Patterson, J. :
This is an appeal from a judgment entered in favor of the plaintiff, in an action for the foreclosure of a mortgage. ’ The record is ■ voluminous, and the evidence as contained in it is filled with such contradictions as show deliberate false swearing by witnesses on one side or the other. The appellant, Mrs. Friedman, made and executed the bond and mortgage mentioned in the complaint, and upon the trial it was conceded by her counsel at the outset, that she is liable for something thereupon, dependent upon the result of an accounting; and he claimed, substantially, that it was for him to prove an affirmative defense set up in the answer, and allegations which, if established, would require a reformation of the instruments. That defense is, that by mistake on the part of the defendant, Yette Friedman, and fraud on the part of the plaintiff, or those acting for him, the bond and mortgage were so drawn as to secure other and greater obligations than those Mrs. Friedman had agreed to assume. Certain facts are conceded, namely, that the plaintiff and one Marcus Rosenthal were copartners [536] in business in January, 1896 ; that a dissolution of that firm was in that month agreed uponthat the plaintiff was to receive payment or security for the payment of $10,000, which he had put in as capital and also indemnity against liability for debts of the copartnership. It "is also conceded that Mrs. Friedman was induced to make the mortgage sought to be foreclosed in this action and to . join in the bond to which it was collateral, as security, but her contention is that it was only for the indebtedness of the firm to its creditors, and that the plaintiff’s contribution to the capital was to be and was paid by the relinquishment to the plaintiff of certain warehouse certificates of the value of $10,000. She alleges in her answer that such was her understanding of the terms upon which . she was to give the bond and mortgage, and she prayed for a reformation of the instruments so that her liability, might be limited to one ■ for the indebtedness of the firm to its creditors. ,Tlie negotiations preceding and the circumstances attendant- upon the execution of the mortgage. were made the subjects of extended inquiry in the examination of witnesses on the trial. Mrs. Friedman (the. defendant) Rosenthal (her son-in-law), Mrs. Rosenthal (her daughter), Theodore Friedman (her son) and Jacob Baum (her brother) testified to a state of facts which, if true, proves that- she was the victim of a gross fraud. She is an illiterate woman, totally unable to read or write. She testified that, being informed of the serious involvement of her son-in-law in his copartnership relations with the plaintiff, she. was induced to attend twice at the office of the plaintiff’s then attorneys, and that she agreed to give security for the debts of the copartnership, and that it was distinctly stated and admitted that the plaintiff’s contribution. to capital was paid back to him by the warehouse, or, as they are called-, whisky certificates. Rosenthal, Jacob Baum and Friedman testified to the sanie thing, and Rosenthal and others, who were present at the time the bond and mortgage were executed.at Rosenthal’s apartment, also testified that when the papers were presented for execution and read by the attorney acting for the plaintiff it appeared from such reading -that the warehouse certificates were referred to. as , having been taken as'security and not as payment, and thereupon a protest was made, and the attorney promised that the error should be corrected before the papers were used. On the othér hand, there is testimony given by the attorney [537] referred to and by the stenographer to whom the papers were ■dictated, that at the office of the attorneys acting for the plaintiff the drafts of such papers were read in the hearing of Mrs. Friedman ; that they contained the same provision respecting the warehouse certificates as in the executed instrument, and the notary public who took the acknowledgment of Mrs. Friedman at the time the papers were signed and delivered contradicts everything testified, to by the defendant’s witnesses concerning the alleged protest against, or criticism of, the contents of the papers when they were read by the attorney on the occasion last referred to. In that state of the evidence the justice at the Special Term held that the ■defendant Friedman had not made out by a preponderance of evidence a right to have the bond and mortgage reformed. On a critical examination of all the record, we fail to see what other disposition could have been made of this branch of the case. Everything depended upon the credibility of witnesses. In the irreconcilable conflict between them there are no circumstances to which we may give heed to turn the scale either way.
We must assume, then, that the bond and mortgage were to stand as security according to their terms, and it is not disputed that Mrs. Friedman occupies as to the plaintiff the relation of surety for Rosenthal, his debtor. Just at this point of the case is introduced the subject of subrogation of Mrs. Friedman to the right of the plaintiff to the warehouse certificates. It is claimed by the plaintiff that the pleadings are not in condition to give rise to an inquiry on that subject. But we do not so regard them. The history of these certificates and the relation of the parties to them came directly into the case. They are referred to in the. answer by an allegation which sets up that they, at the time of the dissolution of the firm of Rosenthal & Co. were given to the plaintiff, either in payment or as security for the $10,000 capital. The determination of the court below was that they were taken *as security. The defendant Friedman prayed that the plaintiff and the defendant Rosenthal be ordered to account to her respecting all the debts, liabilities and obligations of the firm, the amounts paid thereon and the amounts still outstanding and payable, to the end that the amount due upon the said bond and mortgage might be ascertained and determined; and [538] that any and all securities held by the plaintiff as security for the performance of the condition of the bond be delivered to the defendant Friedman, upon the payment by her of the amount found diie upon' the accounting, and that she be in all respects subrogated to the rights of the said plaintiff with reference to said security, and that, in the event that the plaintiff cannot or shall not deliver such securities or any of them, to the defendant, the value of said security be deducted from the amount found due. Thus the whisky certificates Were drawn into the case. It plainly appeared that for the $10,000 capital the plaintiff had two securities, one thewhisky certificates and the other the mortgage. The plaintiff has ■ chosen to resort to the latter, and to enforce it by foreclosure. It is.necessary in the action to take an account to ascertain what, if anything, remained unpaid of the debts of Rosenthal & Co. If nothing so remained unpaid,' and the mortgage is held by the plaintiff (as matter of fact) only as security for the $10,000 capital, then it is not to be disputed that upon the payment of that amount of money the defendant Friedman would be entitled to be subrogated in' equity to the rights of the plaintiff in -and to the whisky -certificates. If debts remain unpaid, the defendant Friedman would not be immediately entitled to the possession of the certificates, for under ordinary circumstances the creditor is entitled to hold his collateral until all that is due him is paid.
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Patterson, J. :
This is an appeal from a judgment entered in favor of the plaintiff, in an action for the foreclosure of a mortgage. ’ The record is ■ voluminous, and the evidence as contained in it is filled with such contradictions as show deliberate false swearing by witnesses on one side or the other. The appellant, Mrs. Friedman, made and executed the bond and mortgage mentioned in the complaint, and upon the trial it was conceded by her counsel at the outset, that she is liable for something thereupon, dependent upon the result of an accounting; and he claimed, substantially, that it was for him to prove an affirmative defense set up in the answer, and allegations which, if established, would require a reformation of the instruments. That defense is, that by mistake on the part of the defendant, Yette Friedman, and fraud on the part of the plaintiff, or those acting for him, the bond and mortgage were so drawn as to secure other and greater obligations than those Mrs. Friedman had agreed to assume. Certain facts are conceded, namely, that the plaintiff and one Marcus Rosenthal were copartners [536] in business in January, 1896 ; that a dissolution of that firm was in that month agreed uponthat the plaintiff was to receive payment or security for the payment of $10,000, which he had put in as capital and also indemnity against liability for debts of the copartnership. It "is also conceded that Mrs. Friedman was induced to make the mortgage sought to be foreclosed in this action and to . join in the bond to which it was collateral, as security, but her contention is that it was only for the indebtedness of the firm to its creditors, and that the plaintiff’s contribution to the capital was to be and was paid by the relinquishment to the plaintiff of certain warehouse certificates of the value of $10,000. She alleges in her answer that such was her understanding of the terms upon which . she was to give the bond and mortgage, and she prayed for a reformation of the instruments so that her liability, might be limited to one ■ for the indebtedness of the firm to its creditors. ,Tlie negotiations preceding and the circumstances attendant- upon the execution of the mortgage. were made the subjects of extended inquiry in the examination of witnesses on the trial. Mrs. Friedman (the. defendant) Rosenthal (her son-in-law), Mrs. Rosenthal (her daughter), Theodore Friedman (her son) and Jacob Baum (her brother) testified to a state of facts which, if true, proves that- she was the victim of a gross fraud. She is an illiterate woman, totally unable to read or write. She testified that, being informed of the serious involvement of her son-in-law in his copartnership relations with the plaintiff, she. was induced to attend twice at the office of the plaintiff’s then attorneys, and that she agreed to give security for the debts of the copartnership, and that it was distinctly stated and admitted that the plaintiff’s contribution. to capital was paid back to him by the warehouse, or, as they are called-, whisky certificates. Rosenthal, Jacob Baum and Friedman testified to the sanie thing, and Rosenthal and others, who were present at the time the bond and mortgage were executed.at Rosenthal’s apartment, also testified that when the papers were presented for execution and read by the attorney acting for the plaintiff it appeared from such reading -that the warehouse certificates were referred to. as , having been taken as'security and not as payment, and thereupon a protest was made, and the attorney promised that the error should be corrected before the papers were used. On the othér hand, there is testimony given by the attorney [537] referred to and by the stenographer to whom the papers were ■dictated, that at the office of the attorneys acting for the plaintiff the drafts of such papers were read in the hearing of Mrs. Friedman ; that they contained the same provision respecting the warehouse certificates as in the executed instrument, and the notary public who took the acknowledgment of Mrs. Friedman at the time the papers were signed and delivered contradicts everything testified, to by the defendant’s witnesses concerning the alleged protest against, or criticism of, the contents of the papers when they were read by the attorney on the occasion last referred to. In that state of the evidence the justice at the Special Term held that the ■defendant Friedman had not made out by a preponderance of evidence a right to have the bond and mortgage reformed. On a critical examination of all the record, we fail to see what other disposition could have been made of this branch of the case. Everything depended upon the credibility of witnesses. In the irreconcilable conflict between them there are no circumstances to which we may give heed to turn the scale either way.
We must assume, then, that the bond and mortgage were to stand as security according to their terms, and it is not disputed that Mrs. Friedman occupies as to the plaintiff the relation of surety for Rosenthal, his debtor. Just at this point of the case is introduced the subject of subrogation of Mrs. Friedman to the right of the plaintiff to the warehouse certificates. It is claimed by the plaintiff that the pleadings are not in condition to give rise to an inquiry on that subject. But we do not so regard them. The history of these certificates and the relation of the parties to them came directly into the case. They are referred to in the. answer by an allegation which sets up that they, at the time of the dissolution of the firm of Rosenthal & Co. were given to the plaintiff, either in payment or as security for the $10,000 capital. The determination of the court below was that they were taken *as security. The defendant Friedman prayed that the plaintiff and the defendant Rosenthal be ordered to account to her respecting all the debts, liabilities and obligations of the firm, the amounts paid thereon and the amounts still outstanding and payable, to the end that the amount due upon the said bond and mortgage might be ascertained and determined; and [538] that any and all securities held by the plaintiff as security for the performance of the condition of the bond be delivered to the defendant Friedman, upon the payment by her of the amount found diie upon' the accounting, and that she be in all respects subrogated to the rights of the said plaintiff with reference to said security, and that, in the event that the plaintiff cannot or shall not deliver such securities or any of them, to the defendant, the value of said security be deducted from the amount found due. Thus the whisky certificates Were drawn into the case. It plainly appeared that for the $10,000 capital the plaintiff had two securities, one thewhisky certificates and the other the mortgage. The plaintiff has ■ chosen to resort to the latter, and to enforce it by foreclosure. It is.necessary in the action to take an account to ascertain what, if anything, remained unpaid of the debts of Rosenthal & Co. If nothing so remained unpaid,' and the mortgage is held by the plaintiff (as matter of fact) only as security for the $10,000 capital, then it is not to be disputed that upon the payment of that amount of money the defendant Friedman would be entitled to be subrogated in' equity to the rights of the plaintiff in -and to the whisky -certificates. If debts remain unpaid, the defendant Friedman would not be immediately entitled to the possession of the certificates, for under ordinary circumstances the creditor is entitled to hold his collateral until all that is due him is paid.
It is undoubtedly the law that a surety, as a general rule, is - only entitled to subrogation upon the payment of the indebtedness of his principal to the creditor, but where a creditor holds ás - collateral security two funds, viz., property óf the debtor. and, in'addition thereto, liability of a third party, a guarantor,, and the creditor elects to look to the liability of the guarantor, and the amount of that liability cannot be ascertained until a judicial accounting, a court of equity has. full power to define the rights of the parties as to both classes of security and to control in the hands of the creditor that to .which the guarantor may be entitled on a full judicial determination of the extent of his liability, and satisfaction of the amount found due. (Philadelphia & Reading R. R. Co. v. Little, 41 N. J. Eq. 519.) It needs no citation of authorities to show that a surety who pays a debt for his principal, is entitled -to be put in the place of the creditor, and is also entitled to all the means which the creditor [539] possessed of enforcing payment against the principal debtor; nor that it is within the power of a court of equity, when the creditor applies for relief against the surety, to require the creditor to. account for those things to which the surety may be entitled on payment, and to make a decree upon all the facts as they appear before it. That is simply the exercise of the ordinary power of a court of equity to determine all that is in contest between the parties to a suit before it and to settle equities, definitively. Circumstances may be .disclosed showing that it is impossible for the surety to know how much he must pay until an accounting is had between the creditor and the debtor, and it is appropriate to the final disposition of such a case that a decree should provide for the substitution of the surety in the place of the creditor upon ascertainment and payment of the amount of the surety’s liability. Thus the court would have power to control all securities in the hands of the creditor. The power is not restricted because the rights of the parties are involved in an action to enforce payment by foreclosure of a lien given by the surety on his property.
The proofs in this case showed that Mrs. Friedman, upon payment of such amount as might be found due on the mortgage, might be entitled to subrogation to the rights of the plaintiff to the whole or some part of the whisky certificates. That depends on the result of the accounting. But the plaintiff has sought to discharge himself from any responsibility for those certificates, and in doing so has .shown that Mrs. Friedman cannot have the actual benefit of them in tliis action. He contends and has endeavored to show that, in recognition of Mrs.- Friedman’s claims to those certificates and her right to control .or have them applied, they were delivered into her possession, and that thus he is freed from all accountability concerning them. It appears from the record that these certificates were taken by the- plaintiff from the safe of Rosenthal & Go. a day or two before the dissolution of that firm, and thenceforth, and until the 27th day of May, 1898, were always in the possession of one of the attorneys at law of the plaintiff. . At some time shortly before the last-mehtioned date, Rosenthal made application to that attorney for the certificates, desiring to use them in his own business and for his own purposes. The attorney was willing to aid Rosenthal in obtaining the certificates, but, as he states himself, he knew they could not be restored to Rosenthal without the consent [540] of Mrs. Friedman and, therefore, he declares he sent them by a messenger to Mrs. Friedman inclosed with a letter as follows “ Agreeable