UNION MUT. LIFE INS. CO. '/1. HANFORD.
Swett, Gr08cup If Swett, for complainant. Fairchild et Blackman, for defendants.
BLODGET'f, J. This case now comes before the court upon an plication for a deficiency decree to be entered against the defendants, Philander C. Hanford, Orrin P. Chase, and Lucy Duncan Fake. The original bill was for the foreclosure of a mortgage given by the defendants Hanford and Chase to Jacob L. Schureman, bearing date September 9, 1870, upon certain property in the city of Chicago, to secure the payment of three notes: one for $5,000, due in one year from the date of said mortgage; one for $5,000, due in two years from that date,-each of said notes bearing interest at the rate of 8 per cent. per annum; and one note for $6,OUO, payable in three years from said date, and bearing interest at the rate of 10 per cent. per annum. Such steps were taken in the suit as that a decree of fore:' closure was entered May 10, 1879, finding the amount of the Illort· gage debt at that time to be $15,881.67, and directing the sale of the mortgaged premises by one of the masters of this conrt at public auction for the pnrpose of making the amount of said indebtedness. At the master's sale, made in pursuance of this decree, the mortgagEid premises brought the sum of $12,000, from which, after the paYlllent of costs and expenses, the sum of $11,716.12 was applied upon the mortgage debt, leaving a deficiency of $4,284.65, for which a defi. ciency decree was entered against the defendants Hanford and Chase, October 27, 1880; afterwards, upon the application of Hanford and Chase, and on the suggestion that the report of the receiver appointed in said case had not been filed, and that there were still funds irihi's hands to be applied on the mortgage indebtedness, that decree was set aside, with leave to the complainant to apply for a deficiency decree at a future day, whenever the receiver's account should be adjusted. This has bEien adjusted, and shows a balance in the hands of the receiver of $64.49, which should have been applied upon the deficiency shown by the master's report. which would have made the deficiency at that time $4-,220.16. The complainant now moves for a deficiency decree against these defendants, and the de.fendant Lucy D. Fake. The defendants Hanford and Chase resist this application, and insist that no deficiency decree can or should be entered against them for the following reasons: First, because the 'statute of limitations has barred the debt as a personal liability; secondly, because the complainant has so dealt with the mortgage indebtedness as to release the personal liability of said Hanford and Chase. . As to the statute of limitations, I do not see any good ground upon which this defense can be supported. The indebtedness was by promissory notes, which are not barred by the Illinois statute until 10 years from the time they mature, the last of which matured on September 9, 1874, !lond the bill in. this case ·was filed in 1878.
and since that time the case has been in court continuously, and complainant has been seeking a decree-First, for foreclosure against the mortgaged premises; and, secondly, a personal decree against these defendants; and is not responsible for the delay of the proceeding, and has lost none of its rights by reason of such delay. It appears from the testimony that, after the making of the notes and mortgage in question, defendants Hanford and Chase, before January 30, 1871, paid the first note of $5,000 ment.ioned in the mortgage, and on January 30, 1871, Schureman, the mortgagee, sold and assigned the notes and the mortgage to the complainant for a valuable consideration, and duly indorsed the notes, and transferred the mortgage in writing to complainant. It further appears that on September 9, 1872, the defendants Hanford and Chase conveyed the mortgaged premises to Lucy Duncan Fake by their warranty deed of that date, in which deed, immediately following the covenant of warranty, occurs the following clause:
"With the exception of and subject to a certain mortgage or trust deed, bearing dl}te September 9, 1870, made and executed by Orrin P. Chase and Philander A. Hanford to Jacob Schureman, and upon which is. at the date hereof. unpaid the sum of $11.000. and interest from September 9. 1872, which said mortgage or trust deed was assigned to the Union Mutual Life Insurance Company of Boston, Massachnsetts. on the thirtieth day of January. 1871, which said mortgage or trust deed. and the notes to which the same is collateral security, made and executed by Orrin P. Chase and Philander C. Hanford to the order of Jacob L. Schureman. it is hereby expressly agreed shall be assumed and paid by the party of the second part."
Prior to making the conveyance to Mrs. Fake, Hanford and Chase had negotiated with Dr. L. D. Boone, the agent of complainant in the city of Chicago, an extension of part of said mortgage indebtedness; so that the $5,000 note, which matured, by its terms, September 9, 1872, was extended to September 9, 1874; and after the conveyance to Mrs. Fake, about September 9, 1873, a further extension was negotiated between the complainant's agent, Dr. Boone, and F. L. Fake, as agent for Mrs. Lucy D. Fake, by which the time for the payment of the tw'o notes, one for $5,000 and the other for $6,000, was extended nntil September 1875. This extension was obtained without the consent or concurrence of Hanford and Chase, and they has released them from liability upon now insist that such the notes, because the complainant has dealt with Mrs. Fake as the principal debtor in the transaction, on her assumption of the mortgage debt. and has by such extension released them from liability. Defendants Hanford and Chase, in support of their defense, introduce proof tending to show that the property covered by the mortgage diminished greatly in value between the ninth of September. 1874, when the last of the notes feHdue under the extension obtained by them from complainant, and the time of filing the bill of foreclos.me; and the master has found, as one of the facts in the case, that ,the value 'Of the mortgaged premises in September,l874, was from
MANUFACTURERS' NAT. BANlt.
eighteen to nineteen thousand dollars, while the value of the same premises on April 4, 1879, was from ten to fifteen thousand dollars only. It is contended by Hanford and Chase that the legal effect of this dealing by complainant with Mrs. Fake wa.s to change their relation to the indebtedness from that of principal debtors to that of sureties, and that, as such sureties, they have become released by the extension of time given to Mrs. Fake, the principal debtor; and the case of Galvo v. Davies, 73 N. Y. 211, is cited and relied upon in support of this position. I have read this case carefully, and think there can be no doubt that it fully sustains the position taken by these defendants, and the rule established by this case is quoted with approval in Jones on Mortgages, 742. The contrary rule is, however, held in Gorbett v. Waterman, 11 Iowa, 86, and Waters v. Hubbard, 44 Conn. 340. It seems to me, however, that the case of Galro v. Davies is fully sustained by a uniform line of decisions in the New York courts tending to the final conclusion of that case, and the rule of that case may be said to be sanctioned by the better authority. It has been repeatedly held in this court that a mortgagee can maintain an action of assumpsit for the mortgage indebtedness, against a purchaser of the equity of redemption who has assumed and agreed to pay the mortgage. Twichell v. Mears, 8 Biss. 211. I therefore conclude, in the light of these authorities, that the complainant has so dealt with Mrs. Fake as to work a release of Hanford and Chase from their personal liability on the indebtedness, and that no decree for the denciency should be entered against them. Complainant is entitled to a decree against Mrs. Fake for the amount of the deficiency, if it chooses to take it.
IRONS and others v. MANUFAOTURERS' NAT.
and others. 1
(Circuit Court, N. D. lllinoia. June 1, 188(1.)
BANKS AND BANKING-NATIONAL BANKS-STOCKHOLDERS' LIABILITY-CRED ITORS SHARE EQUALLY.
In a suit in chancery, under the statute of June 30, 1876, by a cre<:litor of <l. national bank on behalf of himself and all other creditors. against the stockholders of such bank, to enforce their individual liability for the payment of claims against the bank, the fund obtained is a part of the general assets of the bank, and all creditors of the bank stand upon an equal footing in the distribution of it.
SAME-ALL CREDITORS MAY TAKE BENEFIT OF BILL-RUNNING OF STATUTE OF LIMITATIONS STOPPED.
A bill filed under the statute of June 30, 1876, by a creditor of a national bank, against stockholders of such bank, to enforce their individual liability, is for the benefit of all creditors of the bank, although it does not contain an averment of that fact; and filing such a, bill stops .the running of the atatute of limitations upon all claims against the bank·
.1Edited by Russell H,CurtiS, Folq., of the.Chicago bar.