintiffs.” The court refused so to order, and the defendants7 attorney excepted. In this it is contended that the court erred. But it is quite clear that the court was right so far as the judgment settled [572] the priority of right to the proceeds of the mortgaged premises. The assignee of the last installment, or note, took the same subject to all risks as to the adequacy of the proceeds to a complete security, and subject to the prior notes to become due and secured thereby. He was aware that on default to meet the first payment the mortgage would be liable to foreclosure in the manner provided by statute. He therefore took the assignment of the last installment subject to such risk, relying, as he must have done, upon the value of the pledged security and the personal responsibility of the mortgagors. The rule of law is tolerably well settled, that where several notes, falling due at different times, are secured by the same mortgage, equity requires their payment in the order of their maturity, out of the property on which they are secured This is the. general rule, and unless some special equity intervenes, to give a precedence to some other claim, this rule must prevail, State Bank vs. Tweedy, 8 Blackf., 447; 10 N. H., 466; 13 Ohio, 340, and cases cited therein. The assignee of the interest of Wood in the second installment or note, must be presumed to have taken the same in view of the. ultimate security of the mortgaged premises, to answer their ultimate liability, or upon the responsibility of the mortgagors. Our statute has essentially changed the rule of the common law in relation to the position of the fee of the mortgaged premises after condition broken. The fee does not vest upon default of the mortgagor, in the mortgagee, or his assignee. The fee only vests upon sale on foreclosure. The parties contracting in relation to the several sums secured by the mortgaged premises, did so with full cognizance of the law, and must abide its results. But for another reason the judgment of the court below must be reversed. This action was to foreclose for an installment due and unpaid, another installment remaining yet to [573] mature, and the judgment is absolute, and omits to provide that if previous to such sale the defendants should pay the complainants, or bring into court the amount actually due upon the mortgage, and interest and costs, that the proceedings in the case should be stayed. In How vs. English, 6 Wis. 262, we said: “The 87th section of chapter 84, Rev. Stat. provides, in cases of this nature, that if after a decree for sale of the premises is entered, the defendant brings into court the principal and interest due, with the costs, the proceedings in the suit shall be stayed; and the decree in the present case, instead of requiring an unconditional sale of the premises, should have contained a clause to this effect. The form of the decree given in 2 Barb., C. P., page 615, contains such a clause, and it seems very reasonable and very proper that it should have been inserted in the decree in this case. Suppose the appellant had brought into court, or tendered to the sheriff, before sale, the sum actually due upon the mortgage, with interest and costs, would he have felt authorized, under this decree, to receive that sum and stop the sale ? Would the sheriff not have relied upon the mandate of the court, and proceeded with the sale, unless the whole sum secured by the mortgage had been paid ? And yet it is most manifest that, by statute, the appellant was entitled to a stay in the proceedings upon paying, before sale, the sum actually due, interest and costs. This is an insuperable objection to this decree, patent upon the face of it, and cannot be overlooked.” We have no doubt of the correctness of this ruling, and it must be applied here. The judgment in this case falls short of the requirement of the statute in this respect, and must be reversed. Judgment reversed with costs.