Blair & Co. v. Marsh

Stockton, J. It is averred in complainant’s bill, that it was the agreement between Lee and himself, at the time the note was assigned to him, that he should take it without recourse upon Lee, in case of non-payment by Marsh, but that, in such event, he should succeed to the benefit of all the security held by Lee, for the payment of the same. This security held by Lee, and by him assigned to .complainant, must be understood to include such as is given by the statute, (Code, secs. 2094-5), to the vendor of real estate, when part, or all, of the purchase money remains unpaid after the day fixed for payment, whether time is or is not of the essence of the contract, to file Ms bill against the vendee, praying the court to require him to perform his contract, or in default thereof, to foreclose and sell his interest in the property. Courts of equity, where the title has passed to the vendee, will enforce the lien of the vfendor for the unpaid purchase money, against the vendee and his heirs, and other privies in estate, as well as against all subsequent purchasers, having notice that the purchase money remains unpaid. Much more readily will this relief be granted, where the title still remains in the vendor, who has given only a title boird for a conveyance, on the payment of the purchase money. When the day fixed for payment is passed, and the money is not paid, the vendor may, in equity, call upon the vendee to perform his contract; and in case of his failure to pay the money, he may have a decree for the rescission of the contract, or for the foreclosure of the vendee’s right in the premises, and for a sale of the same, to satisfy the unpaid purchase money. Under the statute, the vendee for the purpose of foreclosure, is treated as the mortgagor of the property, and his rights may be foreclosed in the same manner. As the assignees of the promissory note for the purchase money remaining unpaid, and by virtue of the agreement with Lee, that they should be substituted to the benefit of all security held by him for its payment, the complainants were entitled to the relief prayed for in their bill, against [147] the defendants Marsh, and Barclay, Ogg & Co. These defendants are not entitled to interpose the objection, made by the demurrer to the complainant’s prayer for relief, that the complainants are mere assignees of Lee, and that the relation of vendor and vendee did not exist between the complainants and themselves. By virtue of the statute, they are to be treated, for all the purposes of this suit, as mortgagors, and their rights as such may be foreclosed and sold. By the assignment of the note, all the right of Lee, to foreclose against Marsh, passed to complainants, and they may maintain the action in their own name. The right of Lee to foreclose against Marsh, for non-payment, was a quality incident to the debt, which passed by his assignment, and by' virtue of his agreement, to complainants, in analogy to the principle of equity, by which the assignor of a bond and mortgage has been held to be security for its payment, in such a sense, that any collateral security held by him for the payment of the debt, will enure to the benefit of the assignee of the bond and mortgage. Crow, McCraney & Co. v. Vance, 4 Iowa, 434; Curtis v. Tyler, 6 Paige, 431. Lee, on the non-payment of the -note by Marsh,' (to say nothing of his right for such non-payment, to rescind the con tract, and pay back the money received,) was entitled to a decree against Marsh, for a specific execution of his agreement ; and, in default of payment, to a decree of foreclosure of his right in’ the property, and for the sale of the same to pay the balance of the purchase money. The complainants are entitled to the same rights; and it may be enforced by them, as though they were the holders, by assignment from Lee, of the promissory note of Marsh for the purchase money, secured by mortgage on the premises. Barclay, Ogg & Go. are charged to be purchasers, with notice. If they were the purchasers of the title bond only, in good faith, for a good consideration, and without notice of complainants’ rights, they were the purchasers of an equiy only, which they must yield to the rights of Lee, as the [148] holder of the legal title, and to those of complainants asserted under Lee. Rut they were informed, by the terms of the bond assigned to them, that two notes were executed by Marsh for the unpaid purchase money, and that until these were paid, no conveyance was to be made by Lee. This was sufficient to put them on inquiry. They are not, therefore, innocent purchasers, any more than they are holders of the legal title. The objections made upon the demurrer, we have considered as made by the vendee and those bolding under him. Coming from them, we consider them insufficient, and the demurrer should have been overruled. We will, of course, not be considered as deciding any question as to tlie right of Lee, the vendor, to rescind in toto his contract with Marsh, by reason of the non-payment of the purchase money; nor as to his right to object, in any proper manner, to the relief prayed by complainants. Lee was not a party to tlie demurrer put in by the other defendants, and no question affecting bis rights arose upon the same. We have considered only whether the objection made, could be rightfully interposed by Marsb, and Barclay, Ogg & Co. The judgment of the district court upon the demurrer, will be reversed, and the cause remanded for further proceedings in conformity with this opinion. Judgment reversed.