In equity it has not completed its purchase, but to the extent of its payments, innocently made before notice of plaintiff's claim, is entitled to protection. It may, therefore, retire from the transaction without actual loss and without further impairing the rights of the plaint iff.
The action is in aid of plaintiff's execution. Its object is not to reach any equitable assets of Mrs. Tracy, but to strip from her legal title to the premises in question the obstructions created by the deed by which such title, apparently but not in fact passed from her to Howland, Smith and Tracy, and from them to the Baptist Union, and thus to show that the lien acquired by plaintiff's attachment of the premises and perfected by her judgment and execution was valid, and, therefore, may now be enforced free from the obstructions which seemed to defeat it. Such an action is within the equitable jurisdiction of the court. Beck v. Burdett, 1 Paige, 305; Haye v. Bolles, 33 How. Pr. 266; Rinchey v. Stryker, 28 N. Y. 45; Frost v. Mott, 34 Id. 253. Thurber v. Blanck, 50 N Y. 80, does not hold otherwise, but does hold that the attachment to be effective must operate upon legal rights; the precise position of the plaintiff here.
The judgment should be reversed and a new trial granted, costs to abide event.
c. Assignment of mortgage. Subrogation.
51 New York, 333 - 1873.
Action to restrain the prosecution by the defendant of an action upon a bond given by the plaintiff, which was secured by a mortgage on real estate, and for the subrogation of the plaintiff, or some person nominated by him, to the right of the defendant, on his being paid the amount due him.
Lott, Ch. C. - The conveyance by the mortgagor of the mortgaged premises, "subject to" the mortgage in question, to Corn-stock conveyed to him the equity of redemption only, and consequently the mortgage was to be discharged and satisfied out of those premises, before any right or interest therein was acquired by the grantee, and as between those parties it is clearly equitable that such discharge and satisfaction should be made out of the said premises, and that the obligor and mortgagor should not in exoneration thereof, personally be called upon to pay the same out of his individual property. The effect of the transaction was in equity to make the land the primary fund for the payment of the debt, and to place the plaintiff in the situation or relation of surety therefor only. This principle is clearly established. See Jumel v. Jumel, 7 Paige, 591-594; Halsey v. Reed, 9 Id. 446-453, etc.; Marsh v. Pike, 10 Id. 595; Cherry v. Monroe, 2 Barb. Ch. 618; Ferris v. Crawford, 2 Denio, 595; Stebbins v. Hall, 29 Barb. 524, 529, 538.
This relation between the mortagor and his grantee does not deprive the obligee from enforcing the bond against the obligor. He is entitled to his debt, and has a right to avail himself of all his securities. Equity, however, requires that the obligor, on the payment of the debt out of his own funds, should be subrogated to the rights of the obligee, so that he can reimburse himself by a recourse to the mortgaged premises for that purpose. This cannot prejudice the creditor, and it is clearly equitable as between the creditor and the owner of the land. He clearly has no right or color of right, justice or equity to claim that he, notwithstanding the conveyance of the property subject to the mortgage, and thus entitling him only to its value over and above it, should in fact enjoy and hold it discharged of the encumbrance, without any contribution, toward its discharge and satisfaction, from the land. This equitable principle is fully recognized in most of the cases above cited. Indeed, it is so consistent with right and justice as to require no authorities to sustain it.
Upon the application of it to this case, the plaintiff was entitled to protection and indemnity out of the mortgaged premises for what he was called upon to pay for the land, and it was reasonable and proper to have an assignment of the bond and mortgage made to an appointee of his nomination, for his benefit, so as to save any legal technical question that might arise out of the transfer of the security to the debtor and obligor himself, or as to its operation to satisfy the debt. Whether it was made to the plaintiff himself, or another person to hold for him, was wholly immaterial to the defendant.
The decision of the referee was, therefore, right on the merits, nor is there any ground for the reversal of the judgment on the admissibility of evidence. Assuming, as claimed by the appellant, that it was irrelevant and immaterial whether at the time of the execution of the deed from the plaintiff to Comstock there was an allowance made for the mortgage in question, the evidence could not prejudice the defendant. The presumption is, where premises are conveyed subject to a mortgage and the equity of redemption only is sold and conveyed, that the amount thereof is not paid to the vendor, but is deducted from the full value of the property.
There was some evidence given, against the exception of the defendant, of conversations with him, and on one occasion with his wife also, tending to show that he had actual knowledge and notice of the existence of the mortgage in question as a lien at the time of the pun base by his wife and the execution of the deed to her. The objection made to its introduction also was that it was immaterial and irrelevant. In the view I have taken of the case, I think it may be so considered and was entirely harmless. The plaintiff was entitled to the relief given him, irrespective of such knowledge and notice; but I may add, that the defendant cannot complain of the equities resulting from the transaction in favor of the plaintiff, when he was fully advised of the facts on which they were based.
It is unnecessary to inquire whether any personal obligation was assumed by either Comstock or Mrs. Zink to pay off the mortgage. That question is immaterial to the issue involved in this case, and its examination would be entirely irrelevant.