Douglass v. Peele

The Complainant insists in this case, that as the two mortgages were executed and delivered simultaneously to the same mortgagee for the purchase money of the mortgaged premises, each mortgage covering the whole of the mortgaged premises, that the mortgages were concurrent liens upon the premises before either of them were recorded ; and that inasmuch as both mortgages were executed to the same person, the recording of one of them a short time before the other, did not, as between the parties, change the nature of the liens, or give one a priority to the other. He insists, farther, that the mortgagee, being the owner of two simultaneously executed mortgages upon the same premises, by assigning one of them, whether it was the one first or last recorded, assigns and transfers all his interest in the mortgaged premises to such first assignee, so as to vest in such assignee a priority of lien as against the mortgage then held by the assignor. The complainant in this case insists, that from the fact that he is the first assignee of one of two mortgages executed at the same time, by the same mortgagor, to the same mortgagee, upon the same mortgaged premises, he is entitled by such assignment to have his mortgage first paid, or to have it preferred to the other mortgage held by the mortgagee at the time of making the first assignment. Perhaps, if there was nothing more in this case than the mere naked facts above suggested, the complainant might be deemed to be correct in his legal conclusions. It was doubtless competent for the holder of two simultaneously executed mortgages upon the *567same premises, to indicate, by an assignment of one of them, whether the assignee should hold the mortgage so assigned, as the prior or junior lien. Such an indication or direction in an assignment, would doubtless control, if there was no equity in any third person to interfere with it. It may be, too, that the bare act of making an assignment of one mortgage under such circumstances, would give the assignee the preference over the mortgage still retained by the mortgagor, whether such last mortgage was first recoz’ded or not, if the assignee was not infoz’zned, at the time, of any equity which would give the last mortgage the preference. The recording act was • doubtless passed to protect bona fide purchasers— to give them notice of previous claims, liens, or conveyances ; and probably, as between the complainant and George W. Bush, the recording act has very little application. It is another well established principle, also, that although a prior lien or conveyance is not recorded, yet, if a subsequent purchaser has notice of its existence, though unrecorded, he takes subject to such prior claim.

In this case, if Geoz’ge W. Bush’s testimony is to be admitted, it would appear that the complainant was well infoz’med of the whole circumstances, and in such a manner as clearly to give to the defendant Horace Bush, the prior lien. The complainant insists that he is not a competent witness ; or if so, that his testimony is inconsistent with the other known facts and irreconcilable with itself, and that it cannot be admitted, inasznuch as it will vary the effect of written instmments by parol proof. I can see nothing in this case to make the witness incompetent. The case of Van Rensselaer vs. Stafford, (1 Hop*568kins’ Rep. 569,) is quite similar to this, where the mortgagee was examined as a witness, and the admjsg^q¡ty 0f hj8 deposition objected to. The Chancenor does not decide directly upon this point but < 1 1 in his opinion he refers to facts that must have been derived from the mortgagee’s testimony. I therefore infer that it was received—in other words, that he was a competent witness. . This mortgagee, having parted with all his interest in both mortgages, I conceive to be competent as a witness. I see no reason, either, to discredit him from his own statement, comparing that statement with all the other facts in the ease; and he certainly is not discredited by any other testimony.

Parol testimony cannot be introduced, it is true, generally, to vary the terms of any written agreement, to alter or modify a contract in writing; but it is competent to introduce parol evidence to show the purpose with which an instrument was executed, to show facts dehors the instrument, which may materially vary its legal effect. Thus, parol evidence may be given to show usury in a bond and mortgage, and the usurious intent, which, though it does not show a contradiction or variance in the instrument, in legal effect renders them null. Parol evidence may be given to show notice of a prior equity, a deed unregistered, and many other things, which will very materially vary the available legal rights of the party claiming under such instrument. In this case, the testimony of George W. Bush was not introduced to contradict or vary any of the instruments executed • either to or by him ; but simply to show the knowledge of the complainant of all the circumstances connected with the transaction. From this it appears *569that the complainant knew that the land was the property of Horace Bush, though the title was in his son—that twenty-five hundred dollars was to be secured upon the land for his benefit, as the first lien-— and that the mortgage for that amount was recorded first, with the complainant’s knowledge, to secure that object. He knew the purposes for which both mortgages were to be executed, and how they were to be assigned, and for what purpose, and which was to be deemed the elder. With all this knowledge, the complainant received his assignment—he still retains this mortgage—no innocent assignee of his, without knowledge, is to be affected. There is a natural equity in favor of Horace Bush’s mortgage, as being for the purchase money, to secure it to the real owner of the land, of which ownership the complainant had full notice. (1 Hopkins, 569.) The mortgage of the complainant was given merely for his assistance in procuring the sale of the land ; and it was assented to by him that it should be deemed the second or junior lien. It was actually made .such upon the records ; and I cannot consent that he shall come in and have the first lien, or even a pro rata claim with Horace Bush. He must remain where he was placed by his own assent and agreement in the -first place, second to the mortgage of Horace Bush.

George W. Bush acted improperly in applying the moneys which he received upon the larger mortgage, to his own use, instead of remitting it to his father; but that is a matter solely between the father and the son. It has produced no injury to the complainant. The conclusion to which I have come, shows that the complainant was wrong in making Horace *570Bush a party defendant, as a subsequent incumbrancer, inasmuch as his incumbrance was, in point of fac^ prjor that of the complainant. The complainaBt must therefore be personally charged with the costs of the defendant Horace Bush, if the mortgaged premises do not sell for sufficient to pay his mortgage and his costs in this suit. (6 Paige, 635.) The testimony has all been taken before a master in this cause, and he has reported upon all the facts necessary to be before the court, to pronounce a decree of sale. There will, therefore, be no necessity for any farther reference.

The decree must be for a sale of the mortgaged premises ; and the master making the sale, is to pay out of the proceeds of such sale, first, to the defendant Horace Bush or his solicitor, the sum of $1,562 18, with interest from December 1, 1840— that being the amount due on his mortgage, as computed by the master; second, to pay the costs of the defendant Horace Bush, for his defence of this suit third, to pay to the complainant the sum of $1,632 77, with interest from December 1, 1840—that being the amount due on his mortgage, as computed by the master; fourth, the complainant’s costs of this suit.

It must also be provided, if the premises do not produce sufficient to pay the mortgage of the defendant Horace Bush, with his costs of this suit, that said Bush have a personal decree against the complainant for such costs, or any deficiency in such costs, and also have execution therefor,.