Aldrich, Assignee v. Martin Others

4 R.I. 520

• Court: Supreme Court of Rhode Island
• Decided: March 6, 1857
• Status: Published

Opinion

Ames, C. J.

We are entirely satisfied from the proofs, that, with the knowledge of both the mortgagees, the two mortgages in question were executed at the same time by the mortgagor, for the purpose of putting them upon an equality, as securities upon the mortgaged property. Under such circumstances, the fact that Martin’s mortgage was received for record a few minutes earlier on the same day than Hoar’s, can give the former no priority over the latter. The purpose of the two instruments being to secure their several debts and liabilities, the property is to be distributed for their benefit, not in moieties, but in proportion to the debts and liabilities of each. Donnels v. Edwards and Trustees, 2 Pick. 617, 619.

It appears that Lewis was actually indebted to the two mortgagees only in a small sum, comparatively; their liabilities for him in the main being, and to a large amount, outstanding and unpaid. It is a well-settled equity, that if a principal has given pledges or securities to his surety, the creditor is entitled to the benefit of them in the hcmds of the surety, to be applied to the payment of his debt. Wright v. Morley, 11 Ves. 22 ; 1 Story’s Eq. Jurisp. § 638. It is proper that the assignee should administer this equity, as well for the protection of the creditors who hold the indorsed paper, as, that the funds of the assignor should not be diverted from their true destination. We cannot consider in administering this equity of the creditors, by applying the property of the mortgagor to the payment of his debts, the relative position of the mortgagees, as prior and subsequent indorsers upon a portion of this paper. That is a matter which, if the subsequent indorser pays any such paper, will be easily adjusted in a proper action; and at all events, is one with which we have nothing to do.

Let a decree be entered, instructing the assignor, after deducting from the fund in his hands his costs and expenses of this suit, to distribute the same ratably amongst all the holders of the paper protected by either or both of the two mortgages, including in his ratable distribution, payment to the mortgagees of their ratable share upon the secured debts due from the mortgagor to each of them.