Chew v. Buchanan

• Decision Date: 12 March 1869
• Citation: Chew v. Buchanan, 30 Md. 367 (Md. 1869)
• Parties: HENRIETTA S. CHEW, Administratrix of SAMUEL CHEW, v. JAMES M. BUCHANAN, and others.
• Court: Maryland Court of Appeals

30 Md. 367

HENRIETTA S. CHEW, Administratrix of SAMUEL CHEW, v. JAMES M. BUCHANAN, and others.

Court of Appeals of Maryland

March 12, 1869

APPEAL from the Circuit Court for Anne Arundel County, in Equity.

In 1857, John S. Tyson and Rachel, his wife, sold and conveyed to Isaac Simmons several contiguous parcels of land, the maiden property of Mrs. Tyson, and to secure the residue of the purchase money due thereon, $8,728.75, Simmons and wife on the 2d of March, 1857, executed a mortgage of the same property to Mrs. Tyson, and delivered to her three promissory notes, payable to her order, and bearing even date with the morgage, one for $2,300, one for $3,214.37 and the other for $3,214.38, payable, respectively, in three, four and five years, and all bearing interest from date.The condition of the mortgage was for the payment of the said sum of $8,728.75, with legal interest thereon, at the respective periods, limited by the said notes for the payment of the same.On the same day the mortgage was executed, Mrs. Tyson and her husband assigned the first note to Samuel Chew, and executed to him a separate assignment of the mortgage, which was duly acknowledged and recorded on the 6th of March, 1857 on the 3d of August following, Tyson and wife assigned $2,000 of the second note to the appellee, James M. Buchanan, and at the same time executed to him an assignment of this mortgage as also of another mortgage upon certain parcels of ground in the city of Baltimore, which assignment was also duly acknowledged and recorded on the 14th of August, 1857; on the 5th of June, 1860, they assigned the residue of the second note, and the third note entire, to the appellee, John R Clark, and executed to him an assignment of these same mortgages, which was recorded on the 20th of June, 1860.These several notes were assigned and endorsed without recourse.

On the 24th of October, 1860, the first note having matured and not having been paid, Chew filed his bill for a sale of the mortgaged property; subsequently, on the 5th of November 1862, after all the notes had matured, an amended bill was filed, to which all the assignees were parties.To these bills answers were filed, and on the 23d of January, 1864, a decree for a sale was passed, reserving for future decision all questions as to priority of payment out of the proceeds of sale.The land was sold by the trustees on the 3d of February, 1865, for $3,178.14, a sum insufficient, after payment of costs, expenses and trustees' commissions, to pay the principal and interest due on the first note.The sale was duly ratified.The auditor stated two accounts, A and B; by the former, after the payment of costs and commissions, he applied the entire residue towards the payment of the first note, assigned to Chew, leaving a balance due thereon of $677.22; by the latter, the net proceeds of sale were distributed amongst the several assignees and Mrs. Tyson, ratably.To account B, the administratrix of Chew, who had become a party after the death of her husband, excepted, claiming that she was entitled, as the holder of the first note, to the entire net proceeds of the sale by way of priority, as allowed by account A. Buchanan and Clark excepted to account A, claiming that the net proceeds of sale should be applied to their claims and the claim of Chew's estate, in proportion to the amounts respectively due to each of them; and Clark also excepted to account B, in so far as it allowed any portion of the proceeds of the sale to the claim of Mrs. Tyson.

The Court, by an order of the 23d of April, 1868, overruled Mrs. Chew's exceptions to account B, and sustained the exceptions of Buchanan and Clark to account A, and the exceptions of Clark to account B, and remanded the cause to the auditor, for the purpose of stating an account in conformity with the principles so determined; the account was so stated, and by an order of the 5th of May, 1868, the same was ratified.From these orders Mrs. Chew appealed.

The cause was argued before BARTOL, C.J., STEWART, BRENT and ROBINSON, J.

Samuel Snowden, for the appellant:

When different debts or notes are secured by the same mortgage, priority of lien depends on the order of time at which the debts or notes reach maturity, and preference will be given to the debt which first becomes payable.Hough vs. Osborne,7 Ind., 140;Stanley vs. Beatty,4 Ind., 134;Wilson vs. Hayward,6 Fla., 171;Hinds vs. Mooers,11 Iowa, 211;Thompson vs. Field,38 Mo., 320;Mitchell vs. Ladew,36 Mo., 526;Bank of U.S. vs. Singer,13 Ohio, 240;Harris vs. Harlan,14 Ind., 439;State Bank vs. Tweedy,8 Blackf. 447;Wood vs. Trask, 7 Wisconsin, 566; Marine Bank vs. International Bank, 9 Wisconsin, 57;Hunt vs. Stiles,10 N. H., 466;Vansant vs. Allmon,23 Ill., 30;McVay vs. Bloodgood, 9 Porter, 547.

The first assignee of the mortgage with a part of the debt secured thereby, is entitled to have the mortgage security applied to the satisfaction of the debt assigned to him, to the exclusion of those claiming under subsequent assignments.Bryant vs. Damon,6 Gray, 564;Mechanics' Bank vs. Bank of Niagara,9 Wend, 410;Cullum vs. Erwin,4 Ala., 452;Solzman vs. His Creditors,2 Rob.(La.) 241; Wright vs. Parker, 2 Aiken,(Vt.) 212;Gwathmeys vs. Ragland,1 Rand., 466;Warden vs. Adams,15 Mass., 225;Pattison vs. Hull, 9 Cowen, 747.

The assignment from the mortgagee to Chew was duly acknowledged and recorded before the assignment to Buchanan and Clark, and under the decisions referred to, Chew is entitled to priority.These decisions are founded upon the undisputed principle of law, that the purchaser of a chose in action cannot be in a better position than the person from whom he purchased, and as the assignment clothed the assignee with the right to the whole security for the satisfaction of the claim assigned to him, as against the assignor so no subsequent assignee could acquire any greater right than his assignee had, "for it would be contrary to good faith that the vendor of a claim, after receiving the price of it from the assignee, should by his own act prevent the latter from receiving the sum he has paid."Solzman vs. His Creditors,2 Rob. 243;Griffith vs. Frederick Co. Bank,6 G & J., 424.

The question is one of intention or contract, and it is sufficient if it appear to be the clear and certain intention of the parties to convey the right.Bank of England vs. Tarleton,23 Miss., 173.The assignment to Chew, shows the clear and certain intention of the parties to convey to Chew, the whole security for the payment of his claims.

Frank.H. Stockett, for the appellees:

When a mortgage is given to secure the payment of several notes maturing at different times, which are afterwards at different times assigned to several parties, and the proceeds of the sale of the mortgaged property are not sufficient to pay all the notes, the question arises, whether the assignees will be entitled to priority of payment; first, in the order in which the notes matured; or secondly, in the order in which the assignments were made; or thirdly, whether the proceeds of the sale are to be distributed ratably to the respective holders of the notes according to the amounts due to each of them?

In the Courts of some of the States, the proceeds are distributed to those persons holding the notes according to the order of time in which they fall due, as in Indiana, State Bank vs. Tweedy,8 Black., 447;Harris vs. Harlem,14 Ind., 439.In Wisconsin, Wood vs. Trask,7 Wis., 566;andMarine Bank vs. International Bank,9 Wis., 57.In Florida, Wilson vs. Hayward,6 Flor., 171.In Iowa, in the case of Hinds vs. Mooers,11 Iowa, 211; and in Illinois, in the case of Vansant vs. Allmon.23 Ill., 30.

In other of the States, it has been determined that the priority of the assignment, without reference to the maturity of the notes, determines the preference in payment, unless the assignor at the time of the assignment, and by express words gave preference to one or more of the notes, as in the case of Cullum vs. Erwin,4 Ala., 452.

These decisions, however, are in conflict with the rights of the parties, and are not sustained by the principles of justice and equity which should govern the dealings between parties in all such transactions, and which have been clearly announced in the decisions by the Courts in a number of other States, and there should be no difficulty in determining that the fund should be distributed ratably.

The debt, which is the corpus of the assignment is one, and the security is one, and is equally as applicable to the last note maturing as to the first, for though solvendum in futuro, it is debitum in presenti.On an assignment of a mortgage, the thing sold is the debt, and the mortgage passes as an appurtenant to the debt, and these are incapable of a separate and independent alienation.Pratt vs. Vanwyck's Ex's,5 G. & J., 495;Clark vs. Levering,1 Md. Ch. Dec., 178;Ohio Life Ins. & Trust Co. vs. Winn and Ross,2 Md. Ch. Dec., 25.The same principle is fully illustrated in the cases of Johnson vs. Hart,3 John.Ca., 329;Jackson vs. Rogers,4 John.Ca., 43;Aymar vs. Bill, 5 John'sCh. Rep., 570;Bell vs. Morse,6 N. H., 205;Southerin vs. Mendum,5 N. H., 420.

So clearly does this enure to the assignee that the right to all the benefit of the mortgage results to the holder of the debt, though the assigment was not in writing, and though the assignee of the debt did not at the time know of the existence of the mortgage.Kraft vs.Webster, 4 Rawle, 242.The assignees are privileged creditors, each having a lien on the whole property or fund in equal rank and degree, and are entitled equally to look to the whole fund as security and should be paid pari passu.In...