Bryant v. Damon

Thomas, J.

Whether the entry by Young to foreclose was sufficient as against Burgess it is not necessary to determine, as the foreclosure was never perfected.

Parsons is not estopped to deny the validity of the foreclosure as against the Burgess estate, because he made a contract with Damon to redeem the estate. The assignment to Damon operated, so far at least as Parsons was concerned, as a release or discharge of the mortgage. It was done to protect the interest of Parsons, and Parsons had a direct interest in preventing its operation as a foreclosure, because he had covenanted with Burgess to discharge the estate conveyed to him of the Young mortgage, and because he was at the time the owner of the $1,000 note; and because also, in his settlement with Parsons, Damon charges him with the amount paid to discharge the mortgage. This fact is important in two ways; as showing the intent of parties that Damon should redeem, and as a waiver of the foreclosure, if any had been made.

The Burgess mortgage was never foreclosed. It was giver for the payment of two notes, one of $1,000 and the other of $2,250. The mortgage was assigned to Paine, together with *567the note of $2,250. So far as this note was concerned, Paine held for his own use. So far as the $1,000 note was concerned, he held in trust for the owner of that note.

That trust affects as well the assignees of Paine, having notice on the face of the deed itself. Hunt is not a bona fide purchaser, without notice. The character of the mortgage appeared of record. He could not rightly conclude, from the fact that Parsons had given Young possession, that a foreclosure had taken place. He should have inquired and ascertained if the foreclosure was perfected.

It is said that Damon should have had notice at the time of the settlement. Such notice, if necessary, he had. Damon had all the papers ; the record was before him. If he conveyed to Hunt by warranty, it was his own mistake.

The trust then still existing, what is its nature ? We think it is a trust for the holder of the note of $1,000, after the note of $2,250 has been paid. This result seems to follow, whether we look at the situation of the parties and the circumstances under which the assignment to Paine was made, or the words of the assignment itself.

Paine paid full consideration for the note of $2,250; the mortgage was originally for the entire purchase money. It is most improbable therefore that Paine would take the mortgage, and pay tne entire value of the note of $2,250, and then hold in trust to secure himself pro rata.

The assignment itself points to the same result. Solomon Parsons, the mortgagee, in consideration of $2,250, conveys all his right, title and interest to the deed of mortgage, so far as the same is intended to secure the payment of the second note named in the same. Then follows the covenant to warrant and defend against the lawful claims and demands of all persons claiming by or under him, saving only to the mortgagor the right of redemption, as the law provides. We think the plain equitable construction of this assignment is, that Paine was to hold the mortgage as security for the note of $2,250; after such payment, he would hold the mortgage in trust for the holder of the $1,000 note. Decree accordingly.