Thompson v. Chandler , 7 Me. 377 ( 1831 )

Weston J.

delivered the opinion of the Court at the ensuing May term in Kennebec.

The counsel for the respondent insists, that by a union in him of the right to redeem in the original mortgagor, and the interest of Woodman, the first mortgagee, he has a right to hold the land discharged of all intervening incumbrances. The counsel for the plaintiff contends, first, that me transactions between Samuel Fessenden, Esq. under wbom the respondent claims, Fessenden at the time being the owner of the equity of redemption by relation, from the day of his attachment, operated an extinguishment of Woodman’s mortgage, and that he is entitled to the land, as the next in-cumbrancer. Secondly, that if Woodman’s mortgage was not thereby extinguished, he has a right to recover the land, upon payment to the respondent, of what may be due upon that mortgage.

If Fessenden, at the time of his payment to Woodman, and taking from him a release and conveyance of his interest, was not the owner of the equity, it is conceded that Woodman’s mortgage was not extinguished. This was done on the sixteenth of July, 1828, and Fessenden purchased the equity, at a sheriff’s sale, on the twenty-first of August following. His attachment was made on the third of June preceding. The attachment prevented the creation of intervening incumbrances to his prejudice, but did not give him an inchoate title to the equity, for it was altogether contingent, whether he or another person would become the purchaser of it. He might deem it convenient or prudent to do so, because he had bought the interest of the first mortgagee. And upon this view of the case, there is certainly great reason for regarding him as the owner of the mortgage, before he acquired a title to the equity. But we deem a decision of this point entirely unimportant, as we are clearly of opinion that whether Fessenden was or was not, at the time he took a release or conveyance from Woodman, the owner of the equity, the mortgage was not thereby extinguished.

The counsel for the plaintiff, to make out an extinguishment, relies upon the case of Wade v. Howard, 6 Pick. 492. The reporter, in his marginal abstract in that case, states that where the purchaser of an equity of redemption of land, which is subject to two mortgages, pays and takes an assignment of the first mortgage, it seems that he does not thereby acquire the rights of the first mortgagee, but that the first mortgage is discharged. Upon an examination of that case, it will be found that the question reserved for the consideration of the court was, whether the mortgage had been assigned or discharged. If assigned, the tenants were to be defaulted; if discharged, the demandants were to become nonsuit; and the court upon the facts held the mortgage to have been discharged. This was the point decided. There are, it is true, to be found in that case, dicta of the Chief Justice, by whom the opinion of the court was delivered, which may be thought to favor the doctrine, which in the opinion of the reporter seems to be deducible from it. If however the reasoning of the Chief Justice, instead of being regarded as general, is limited and restrained, as it doubtless ought to be, to the facts in the case then under consideration, no such principle is to be drawii from it. The learned Chief Justice, in Gibson v. Crehore, 3 Pick. 475, had himself laid down a different doctrine with great strength of illustration and weight of authority, in a case in which the question, whether the first mortgage was extinguished or not, was directly presented ; which was again sanctioned by the court in a bill in equity between the same parties, 5 Pick. 146. The principle stated in the first of these cases, and recognized in the second, is, that when the purchaser of the right to redeem a mortgage, takes an assignment of it, this shall not operate an extinguishment of the mortgage, if it is for the interest of the assignee to uphold it. And this doctrine has been clearly settled in the English court of chancery, and in New-York, and also in our own State, upon full consideration, in Freeman v. Paul, 3 Greenl. 260. Now it cannot admit of a question that in the case before us, it was manifestly for the interest of Fessenden to uphold Woodman’s mortgage.

By the conveyance from Woodman, Mr. Fessenden acquired the rights of the first mortgagee, and by his purchase at the sheriff’s sale, he acquired also the equity of redemption. According to the English law he might exclude intervening incumbrances, unless he had actual notice at the time of their existence, and the registry is not there held sufficient, to prove such notice, 4 Kent, 167. But their doctrine of tacking has not been adopted in this country, but has been in fact expressly repudiated ; and Mr. Fessenden frankly admits that he does not expect to prevail on this ground. But he insists that the right of the mortgagor, and those claiming under him, is gone unless he or they avail themselves, within the year, of the right allowed by the statute to redeem an equity, seized and sold on execution ; and that under the circumstances under which ho held, the right to redeem at any time within three years, which exists in ordinary cases, became restricted to one year. But this position is taken without due regard to the distinct interest of incumbrancers, whose rights accrued before the seizure of the equity. After each successive incumbrance, there still remains in the mortgagor a right to redeem upon payment of all the mortgages created. This right a creditor may seize and sell, and this sale is a statute conveyance from the mortgagor to the purchaser. But although there remains nothing valuable, in the eye of the law, in the mortgagor, which another creditor may take, the law allows him to redeem his interest from such purchaser within a year. This is a distinct and independent limitation of a new right, created by the law. It operates between the purchaser of the equity and the former owner, the judgment debtor, and only upon the interest acquired by the purchase. It is what the judgment debtor had remaining in him, a right to redeem upon payment of all antecedent mortgages. The interests of preceding incumbrancers remain unaffected. The first mortgagee, which Fessenden was by substitution, cannot by the purchase of the last equity, exclude intervening rights, any more than the purchaser of the last equity might do so, by taking an assignment of the first mortgage. And whether the purchaser of the last equity takes an absolute conveyance of it, or whether subject; to the right of the former owner to redeem it within a year, makes no difference in principle. The rights of a second mortgagee, or of any subsequent mortgagee, who duly records his title, cannot be extinguished or foreclosed, except upon the lapse of three years, after the entry of an antecedent mortgagee for condition broken. His interest cannot be impaired by any transactions between the party from whom he derives title and his' creditor, or other persons claiming under him. The principle is, that until a foreclosure lakes place, the claims of each incumbrancer are to be allowed in due order, having regard to the time of their creation. 4 Kent, 171.

It appears from the answer of the respondent, that Woodman entered for condition broken, on the twenty eighth of May 1828. In three years from that time the mortgage would have been foreclosed, and Woodman, and those claiming under him, would have had, an absolute title. But long prior to the lapse of that period, viz. on the fifth of November 1829, the plaintiff in equity, who was second mortgagee, tendered to the defendant, who stood by substitution in the place of Woodman, the amount due on the first mortgage, and thereby saved his’rights from foreclosure.

The decree of the court is, that the defendant state the amount due on Woodman’’s mortgage, and that upon payment of that sum, when it shall have been liquidated, by the plaintiff, the respondent is to surrender to the plaintiff the possession of the land in controversy, and also make and execute to' him a release and conveyance of the right he acquired, as assignee of Woodman’s mortgage.