Frankenthaler, J.
This is a motion by the Superintendent of Insurance, as liquidator of New York Title and Mortgage Company, for an order approving and confirming his “ First Preliminary Report and Petition.” The report embodies the action taken by the liquidator upon four claims selected by him as “ test cases for adjudication,” two of them based on whole mortgage guaranty policies, one on a participation certificate in a single mortgage, and one on four participation certificates in a group series.
More than 40,000 proofs of claim have been filed in the liquidation proceeding, including a blanket proof of claim executed by the Mortgage Commission of the State of New York on behalf of all the certificate holders of the company, which the Superintendent regards as “ effective to protect the interests of many holders of guaranteed mortgage participation certificates * * * who shall not have filed individual proofs of claim with the Liquidator prior to December 31, 1935.” The Superintendent points out that “ the determination and adjudication of claims based upon whole mortgage guaranty policies and guaranteed mortgage participation certificates involve questions of law which are to a large degree novel ” and that “ there has been no authoritative interpretation of the provisions of Article XI of the Insurance Law, enacted in 1932, to guide the Liquidator in the determination and adjudication of such claims.” In the interest of economy and speed of liquidation, it was, therefore, thought advisable “ to select a group of cases, representative of the major portion of the claims filed, to make adjudications, and to submit them ” for the court’s consideration “ on notice to all who might be in a position to offer any suggestion.” [72] The present motion to confirm is, in effect, “ a motion for instructions from this court as to the method or standard or formula which shall be used in allowing the claims that have been filed.” Although the four test cases cannot possibly include every variety of claim asserted against the liquidator, they are typical of a very large portion of the claims filed and also of the bulk of the claims which will' be presented in the liquidation of other mortgage guaranty companies. The Superintendent of Insurance accordingly characterizes this motion as “ probably one of the most important applications made by the Insurance Department to any Court.” He points out that “ while in form it involves the determination or allowance of only four specified claims on mortgage guarantees, the decision here made will vitally affect the distribution to the mortgage guaranty creditors, including holders of guaranteed participation certificates, of all the guaranteed mortgage companies now in the hands of the State.”
The first question which arises relates to the provability of the claims. Section 404 of the Insurance Law declares, in respect of a domestic insurer whose liquidation has been directed by order of the court, that “ the rights and liabilities of any such insurer and of its creditors, policy holders, stockholders, members and/or all other persons interested in its estate shall, unless otherwise directed by the court, be fixed as of the date of the entry of the order directing the liquidation of such insurer * * *. Provided, however, that the right of claimants holding contingent claims on said date to share in an insolvent estate shall be determined by section four hundred and twenty-five of this chapter.” Subdivision 3 of section 425 contains the following provision for contingent claims: “ No contingent claim shall share in a distribution of the assets of an insurer which has been adjudicated to be insolvent by an order made pursuant to section four hundred and twenty-four of this chapter except such claims shall be considered, if properly presented, and may be allowed to share where (a) such claim becomes absolute against the insurer on or before the last day fixed for the filing of proofs of claim against the assets of such insurer, or (b) there is a surplus and the liquidation is thereafter conducted upon the basis that such insurer is solvent.” The power of the court to specify a date as of which the liabilities of the insurer shall be fixed may be exercised only at the time of the entry of the order of liquidation. (Matter of Empire State Surety Co., 214 N. Y. 553, 567, 568.) Otherwise the focal date is the day of the entry of the order of liquidation. As the order of liquidation of the New York Title and Mortgage Company specified no time as of which claims should be determined, the provability of claims [73] depends upon their status on July 15, 1935, the date of the entry of the order of liquidation. No claims against the insolvent insurer which were contingent on that day may be allowed (Matter of Empire State Surety Co., supra) unless they became absolute on or before December 31, 1935, the last day fixed for the filing of proofs of claim. (See Insurance Law, § 425, subd. 3.)
The claim upon participation certificates in a group of bonds and mortgages (a so-called group series) was clearly absolute, and not contingent, on July 15, 1935. The provisions of the certificates and of the deposit agreement to which they are subject are substantially the same as those of the certificates and deposit agreement construed by the Court of Appeals in Matter of People (Tit. & Mtge. Guar. Co.) (264 N. Y. 69). Although the company’s obligations in that case were in form those of a guarantor of bonds and mortgages owned by the certificate holders, the court, in an opinion by Judge Lehman, declared that, in substance (pp. 88, 89): “ the guaranty company is a primary debtor, assigning the mortgages only as collateral security for the debt.” This interpretation of the character of the legal relationship between the certificate holders and the guaranty company answers the only argument which could be advanced in support of a contention that the claim is contingent, viz., that the company was a guarantor and, as such, liable only in the event of a default by its principals, the obligors, on the deposited bonds and mortgages.
The question of whether the claims upon guaranties of whole mortgages and upon guaranteed participation certificates in single mortgages are absolute or contingent, is a more difficult one. The legal nature of the company’s obligations in these instances has not been determined by the Court of Appeals. This court, sitting in the Additional Special Term for Rehabilitation, has uniformly held (1) that the holder of a whole mortgage covered by the company’s policy is the owner, not merely the pledgee, of the mortgage, and that the guaranty company is a guarantor rather than the primary debtor; and (2) that the holder of a guaranteed participation certificate in a single mortgage is the owner of an undivided interest in the mortgage, the company’s obligation being that of guarantor. (Matter of Lawyers T. & G. Co., 157 Misc. 516, 519; Matter of Lawyers Mortgage Company [345 West End Ave.], Id. 813, 815.) The basis of these decisions has been the court’s belief that in construing the company’s obligation upon certificates in group series as that of a primary debtor in Matter of People (Tit. & Mtge. Guar. Co.) (supra), the Court of Appeals relied upon peculiar provisions of those certificates which are absent from the certificates [74] in single mortgages and from policies guaranteeing whole mortgages. The court’s views as to the limited application of the case last cited are shared in an article in the Columbia Law Review on “ Present Problems in New York Guaranteed Mortgages ” (34 Columbia Law Review, 663, 681-683, 675, 681). Very recently the Circuit Court of Appeals reached the same conclusion in a case involving participation certificates in a single mortgage (Matter of The Westover, Inc., 82 F. [2d] 177). Judge Chase, writing for the court, said (p. 180): “ This is not a case of the guaranty of bonds secured by one or more mortgages assigned to a trustee as security for the mortgagor’s undertaking to pay the bonds which is the obligation guaranteed. Nor is it the case of the issuance of certificates assigning no interest in any specific mortgage, but an undivided share in a principal sum secured by a group of mortgages deposited in a pool from which any security may be withdrawn provided the pool is kept ample in amount by the substitution of other security; where the certificates are payable in amounts and at times therein stated regardless of the due dates of any securities deposited in the pool; and where the payment of the certificates has been guaranteed by a third party. Such a situation as last outlined was disclosed in People v. Title and Mortgage Guarantee Company of Buffalo, 264 N. Y. 69, where it was held that the certificate holders had no interest in the pooled mortgages except as security for the obligation of the guarantor to pay the certificates which was the direct and primary obligation which the holders received when they purchased them.” (Italics mine.)
Our own Court of Appeals has itself intimated that holders of certificates in a single mortgage may be owners rather than pledgees of undivided interests in the mortgage, thus limiting its analysis of the relationship between the company and certificate holders, in Matter of People (Title & Mtge. Guar. Co.) (supra), to certificates in group series. In Matter of People (Westchester Tit. & T. Co.) (268 N. Y. 432) the mortgage investments consisted of certificates in a single mortgage. Judge Lehman, writing for the court, said (pp. 439, 440): “ In Matter of People (Title & Mortgage Guarantee Co.) (264 N. Y. 69) this court sustained the validity of the earlier statute (Laws of 1933, ch. 745) which conferred similar authority and powers upon the Superintendent of Insurance. True, in that case, the mortgage investment was evidenced by certificates of different form, and the interest of the holders of the certificates in the mortgage investment 7nay, perhaps, have been less direct than the interest of the petitioner, here, in the 7nortgage investrnent over which the Mortgage Co7mnission is now asserting right of control. Then, too, the provisions in regard to the depository of the mortgage are not the same. [75] Such differences are, however, immaterial where the question concerns only the right to possession and control of the mortgage investment. Such differences do not affect the basic conditions which justified legislative action for the protection of the general welfare and the interests of holders of certificates.” (Italics the court’s.)
As to guaranteed whole mortgages, there is likewise language of the Court of Appeals tending to indicate that their holders are owners rather than pledgees of the mortgages, and that the guaranty company’s legal status is that of guarantor rather than that of a primary debtor. Thus, in Matter of People (Lawyers Title & Guar. Co.) (265 N. Y. 20) the opinion of the court, written by Judge (now Chief Judge) Crane, repeatedly refers to the holder of the mortgage as “ the mortgagee,” to the company’s obligation as “ the contract of guaranty ” and “ the guarantee contract,” and to the company as “ the guarantor.” Although the court’s actual decision may, possibly, have been the same even if the holder of the company’s policy were regarded as the pledgee, and not the owner of the mortgage, it is difficult to read the opinion without arriving at the conclusion that the company was thought to be the guarantor of a bond and mortgage owned by the holder of its policy.
In this connection it is well to bear in mind that the determination of the legal relationship existing between the company and the holders of its guaranties may have an important bearing upon their legality as investments for trust funds. This is pointed out in the article above referred to (34 Columbia Law Review, 683): “ But in evaluating the construction adopted by the Court of Appeals (Matter of People [Title & Mtge. Guar. Co. of Buffalo], 264 N. Y. 69), it must be recognized that cogent policy considerations influenced the decision. Yet it cannot he disregarded that such interpretation casts some douht on the certificates’ compliance with the statutory definition of ‘ legáis ’ and strips the companies of their chief characteristics as insurers.” (Italics the court's.)
In the very recent case of Matter of People [Title & Mort. Guar. Co.] (270 N. Y. 629) the Court of Appeals expressly refrained from passing upon the question of the nature and legality of participation certificates in a group series (p. 630): “ We express no opinion upon the question as to whether the participation certificates constituted legal investments for trustees or whether they constituted shares or parts of mortgages.” If holders of guaranteed whole mortgages and guaranteed certificates in single mortgages are held to he pledgees rather than owners of the mortgages or of undivided interests therein, as the case may he, the status of the mortgages and certificates as legal investments is seriously impugned.
[76] However, in the view this court takes of the matter whether the company’s obligation on its “ guaranty ” of whole mortgages and of certificates in single mortgages is that of a primary debtor (the mortgages being pledged as security), or that of a guarantor is immaterial for the purpose of determining whether the claims involved upon the present motion are absolute or contingent. If the company is a primary debtor, the liability is obviously absolute and no real problem is presented. It is the court’s opinion that even if the company is deemed to be a guarantor and the mortgage to be owned by the holder of its policy or the holders of its certificates, the obligation is likewise absolute. In the case of whole mortgages, the company guarantees payment of interest at a specified rate “ when and as the several instalments of interest become due ” upon the bond and mortgage, and payment of the principal of the said bond and mortgage, and of every instalment thereof, as soon as collected, but in any event within eighteen months after the same shall have become due and shall have been demanded by the insured, with regular payment of interest in the meantime at the rate guaranteed.” In the certificates representing undivided interests in a single bond and mortgage, the guaranties of interest and principal are substantially the same. The company’s obligation to pay interest as well as principal to the holders of the mortgages or of the certificates is not, however, contingent upon the failure of the mortgagors to pay the interest and principal in accordance with the terms of the mortgages. The company is liable for the interest on the interest dates specified in each mortgage, regardless of whether or not there is an interest default by the mortgagor. The reason is that under the express provisions of the company’s policies and certificates, their holders bind themselves to look only to the company for the payment of their interest or principal. They expressly agree “ to refrain from collecting any part of said interest or of the principal secured by said bond and mortgage, except through this company,” and they confer upon the latter an exclusive and “ irrevocable ” agency to collect the interest and principal. Whether the interest due on the bonds and mortgages is or is not paid by'the mortgagor, the company is liable to the holders of its policies and certificates. There is, therefore, nothing contingent about its liability for interest. If said holders had the right to collect the interest from the mortgagor, there might, perhaps, be some basis for a contention that the company’s obligation is contingent upon a default by the mortgagor. In the cases under discussion, however, the company’s liability is not dependent upon the mortgagor’s default, for, even if the mortgagor did not default, the company would, nevertheless, be hable for the interest received [77] by it from the mortgagor. For like reasons the company’s obligation to pay principal is also absolute, and not contingent. It makes an unconditional promise to pay unpaid principal within a specified number of months after its due date under the bond and mortgage. The time of payment may be accelerated if, and to the extent that, the company collects principal from the mortgagor, but it cannot be postponed or the right to payment defeated. Irrespective of whether collections are or are not made by the company, it, and it alone, is liable for the principal to the holders of its policies and certificates. It undertakes to pay the principal to the latter in any event, out of the collections as and when made, and out of its own funds, within a specified period, to the extent that overdue principal remains uncollected at the end of that period. Under no circumstances could the company escape liability for the principal while its exclusive right to collect remained in force. If collections were made it was liable, and if they were not made it was likewise liable. The only uncertainty affecting the company’s obligation to pay principal relates to the time the payment must be made, not to the necessity of making the payment. This conclusion is not affected by the provisions requiring a demand upon the company to start the running of the period of grace. The order of liquidation rendered any demand futile and, therefore, obviated the making of a demand. Moreover, even if a demand were indispensable to a recovery, the necessity therefor would affect only the time of payment, not the certainty of the company’s liability to pay. The provability of absolute claims does not depend upon whether they have become due and their amount fixed at the time of the order of liquidation or such other date as the order may fix. (See Glenn on Liquidation, § 488; Matter of Empire State Surety Co., supra.) In the case cited the Court of Appeals declared (p. 564) that the insolvency of the insurer disabled it from performing its obligations under its contract to defend such suits as were brought against the assured and were within the policy, and accordingly held (pp. 563, 565) that even those who settled claims against them after the order of liquidation possessed provable claims against their insurer. The court accordingly holds that the four claims involved upon the present application are absolute, and not contingent, and that they are, therefore, provable in the liquidation proceeding. Whether this conclusion is also applicable to claims based upon policies covering whole mortgages or participation certificates in single mortgages, in cases where the agency of the guaranty company was terminated before July 15, 1935, is a question which is not presented here and which must await determination until an application involving such claims, which are undoubtedly few in number, is submitted to the court.
[78] The next question to be considered is whether, in allowing claims, the value of the guaranteed mortgage or mortgages must be deducted from the amount- due and unpaid upon the company’s guaranty. Prior to the enactment of chapter 119 of the Laws of 1918, which amended section 63 of the Insurance Law, the rule laid down by the courts of this State was that, in the absence of legislation requiring a contrary result, a secured creditor of an insolvent might prove for the full amount of his claim, without making any deduction for the security, and receive dividends upon that amount, applying any security held by him toward the balance thereafter remaining. (People v. Remington, 121 N. Y. 328.) Of course, if the collateral security was more than sufficient to satisfy any deficiency in the debt after crediting the dividends received, the insolvent estate was entitled to receive the excess. (People v. Remington, supra.) This rule is, however, no longer applicable to claims against an insolvent domestic insurance company. The 1918 amendment to the Insurance Law, previously referred to, added a provision reading as follows: “ No claim of any secured creditor or claimant shall be allowed in any proceeding under this section at a sum greater than the difference between the value of the security and the amount for which the claim is valid, unless the creditor or claimant shall surrender his security to the liquidator, in which event the creditor or claimant may file a claim and become a claimant for the full amount thereof.”
In 1932 section 63 of the Insurance Law was repealed by chapter 191 of the laws of that year, in effect March 15, 1932. A new article was added to the Insurance Law (Art. XI), containing, among others, the following provision (§ 425, subd. 5): “ No claim of any secured claimant shall be allowed at a sum greater than the difference between the value of the security and the amount for which the claim is allowed, unless the claimant shall surrender his security to the Superintendent in which event the claim shall be allowed for the full amount for which it is valued.” The language of this subdivision clearly covers the claim upon the certificates in the group series. The Court of Appeals has held that the holder of such certificates does not own undivided interests in the deposited bonds and mortgages, but is merely the pledgee of the interests, the guaranty company being “ a primary debtor, assigning the mortgages only as collateral security for the debt.” (Matter of People [Title & Mtge. Guar. Co.], supra, at pp. 88, 89.) A somewhat different problem is presented as to the remaining claims by the holders of the policies guaranteeing whole mortgages and of certificates in single mortgages. If the company is deemed the primary debtor and the holders of the policies and certificates are regarded as [79] pledgees, rather than owners of the mortgages or of undivided interests therein, their claims are likewise covered by the language of subdivision 5 of section 425. If, on the other hand, these claimants are held to be owners of the mortgages, or of interests therein, as the case may be, it becomes necessary to determine whether they are “ secured claimants ” within the meaning of that subdivision. The contention is made that a similar provision in the National Bankruptcy Act (§ 57, subd. [e]; U. S. Code, tit. 11, § 93, subd. [e]) has been held to apply only to claimants holding security belonging to the debtor. This ruling is, however, based upon the express provision of the Federal statute that “ ‘ secured creditor ’ shall include a creditor who has security for his debt upon the property of the bankrupt of a nature to be assignable under this title, or who owns such a debt for which some indorser, surety, or other persons secondarily liable for the bankrupt has such security upon the bankrupt’s assets.” (Bankruptcy Act, § 1, clause [23]; U. S. Code, tit. 11, § 1, clause [23].) (Italics the court’s.) Thus, in Ivanhoe Bldg. & Loan Assn. v. Orr (295 U. S. 243), in holding that the petitioner in that case was not a secured creditor, the United States Supreme Court said (p. 245): “ Petitioner does not come within the definition, for at the date of bankruptcy it held no security against the bankrupt company’s property, nor security given by any other person who in turn was secured by the bankrupt’s assets. Sections 1 (23) and 57 (e) do not, therefore, forbid the proof of a claim for the principal of the bond with interest, though the petitioner may not collect and retain dividends which with the sum realized from the foreclosure, will more than make up that amount.” Another case to the same effect is Matter of United Cigar Stores Co. (73 F. [2d] 296). The definition of “ secured creditor ” which forms the basis of these bankruptcy decisions represents a limitation or restriction of the popular and generally accepted meaning of those words (Collier Bankruptcy [13th ed.], p. 27): “ Secured Creditor.— This term is defined in subdivision 23 of this section. Under this definition a creditor, to be secured, must either (a) hold security against the property of the bankrupt, or (b) be secured by the individual obligation of another who holds such a security. This definition thus restricts the popular meaning. The English definition, ‘ a person holding a mortgage, charge or lien on the property of the debtor, or any part thereof, as security for a debt due to him from the debtor,’ is even more restrictive than is ours. Thus, in both systems, creditors may often be secured and yet not be secured creditors.” (Italics the court’s.) The definition of “ secured creditor ” found in the Bankruptcy Act has not been carried over into the Insurance Law of this State. In fact, that statute contains no provision [80] defining the words “ secured claimant ” or “ security.” These words must, therefore, be construed in the sense in which they are ordinarily and generally understood, not in the narrower sense required by the Bankruptcy Act. The adoption of the bankruptcy provision regarding the proving of secured claims, without at the same time taking over the bankruptcy definition of “ secured creditor,” is a significant circumstance, tending to indicate that the Legislature of this State intended the words “ secured claimant ” to be interpreted in the broader sense in which they are commonly used. It is difficult to escape the conclusion that the claimants here are “ secured ” in the popular and ordinary sense of the word. They hold not merely the company’s obligation, but also mortgages or undivided interests in mortgages. Their total recovery from both sources is limited to the amount due on the company’s obligations. They may not retain for themselves from the proceeds of the mortgages more than is necessary to satisfy the balance due them upon the company’s guaranties. The mortgages tend to assure and make more certain the recovery of the amount guaranteed by the company. In this sense they constitute security for the claims asserted against the latter. “ Secured creditor ” has been defined as one “ who holds some special pecuniary assurance of payment of his debt, such as a mortgage or lien.” (Black Law Diet. [3d ed. 1933], p. 1595.) Another definition expressly recognizes that the security need not necessarily belong to the debtor: “ Secured Creditor. A creditor who holds a security which will cover the amount the debtor owes him. Among these securities may be classed mortgages, deeds, bills of sale, a lien upon goods, warrants, delivery orders, good stocks and shares, or any other security which can be readily sold in the open - market. It also means a person holding a mortgage charge or lien on the property of the debtor, or any part thereof, as security for a debt due to him from the debtor.” (Sturges & Hewitt, Dictionary of Legal Terms and Citations [1934], p. 216.) (Italics the court’s.) “ Security ” is defined as “ something which makes the enjoyment or enforcement of a right more secure or certain” (First National Bank v. Hollinsworth, 78 Iowa, 575, 580; 43 N. W. 536), and as “ that which secures or makes safe ” (Century Diet.). In the court’s opinion, subdivision 5 of section 425 was intended to apply to all claimants possessing the right to look to something other than the dividends received from the insolvent insurer for the satisfaction, complete or partial, of their claims against the latter. To permit such claimants to prove for the full amount of their claims without any deduction for the mortgage or interest in the mortgage owned by them, would be contrary to the spirit, if not the express letter, [81] of the statute. The court accordingly holds that the four claims are “ secured,” within the meaning of subdivision 5.
A contention is made by counsel for the Westchester trustees, as amicus curise, that subdivision 5 of section 425 of the Insurance Law has no application to the rights of holders who acquired their certificates or policies of guaranty prior to March 15, 1932, the date said subdivision went into effect. If subdivision 5 worked a change in the law existing at the time of its passage, there might be considerable force to the argument that any attempt to apply it retroactively would be unconstitutional as impairing the obligation of contracts. In view, however, of the fact that the section merely restates, in somewhat different language, the provisions which had been part of section 63 of the Insurance Law since 1918, it must be evident that the position taken by counsel for the Westchester trustees is untenable, except, perhaps, as to certificates or guaranties issued prior to 1918. No such certificates or guaranties are involved here.
We turn now to the question of how the value of the mortgages, or undivided interests therein, held by the claimants shall be determined. Some urge that the mortgages should be appraised at the value of the underlying real estate, after deduction of prior liens and the cost of foreclosure. The Superintendent of Insurance, on the other hand, takes the position that the claimants hold mortgages, not real estate, and that the mortgages must, therefore, be valued as mortgages, and not as realty. In the court’s opinion, the Superintendent’s analysis is the correct one. It would be manifestly unjust to compel claimants to submit to a deduction from their claims of the value of the mortgaged real estate as of July 15, 1935, unless they were in a position on that day to sell the real estate and realize its then market value. None of the claimants owned any mortgaged realty on July fifteenth, and none could, therefore, convert its appraised value into cash or its equivalent. Let us take, for example, the case of a claimant holding a mortgage which he had an immediate right to foreclose on July 15, 1935, by reason of defaults in interest and/or taxes. If any set of facts can be said to call for the application of the “ value of the realty ” method of appraisal, advocated by those opposing the Superintendent’s view, this would seem to be the one. Yet a moment’s reflection will render it readily apparent that even in this type of situation it would be highly inequitable to charge the mortgagee with the value of the real estate. Assuming that he commenced a foreclosure action on July 15, 1935, and that no obstacles of any kind were placed in the way of the prompt prosecution of the action, [82] the sale of the realty pursuant to the judgment of foreclosure could not occur for at least several months thereafter, during which the property might well depreciate in value to a substantial extent below the July fifteenth valuation. Moreover, even after the commencement of the foreclosure action the mortgagor might avail himself of the provisions of section 1077-e of the Civil Practice Act and obtain a dismissal of the action by making good the defaults in interest and/or taxes, in which event the mortgagee might be compelled to wait years before he would be legally free to foreclose and thus realize the value of the mortgaged real estate with which he is sought to be charged. Undoubtedly, the value of the realty is a very important factor in determining the value of the mortgage. It is not, however, as those urging the “ value of the realty ” rule, in effect, contend, the sole factor. Such cases as Matter of Soltmann (238 Fed. 241) and Matter of Dix (176 id. 582), cited by the committee of creditors of Lawyers Mortgage Company, as amicus curise, are not in point, for in each of them a foreclosure judgment had been obtained by the creditor and the property actually sold. The court is of the view that a mortgage, though in default and in a position to be foreclosed on July 15, 1935, must be valued as a mortgage, and not as real estate. A f ortiori is this true of a mortgage not in default as to interest or taxes on July 15, 1935, for the right to foreclose such a mortgage and realize the value of the underlying land may not accrue to the mortgagee for many years, if at all. The contrary view urged upon the court by the stockholders of the guaranty company and others, wholly disregards or overlooks the very important fact that claimants holding mortgages, or undivided interests in mortgages, which had not been foreclosed on July 15, 1935, were not the owners of the underlying real estate at that time and were unable to sell the same and obtain the then market value thereof. They may only be charged with the value of the security which they possessed, viz., unforeclosed mortgages on real estate. They may not be charged with the unobtainable value of realty which they did not own.
The court’s views in this respect find support in a recent decision of the Federal court (Matter of Bankers Mortgage Co. of Topeka, Kansas, decided Dec. 23, 1935).