Cochrane v. Hawver — 28 N.Y. St. Rep. 1

Majority

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Aaron V. S. Cochrane v. Chancellor Hawver, Executor, et al.

(Supreme Court, General Term, Third Department,

Filed December 11, 1889.)

Headnote

Executors ayd administrators—Note payable out op personalty ALTHOUGH MORTGAGE GIVEN TO SECURE ENDORSER.

McClure in 1873 gave a mortgage to Moore to secure him for any accommodation endorsements he might make. In 1888 Moore endorsed the note in question, which has not been paid, and plaintiff is assignee of the note and mortgage. Soon after making the note McClure died, leaving a widow and child; also a will by which he gave his property, in trust for the child, to defendant Hawver, his executor. Upon a foreclosure of the mortgage, Held, that the widow was entitled to have the note paid out of the personal estate and that the provisions of IE. S., 749, § 4, directing that the heir or devisee must discharge his ancestor’s or testator’s mortgage from the property which descends or passes to him without resort to the executor, did not apply to such a case.

Appeal by defendant Hawver, as executor of James E. McClure, from that part of a judgment which directs that the amount of plaintiff's mortgage and costs be paid by the executor out of the personal estate without resorting to the mortgaged property.

Action to foreclose a mortgage given to secure one M. for endorsements of testator’s note. The court held that the widow, Clara V. McClure, was entitled to have the note and costs paid out of the personal estate, so far as sufficient therefor, before re-' sorting to the real estate.'

Chancellor Hawver, for app’lt; A. Frank B. Chase, for resp’t.

The deceased, some sixteen years before malting the note in question, executed a mortgage to Moore to secure him against liability for accommodation endorsements to be made. After making the note he obtained the endorsement of Moore and had the note discounted at a bank. Subsequently he married Clara V., one of the defendants. After his marriage he died, leaving his widow surviving and having made a will by which he gave his property in trust for his child. The note has not been paid by the maker or liis estate. But the note and the mortgage have been assigned to the plaintiff. It therefore becomes important to the widow that the note should be paid by the executor out of the personal estate, which is ample.

Ho question has been made whether Moore could maintain an action of foreclosure until he had been obliged to pay and had

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paid the note. If he could not, then of course neither could the plaintiff. • But we do not pass on this.

Of course there are cases in which the creditor, in order to collect- his debt, is entitled to the benefit of securities held by the surety. But this right of the creditor is for his benefit. It is not for the purpose of controlling the question of marshalling the assets of the principal debtor. Therefore this right of the creditor is of no consequence in this case.

The old rule was that a debt, though secured by a mortgage, was to be paid by the executor out of personal property. That rule is changed by B. S., 749, § 4. And the only question here is whether that statutory provision applies to this case. The reason of the statute was undoubtedly that, though legally the mortgage is collateral to the debt, yet it is ordinarily thought of as the principal thing. The legislature saw that a testator devising property which was subject to a mortgage would usually intend that the devisee should take the land with the burden, and would not intend, unless he so expressly stated, that his personal property should be used to relieve the land. The legislature thus gave to a will the effect which the testator undoubtedly would intend. So also as to an intestate.

But a mortgage of the kind in this case is very different. The mortgagor does not intend to permanently burden his estate. He only desires to secure his surety. He intends to perform to his surety the duty of paying the debt, and does not desire that the surety shall pay and then foreclose. The mortgage is not given to the creditor as security for the debt. It is a collateral affair, intended merely to keep safe the surety. It is conditioned on the event that the surety suffer loss. The land is not specifically appropriated to the payment of the debt.

It is appropriated only to the indemnity of the surety. The reason, therefore, of the statute fails. And though, as urged, the language may be broad, yet we are confident that this case is not within the intent of the statute.

We think, therefore, that the learned justice was right that the widow is entitled to the marshalling of assets which was provided for by the decree, that is, that the debt is to be paid if possible out .of the personal estate.

Judgment affirmed, with costs against the executor to be paid out of the estate.

Ingalls and Landon, JJ., concur.