Brackenbridge v. Cummings , 18 Pa. Super. 64 ( 1901 )

Opinion by

William W. Porter,

The plaintiff is an assignee of a mortgage. The defendant is a terre-tenant. The defense set up is that the mortgage was given to secure the payment of certain promissory notes of the mortgagor; that all of them are paid but two; that recovery upon the two is barred by limitation and that the mortgage is therefore unenforceable. By its terms the mortgage was given not to secure a right of recovery on the promissory notes, but the payment of the debt of which the notes were the evidence. The mortgage stipulates that it is given “ as well for and in consideration of the aforesaid debt or sum of $5,800, and for the better securing the payment of the same,” and that it shall cease to be of effect provided the mortgagor shall pay “ the aforesaid sum of $5,800; ” and again in the recital the mortgage speaks of the debt “ as evidenced by the said twenty-nine promissory notes.” The running of the statute against the two unpaid notes and the consequent inability of the mortgagee to sue upon them did not pay that portion of the debt of which they were evidence. The statute does not extinguish the debt. It forms a bar to the remedy of the party to recover by action: Leasure v. Mahoning Township, 8 Watts, 551. The mortgage is then security for the payment of the debt. But both the notes and the mortgage are evidence of the debt, and there is no rule “ that a debt once evidenced by two instruments shall never be proved by one: ” Fleming v. Parry, 24 Pa. 50. Therefore, while action on the notes may be barred, the right of action on the mortgage continues until the debt is paid or extinguished. “ The mortgage was perfect in itself as a cause of action: ” Twitehell v. McMurtrie, 77 Pa. 383. Furthermore, viewing the mortgage strictly as a collateral, that is, apart from its being evidence of the original debt, the action on it survives the extinction of the right of action upon the notes. The right of a pledgee of securities to exhaust, or pursue his remedy upon, the collateral is not lost by the running of the statute upon the original obligation: Hartranft’s Estate, 153 Pa. 530. A creditor may hold an unlimited number of collaterals and can avail himself of any of them as long as the debt remains unpaid: Ayres v. Wattson, 57 Pa. 364.

The supplemental affidavit alleges that the two unpaid notes were taken up by the maker; that a new note was given for the amount and that this constituted a novation. The facts alleged upon which a novation is sought to be founded, are inadequate. If the new note was given before the appellant purchased the real estate, he has no right to complain. If given afterwards, he should have so said in his affidavit. But if given afterward, there is no allegation of the fact upon which a novation can be predicated. There can be no novation unless the intention of the parties to substitute a new security for the old and thereby extinguish the debt, is made to appear (McCartney v. Kipp, 171 Pa. 644), and nothing is set forth in the affidavits showing such intention.

In Shrewsbury Savings Institution’s Appeal, 94 Pa. 809, a bond was given “ as collateral security for sundry notes,” etc. The note in contention was a renewal. Mr. Justice Paxson says: “ There was no agreement that the bond should stand for the renewal. We must, therefore, look at the legal effect of the condition. It was contended by the appellees, who are judgment creditors, that it was collateral to the notes merely, and not to the debt represented thereby; that the lifting of the old notes' by the renewals was a novation and satisfied the condition of the bond. The distinction between the notes and the debt is exceedingly refined. If the judgment is collateral to the notes it is also collateral to the debt, for the reason that the notes are but the evidence of the debt with a promise to pay it. Has the debt been paid ? As between parties to a note it has never been held that a renewal was payment unless so accepted and intended. (Authorities cited.) ' It follows that the indebtedness for which the judgment was given as collateral, being still unpaid, Seitz, the debtor, has no standing to allege that the note is not protected by the lien of said judgment.” The principle thus expressed was followed in the case of Laucks v. Michael, 154 Pa. 357, where a judgment was given as collateral to notes which were renewed, and has application to the case before us.

More than this, there is no inference to be drawn from the transaction as stated in the affidavits, that the renewal note was given in satisfaction or release of the mortgage. The sound conclusion is that the giving of the renewal note, whether before or after the purchase of the mortgaged property by the appellant, was but the substitution or supplementation of evidence of an unpaid debt, of which the mortgage itself was evidence and which by its lien the mortgage continued to secure.

The appellant made his purchase with knowledge of an unsatisfied mortgage showing of record that but a part of the debt was paid. Even if he were permitted to infer from the lapse of time that the right to sue on the two unpaid notes was gone, yet had he no right to infer that the debt was paid. We can discover no equity in the appellant entitling him to take the property exonerated from the unpaid portion of the debt secured and represented by the mortgage. To sustain his present contention would be to give him property freed from a recorded lien, and this at the expense of the holder of a mortgage securing a debt which has never been paid.

The precise question here decided seems not to have been raised heretofore in Pennsylvania. Courts of other states, however, have passed upon it reaching conclusions similar to those here expressed: Hulbert v. Clark, 128 N. Y. 295; Joy v. Adams, 26 Me. 330; Davis v. Mann, 19 Pick. 535; Ballou v. Taylor, 14 R. I. 277. See also 2 Jones on Mortgages, sec. 1204, and cases there noted.

The judgment is affirmed.