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 .
The principle that an assignment of the debt involves an assignment of the mortgage security applies in the case of an assignment of a part only of the debt, which is usually effected by a transfer of one of several notes or bonds evidencing the debt, and in such cases the assignee is ordinarily entitled to share in the benefit of the mortgage security.20 Difficult questions, however, arise as between the assignor and his assignee, and between different assignees of parts of the debt secured, as regards the application of the mortgaged property or its proceeds in case it is insufficient in value to satisfy the entire debt.
(Mass.) 165; Pierce v. Faunce, 47 We. 507.
17. See Greene v. Warnick, 64 N. Y. 220; Potter v. Stransky, 48 Wis. 235, 4 N. W. 95; Wiley v. Williamson, 68 Me. 71.
18. Martinez v. Lindsey, 91 Ala. 334, 8 So. 787; Moore's Appeal, 7 Watts. & S. (Pa.) 298; Converse v Michigan Dairy Co., 45 Fed. 18; Cutler v. Clementson, 67 Fed. 409 (semble).
19. Citizen's State Bank of Noblesville v. Julian, 153 Ind. 655, 55 N. E. 1007; Swift v. Edson, 5 Conn. 531; Hasselman v. Yandes, Wils. (Ind.) 276; Gillian v. Mc-Dowall, 66 Neb. 814, 92 N. W.
991; Merrill v. Luce, 6 S. D. 354, 55 Am. St. Rep. 844, 61 N. W. 43.
20. Phelan v. Olney, 6 Cal 478; Smith v. Stevens, 49 Conn. 181: Sargent v. Howe, 21 111. 148; Norton v. Palmer, 142 Mass. 433, 8 N. E. 346; Anderson v. Baumgart-ner, 27 Mo. 80; Studebaker Bros. Mfg. Co. v. McCargur, 20 Neb. 500, 30 N. W. 686; Page v. Pierce, 26 N. H. 317; Miller v. Campbell Commission Co., 13 Okla. 75, 74 Pac. 507; Patrick's Appeal, 105 Pa. St. 356; Muller v. Waddington, 5 S C. 342; Miller v. Rutland & W. R. Co., 40 Vt. 399, 94 Am. Dec 414.
"We will first consider the question as between the transferee of a part of the debt secured, and the transferor, retaining a part thereof. Their respective rights in regard to the application of the security may in the first place be determined by a provision of the mortgage instrument fixing the rights in this regard of different parts of the debt secured.21 Or their rights as to the application of the security may be determined by an agreement entered into by the parties to the transfer that the mortgaged property shall be first applied in satisfaction of the part of the debt transferred, or of the part retained, or otherwise.22 And the fact that the instrument of transfer in terms transfers the mortgage or the transferor's interest therein, as well as the debt secured, has ordinarily been regarded as showing an agreement on the part of the transferor to give priority to that part of the debt which is the subject of the transfer.23
If the transferor, in making the transfer of part of the debt, makes himself expressly liable, by guaran21. McVay v. Bloodgood, 9 Port. (Ala.) 547; Ellis v. Lammie, 42 Mo. 153; Bank of England v. Tarleton, 23 Miss. 173.
22. Cullum v. Erwin, 4 Ala. 452; Arnett v. Willoughby, 190 Ala. 530, 67 So. 426 (agreement inferred from circumstances); Grat-tan v. Wiggins 23 Cal. 16; Walker v. Dement, 42 111. 272; Morgan v. Kline, 77 Iowa, 681, 42 N. W. 558; Howard v. Schmidt, 29 La. Ann. 129; Chew v. Buchanan, 30 Md. 367; Bank of England v. Tarleton, 23 Miss. 173; Ellis v. Lamme, 42 Mo. 153; Vredenburgh v. Burnet, tee or otherwise, for the payment of that part, as, for instance, he may do by indorsing part of the notes given for the debt, he cannot assert any right to participate in the mortgage fund, until the part of the debt for which he is thus liable has been paid.24 The more difficult question arises when there is no express guarantee on the part of the transferor, nor any language susceptible of construction as bearing on the respective rights of the transferor and the transferee, when, for instance, there is merely an assignment of a part of the debt in the simplest terms, without any mention of the mortgage. Whether the assignee is in such case entitled to payment in full, out of the mortgaged land, of the part of the debt assigned, before any part of that retained is paid, would seem properly to depend on whether, in that jurisdiction, the assignor of a chose in action is ordinarily to be regarded as impliedly warranting the payment of the claim. If he is so to be regarded, there is a clear equity in favor of the assignee that the assignor shall not, by asserting a conflicting claim against a fund from which it is payable, interfere with its payment in full,25 while, on the other hand, if no warranty is to be implied, it is somewhat difficult to perceive any ground for raising an equity in favor of the assignee as to the application of the mortgage security, in the absence of language showing an agreement to give him priority. As to whether there is an implied warranty of payment upon the part of the assignor of a chose in action, the decisions are not in accord,26 and consequently it might have been anticipated, as is the case, that the decisions would not
31 N. J. Eq. 229, 34 Id. 252; Pat-tison v. Hull, 9 Cow. (N. Y.) 747; McLean's Appeal, 103 Pa. St. 255; Rolston v. Brockway, 23 Wis. 407. 23. Noyes v. White, 9 Kan. 640; Chew v. Buchanan, 30 Md. 367; Bryant v. Damon. 6 Gray (Mass.) 504; Foley v. Rose, 123 Mass. 557; Solberg v. Wright, 33 Minn. 224, 22 N. W. 381; Langdon v Keith, 9 Vt. 300; Miller v. Washington Saw Bank, 5 Wash. 200, 31 Pac. 712. But see Henderson v. Herrod, 10 Sm. & M. (Miss.) C31, 49 Am. Dec. 41.
24. Dixon v. Clayville, 44 Md. 573; Whitehead v. Morrill, 108 N. C. 65, 12 S. E. 894; Fourth Nat. Bank's Appeal, 123 Pa. St. 473, 1G Am. St. Rep. 538, 16 Atl. 779; Donley v. Hays, 17 Serg. & R.
(Pa.) 400; Cannon v. McDaniel. 4G Tex. 303.
25. See Mohler's Appeal, 5 Pa. 418; Dixon v. Clayville, 44 Md. 573.
26. 5 Encyclopedia Law & Practice, 952; 5 Corpus Juris, 969 be in accord as to whether the assignee of a part of the mortgage debt is entitled to priority over his assignor.27 It cannot be said, however, that the decisions asserting that the assignee is entitled to priority of payment as against his assignor are specifically based on the existence of an implied warranty on the assignment of a debt.28 They are more usually based on a broad statement that the transferee having, presumably, paid value for the assignment, it would be contrary to good faith for the assignor to assert any claim calculated to interfere with the payment of the debt assigned.29 The analogy occasionally suggested, in favor of this view, of the right of the transferee of a part of mortgaged land to demand that the mortgage be enforced first against the land of the mortgagor, appears to be entirely inapplicable, this being based