This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
Occasionally the mortgage instrument provides that it shall be void in a certain contingency other than the payment of the debt secured, as, for instance, in case of the death of the mortgagee,38 or in case of the sale of certain property.39 Such a provision will no doubt ordinarily be construed as discharging the obligation secured as well as the mortgage lien, in case such contingency comes to pass. So a provision that a note and mortgage given to secure the payments on a building contract should be cancelled on failure to construct the building as agreed has been given effect,40 as has a provision that a mortgage given to secure the performance of work as agreed should be void in case the mortgagee failed to furnish work.41 In such cases the provision discharging the obligation secured, and incidentally the security, is in effect a condition subsequent.42 There may on the other hand
36. Munson v. Munson, 30 Conn. 425. So in the case of a mortgage to secure an annuity, Power v. Jenkins, 13 Md. 443.
37. Taft v. Stoddard, 142 Mass. 545, 8 N. E. 586; Abbott v. Upton, 19 Pick. (Mass.) 434; Gibbs v. Haughowout, 207 Mo. 384, 105 S. W 1067; Aschanibeau v. Green, 21 Minn. 520; Richard v. Talbird, Rice Eq. (S. C.) 158; Nichols v. Cabe, 3 Head (Tenn.) 92; Newell v. Hurlburt, 2 Vt. 351.
38. Hollis v. Hollis, 84 Me. 96, 24 Atl. 581.
39. Fiske v. Ruggles, 4 Gray (Mass.) 528.
40. Perry v. Quackenbush, 105 Cal. 299, 38 Pac. 740.
41. McClellan v. Coffin, 93 Ind. 456.
42. See Hammon, Contracts, Sec. 422. So where there was an agreement that the mortgage debt be be a condition precedent to the effectiveness of the obligation secured and the incidental security, by reason of an extraneous agreement that the obligation shall not legally exist until an event named has come to pass.43- 44
Although a discharge in bankruptcy relieves the bankrupt from personal liability for a debt, it does not put an end to the debt,45 and consequently a mortgage securing the debt,46 as any other lien therefor,47 is not affected by the discharge. This is a fortiori the case if the mortgage is made to secure the debt of a person other than the mortgagor. The mortgagor is in such case, as regards his land, in the position of a surety, and the ordinary rule that the discharge in bankruptcy of the principal debtor does not terminate the liability of the surety would apply.48
-(b) Payment. Although the obligation secured is for the payment of money, payment in another medium may be substituted with the consent of the creditor, as for instance when it is made by the delivery of specified articles of a chattel character,49 or by the conveyance to the mortgage creditor of the mortgaged land.50 Such a payment, if made at or before the paid from the sale of certain land, held in trust by the mortgagee for the mortgagor, and, the former refusing to make sale, it was decided that, to the extent of the proceeds of sale which might have been obtained, the mortgage was satisfied, the court in effect introduced by construction a condition subsequent. See Cook v. Bell, 114 Mich. 283, 72 N. W. 174. 43-44. Wald's Pollock, on Contracts (Williston's Ed.) 311; 4 Wigmore, Evidence, Sec. 2410.
45. Newton v. Scott, 9 M. & W. 434; Champion v. Buckingham, 165 Mass. 76, 42 N. E. 498.
46. Begein v. Brehm, 123 Ind.
160, 23 N. E. 496; Bush v. Cooper, 26 Miss. 599, 59 Am. Dec. 270.
47. Remington, Bankruptcy, Sec. 2668.
48. Burtis v. Wait, 33 Kan. 478, 6 Pac. 783; Post v. Losey, 111 Ind. 74, 60 Am. Rep. 677, 12 N. E. 121.
49. Neylan v. Green, 82 Cal. 128, 23 Pac. 42; Smith v. Williams-Brooke Co., Ill Miss. 393, 71 So. 648; Ketchem v. Gulick, - (N. J. Ch.) -, 20 Atl. 487; Very v. Levy, 13 How. (U. S.) 345, 14 L. Ed. 173; Swain v. Seamens, 9 Wall. (U. S.) 254, 19 L. Ed. 554.
50. Rodgers v. Parker, 136 Cal. 313, 68 Pac. 975; Bassett v. Mason, maturity of the debt, operates, strictly speaking, by way of substituted performance, while if made after maturity, it operates by way of accord and satisfaction.51 Payment may also be made, if so agreed between the debtor and creditor, by the application of a claim or claims in favor of the debtor against the creditor,52 by the performance of services by the former for the latter,53 or by the creation of another debt, differently secured.54
The receipt by the creditor of the proceeds of a sale of a part of the mortgaged properly, which sale was made with the former's consent, constitutes in effect a payment pro tanto upon the debt secured.55
The possession by the debtor of a note or bond evidencing a debt secured by mortgage, as of one not so secured, is prima facie evidence that the debt has been paid.56 And payment may usually be pre18 Conn. 131; Ernest v. McChes-ney, 186 111. 617, 58 N. E. 399; Chapman v. Lester, 12 Kan. 592; Leary v. Clayton, 131 Md. 545, 102 Atl. 765; Dickason v. Williams, 129 Mass. 182; Quick v. Raymond, 116 Mich. 15, 74 N. W. 189; Milnor v. Home Savings & Loan Ass'n, 64 Minn. 500, 67 N. W. 346; Collins v. Stocking, 98 Mo. 290, 11 S. W. 750; Jennings v. Wood, 20 Ohio, 261; In re Miller's Estate, 251 Pa. 201, 96 Atl. 473.
51. Anson, Contracts (Huff-cut's Ed.) 347, 349: Hammon, Contracts 865, 943.
52. Davis v. Thompson, 118 Mass. 497; Gallup v. Jackson, 47 Mich. 475, 11 N. W. 277; Hol-comb v. Campbell, 118 N. Y. 46, 22 N. E. 1107.
53. Gescheidt v. Drier, 63 Hun.. (N. Y.) 627, 17 N. Y. Supp. 741;
Stoel v. Flanders, 68 Wis. 256, 32 N. W. 114.
54. Baker v. Cent. Nat. Bank, 86 Kan. 293, 120 Pac. 549.
55. Pratt v. Waterhouse, 158 Pa. St. 45, 27 Atl. 855; Fredonia Nat. Bank v. Borden, 166 Pa. St. 177, 30 Atl. 975, 976; Wilkens v. Potts, - (Tex. Civ. App.) -, 54 S. W. 279; Field v. Doyon, 64 Wis. 560, 25 N. W. 653; Vaughn v. Smith, 148 Ky. 531, 146 S. W. 1094. In some of these cases it is said that by such receipt of the proceeds of sale, the creditor is estopped to that extent to assert his claim. The introduction of the doctrine of estoppel appears unnecessary.