Swayze v. Schuyler

Reed, V. C. The counsel of the defendants insist that the complainant cannot foreclose because the debt, for which the mortgage purports to be a security, has been extinguished. This, it is insisted, results from the fact, that the equity of redemption was sold to James A. Swayze and the Messrs. Bulgin, by deeds in which the payment of these debts was assumed by the grantees; that the Bulgins sold their one-half interest to James A. and Aurelius Swayze, by a deed in which there was the same assumption, and that Aurelius succeeded to the rights of James A. Swayze in the property as his heir-at-law. It is argued, therefore, that Aurelius having bought this part of the mortgage debt, he cannot prosecute a suit to foreclose the mortgage. If Aurelius J. Swayze bought the bonds as executor, there [78] would result no merger by legal operation, because he thereafter held the debt and the equity of redemption in different rights. To meet this objection, it is said that he bought the bonds with his own money, and therefore he is the substantial.owner. This, however, is not proved. The assignment itselfj whenever actually made, shows that it was made to the complainant as executor. And the probabilities are that whatever money Aurelius J. had to be applied to the purchase of these bonds, was money of the estate of John E. Swayze. Nor would his assumption of the debt or the assumption of James A., from whom he inherited three-fourths of the equity of redemption, extinguish the debt in his. hands as the executor of James E. Swayze. If thefunds of the estate were used then the estate is entitled to the security bought with those funds. Aurelius J. had the right to keep alive the mortgage security; and as merger is always a question of intention, it is quite clear that the intent was to preserve the two interests distinct. By their assumption James A. and Aurelius became, in equity,'liable personally for the payment of the mortgage debt, but that in no way prevented the representative of the estate of John K. Swayze, whether such representative was Aurelius J. or a stranger, from proceeding in rem to make the money due out of the real estate security. But it is said that the property of James E. Swayze goes to Aurelius J. as the surviving child, and therefore, if the funds with which the bonds were purchased were derived from the estate of James E. Swayze it was really the property of Aurelius J. But the estate of James K. Swayze has never been settled. The assets of the estate are still held as a trust by his executor, and any property bought with those trust funds constitute a part of the trust assets. It is to be observed that the defendants, who raise these objections, are the owners of other portions of the debt secured by the mortgage. Originally,' that debt had nothing to do with either Aurelius J. or John E. Swayze. The purpose of the defendants now is to strip the holder of these two bonds of the real estate security to enhance the security of the holders [79] of the remaining bonds. There is no equity in this endeavor, for the subject-matter covered by the mortgage now is the same as when taken — in fact, better than when taken, for two o'f the outstanding bonds, it is said, have been paid. I am of the opinion that the debt of the complainant still •exists and that he is in no way precluded from pursuing his suit. The counsel for the personal representative of the deceased widow raised another question. They say that, upon the assumption that the interest due to ■her during her life upon her bond was not paid, so much of it as is not paid is a debt which is prior in lien upon the mortgaged premises to the debts which are secured by the other mortgage given at the same time. Now, the two mortgages, being executed at the same time, would be, ordinarily, concurrent liens. But the special facts upon which the preference of the widow’s mortgage is claimed is, first, that it was given to secure her •dower interest in the mortgaged property, and secondly, that her debt first matured. I see no substance in the first of these contentions. She consented to take her mortgage concurrently with the ■other mortgage, and she had the right to accept any security she ■chose in consideration of her right to have her one-third interest in the property set off to her for life. Having so accepted it, she took it as any other mortgagee. The second point is that the interest upon the bond of the dowress matured before the death of the dowress and that the second class of bonds matured at her death, and therefore the claim first maturing is •entitled to priority of payment out of the mortgaged premises. I know this has been so held in some courts, but I do not • think it should be adopted as a general rule. The claims have all matured, and if there is anything due upon the annuity bond it should be paid ratably with the rest of the debts secured by the mortgage. There will be a reference to a master, to ascertain the amounts due, which will include the inquiry whether any, and if so what, "interest upon the dower mortgage remains unpaid.