
    C. R. Bryce, Ex’or, vs. G. S. Bowers and John Stork.
    
      Pleading — Parties—Mortgage — Foreclosure — Assignee— Presumption — Payment.
    B mortgaged land to A, to secure the payment of a bond, and afterwards conveyed the land to C, who conveyed to D. B, then, assigned his estate for the benefit of his creditors, and died insolvent. On bill filed by A, against C and D, for foreclosure, no demurrer was filed, for lack of proper parties. JETeld: That defendants could not insist, at the hearing, that the personal representative of B should be made a party to the bill.
    That the assignee of B was not a necessary party to the bill.
    
      Qncere, whether to a bill against the party in possession of the mortgaged land, for foreclosure of the mortgage, the personal representative of the deceased mortgagor is, in any case, a necessary party.
    Where a mortgage has been duly registered, a subsequent purchaser of the land will not be protected by presumptions of payment arising from the lapse of time, whore the mortgagor himself is not so protected — he having made payments which rebut the presumption.
    A promissory note, not expressly taken in payment of a bond, held, not to be payment.
    BEFORE LARGAN, CH., AT RICHLAND, JUNE, 1858.
    The decree of his Honor, the Circuit Chancellor, is as follows :
    Dargan, Ch. On February 21, 1833, James Fenton executed a mortgage to John Bryce, of a lot in Columbia, to secure a bond given by said Fenton to said Bryce for $500, dated 21st February, 1833, payable the 1st of January, 1834, and bearing interest from the date. The iuterest on this debt was paid annually, and with great punctuality, up to 1st July, 1855. About that time Fenton had become insolvent, and on the 4th June, 1855, he made an assignment to Henry Davis of the most of his estate for the payment of his debts, in a certain order or classification therein prescribed. Bryce’s debt, secured by the mortgage as aforesaid, was embraced in the first class of preferred debts; it was not specifically provided for, but the assignee was directed, out of the proceeds of the sale of the property assigned, to pay, “ the several mortgages, judgments and executions now existing and in force against me, according to their legal order ■and priority.”
    On or about the 12th February, 1850, Fenton, for the consideration of $1,200, sold and conveyed to G. S. Bowers the same lot which he had previously bought from and mortgaged to Bryce. He took a bond and mortgage for $1,000 of the purchase money, $200 of the same having been paid in cash. This debt was subsequently paid in full, and satisfaction entered 22d October, 1852. Bowers had possession of and lived on the premises from the time of his purchase in February, 1850, for four or five years, and afterwards rented it to his co-defendant, John Stork, until the 11th day of March, 1857, when he sold and conveyed the said lot to the said John Stork in fee, with a covenant of warranty as to the title. Stork, at the date of the filing of the bill, was in possession, and still is.
    The mortgage of Fenton to Bryce was duly recorded. No express notice either to Bowers or Stork was proved, nor is it believed there was any.
    This is a bill filed by C. R. Bryce, the Executor of John Bryce, to foreclose the mortgage against Bowers and Stork. The latter is a necessary party, and so, perhaps, is Bowers. The legal representatives of Fenton should also have been made .parties to these proceedings. So invariably is this rule observed, and so essentially important is it in many cases, that I doubt the propriety of my going on with the case without Fenton being represented. But as Fenton made an assignment, and died utterly insolvent, I suppose, (but do not know,) that he has no legal representatives. But as the defendants did not plead this matter in abatement, nor interpose an objection in any form on this ground, I do not feel that my duty calls upon me to start the objection, which certainly would have prevailed if it had been made. If a decree for foreclosure should be made, and the land should sell for more than enough to satisfy Bryce’s mortgage, the surplus would not belong to Fenton’s legal representatives, nor to his assignee — it should go to Stork and Bowers, and they are both parties before the Court. We have, then, all persons before the Court who have, or can have, any interest in the property, and substantial justice can be done. In a case like this, it would be a mere matter of form to make the legal representatives of Fenton parties to the cause.
    This case has been referred to the commissioner to report as to the mortgage, and the amount due thereon ; also, to report any special matter. In his report, the commissioner states the amount due upon the mortgage. He also reports the evidence as adduced by either party on the questions raised, and recommends that the whole amount due on the mortgage be paid by sale of the mortgaged premises.
    The defendants except to the report of the commissioner, on the ground that the lien of the mortgage was waived or lost by the plaintiff’s testator:
    1. Because the said John Bryce permitted his mortgage to fade away, and perish by lapse of time, so far as the defendants are concerned.
    Where there is a debt secured by a mortgage [be it of lands or chattels) which would be subject to the plea of the statute of limitations, or to the presumption of satisfaction arising from the lapse of time, but for promises, payments or other transactions between the mortgagor and mortgagee, keeping the debt alive as between themselves, will the lapse of twenty years protect a subsequent purchaser or mortgagee, affected only with implied notice, from the lien of the first mortgage? That is the question intended to be raised on this exception.
    After the lapse of twenty years, the debt due to Bryce was neither actually paid, nor was it subject to the presumption of satisfaction. Not a dollar of the principal had been paid; but the annually accruing interest was punctually paid up to a short period before' the death of both parties. Here is a third party claiming the benefit of a presumption which has been most completely rebutted. This is a doctrine which only applies as between creditor and debtor, and it seems to me absurd and unmeaning to apply it otherwise.
    A creditor has a debt secured by a mortgage as to which he is perfectly satisfied with the payment of the interest, or the performance of other conditions which the parties may agree on; he is content to let the principal remain unpaid; twenty years elapse; no presumption of satisfaction can arise as between the mortgagor and mortgagee, because of their agreement. But a third party, who is a subsequent purchaser or mortgagee; steps in and says: Though your debtor cannot claim the benefit of the presumption of satisfaction, I can; you advanced your money on the security of a mortgage which is admitted on all sides to be unpaid. I have laid out my money subsequently in the purchase of the same property, and though in this Court the doctrine prevails, prior in tempore potior est in jure, yet my equity is higher than yours. I purchased without notice of your prior claim, and therefore my claim should be preferred. The colloquy might be supposed to be further extended, by the mortgagee saying: I did give you notice in the way the law prescribes, and in the only way in which it was possible for me to have given you notice. I did not personally know you (as the case may be), or that you, among all the living sons of Adam, contemplated purchasing the lot of land covered by my mortgage; so, proceeding in the way the law directs, and the only possible way, I gave notice to all the world that my mortgage existed ; you had the implied notice, which is as strong and effectual where it exists as express notice, and much more easily proved. To this, the only response of the second purchaser would be an admission that he had notice, but he did not know that the debt was unsatisfied. In a case like the present, then, the complaint dwindles down to this: the second purchaser, knowing of the existence of the mortgage, did not know but that it may have been satisfied. How is such notice to be given ? To individuals ? That is absurd. In the newspapers ? That would be ineffectual. By the public registry ? Where is the law which requires a mortgagee to give notice by registry that a mortgage, otherwise outstanding and in force, is not satisfied ?
    But if the lapse of twenty years, after a bond debt secured by mortgage is due (though kept alive and of force as between mortgagor and mortgagee, by payments or acknowledgments), renders such mortgage inoperative, and defeats its lien as to a subsequent purchaser with only constructive notice, still, the facts of this case do not come up to the terms of the proposition. The debt of Fenton to Bryce was due 1st January, 1834. On the 1st January, 1854, it would have been subject to the presumption of satisfaction from the lapse of twenty years, but for the annual payment of the interest. On the 12th February, 1850, Fenton conveys the mortgaged premises to the defendant, Bowers. It wanted, then, nearly four years of the time necessary to create the legal presumption on which the defendant relied. If the doctrine were true, it does not apply in this case.
    It is proper for me to state, that I bear in mind the fact, that the legal question raised in this exception is pending before the Court of Errors in (Vright and Eaves, and others, and nothing that I have said here is to conclude my judgment when that ease shall come up for decision.
    2. That said Bryce did not give the defendant notice of his claim of lien on said lot, but stood by and saw him purchase, take possession and hold it for a number of years, without giving such notice.
    The language of this exception, I apprehend, is not intended to he taken in its literal sense. There is no pretence that Bryce actually stood by, and saw Bowers purchase, &c. The parties all lived in the same town, and hence it was inferred that Bryce was aware of the transaction between Fenton and Bowers, from the change of possession. But there is no evidence, inferential or other, that Bryce knew the terms on which Bowers held.
    3. Because the said Bryce did not take or accept payment of his mortgage out of the money raised and set apart in the hands of Davis for him, by Fenton’s deed of assignment, which was fully known and acquiesced in by the said Bryce.
    There is controversy about a large portion of the assets assigned. For a great part, they have not yet been realized, and perhaps never will be; there is litigation with the estate of Peay still pending about a large portion of the assets. Bryce was not bound to let go a better security for a worse. To compel him to do so would not be equitable. Besides this, why might not the creditors of Fenton, for whose benefit the assets were assigned, say to Bryce: “you have two liens or resources from which to satisfy your debt; do you, resort to your mortgage, under which we have no claim, and leave the assigned effects to us, which is our only resource.” What answer could be made to such a demand ? This' doctrine is never applied, except to the claims of creditors with liens. Bowers and Stork are purchasers, not creditors of Fenton. If they are creditors at all, they are only simple contract creditors — their claims arising under a breach of the covenant of warranty of title. But they are not claiming under the character of creditors.
    4. That the said Bryce, by taking from Fenton a negotiable promissory note for the amount of the mortgage, and giving him further time of payment from the 2d of April, the date of the note, to the end of ninety days thereafter, released and discharged said mortgage.
    The facts bearing on this exception are these: On the 2d April, 1855, Fenton made a note to Bryce for $500, payable at ninety days, which note was endorsed and discounted by Bryce at the Commercial Bank. It was stipulated by Bryce that if this note was paid by Fenton at its maturity, the mortgage should be delivered up to him satisfied. There was no contract that the note should be taken in payment or satisfaction of the mortgage, or that the time of payment should be extended; but simply if, or when, the note was paid, it should operate as a satisfaction of the mortgage. Though it may have been in violation of implied faith, there was nothing in the agreement which would, in law, have prevented Bryce from instituting process for the foreclosure of the mortgage the next day after the note was given. A note, though given for the same debt, is not a satisfaction of a pre-existing bond, or other specialty, unjil it is paid, unless there be a stipulation to that effect. Such was not the understanding of the parties to this transaction. It would be absurd to suppose a shrewd business man, or any one whose capacity was above that of an idiot, to have given up a debt amply secured by mortgage, for the simple note of hand of his debtor, known to be embarrassed, if not insolvent.
    There was nothing in the circumstances which attended (his transaction that would operate to the discharge of a surety, if there had been one to the note. But suppose that a surety, had there been one, would have been discharged? What had that to do with the case? Where is the analogy? The counsel for the defendant says, in his argument, that the mortgaged lot is the surety! I can understand how land may be a security, but how it can be a surety, passes my powers of comprehension.
    The exceptions to the report are overruled, and the report is confirmed. And it is ordered and decreed that the mortgage be foreclosed, and that the mortgaged premises be sold on the terms recommended by the commissioner in his said report — said sale to take place on the first day of January, 1859.
    The defendants appealed:
    1. Because the plaintiff should have made the legal representative of James Fenton, deceased, or at least Henry Davis, his assignee, a party defendant to his bill and proceedings in this Court, to foreclose his said mortgage. And not having made either the one or the other a party, the Court, according to its usage and practice, will not proceed to a decree in the cause.
    
      2. Because each and every one of the exceptions taken by the defendants to the report of the Commissioner, against the plaintiff's right and equity to foreclose his mortgage on the house and lot in question, was well founded and fully sustained by the pleadings and proofs, and, therefore, should have been sustained by the Court.
    
      Baushett, for appellant.
    
      Be Saussure, contra.
   The opinion of the Court was delivered by

Wardlaw, Ch.

The bill in this case is simply a bill for foreclosure of a mortgage, and does not seek payment of the debt from the defendants beyond the estate in their possession subject -to the plaintiff’s lien. The defendants never contracted, in any form, to pay the debt claimed, and it would have been absurd and unjust to pursue them nakedly for this purpose; but they acquired estate with implied notice of air existing lien upon it for satisfaction of plaintiff’s demand, and cannot complain of the enforcement of this limited right. In the first ground of appeal, defendants insist that the personal representative of the deceased mortgagor, or, at least, the assignee of his estate, by deed of the mortgagor in his lifetime, should have been made a party defendant. Personalty, in case of land, is the primary fund for payment of'debts,; and, as Courts of Equity delight to do complete justice, and not by fragments, as first to decree the liability of the heir or alienee of the realty, and then put him by another bill to claim reimbursement out of the personalty, they usually exact, to avoid circuity of action, that in suits concerning the bonds or covenants of one deceased, the executor or administrator, as well as the heir, devisee or alienee, shall be a party. Knight vs. Knight, 3 P. Wms., 333 ; Valk vs. Vernon, 2 Hill Ch., 256 ; Drayton vs. Marshall, Rice Eq., 373. Yet, Courts of Equity have not acted on this doctrine in bills simply for foreclosure; for, although a mortgage is a debt primarily charged on the personal assets, a mortgagee is not bound to involve himself in an intricate account concerning the personalty of his debtor, and may, at his option, pursue singly his real security, leaving the terre-tenant to his remedies for reimbursement. Duncombe vs. Hansley, cited by Mr. Cox, 3 P. Wms., 333 ; Coop. Eq. Pl., 38; Calv., Part. 167; Stor. Eq. Pl., 175, 176.

In some of the Euglish cases, and in our own case of Drayton vs. Marshall, a distinction is intimated as to the necessity of bringing the personal representative before the Court, between bills for foreclosure and bills for the sale of the mortgaged realty. In England, bills for foreclosure are usually brought to quiet the estates of the mortgagees, simply, by barring proceedings of the mortgagors for the equity of redemption; but here, as in the Irish Chancery, bills of foreclosure proceed for the sale of the mortgaged premises. Iin my judgment, so far as the making of parties is concerned., bills for foreclosure here stand on the same foot as in England. Certainly there is a great difference in procedure between barring the rights of the mortgagor and enforcing payment of the debt from the sale of the mortgaged premises; but the substantial result is identical, as in both instances the lien is enforced. It is precisely similar to the difference of practice as to partition and dower, always specific in England; here commonly by sale or assessment. Whatever may be the form of procedure as to foreclosure, the same propriety exists of exempting the mortgagee from the necessity aga-inst his option of intermeddling in the administration of the personalty. One having a ready remedy should not be delayed until the equities of all interested in the matter should- be adjusted. I expressed these views briefly in the circuit opinion in Wright vs. Eaves, Ms., December, 1858, and they were not disapproved by the Court of Errors, although my learned and expert associate, Chancellor Dunkin, did express some preference, that in addition to an administrator de bonis non, who w,as a party there, representatives of sureties of former administrations of the mortgagor’s estate should be made parties in order that complete justice might be done. That was a bill for foreclosure against the alienee of the mortgagor. In Scott vs. Davis, Ms., Columbia, December, 1856, I, 122, the representative was treated as an unnecessary party in a bill for foreclosure, on the principle of the case of Goodwin vs. State Bank, 4 Des., 389.

In this particular case it may not be necessary to rely on the general doctrine. The defendants do not demur for lack of parties, and so far from insisting on the necessity of making Fenton’s personal representative a party, they, by their averments, help the plaintiff, suggesting that Fenton died insolvent and intestate, and that no person has administered on his estate. This may be well considered as waiving any plea that an executor or administrator of Fenton should have been impleaded by the plaintiff; but in the same connection the defendants substantially insist that the assignee of Fenton should be a party. As to the assignee they cannot be considered as concluded by their answer. All of us concur in the conclusion that the assignee was not a necessary party, but there is difference among us in the process of reasoning, by which this result is attained. It is proper to avoid, so far as practicable, discussion of matters which may be hereafter litigated. If the plaintiff were in the first class of preferred creditors, whether he accepted or not the terms of the assignment, within the time limited, as the Chancellor supposed, then the defendants might have paid the debt and obtained an assignment of the mortgage entitling themselves to the same preference, or may be now entitled to subrogation to the rights of the mortgagee on payment of the debt,,and in this view the defence is, to a great extent, unfructual and fanciful, and should be disallowed as not formally pleaded. If, however, the assignment be interpreted as in trust for Ihe payment of such creditors as accepted its terms in proper time, then the plaintiff (or the defendants, if in any event his substitutes,) is not within the protection of the deed of assignment, and the assignee is a stranger, and consequently an unnecessary party. Personally I am not involved in this dilemma, for I believe on general principles that the mortgagee at his option may exclusively pursue his real security. On the other questions submitted, we consider argumentation unnecessary as they are authoritatively settled by the case of Wright and Eaves, above referred to, or are in themselves plain.

It is ordered and decreed that the Circuit decree be affirmed and the appeal be dismissed.

Johnston and Dun kin, CC., concurred.

Dunkin, Ch.

I should have more hesitation as to the propriety of calling in the assignee of James Fenton, if I thought that the mortgage to the plaintiff’s testator was protected by the assignment. But, according to the construction which I give to that instrument, the assignee was required only to pay off the existing liens on the property assigned ; and for the obvious purpose of enabling him (the assignee) to give a clear title to the purchasers. But the premises mortgaged to Bryce, constituted no part of the assigned estate, and, besides, in the eighth class of creditors, the note, subsequently given by Fenton for the mortgage debt, is specifically provided for; why, if already payable in class No. 1 ? But, as plaintiff’s testator never accepted the terms of the assignment, he would have no claim under this latter provision, and, therefore, no right to which the defendants could be subrogated.

Decree affirmed.  