Bank of Orleans v. Torrey & Gilbert

Headnote

T.j being the owner of four lots of land and of a small farm of forty acres, the whole of which he had mortgaged to F. to secure the payment of $3000 in five years with annual interest, sold two of the lots and the farm to G., as trustee of B., who assumed the payment of $2000 of the mortgage as a part of the purchase money. The conveyance of the two lots stated the existence of the mortgage, and that $1747 of the mortgage money, together with the interest thereon, was to be a lien upon those lots, and be paid by G. as it became due. The farm was conveyed in like manner, charged with $253 of the mortgage money, together with interest; and G. afterwards sold the same to A., subject to this lien, taking back a bond and mortgage for $1800 of the purchase money. The $1800 mortgage was assigned to the Bank of Orleans by G.; and he also conveyed the two lots to the bank, by a deed specifying the amount or part of F.’s mortgage which was a charge on them, and providing that this was to be paid by the bank as it became due. Held, on a bill filed by T., that the bank was bound to payoff and satisfy so much of F.’s mortgage as was intended to be a charge on the two lots, ■ in order to relieve the residue of the premises from this part of the lien.

Held further, that the bank having omitted to pay its portion oí F.’s mortgage, in consequence of which the same was foreclosed, and the cashier having purchased one of the remaining lots upon the master’s sale, which lot was in equity discharged from the lien of the mortgage as between the bank and T., such purchase was improper, and should be set aside.

The rule of equity that one placed in a situation of trust and confidence in reference to the subject of a sale, cannot be a purchaser on his own account, is not confined to a particular class of individuals, such as guardians, trustees and solicitors, but applies to all persons coming within its principle.

Accordingly, where a bank is bound to pay off and discharge a mortgage, so as to relieve the property of a third person from sale under a decree of foreclosure, and

the cashier attends the sale as agent for the bank, and bids off the property on his own account, he must in equity be regarded as having purchased for the benefit of the bank.

On appeal from, the court of chancery, where a decree was. made reversing the decision of the vice chancellor of the eighth circuit. For the facts of the case, and the opinion of the chancellor, see 9th Paige, 649 et seq. The case was argued here by