The opinion of the court was delivered by
Garrison, J.
The bill in this case is to foreclose a mortgage. In form the suit is between William L. Bull, trustee, the holder of the legal title to the mortgage, and Fisher & Furman, owners as tenants, in common of the legal title to the mortgaged premises. The real [306]*306contest, however, is between Bull and others (executors under the will of Henry R. Worthington, deceased), who claim, as equitable assignees of Harry F. Worthington, the eestm que trust of the mortgage, and the defendants Fisher & Furman, the mortgagors, who claim a right in equity to set off the amount paid by them for said Harry F. Worthington under a prior assignment to them of his interest in said mortgage debt. The transaction that gave rise to that situation was this: In 1880 Henry R. Worthington and Harry F. Worthington, his son, were owners as tenants in common of certain premises known as the Worthington brick property. On March 3d, 1880, Harry F. Worthington conveyed to the Worthington Brick Company, a corporation under the laws of New York, his equal undivided one-half part of the premises in question. Henry R. Worthington, the father, died in December, 1880, without having conveyed his undivided half. By his- last will he appointed as the executors thereof his widow, Sara H. Worthington; his two sons, Charles C. Worthington and said Harry F. Worthington, and his son-in-law, William L. Bull, who proved the will and took upon themselves the administration of said estate, with power to convey lands. On August 5th, 1881, an action was begun in the supreme court of the State of New York by the Worthington Brick Company, as plaintiff, against the said executors, for the specific performance of an agreement to convey the undivided one-half part of said lands, made by said Henry R. Worthington in his lifetime. While this action was pending a proposition was made for the purchase of the Worthington brick property by William F. Fisher and Hoah Furman, which was accepted, and, in order to insure a good and sufficient title thereto, all of the parties in interest joined in a series of conveyances and stipulations by which the legal title to said- property passed to Fisher & Furman in consideration of certain payments of cash and a purchase-money mortgage of $9,000, executed by said Fisher on his undivided one-half of said property. This is the mortgage now sought to be foreclosed. The mortgage was accordingly made to William L. Bull as trustee, for whom it might concern among the parties to the action then pending in [307]*307the court of New York; and it was further stipulated that the said bond and mortgage should be considered in any final division or distribution of the proceeds of said sale as belonging to and distributable in the undivided half formerly belonging to the said Harry E. Worthington in the said lands and premises. In 1884 Fisher paid on the principal of said mortgage the sum of $6,000, and in 1885 conveyed to Noah Furman his one-half interest in the said premises. In 1887 William L. Bull, trustee, filed his bill against said Fisher & Furman to foreclose said mortgage, which proceeding has since been amended by joining as parties thereto the legal representatives of Henry R. Worthington, deceased. In his replication in this suit, William L. Bull, the complainant, states that the said executors of Henry R. Worthington (of whom he was one) had made a settlement with Harry F. Worthington with respect to his interest in said mortgage and had taken from him an absolute assignment of all his (said Harry F. Worthington’s) interest in the same, as such cestui que trust to the estate of said Henry R. Worthington, deceased. In his said replication the complainant further states that, as trustee under said stipulations, he assented to the said assignment and that he still holds said mortgage for the benefit of the said executors under this assignment, and in their interest filed the bill of complaint to foreclose the same.
Turning now to the claim of the defendants Fisher & Fur-man, the ease shows that they have an equitable defence to the said mortgage, resting upon a certain payment by them for and on behalf of said Harry F. Worthington, under an assignment to them of his interest in said mortgage, prior in point of time to the assignment by which the executors of Henry R. Worthington, deceased, claim title. The transaction with the defendants was in this wise: After Harry F. Worthington had conveyed his undivided interest in the brick property to the Worthington Brick Company, one James Sweeney, on the 5th day of October, 1881, sued out a writ of foreign attachment in this state against said Harry F. Worthington, under which the interest of said Harry F. Worthington in all of said lands was seized and .attached. After the death of Henry R. Worthington and after [308]*308the commencement of the suit for specific performance in New York, and in order to effectuate the conveyance above mentioned to Fisher & Furman, and to free the premises from all encumbrances, the said Fisher & Furman became sureties for the said Harry F. Worthington to the said Sweeney, the plaintiff in attachment, whereupon the premises were released from the lien thereof. The said Harry F. Worthington, in order to indemnify said Fisher & Furman, assigned and transferred t'o them, as collateral security, his interest in the said bond and mortgage held by William L. Bull, trustee as aforesaid, which act of assignment was, by the deed of said Harry F. Worthington, dated and delivered March 30th, 1883, the same day upon which the said mortgage to Bull, trustee, was acknowledged and delivered. Subsequently, the said attachment was prosecuted to a verdict against said Harry F. Worthington and an action brought against the said Fisher & Furman on their said bond,- as sureties, whereby they were compelled to pay, and did pay, for said Harry F. Worthington, on the 22d day of January, 1886, the amount of said verdict, to wit, $2,402.35, together with the costs and interest thereon, for which sum they now claim a deduction from the balance remaining due upon the said mortgage.
From this recital it is evident that the real complainant in equity is not William L. Bull, the trustee of said mortgage, but William L. Bull and others, executors of Henry R. Worthington, deceased, whose claim rests not upon or through the legal title of William L. Bull, trustee, but solely upon their settlement with Harry F. Worthington and his consequent assignment to them of his interest as the cestui que trust of said mortgage. The defendants Fisher & Furman may in equity be regarded indifferently as prior assignees of the interest of Harry F. Worthington, or as mortgagors who have discharged part of their debt. In the court of chancery the case was tried upon the theory that William L. Bull, trustee, must recover upon the strength of his legal title unless he had notice of the assignment by his cestui que trust to Fisher & Furman. Upon this point a large mass of testimony was taken, which, however, failed to satisfy the learned vice-chancellor that notice had been given, [309]*309who thereupon has advised a decree in favor of the complainant for the entire balance due on said mortgage.
It would seem clear that in this disposition of the case the real parties in interest are lost sight of, as likewise is the true nature of their dispute. The'essential facts to be dealt with were these: First. That Harry F.
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The opinion of the court was delivered by
Garrison, J.
The bill in this case is to foreclose a mortgage. In form the suit is between William L. Bull, trustee, the holder of the legal title to the mortgage, and Fisher & Furman, owners as tenants, in common of the legal title to the mortgaged premises. The real [306]*306contest, however, is between Bull and others (executors under the will of Henry R. Worthington, deceased), who claim, as equitable assignees of Harry F. Worthington, the eestm que trust of the mortgage, and the defendants Fisher & Furman, the mortgagors, who claim a right in equity to set off the amount paid by them for said Harry F. Worthington under a prior assignment to them of his interest in said mortgage debt. The transaction that gave rise to that situation was this: In 1880 Henry R. Worthington and Harry F. Worthington, his son, were owners as tenants in common of certain premises known as the Worthington brick property. On March 3d, 1880, Harry F. Worthington conveyed to the Worthington Brick Company, a corporation under the laws of New York, his equal undivided one-half part of the premises in question. Henry R. Worthington, the father, died in December, 1880, without having conveyed his undivided half. By his- last will he appointed as the executors thereof his widow, Sara H. Worthington; his two sons, Charles C. Worthington and said Harry F. Worthington, and his son-in-law, William L. Bull, who proved the will and took upon themselves the administration of said estate, with power to convey lands. On August 5th, 1881, an action was begun in the supreme court of the State of New York by the Worthington Brick Company, as plaintiff, against the said executors, for the specific performance of an agreement to convey the undivided one-half part of said lands, made by said Henry R. Worthington in his lifetime. While this action was pending a proposition was made for the purchase of the Worthington brick property by William F. Fisher and Hoah Furman, which was accepted, and, in order to insure a good and sufficient title thereto, all of the parties in interest joined in a series of conveyances and stipulations by which the legal title to said- property passed to Fisher & Furman in consideration of certain payments of cash and a purchase-money mortgage of $9,000, executed by said Fisher on his undivided one-half of said property. This is the mortgage now sought to be foreclosed. The mortgage was accordingly made to William L. Bull as trustee, for whom it might concern among the parties to the action then pending in [307]*307the court of New York; and it was further stipulated that the said bond and mortgage should be considered in any final division or distribution of the proceeds of said sale as belonging to and distributable in the undivided half formerly belonging to the said Harry E. Worthington in the said lands and premises. In 1884 Fisher paid on the principal of said mortgage the sum of $6,000, and in 1885 conveyed to Noah Furman his one-half interest in the said premises. In 1887 William L. Bull, trustee, filed his bill against said Fisher & Furman to foreclose said mortgage, which proceeding has since been amended by joining as parties thereto the legal representatives of Henry R. Worthington, deceased. In his replication in this suit, William L. Bull, the complainant, states that the said executors of Henry R. Worthington (of whom he was one) had made a settlement with Harry F. Worthington with respect to his interest in said mortgage and had taken from him an absolute assignment of all his (said Harry F. Worthington’s) interest in the same, as such cestui que trust to the estate of said Henry R. Worthington, deceased. In his said replication the complainant further states that, as trustee under said stipulations, he assented to the said assignment and that he still holds said mortgage for the benefit of the said executors under this assignment, and in their interest filed the bill of complaint to foreclose the same.
Turning now to the claim of the defendants Fisher & Fur-man, the ease shows that they have an equitable defence to the said mortgage, resting upon a certain payment by them for and on behalf of said Harry F. Worthington, under an assignment to them of his interest in said mortgage, prior in point of time to the assignment by which the executors of Henry R. Worthington, deceased, claim title. The transaction with the defendants was in this wise: After Harry F. Worthington had conveyed his undivided interest in the brick property to the Worthington Brick Company, one James Sweeney, on the 5th day of October, 1881, sued out a writ of foreign attachment in this state against said Harry F. Worthington, under which the interest of said Harry F. Worthington in all of said lands was seized and .attached. After the death of Henry R. Worthington and after [308]*308the commencement of the suit for specific performance in New York, and in order to effectuate the conveyance above mentioned to Fisher & Furman, and to free the premises from all encumbrances, the said Fisher & Furman became sureties for the said Harry F. Worthington to the said Sweeney, the plaintiff in attachment, whereupon the premises were released from the lien thereof. The said Harry F. Worthington, in order to indemnify said Fisher & Furman, assigned and transferred t'o them, as collateral security, his interest in the said bond and mortgage held by William L. Bull, trustee as aforesaid, which act of assignment was, by the deed of said Harry F. Worthington, dated and delivered March 30th, 1883, the same day upon which the said mortgage to Bull, trustee, was acknowledged and delivered. Subsequently, the said attachment was prosecuted to a verdict against said Harry F. Worthington and an action brought against the said Fisher & Furman on their said bond,- as sureties, whereby they were compelled to pay, and did pay, for said Harry F. Worthington, on the 22d day of January, 1886, the amount of said verdict, to wit, $2,402.35, together with the costs and interest thereon, for which sum they now claim a deduction from the balance remaining due upon the said mortgage.
From this recital it is evident that the real complainant in equity is not William L. Bull, the trustee of said mortgage, but William L. Bull and others, executors of Henry R. Worthington, deceased, whose claim rests not upon or through the legal title of William L. Bull, trustee, but solely upon their settlement with Harry F. Worthington and his consequent assignment to them of his interest as the cestui que trust of said mortgage. The defendants Fisher & Furman may in equity be regarded indifferently as prior assignees of the interest of Harry F. Worthington, or as mortgagors who have discharged part of their debt. In the court of chancery the case was tried upon the theory that William L. Bull, trustee, must recover upon the strength of his legal title unless he had notice of the assignment by his cestui que trust to Fisher & Furman. Upon this point a large mass of testimony was taken, which, however, failed to satisfy the learned vice-chancellor that notice had been given, [309]*309who thereupon has advised a decree in favor of the complainant for the entire balance due on said mortgage.
It would seem clear that in this disposition of the case the real parties in interest are lost sight of, as likewise is the true nature of their dispute. The'essential facts to be dealt with were these: First. That Harry F. Worthington, who was in equity the owner of the debt due from Fisher & Furman, received from them a certain part thereof for which he assigned to them his interest in their own debt. Second. That Harry F. Worthington afterwards assigned all of his interest in said debt to the executors of his father’s estate.
From this brief summary of the case it is evident that under a mass of detail the real transaction was simply the purchase by the complainants of a debt that had been partly paid, by the debtor to their assignor. That an assignee of a bond and mortgage or any other non-negotiable or matured debt takes it subject to all the equitable defences that the original debtor may have, is a settled rule in this state as well as elsewhere. Magie v. Reynolds, 6 Dick. Ch. Rep. 113, and cases there cited. Whether Bull, trustee, had notice of the first assignment, is not a question that concerns us, for the reason that no party in interest claims through the legal title of which he was trustee, the real parties having dealt, over his head, directly with the owner of the debt in equity. That there might have been such action by Bull, trustee, in the execution of his trust as would have postponed a prior assignee to the taker of the legal title without notice to the trustee, may be conceded -without affecting at all the decision of the case in hand. At bottom the doctrine of notice is part of the law of negligence. It is undoubtedly true, as a general rule, that an assignee of a fund is negligent if he fail to give notice to the depositary, who otherwise may innocently pay it out to a subsequent assignee. That is not the case here, where the first assignee is not only the debtor, but is also, so to speak, the depositary of the fund itself. The case discloses no negligence of which the second assignees can complain. They were buying a debt, and it was clearly their duty to find out from the [310]*310debtor whether he had any set-off. Having neglected to do this they must be postponed to the just claim that he now presents.
The case will be remitted to the court of chancery, in order that an account may be taken and a decree entered in accordance with these views.
For reversal — The Chief-Justice, Abbett, Depue, Dixon,. Garrison, Lippincott, Reed, Van Syokel,. Bogert, Brown, Krueger, Smith — 12.
For affirmance — None.