The true point upon which the merits-of this case rests, is as to the effect of the rescisión of the contract of purchase, and the subsequent payments or advances made by Holbrook to Lloyd, in consequence of that rescisión.
The complainants rest their case upon the following state *104of facts : — In 1843, the defendant, Lloyd, went into the possession of certain real estate in Tallahassee, under a contract of purchase from Call and Walker, they having* previously mortgaged the property to Hackley, who- assigned. it to the Union Bank. The notes given by Lloyd were subsequently assigned to defendant, Holbrook, in exchange for certain securities he held against Walker; and for the purpose of securing to Holbrook the payment of those notes, Call and Walker conveyed to him their equity of redemption, and induced the Union Bank to assign to him the mortgage deed. In 1846, Lloyd being still in the possession of the property, under the contract of purchase, executed the mortgage under which the complainants claim, and which was duly recorded.
Whatever may have been the character or extent of Lloyd’s equity, previous to the assignment of Call and Walker’s-mortgage to Holbrook, it is unnecessary to consider. It is, however, clear that after the assignment, and when Holbrook had united in himself the legal and equitable title, and assumed the execution of the contract of purchase, he became, for all legal purposes, the vendor of Lloyd.
At the time Lloyd executed his mortgage, he was not only in possession of the premises, free of rent, but, under the contract of purchase, had an interest in the land, the subject of mortgage or sale; an interest which was devisable and descendible as his real estate. Craig vs. Leslie, 3 Wheat., 577.
It is insisted that the contract of purchase is to be considered as a simple executory agreement, creating no charge on the land, or attaching to it in any manner as an incident. This is undoubtedly true at law, but equity considers the contract in a different and more favorable light, and, for many purposes, treats it as specifically executed. The vendee is regarded as the equitable owner of the prop*105erty, and, as land, it passes by descent to his heirs. 1 Fonbl. Eq., Ch. 6, Sec. 9; 2 Story’s Eq. Juris., Sec. 790. Holbrook, as the vendor of Lloyd, was bound to a specific performance of the contract. For his security, he had a paramount claim on the land, by virtue of the vendor’s equitable lien, and which would bind the estate, not only in the hands of the vendee, but his heirs, and those .claiming under him. From the time that Holbrook became the owner of the legal title, he held the same for the benefit of the purchaser, the trust attaching to the land. Green vs. Smith, 1 Atk. R., 572; 6 John C. R., 402. And it is in view of his character as trustee, that he would be compelled to surrender the title on the payment of the purchase money. Lloyd’s right, therefore, to mortgage this property, or convey it in any other mode, cannot be questioned.
Undue importance, we think, has been given by counsel to the decree of strict foreclosure rendered by the Circuit Court, in 1847, against Call and Walker. The relative position of Lloyd and Holbrook, as to their respective rights and liabilities, was not affected by this decree. Lloyd was no party to this proceeding, though the party in interest. In possession, and asserting his claim to the property by virtue of his contract with Holbrook, his equity was paramount to any rights growing out of the mortgage debt, for-bad Holbrook obtained a decree for the sale of this property, in satisfaction - of the debt, a Court of Equity would not have hesitated to enjoin the sale, upon the application of Lloyd. The bill for foreclosure was against Call and Walker alone, and the decree could only vest the title as against the party to the suit; but they had previously conveyed their equity of redemption, and had no longer any interest in. the property ; and their consent, entered of record, surrendering the property in satisfaction of the mortgage debt, impaired no one’s interest, and vested Holbrook *106with no additional right. The mortgage in the hands of Holbrook was in no manner available, except that it secured to him the legal title to the property. His purpose in procuring, through "Walker, an assignment of the mortgage, was not to keep it alive as a security for the debt, or to enforce at any time a collection of that debt, but solely with the view of obtaining the legal title, as a security for the payment of the notes given by Lloyd, under the contract of purchase, and at the same time place himself in a position to perform his part 'of that contract. By the assignment of the mortgage, and the purchase of mortgagor’s equity of redemption, Holbrook became in fact and in law as fully invested with the legal title as he could have derived under any decree of strict foreclosure. Whether by this union of the legal and equitable title, the mortgage debt became extinguished, it is of no consequence to consider. It is sufficient that the property in the possession of Lloyd, was not liable for the payment of the debt, or any part of it. As to the agreement entered into between Lloyd and the attorneys' of Holbrook, about the time this decree was rendered, it cannot affect the merits of this case in any way. It is not a substitution for the 1 original contract of ■purchase, but is endorsed on it, and recognizes its validity. It secures to Lloyd, it is true, additional time for the payment of the purchase money,. Holbrook agreeing, on his part, to assign the decree on the payment of the notes. It was a mere change in the time of payment by Lloyd, with-, out increasing or diminishing the liability of Holbrook. Bp to this time, the relative position and the rights of the parties were in no manner changed; Holbrook, holding the technical legal title in trust for his vendee; — the complainants, the mortgage of Lloyd upon his equity, while he held the naked contract of purchase. Sometime after this, the contract of purchase was rescinded, and delivered up to *107Holbrook, in consideration of bis allowing Lloyd to value, on bis bouse in New York, for tbe said lot and improvements, over and above tbe sum of $1,150, then due on account of tbe purchase money. In pursuance of this agreement, Holbrook honored the drafts of Lloyd to the amount of $3,143. It is insisted, in argument, that Holbrook, in this transaction, is not to be considered in the character of a purchaser of Lloyd’s equity, but that tbe payments made to Lloyd are tobe regarded as advances made by Holbrook as a prior incumbrancer ; and unless bo had actual notice of tbe complainants incumbrance, before these advances were made, he should be protected in a Court of equity.
As a general rule, it is undoubtedly true that a prior incumbrancer, or person bolding the legal title, is not bound to act in reference to tbe rights or equities which may exist in favor of a subsequent incumbrancer; and if tbe defendant, Holbrook, stood in reference to this case in the light of a prior incumbrancer, with a mortgage to cover fu. ture advances, actual notice of the outstanding equityjwould berequisite. Shirras vs. Craig, 7 Cranch, 34; 2 Barb. C. R., 297, 303. We do not question the doctrine that a mortgage given to secure future advances, is a protection to the bolder, for all advances made prior to the receipt of actual notice of the intervening title; for otherwise the mortgage, to tbe extent of its provisions, would be a fruitless security, and it would be impossible for a prior creditor to protect himself against loss. But the reason of the doctrine shows its want of application to the case before us.
Tbe subsequent advances are commensurate with the terms of tbe deed — they are based upon tbe faith of the deed, and are a part of the original transaction. But where these advances are not provided for in the security, they must of necessity rest upon a new agreement between tbe parties not growing out of the original contract, but inde *108pendent of it. Aside from these considerations, the mortgage lien in this case was extinguished, and the mortgage merged in the decree of foreclosure.
Ve do not question the right or capacity of the parties to rescind the contract of purchase by a surrender and acceptance of the title papers, so far as their interest are involved. Between them the surrender would be good for all purposes. But where tbe rights of third persons founded on the contract, as in this case, are affected, the surrender whether by delivering up of tbe contract or a conveyance, would be a fruitless effort to defeat an outstanding equity, tbe evidence of wbicb bad been duly recorded. Otherwise it would be in the ¡sower of Lloyd to defeat the lien of his own mortgage by a parol agreement with his vendor. The effect of the surrender was to vest in Holbrook, tbe equity of Lloyd as effectually as could have been done by a deed of conveyance. It was so designed, for the agreement to pay and the actual payment of the value of the lot and improvements, by Holbrook, so far from being made in relation to any mortgage or title he held, was the consideration of the surrender by which Lloyd’s remaining equity passed to Holbrook. It is true, that technically, Holbrook was not a purchaser, for there was no deed of conveyance to him. But none was necessary, for he held the legal estate and the only incumbrance upon it, in Lloyd’s hands, was Holbrook’s agreement to make titles on tbe payment of tbe remaining instalment of $1150.
Under1, this state of facts, we feel bound to consider the defendant, Holbrook, in the light of a subsequent purchaser, and as a consequence, the record of Lloyd’s mortgage sufficient notice to him of that incumbrance.
Tim only remaining question to be disposed of is, in re» *109ference to the first note given by Lloyd under his mortgage, amounting to $1156 48.
Holbrook, it appears, in 184T, paid this note and took an assignment of it. And he now claims the benefit of the mortgage security, and insists that the property should first be applied to the satisfaction of this note'.
That it has a priority over the mortgage note, in the hands-of the complainants, is true. But why apply the proceeds of property of which he is the owner, to the payment of an incumbrance from which he has relieved it ? líe has all the benefit of the payment by having discharged the mortgagé lien to the extent of the note. If the property was inadequate to pay more than this note, and the sum of $1150, originally due from said Lloyd, under the contract of purchase, the question would present a different aspect. As it is, the only incumbrance for which the property should be chargeable, is the remaining note due the complainants.
It is therefore ordered and adjudged, that the decree of the Court below be affirmed, except in such particulars as conflict with the opinion of this Court. It is further ordered, that this cause be remanded to the Court below, with instructions to modify its decree in conformity with this opinion.