and the grantee, the latter is the princ.pal debtor, and the grantor is his surety, and the creditor or mortgagee, being entitled upon equitable principles to the benefit of all collateral securities held by his debtor, may resort by way of equitable subrogation to the covenant of the purchaser or grantee with the mortgagor. Willard v. Worsham, 76 Va. 392; Osborne v. Cabell, 77 Va. 462; Ellett v. McGhee, 94 Va. 377, 26 S. E. 874. See the title SURETYSHIP. A mortgage creditor by releasing a levy on property of a grantee of the mortgaged premises, who has assumed payment of the mortgage debt, releases to the extent of the value of such property the mortgagor and his sureties, and in an action for deficiency an account concerning such property is properly directed. Francisco v. Shelton, 85 Va. 779, 8 S. E. 789. But where the purchaser was adjudicated a bankrupt, and at sale of some of his lands the trust creditor was purchaser of some and bidder for others, and court below directed an account of value of such lands and injury by such bidding, it was held, error. Francisco 7. Shelton, 85 Va. 779, 8 S. E. 789. Limit of Purchaser's Liability. The limit of the amount which a mortgagee may recover of the grantee of a mortgagor who has conditionally assumed the payment of the mortgage debt, is the amount which the mortgagor could recover of such grantee if he had paid the debt and then sued the grantee for it. There being no contract between the mortgagee and the grantee, the mortgagee is only entitled, by way of equitable subrogation, to resort to the covenant of the grantee with the mortgagor for the payment of the mortgage debt, and stands in the mortgagor's shoes, and is substituted to his rights and remedies, and none other. Ellett v. McGhee, 94 Va. 377, 26 S. E. 874. (4) Effect of Failure of Title to Property Conveyed. secure his debt. H. sold the land to S. who gave bond to B. for less than B.'s debt, which bond B. accepted to he, when paid, in discharge of his debt. Title proved defective, and S. had to relieve it of an encumbrance and incur costs of suit in defense of title. B. had made no misrepresentations as to the title and no guaranty thereof. In suit by S. against B., it was held, that the acceptance of the bond did not discharge B.'s trust deed. B. is under no liability to indemnify S. against either the encumbrance or the costs. Stimpson v. Bishop, 82 Va. 190. A negro man being conveyed by deeds of trust to secure debts amounting to more than his value, the grantor sells him, and the purchaser pays to one of the cestuis que trust part of the purchase money, and executes to the other his obligation for the residue, payable some months afterwards. The grantor makes to the purchaser a bill of sale of the negro as a slave, and therein warrants and defends the title to him against the claims of all persons whatsoever. The cestuis que trust do not join in the bill of sale, or warranty, but, by the arrangement, their liens on the negro are relinquished to the purchaser, and the payment made by him to one of the cestuis que trust, and the obligation executed by him to the other, discharge the grantor's debt to them pro tanto. It turns out that the negro so purchased is a free man; and judgment being obtained at law against the purchaser upon his obligation, an injunction is awarded him. It was held, that the purchaser can have no relief against the cestuis que trust, and the injunction is therefore dissolved, and the bill dismissed. Findlay V. Hickman, 10 Leigh 354. (5) Effect of Usury in Debt Secured. A having executed his bond, and B being bound as his surety for the debt, to C, mortgages property to B to indemnify him against this suretyship, B. held trust deed on H.'s land to and then sells the mortgage subject to D, he undertaking to pay the debt to C; then C brings suit at law on the bond against A, who pleads usury, but C recovers judgment; and then files a bill in equity against A, B and D, to have satisfaction of the debt out of the subject mortgaged by A to B, and then sold by A to D; the debtors, A and B, say the debt is usurious, but insist, that the purchaser, D, is bound to pay it. It was held, that D. is bound to pay the debt, and the mortgaged subject in his hands shall be subjected to the satisfaction of it; that the answer of A and B is not evidence of the usury for D; and that it is not competent to D to set up the objection of usury practiced on A. Crenshaw v. Clark, 5 Leigh 65. tee so as to defeat mortgagee's right against the latter on his promise to pay the debt. Willard v. Worsham, 76 Va. 392. Certainly where the release is without consideration, and is plainly and palpably designated for no other purpose than to defeat a recovery against the grantee of the claim, the release, however effectual as between the parties, is invalid as to the mortgagee. Willard v. Worsham, 76 Va. 392, 401. d. Enforcement of Purchaser's Liability. Jurisdiction-Whether at Law or in Equity. It may be that the mortgagee not being a party to the agreement between the mortgagor and purchaser can maintain no action at law, but he Generally, as to defense of usury, has a remedy in chancery, where all see the title USURY. (6) Assumption of Part of Debt. the parties may be convened and the matter closed. Willard v. Worsham, 76 Va. 392. Ellett v. Mc In 1859, S. sold to C. for $15,000 cash Venue. A mortgagee may sue the one-half of Hygeia Hotel, and they became partners in running it. Sale was grantee who has assumed the payment subject to debt of $5,000, secured to of the mortgage debt, to recover the W. by deed of trust on hotel, this debt balance of the mortgage debt, after S. and C. agreed should be paid by crediting the net proceeds of the mortthem equally and jointly. It was in gaged property, in the jurisdiction in four installments-first was paid by S. which the grantee resides, although it before sale to W.; second and third be other than that wherein the mortwere paid by S. and C.; fourth remains gage was foreclosed. unpaid. The hotel was destroyed in Ghee, 94 Va. 377, 26 S. E. 874; Tatum 1862 by federal orders. S. became and". Ballard, 94 Va. 370, 26 S. E. 871. Decree against Purchaser in Proceedremains insolvent, and in 1864, without consideration, released C. from all lia-ing to Foreclose. The rule seems to bility on the agreement to pay W.'s be settled that where a mortgagor has debt. On bill in chancery to collect sold the mortgaged property, and his this installment from S. and C., it was vendee has assumed to pay the mortheld, that C., as grantee of half the gage, a decree in his suit to foreclose trust property, assumed payment of the mortgage can be rendered directly half the trust deed debt as part of the against such purchaser, or his vendee, consideration, and became personally who has also assumed its payment, in liable to W. Willard v. Worsham, 76 favor of the mortgagee, for any balance that may remain due after the mortgaged subject purchased by such vendee has been sold, and the proceeds applied to the payment of the mortgage. Fisher v. White, 94 Va. 236, 26 S. E. 573; Osborne v. Cabell, 77 Va. 462; Willard v. Worsham, 76 Va. 392; Whitlock v. Gordon, 1 Va. Dec. 238, Va. 392. c. Release of Purchaser by Mortgagor. It seems that where grantee assumes payment of the mortgage debt for the indemnity of the mortgagor, and not for the better security of the mortgagee, the grantor can not release gran Va. Law Jour. 1877, p. 370; Watkins v. remedies against O., and therefore C. Dupuy, 87 Va. 87, 12 S. E. 294. has none. As against B., C. has a diBut in order to warrant a decree rect claim, founded on B.'s covenant against a purchaser of the mortgaged to him to pay the trust debt. As premises who has assumed the mort- against H., C. is substituted to B.'s gage debt, such relief must be prayed rights and remedies, which would apfor in the bill to foreclose. Fisher v. pear to be complete. C.'s claim against White, 94 Va. 236, 26 S. E. 573. O. did not become a personal one, because there was no consideration moving to O. from H. Osborne v. Cabell, 77 Va. 462. When there is an unbroken chain of liability upon each purchaser to his immediate grantor, there may be a decree in the first instance against the person ultimately liable; but if there be noth- XII. Assignment of Mortgages ing due, under their agreement, from or Deeds of Trust. the ultimate purchaser to his immediate A. WHAT CONSTITUTES AN ASgrantor, neither the latter nor the credSIGNMENT. itor can recover against him. Osborne 1. Assignment of Debt Secured. v. Cabell, 77 Va. 462. The rule is well settled that both In 1860, C. borrowed of L. $2,853.08, deeds of trust and mortgages are reand executed bond secured by trust garded in equity as mere securities for deed on lot in R. In January, 1862, C. the debt, and whenever the debt is asconveyed lot to B. for certain sum cash, signed the deed of trust or mortgage is and his assuming the trust debt. In assigned or transferred along with it. November, 1862, B. conveyed lot to Machir v. Sehon, 14 W. Va. 777, 783; H. for certain sum cash, and his as- James v. Burbridge, 33 W. Va. 272, suming the trust debt. In 1865, agree- 276, 10 S. E. 396, 397; Tingle v. Fisher, ment was executed between H. and O. 20 W. Va. 498; Camden v. Alkire, 24 for adjustment of all claims between W. Va. 674, 680; Hale v. Pack, 10 W. them, and in pursuance thereof H. con- Va. 145; Jenkins v. Hawkins, 34 W. Va. veyed lot to O. for $1,000, and his 799, 12 S. E. 1090; Thomas v. Linn, 40 promise to pay the trust debt. H. W. Va. 122, 20 S. E. 878; Stimpson v. failed to perform his part of the agree- Bishop, 82 Va. 190; Schofield v. Cox, ment, and continued indebted to O. in 8 Gratt. 533; Glaize v. Glaize, 79 Va. the sum of $3,000. The trust debt re- 429; Augusta Nat. Bank v. Beard, 100 maining unpaid, L. sold lot for Va. 687, 694, 42 S. E. 694; Gwathmeys $1,566.65 net, which was credited v. Ragland, 1 Rand. 466; McClintic z. thereon, leaving balance unpaid of Wise, 25 Gratt. 448, 449. $1,402.25, as of 4th September, 1867, which C. pays. In 1875, C. institutes chancery suit against B., H. and O. At hearing, circuit court decreed against O. for that balance. On appeal it was held that the failure of H. to perform his agreement with O., absolved O. from his promise to pay the trust debt. C. stands in H.'s shoes, and is substituted to the rights and remedies of H. against O., and nothing more. But as H. failed to perform his agreement with O., and on that account remained indebted to O. in the sum of $3,000, H. has no rights and In 1859, R. and wife owed J. $2,000, secured by trust deed on steam mill and land. In 1861, R. and wife sold mill to A. for $1,128.76, and R. and wife, J., and C., the trustee, conveyed it to A., who reconveyed it to C. in trust to secure his bond, payable to Mrs. R., for the price. Later, in 1861, J., being indebted by note to G. in $3,893, by writing assigned to G. certain bonds and $1,145.85 out of the debt of R. and wife to J., making $3,969.11. G. delivered to J. his note and paid the $76.14 excess. In 1879, at J.'s instance, C. advertised the land for sale. G. filed his bill, praying the court to administer the trust and apply the proceeds to balance due him. J. answered, denying that any interest under that deed had been assigned to G. The written assignment on its face was ambiguous. The testimony taken was unsatisfactory and contradictory. The court below decided for G. On appeal here it was held, that the assignment entitled G. to $1,145 out of the entire debt of R. and wife to J., and to that extent to the benefit of all J.'s securities, including the trust deed on the land. Glaize v. Glaize, 79 Va. 429. 2. Payment of Mortgage by Third Per son. son for about half its value with the fraudulent purpose of hindering, delaying and defrauding his creditors. A deed of trust is executed at the same time to secure the payment of the bond for the purchase money, which bond is assigned to a third person. The trustees in the deed of trust advertise the land for sale, and a creditor of the father at the time of the conveyance to the son obtains an injunction to prohibit the sale of the land by the trustee. It was held, that the injunction ought not on motion be dissolved, whether the third person, to whom the bond was assigned, was or was not a party to the fraud. Beall v. Shaull, 18 W. Va. 258. See the title FRAUDULENT AND VOLUNTARY CONVEYANCES, vol. 6, p. 540. b. Right of Assignee Claiming through Where the mortgage is paid by a third person, this does not constitute an equitable assignment of the mortgage, nor can a mortgage creditor be compelled to assign the debt and the mortgage upon receiving payment; all If a lien creditor, standing in the that can be required of him is an ac- position of a subsequent purchaser for quittance and release. The exception valuable consideration without notice, to this rule, if it can be so termed, is transfers his debt to an assignee, who found in those cases where the party had notice of a prior unrecorded deed, making the payment occupies the posi- such assignee will hold such debt from tion of surety for the debt, or is in such unrecorded deed in the same mansome way personally bound for its pay-ner as his assignor was entitled to hold ment. Such a person may, in equity, the same. Cox v. Wayt, 26 W. Va. require an assignment or transfer not only of the mortgage itself, but of all the securities held by the creditor for his protection and indemnity; and although no such assignment of transfer is actually made, a court of equity will treat it as done. Gatewood v. Gatewood, 75 Va. 407. See the title SUB ROGATION. 3. Conveyance of Mortgaged Property by Mortgagee. Conveyance by mortgagee is an assignment of the mortgage, and passes mortgagee's interest. Turk v. Skiles, 45 W. Va. 82, 30 S. E. 234. B. EFFECT OF ASSIGNMENT. 1. Rights of Assignee. 807, 809. c. Rights against Assignor. (1) Recovery for Deficiency upon Sale of Mortgaged Property. A purchased real estate and in part payment assigned B's bond and mortgage with the proviso that if B failed to pay and A paid, then the assignment should be void. The assignee sold the mortgaged property, but the sale did not realize a sufficient sum to pay the bond. It was held, that in the absence of an agreement to the contrary A was liable for the balance of the debt. Peay v. Morrison, 10 Gratt. 149. In order for the assignee to recover from the assignor he must exercise a. Effect of Fraud between Immediate diligence in enforcing his claim against Parties. the principal debtor. If he is guilty A deed is made from a father to his of laches or unreasonable delay, he will not be entitled to relief against the out consideration, and had been given assignor. Payne v. Huffman, 98 Va. and taken with the intent to hinder, 372, 36 S. E. 476; Atherton v. Hull, 12 delay, and defraud the creditors of the W. Va. 170. See the title ASSIGN- mortgagor, and was so held in a suit MENTS, vol. 1, p. 745. to foreclose, of which the assignor had Jurisdiction.-A. institutes a suit in notice, and was therefore wholly worthchancery, for the purpose of compell-less to the assignee. It was held that ing the execution of himself of a deed such assignee is entitled to recover back by trustee for land sold under a deed the sum with its interest, paid for the of trust, and to have a decree over assignment. Robinson v. Welty, 40 against the administrator of the first W. Va. 385, 22 S. E. 73. assignor (there being two), of the bonds secured by said deed of trust, for the unpaid balance due on said bonds, and the bill makes defendants, the trustee, the administrator of the first assignor, and also the second assignor. It was held, that chancery has jurisdiction of the cause; and that § 16 of ch. 99 of the Code in such a case does not affect the jurisdiction. Atherton v. Hull, 12 W. Va. 170. It is not a good defense for an assignor to aver and prove that if the assignee, the plaintiff in the suit to foreclose, had set up, by way of confession and avoidance, the fact that he was a bona fide assignee for value, without notice of the fraud rendering void the mortgage as against the creditors of the mortgagor, it would have been held good in his hands, and allowed. Robinson v. Welty, 40 W. Va. 385, 22 S. E. 73. Action for Recovery.-Where an assignment is made of an invalid mortgage, the assignee may recover back the consideration paid on a special count in general indebitatus assumpsit, setting forth specially the facts creat consideration of the promise. Robinson v. Welty, 40 W. Va. 385, 22 S. E. 73. It may also be recovered back, on the common count in general indebitatus assumpsit for money had and received, accompanied with a sufficient bill of particulars. Robinson v. Welty, 40 W. Va. 385, 22 S. E. 73. (2) Recovery Back of Consideration Paid for Void Mortgage. Right to Recovery. A party buys and takes a conveyance of certain real estate from a second party, who is insolvent. The real estate is subject to three mortgages and a judgment lien. The first party, for the purpose of making the liability, and averred as the ing a proper application of the purchase money, and in order to control and thereby clear off the charges and liens, having made known to a third party, one of the mortgagees, his object, takes from him a separate written assignment of one of the mortgages and the negotiable note payable to his order, not yet due, thereby secured, which was not indorsed; and the first party was ignorant of the facts, but was induced by the false and fraudulent representations of the third party, the mortgagee, who knew that the mortgage was fraudulent and voidable, to believe, and did believe, that the mortgage of $2,000 was a valid and subsisting charge to the extent of $1,203.82, which sum he paid the mortgagee for the assignment, when in fact, and to the knowledge of the third party, the mortgage was wholly with d. Enforcement of Mortgage. Recovery of Land in Ejectment.— See the title EJECTMENT, vol. 4, p. 890. Subjection of Land to Debt.-An assignor of a bond secured by a deed of trust upon land, the assignment being absolute, is not a necessary party in a suit by the assignee against the vendee of the obligor, to subject the land to satisfy the debt. Omohundro v. Henson, 26 Gratt. 511. |