Green v. Hart

1 Johns. 580

• Court: New York Supreme Court
• Decided: February 15, 1806
• Status: Published

Opinion

Spencer, J.

delivered the unanimous opinion of the court. On the argument, it has been insisted by the appellant’s counsel,

1st. That the respondent having, in his bill of complaint, interrogated the appellant, as to the consideration for the note and mortgage, his answer, in relation to the usury, becomes evidence in the cause, and is not disproved.

2d. That it was not Green's intention to transfer the mortgage to Hart ; and had it been so, nothing passed by the mere delivery, as the statute, to prevent frauds and perjuries, requires a deed or note in writing.

3d. That the decree is erroneous, in directing the whole amount of Johnson’s note and mortgage to be paid to IIart^ inasmuch as it was a security to him, for 81491 11 cts. only, the difference between which and Johnson’s note being clearly due to Green.

With respect to the first point, it is to be observed, that the respondent was in possession of Johnson’s note, as indorsor ; and the fact of the absolute indorsement by Green, was prima facie evidence of a full and adequate consideration paid for the note. The respondent was under no necessity of inquiring into it ; but he did allege, that the consideration was a full and valuable one. This the appellant might have denied ; and had it been incumbent on the respondent, he must have proved his allegation, or failed in the suit. The burthen of showing, that the consideration was illegal or inadequate, rested on the appellant. When he goes into a charge of usury, he departs from the question put to him, which admitted only of an affirmative or negative answer ; and it was wholly immaterial whether it was the one or the other. I view, therefore, the appellant’s answer, charging usury, as insisting on a distinct fact, by way of avoidance. The respondents having replied and given him an opportunity to prove the fact, and he having failed to do so, his answer is no evidence of the fact. This is a well established principle in chancery proceedings, and will be found recognised in every treatise on evidence, in that court.

Courts of equity consider mortgages according to the essential nature of contracts, and give them operation according to the intention of the parties : the debt is, consequently, there esteemed the principal, and the land the incident; and whenever the debt is discharged, the interest of the morigagee in the land ceases of course. There is, then, a manifest distinction between absolute estates in fee, and conditional estates for securing the payment of money. Mortgages are not now considered as conveyances of lands, within the statute of frauds ; and the forgiving the debt, with the delivery of the security, is holden to be an extinguishment of the mortgage.

* If, however, a mortgage was within the statute, the circumstances of this case would exempt it from its operation. In case of the payment of the money secured by mortgage, in equity, a trust arises for the benefit of the mortgagor ; so, where the debt thus secured, is transferred by the mortgagee, he becomes a trustee, for the benefit of the person having an interest in the debt.† In the case of Martin v. Mowlin, (2 Burr. 979.) Lord Mansfield lays it down, as an established principle, that the assignment of the debt will draw the land after it; and I cannot agree that this was an obiter dictum of the judge.

In the present case, the mortgage was delivered to the assignee of the debt. Had it not been delivered, nor any thing said about it, I should have considered the respondent, on the failure of Johnson to pay the note, entitled to the aid of the mortgage. It was competent to the parties to agree, that the mortgage should not be resorted to by the holder of the note ; but the proof of such agreement lies on the appellant, and it should be explicit. The receipt furnishes no evidence of such agreement ; it describes the real situation of the mortgage as not assigned. But this expression fails far short of an agreement, that it was not to be assigned. It does not appear that the appellant had any rights prejudiced by the assignment of the mortgage; and it is impossible to evade the force of the fact of his depositing it in the respondent’s hands. It spealcs a language incapable of being misunderstood, and is decisive of the question. An issue, to investigate the intention of the parties, on that act, would have been useless; I therefore think, that the respondent had an equitable interest in the mortgage, equivalent to the amount of the principal and interest of his note, against Greeiu

I shall be very brief on the last point, because I understand the chancellor, as saying, in assigning his reasons, that the question of distributing the fund, to be produced by the sale, is yet before him. The master’s report furnishes him the necessary data on which to make a just distribution ; and it would be unnecessary to give directions on that subject, the respondents not claiming any thing beyond the principal and interest of the appellant’s note, and his costs, to which I think him well entitled. The decree ought to be affirmed with costs. I cannot think, however appearances may be, that the respondent, or his counsel, considered the points, now decided, as necessarily, or absolutely adjudged on the former appeal; and I am, therefore, disinclined to allow anything beyond the taxable costs.

It was, thereupon, ordered, adjudged and decreed, that the decree of the court of chancery complained of, be affirmed, and that the appellant pay to the respondent, his costs, to be taxed, and that the record be remitted.

Judgment of affirmance.

Powell, 3d ed. Mort. 54. Barnard, 90. Richard v. Sims. 2 Burr, 979.

2 Anstruther, 438.