Mead v. Hammond

The controversy between the parties to this appeal is as to the priority of real estate mortgages owned by them respectively. The plaintiff is foreclosing a mortgage executed by the defendants Hugh *576, Davidson, Ellsworth Davidson ánd Frank Davidson to Albert H. F. Seeger, October 24, 1901, and recorded October 26, 1901. The appellant, William IL Hammond, is the owner of a subsequent mortgage executed by the three Davidsons on the same property January 11, 1902, and recorded January 18, 1902, which mortgage, he claims, has priority in lien to the plaintiff’s.

The plaintiff’s mortgage is collateral ±0 a bond of the three David-sons of even date, conditioned that they would pay all promissory notes then made or indorsed by Seeger for their accommodation, or • which may afterwards be made or indorsed by him, and any and all renewals thereof, whether the same be held by him or any other person in the following order: First, all promissory notes upon which he is liable .as maker; second, all promissory notes held by him; thvrd, all promissory notes on which he is liable as first indorser; fourth, all other promissory notes upon which he is many manner liable. The bond further provided that on default "in the payment of any part of the notes referred to, Seeger should have power to sell the mortgaged premises according to law; and that the whole of the principal sum of the notes and interest should become due at his option after default in the payment of any note on which he is liable, notwithstanding the fact that the remaining notes on which he is liable, or which may be held by him, are not yet due and payable.

On March 15, 1902, there were twelve notes outstanding and unpaid, amounting in the aggregate to $6,750. Seeger was liable on all these notes either as maker or indorser, and they were all renewals of notes which were in existence and outstanding .at the time of the execution of the mortgage to the appellant, the only change -being a .slight reduction in the .amount of the liability between the -date of the execution of that mortgage and March 1-5, 1902. On March 11, 1902, the Davidsons defaulted on one of the notes which matured on that day, and it went to protest; whereupon Seeger on the loth of' March, 1902, took up all the notes, paying to the owners the amount, both principal and interest, in full, and transferred them 'with his bond and mortgage to the plaintiff.

The principal contention on the part of the .appellant is that Seeger -was not -.entitled to resort to his -morgage except for reimbniTsememit of -whait .he might be 'compelled to pay -as indorser, 'after each note had been presented and protested, -the mortgage having *577been given in'this view only to secure him against loss by reason of his contingent liability. The contention ignores the plain language of the bond which seems controlling, and which expressly permits the collection by Seeger from the Davidsons of the full amount of the outstanding liability,, whether due or not, immediately, on default in the payment of any note. I think that on the 11th of March, 1902, Seeger was entitled to foreclose the mortgage at once, without taking up any of the notes, but whether that be so or not, the appellant certainly has not been injured by the fact that he preferred to pay them off, and thus- to become the actual physical owner and holder of them. What was done was clearly within the contemplation of the parties when the bond and mortgage to Seeger were executed, and the appellant not only took his security subject to all the rights previously conferred on Seeger, but with full constructive knowledge of their scope and nature. Nothing has been added to the amount of the prior incumbrance of which the appellant was at least constructively aware at the time he took-his security, and I cannot see that he has been aggrieved in any way.

The view taken renders it unnecessary to determine the other questions presented by the appellant.

The judgment, in so far as appealed from, should be affirmed.

Bartlett, Woodward, Hooker and Miller, JJ., concurred.

Judgment, in so far as appealed from, affirmed,, with costs.