Mortgage, Of real estate.
Where the defeasance clause in a mortgage of real estate reads, "that if the grantor . . . shall pay . . . two thousand dollars . . . in one year from this date, with interest . . . at the rate as stated in a note of even date and given herewith, (together with any other liability or liabilities, direct or indirect of the grantor or either of them, to the holder or holders hereof, due or to become due, or which may hereafter be contracted) . . . then this deed, as also a promissory note of even date herewith . . . shall be void," and the mortgagor, after the giving of the mortgage, borrowed other moneys of the mortgagee, for which he had given a note further secured by collateral, the mortgagee, after a default and a sale in foreclosure of the mortgage, is not required first to apply the proceeds of the sale to the payment of the note for $2,000, but may apply them first toward the payment of a balance remaining due on the second note after the sale and application of the collateral which secured it, and then may maintain a suit for a balance still due on the note for $2,000 against one who with the mortgagee's knowledge had indorsed it for accommodation, but who was not a party to the second note.
WAIT, J.
The law of this case is settled by Richardson v. Washington Bank, 3 Met. 536, Wilcox v. Fairhaven Bank, 7 Allen, 270, Fall River National Bank v. Slade, 153 Mass. 415, and Boston Safe Deposit Trust Co. v. Manning, 211 Mass. 584. The case differs entirely from Fitcher v. Griffiths, 216 Mass. 174, and from. Ricker, v. Ricker, 248 Mass. 549.
The contentions of the defendant rest throughout on a misapprehension of fact. The mortgage held as security for the note in suit was not made, as she contends, "for the sole purpose of securing the note." Its condition recites that if the grantor . . . shall pay . . . two thousand dollars . . . in one year from this date, with interest . . . at the rate as stated in a note of even date and given herewith, (together with any other liability or liabilities, direct or indirect of the grantor or either of them, to the holder or holders hereof, due or to become due, or which may hereafter be contracted) . . . then this deed, as also a promissory note of even date herewith . . . shall be void"; and thus makes clear, since it is the condition of the mortgage referred to in the margin of the note in suit, that the security may apply, and in terms is made applicable, to other indebtedness of Frederick C. Hitchcock, then or thereafter existing.
The cases cited establish that the creditor in applying the proceeds of foreclosure as it has done, was wholly within its rights. The defence fails; and the order must be that a final decree be entered for the plaintiff in accordance with the terms of the report.
So ordered.