Gordon v. Hazzard

Mr. Justice McIver,

dissenting. I am unable to concur in the conclusion reached by the majority of the court in this case; and if time permitted, would be glad to discuss at length the question involved. But the unusual number of cases heard at the present term leaves but little time to devote to a mere dissenting opinion. I must therefore content myself with merely indicating as briefly as practicable the grounds of dissent.

Inasmuch as there'is no authoritative decision in this State of the question involved, this court is at liberty to adopt either one of the three views presented by Mr. Pomeroy in his valuable work on Equity Jurisprudence, and set forth briefly in the opinion of Mr. Justice McGowan. It seems to me that the view most in accordance with well settled principles of equity, and which therefore ought to be adopted, is that which gives priority to the assignment first in order of time. There can be no doubt that, upon the plainest principles of equity and justice as between the assignee and the mortgagee, the assignee is entitled to the preference ; and as is said in 3 Pom. Eq. Jur., § 1203, it has been generally so held. Now, if this be so, if the assignee has an equity to be preferred to his assignor, the mortgagee, I do not see how he can be deprived of that equity by any subsequent act of *357the mortgagee to which the assignee has in no way contributed, could not prevent, and very probably knew nothing of. If the mortgagee, after having assigned one of the bonds secured by the mortgage, holds the same subject to the prior right of his assignee, it would seem to follow that, as he could not transfer to another any higher or better right than he hirnsejf had, the second assignee must take subject to the rights of the first assignee.

This would work no injustice to the assignee, for the terms of the mortgage, of which he is presumed to have notice, would inform him that it was given to secure the payment of two separate bonds; and, as was said in Lynch v. Hancock (14 S. C., at page 86), the very fact that two separate bonds were given, instead of one payable in two instalments, indicated that the original purpose was to make use of th.ese bonds separately, by a transfer of them to different persons. Ordinary prudence would therefore suggest to a purchaser the inquiry, what had become of the other bond, and such inquiry .would lead to the discovery of the fact that it had previously been assigned to a third person, who had thereby acquired a priority over the mortgagee; and if, in the face of this information, the purchaser saw fit to buy the other bond which he knew was then subject to the bond previously assigned, he would have no just ground to complain, when such priority is subsequently asserted. In effect, the second assignee buys property which he knows is subject to the claim of a third person superior to that of his vendor or assignor, and such superiority follows it into his hands. Practically, though not in form, he buys or takes a lien upon property which he knows or o'ught to know is subject to a prior lien in the hands of his vendor or lienor, and he therefore must take subject to such prior lien ; for although it may not be correct to apply the term lien in this way, yet the principle involved is the same, and I have ventured to use that term simply as illustrative of the principle.

The view which I have adopted is in close analogy to the well settled and undisputed doctrine, that where a mortgagor sells to third persons, at different times, portions of the mortgaged premises, the first purchaser has an equity to require the mortgagee, when he comes to foreclose his mortgage, to sell the different por*358tions in the inverse order of the sales by the mortgagor. Now, this equity in the first purchaser exists not only against the mortgagor, but also against the second and all subsequent purchasers, and I do not see why, upon the same principle, the equity which the first assignee unquestionably has against the mortgagee, should not also be recognized against the second assignee or purchaser. It is true that the mortgage was designed to secure the payment of both of the bonds; but when the mortgagee parts with one of them for valuable consideration, equity will not allow him to enforce the security for the payment of the bond which he has retained, until his assignee, whose money he has received, has been paid, and a purchaser from him — the second assignee — has no higher rights than he has ; for, to borrow the idea, though not the precise language, of Chan. Kent in Clowes v. Dickenson (5 Johns. Ch., 241), he sits in the seat of his assignor. So it is true, in the ease from which the above analogy is drawn, the mortgage covers the entire land, and, if necessary, the whole of it may be sold; but by reason of the equity arising in favor of the first purchaser the moment he makes his purchase, he can require itot only that the portion of the mortgaged premises retained by the mortgagor shall be first sold, but also that sold to the second purchase-, before resort can be had to that bought by the first purchaser; for, as said by Chan. Kent in the case cited, “he sits in the seat of his grantor and must take the land with all its equitable burdens.”

As to the question presented by defendant’s second ground of appeal, it seems to me that it has been decided by the referee, and as all of the conclusions of the referee were confirmed by the Circuit Judge, it is properly before us. But as this is a question more of fact than of law, in view of the concurring judgment of the referee and the Circuit Judge, I do not think this court should interfere.

Judgment modified.