Opinion
02-24-1894
JOHNSON v. CLARKE et al.
Nelson Y. Dungan, for complainant. H. B. Herr and J. N. Voorhees. for defendants Hildebrant and Hoffman. Henry A. Fluck, for defendant Greendyke. Paul A Queen, for defendant Sutton.
Bill by William Y. Johnson, receiver, against James S. Clarke and others. Dismissed.
Nelson Y. Dungan, for complainant. H. B. Herr and J. N. Voorhees. for defendants Hildebrant and Hoffman.
Henry A. Fluck, for defendant Greendyke. Paul A Queen, for defendant Sutton.
BIRD, V. C. The complainant, who is the receiver of an insolvent bank, presented this bill to foreclose a mortgage, which, together with the bond therein referred to was given to secure the bank for advances made to the defendant Clarke. In compliance with the understanding at the time of the execution and delivery of the bond and mortgage, a loan was made to Clarke, of $2,382.59, upon his note, which was indorsed by J. N. Pidcock. This note went to protest. The receiver found this note and the said bond and mortgage among the assets of the bank. After the riling of the bill, J. N. Pidcock made a draft for $1,766 upon his son, John F. Pidcock, and delivered it to the receiver, with the directions that that amount was to he appropriated to the payment, to that extent, of this note. The draft was presented to John F. Pidcock, who thereupon gave his certified check to the receiver, upon the agreement that the receiver was to assign to him the bond and mortgage, and should allow the proceedings in this suit to be conducted to a decree in his (the receiver's) name. Such an assignment was made by the receiver. The receiver, however, re">tained, not only the possession, but the ownership,of the said note, for the purpose of collecting the halance, if possible, from the maker or indorser. The amount of $1,766 was indorsed upon said note as payment to that extent.
These facts show, first, that the complainant has no longer any interest whatsoever in this suit, and that as to him the bill, under the practice of this court, must be dismissed. If John F. Pidcock has any interest therein,—not being a party complainant, and not having taken the proper steps to establish his interest upon the record,—of course, as to him, it cannot stand. See Fulton v. Greacen, 44 N.J.Eq. 443, 15 Atl. 827; Smith v. Davis, (N.J.Ch.) 19 Atl. 541.
These facts show, secondly, that the debt which was manifested by the note was actually discharged, to the extent of the $1,766, and that the lien of the mortgage was consequently, to that extent, at least, if not absolutely, discharged. At all events, they show that John F. Pidcock, the assignee of the bond and mortgage, took nothing of any value, from a legal or equitable standpoint, because he took no interest in the note itself, which was the principal thing, nor in any part thereof. When a debt is discharged, all securities connected therewith are necessarily released. So, too, when instruments which are merely incidental to the principal are assigned without the principal or any interest therein, such assignments confer no rights, as against the holder or maker of such principal. It would be quite absurd to say that in such case the holder of the evidence of a debt, who is also the holder of collateral securities, could separate or divide the obligation in such a manner as to subject the debtor to two prosecutions for the same debt. This would manifestly be the case if he could assign any rights in such securities, for in such case the holder of the securities could prosecute thereon, and the holder of the principal evidence of indebtedness could also prosecute. It is plain, therefore, that without the assignment of the debt, which is but the evidence thereof, the assignment of the securities confers no rights. Stevenson v. Black, 1 N.J.Eq. 339; Bolfes v. Wade, 4 N.J.Eq. 459; Den v. Dimon, 10 N.J.Law, 156; 1 Jones, Mortg. 804, 806, 840. So far, I only speak with reference to the rights of John F. Pidcock, to whom it is alleged that the said bond and mortgage (but not the note which they were given to secure) were assigned. The assignment itself not having been produced, I can make no reference to any other interests, beyond the facts which were either proved or admitted as above. But with respect to J. N. Pidcock, the indorser upon the note which was secured by the mortgage in question, it may be said that the pleadings and proofs establish that he became the owner in fee of the equity of redemption covered by the mortgage, and that he gave a draft upon the said John F. Pidcock for the said $1,766, which was indorsed upon the note, as above mentioned. The receiver took this in satisfaction of the lien of the mortgage upon the premises; he stating that he did so because he supposed it was the full value of the premises. If this payment was made with the understanding between J. N. Pidcock and the receiver that the premises should be discharged, then, of course, the mortgage can have no vitality; and, if it be true that J. N. Pidcock paid the $1,766, then, he being the owner of the equity of redemption, the mortgage is discharged pro tanto. Bolles v. Wade, 4 N. J. Eq. 459; Bank v. Barrows, 30 N.J.Eq. 93; Traphagen v. Lyons, 38 N.J.Eq. 613, 616. I will advise that the bill be dismissed, with costs to each of the answering defendants.