Taylor v. Wing

The important question in this case relates to the effect of the agreement, dated February 8, 1872, between William L. Ferris, Jr., and the Farmers’ and Manufacturers’ Bant. At that time there were three mortgages upon the premises mentioned in the complaint, one held by the county treasurer of Orange, county for .$9,000, on which $3,000 only was due. That was the first mortgage, and it was held only as security for moneys belonging to William L. Ferris, which had been deposited with the county treasurer, for. investment, during the minority of said Ferris. Next in order of priority were the plaintiff’s two mortgages, amounting together to $8,000. The mortgage to the bank is for $15,000, and it is junior in date to all the mortgages above referred to. There is due upon the latter mortgage $2,100 of principal only, and it is now held by the defendant Wing, by virtue of an assignment thereof to him, made by an assignee of the bank. One of the find-' ings of the trial judge, is that William L. Ferris, by the agreement of February 8, 1872, covenanted and agreed that the mortgage to the bank have priority of lien above the said first-mentioned mortgage, as fully and to the same effect as if it had been previously executed and recorded. Nevertheless, he also found that the plaintiff’s mortgages are a first lien upon the mortgaged premises. We think it was error to give to the plaintiff’s mortgages priority of lien over the bank mortgage, held by Wing. No objection has been taken on the ground that the county treasurer was not a party to the agreement of February 8, 1872. He was a naked trustee only. William L. Ferris was the equitable owner of the mortgage held by the county treasurer, and entitled to an immediate assignment thereof, by reason of his having attained his majority. Ferris was, therefore, competent to- discharge the mortgage debt, and, of course, to do the lesser act of making a junior mortgage a lien prior to that of the mortgage which was held for his benefit. The plaintiff, however, was not a party to the agreement by which such priority of lien was given. The agreement does not import, nor was the object of it to accomplish the postponement of a prior mortgage, but to insure the advancement of a junior one. The language used is significant. The mortgage to the bank was given *236“ priority of lien before and above the said first-mentioned mortgage, as if it had been previously executed and recorded.” The-new position which the bank mortgage was to take, in part, in marshalling the liens on the mortgaged premises, was thus plainly indicated. The bank mortgage, to the extent of the amount due-, on the first mortgage, was put in the place of the latter in the order of priority of lien, and thenceforward it became a first mortgage for that amount, but it remained a third mortgage in all other-respects. In Frost v. Yonkers Savings Bank (70 N. Y., 553), there was an agreement between a judgment creditor, whose judgment was a first lien on premises which had been subsequently mortgaged four times, and the fourth mortgagee, by which the lien of the judgment was postponed and made subordinate to the lien of the fourth mortgage. It was held, that as between an assignee of the fourth mortgage, and a mortgagee whose lien was intermediate the judgment and the fourth mbrtgage, and who had purchased the mortgaged premises at a sale on execution issued upon the judgment, the agreement made the fourth mortgage the-senior security, and that the assignee of the latter had a right to redeem the prior mortgage without redeeming the judgment. Such an adjustment of the liens is equitable. The liens of the plaintiff’s, mortgages are not affected by the application of such a rule, for the reason that the bank mortgage merely takes the place of the first, mortgage, to the extent of the lien of the latter. Such priority of lien of the bank mortgage, followed the assignment thereof toWing. (70 N. Y., supra.)

If these views are correct, Wing is entitled to a priority of lien over the plaintiff’s mortgages, notwithstanding the fact found by the trial judge, that the mortgage to the county treasurer had been in legal effect paid before the assignment of the bank mortgage to Wing, i For such payment merely extinguished a lien which had become junior to those of the plaintiff’s mortgages, but it had no effect upon the lien of the bank mortgage, which had obtained priority over such liens of the plaintiff. The bank mortgage having obtained priority by the agreement of February 8, 1872, no act without the assent of the bank or its assignee could change the priority thus acquired.

*237We need not examine tbe evidence to see whether the last-named finding is correct, because there must be a new trial for the ■error in according to the plaintiff’s mortgages priority of lien over ■the bank mortgage held by Wing.

The judgment must be reversed, and a new trial granted, with -costs to abide the event.

Judgment reversed, and new trial granted, with costs to abide ■event.