or remained in the mortgagee, there was no distinction, but an action might be brought for the difference. There seems, therefore, some reason to doubt the accuracy of the report in 2 Dick., 785. The case of Perry v. Barker afterwards came to a hearing before Lord Erskine (13 Ves. Jr., 197), who, after a full argument, decided that, notwithstanding a foreclosure, the mortgagee had a right to proceed on his bond; but that such a proceeding entitled the mortgagor to redeem, and if the mortgagee had previously sold the estate and could get it back, equity ought to allow him time for the purpose. It seems, however, to have been his lordship's opinion, that, if this could not be done, the mortgagee ought to be restrained from proceeding, and, under the peculiar circumstances of the case before him, he decreed a perpetual injunction.

We profess ourselves unable to comprehend the particular principles upon which in either case a court of equity proceeds to restrain a creditor from pursuing his remedy at law, when by the foreclosure he has not obtained a satis faction of his debt. We should have thought that natural justice, as well as the stipulations of the parties, would have been better subserved by allowing the creditor every remedy in rem and in personam, until his debt should be completely satisfied. If afterwards he should make an oppressive use of his power by attempting to obtain a double satisfaction, then, and not till then, the interposition of chancery by way of injunction would seem conscientious and salutary.

As little can we comprehend the ground on which, as in Dashwood v. Blythway, courts of equity have held that a suit on the attendant bond opens the foreclosure and lets in the equity of redemption. By such foreclosure the mortgagee obtains an absolute estate which, perhaps, may well be deemed a purchase at the full value of the land, if less than the debt, and if greater, at the amount of the debt. But why a personal suit to recover the deficiency of the land to pay the debt should change the nature or effect of a foreclosure has not yet been satisfactorily explained. It is rarely that a foreclosure can take place where the estate much exceeds the debt in value. Another purchaser is usually found, and a non-redemption, therefore, affords a pretty strong evidence of an inferiority in value. Besides, is it no inconvenience to the creditor to take land instead of his money? If, after the foreclosure, the estate should become materially lessened in value, the loss has never been deemed to be the mortgagor's. Why, then, should he derive benefit from an accidental rise in value, when he has been altogether in default? If, indeed, after a foreclosure, the mortgagee should come into equity to seek relief against the mortgagor, there might be some room to apply the maxim, that he who seeks equity must do equity. But in fact he only claims the exercise of his legal rights, secured to him by contract; and is then told that he must submit to retrace all his steps, or an injunction will bar his proceedings. And even if such a hard measure of justice were dealt out to the mortgagee while the property was in his own hands, it would seem not inequitable, when he had rightfully passed it to a purchaser, to hold him entitled to his personal remedy for all the pledge had failed to pay. That a sale after a foreclosure should be deemed so far a wrongful act as to draw after it the penalty of a perpetual injunction is a doctrine not easily reconcilable with the sound principles which govern contracts of this nature. We are happy to add that the opinions imputed by the better authorities to Lord Thurlow sanction the doctrines for which we contend. But whatever may be the effects attributed to a suit in personam after

a foreclosure, as to reviving the equity of redemption, such effects can be allowed in chancery only when it acts upon its own peculiar principles, unaffected by statutory provisions. In Massachusetts, where this mortgage was executed and enforced, and, of course, by whose laws it is to be regulated, the equity of redemption is limited to three years after possession obtained, and negatived afterwards by the express provisions of the statute. Stat. 1 March, 1799, ch. 77. The foreclosure, therefore, once complete, fixes the absolute rights of the parties, and no subsequent event can control or alter their legal efficacy.

To return: whatever may be the differences of opinion among the learned chancellors on other points, the foregoing examination abundantly shows that they all proceed upon the supposition that at law a foreclosure of the mortgage is no bar to an action on the attendant bond; and that equity alone can afford relief by acting on the conscience of the creditor, and decreeing a perpetual injunction. Sitting, then, in a court of law, we should have no difficulty, even if this were a case primæ impressionis, in holding that the plea is bad, and that the demurrer must be sustained. Our judgment would be, that upon principle the mortgagee must be entitled to recover on the note, in damages, the deficiency of the mortgaged property to pay the debt, calculating its value at the time of the actual extinction of the equity of redemption; and that, even admitting the foreclosure to be a purchase of the property, in no event could the purchase money be deemed to exceed the debt.

But this question has been solemnly adjudged in the state where this contract of mortgage was made and to be executed. In Amory v. Fairbanks, in 1793, the supreme court of Massachusetts decided, upon a special plea like the present, that the bar was bad, and the mortgagee entitled to recover the deficiency of his debt, notwithstanding the foreclosure. 3 Mass., 562. At the distance of fourteen years, this decision was cited and approved by the same court, and may now be considered as the settled law of that state. 3 Mass., 154. Such an authority, even if not binding on this court, is so conformable with principle and so highly respectable in itself, that it is not easy to shake its force.

It has been argued that the creditor might in Massachusetts have first sued his note, and levied his execution on the mortgaged estate at its appraised value, and thereby have avoided the ill effects of a foreclosure, if the estate was of less value than the debt, and that therefore there is less reason to hold him entitled to recover when he elects a foreclosure in the first instance. But is it quite certain that the mortgagee would in equity be allowed in this way to avoid the mortgage? And even if he might, still it might well admit of doubt how far such a proceeding extinguished his mortgage so as to let in other intermediate incumbrances and attachments on the estate. If the defendant's argument be correct, the election of a personal suit would amount to a waiver of the mortgage, whether the execution were levied on the mortgaged property or remained unsatisfied. Yet authority does not seem to countenance such a principle. See Bantleon v. Smith, 2 Binn., 146.

There are some other views of this case which, if the principal point admitted of doubt, might deserve consideration. The suit is upon a judgment of another state, and must have all the validity and conclusiveness here that it has there. See S Cranch, 29. If the plaintiff was bound by his election to foreclose the mortgage, that election had been made previous to the original suit and might have been pleaded in bar to it, and the neglect so to do cannot now be helped. If, on the other hand, the bar did not arise until after the election so made and an actual extinguishment of the equity of redemption, then,

by the law of Massachusetts, it was no defense against a suit on the judgment. On the whole we are of opinion that the demurrer is well taken, and that judgment on this plea must pass for the plaintiff. Plea adjudged bad.

§ 771. Application of payment upon judgment including mortgage debt.- Where a creditor obtains one judgment on several debts, some of which are secured by mortgage, and the execution is satisfied only in part, a court of equity will apply the moneys in the first place to the unsecured portion of the debt. Williams v. Reed, 3 Mason, 405, 417.

§ 772. Who may appropriate payments.- A mortgage debtor owing other debts to his mortgagee, aside from the mortgage debt, in making a payment may appropriate it to whatever account he pleases. But if he makes no appropriation, his creditor may apply it either to the secured or unsecured debt. If, however, neither the debtor nor the creditor makes any appropriation the court will apply it according to the equity of the case. Gordon v. Hobart, 2 Story, 243.

§ 773. A mortgagor, by charging himself as executor of the mortgagee with the amount of the mortgage note as part of the assets of the estate and settling his account on that basis, shows that he supposed the debt to be a valid one, and is a substantial admission of it in a suit by an administrator with the will annexed to foreclose the mortgage. But the inventory and the order of distribution in the probate court are not conclusive evidence that the note has been paid. Butterfield v. Smith, 11 Otto, 571.

§ 774. Change of debt does not affect the security.- A mortgage or other conveyance made as security for a debt evinced by a note or bond will operate as security for the same continuing debt, though the evidence of it be changed by renewal or otherwise. But if the security itself has been changed, and not the evidence of the debt, and a new mortgage has been executed in substitution for the first, the first thereupon ceases to have any validity or effect. In re Wynne, Chase's Dec., 227, 249.

$775. A mortgage or other like deed given as security for a debt will operate as a security for a continuing debt though its evidence be changed by renewal, etc. Ibid.

§ 776. If one deed of trust be substituted for another the older deed becomes invalid. Ibid.

§ 777. A mortgage is not extinguished by a decree in which it was recognized, the rate of interest increased, and the time of payment extended, that decree declaring that it was not to operate as a novation of the original mortgage or to "affect the validity of the same." Hunt v. Innis,* 2 Woods, 103.

§ 778. Proof of a mortgagee's whole debt against the estate of a deceased mortgagor does not extinguish the mortgage. Mortgagee may receive his dividend and enforce his mortgage lien for any portion of the debt remaining unpaid. Schuelenburg v. Martin, 1 McC., 348 (§§ 765-767).

§ 779. The title remaining in the mortgagee after payment of the debt is not sufficient to enable him to maintain a writ of entry or other suit at law against the mortgagor to recover possession of the mortgaged premises. Gray v. Jenks,* 3 Mason, 520.

§ 780. Payment of the debt extinguishes the mortgage.- Where the debt secured by the mortgage is extinguished, no matter how, the assignee of the mortgagor is entitled to the possession of the premises; and the mortgagee or his assigns, if in possession at the time, hold in trust for the benefit of the mortgagor and his assigns. Upham v. Brooks,* 2 Woodb. & M., 407, 416.

§ 781. A court of law will not permit an outstanding satisfied mortgage to be set up against the mortgagor. Yet the legal title is not technically released by receiving the money. This rule must then be founded on an equitable control exercised by courts of law over parties in ejectment. It would be contrary to the plainest principles of equity and justice, to permit a stranger who had no interest in the mortgage to set it up, when it had been satisfied by the mortgagor himself, to defeat his title. But if this stranger had himself paid it off, he would be considered as an assignee, and might use it for his protection. Peltz v. Clarke, 5 Pet.. 481,

483.

§ 782. In Louisiana a mortgage may be erased in a proceeding by rule in the nature of a petition. New Orleans National Bank v. Adams, 3 Woods, 21, 25.

§ 783. Recovery of deficiency. A mortgagee is entitled to recover in an action at law upon the mortgage debt the deficiency of the mortgaged property to pay the debt, calculating its value at the time of the actual extinction of the equity of redemption. Hatch v. White, 2 Gall., 152, 160 (§§ 769-770).

§ 784. Release of mortgage without surrender of note.- Where a note secured by mortgage has been passed to a third party, a subsequent release of the mortgage without the surrender of the note is void, upon the principle that the assignee of the note is entitled to

the security given for its payment, and that the assignment of the debt operates as an assignment of the mortgage. Dickinson v. Worthington, 4 Hughes, 430, 433.

§ 785. The release of a deed of trust to secure a note, which was executed by the trustee without authority from the holder of the note and without its payment, is not good in favor of a subsequent purchaser with notice. Insurance Co. v. Eldredge, 12 Otto, 547.

§ 786. Discharge obtained by fraud.— A cancellation of a mortgage by a trustee, obtained through the fraudulent representations of interested persons. cannot operate to abridge the rights of beneficiaries. McLean v. Lafayette Bank, 3 McL., 587, 625.

XIX. REDEMPTION.

SUMMARY — A rule of property; time allowed after foreclosure. § 787.- Rule of circuit court to allow commission to clerk, § 788.- Sheriff's certificate of redemption, § 789.- No redemption after expiration of time allowed, § 790.— Appeal within time allowed for redemption, 791.- Redemption of homestead by assignee in bankruptcy, § 792.— Amount payable to redeem from mortgagee who has paid prior incumbrances, § 793.— Redemption by junior pending foreclosure of prior mortgage, § 794.- Parties to bills to redeem, §§ 795– 799.

§ 787. A right of redemption after foreclosure, given by statute in any state, becomes a rule of property binding upon the courts of the United States sitting in such states; and the rules of practice of such courts must be made to conform to the law of the state so far as may be necessary to give full effect to the right. Therefore, a court of the United States sitting in Illinois and decreeing a foreclosure sale of land in that state should provide for a redemption according to the statute of that state. Brine v. Insurance Co., §§ 800-804. Followed in Orvis v. Powell, §3 1070-1072.

§ 785. The circuit court of the United States has power, by rule or otherwise, to require a party exercising the right of redemption given by statute, to pay to the clerk of the court one per cent. on the money received and paid out by him as redemption money. Blair v. Chicago & Pacific R. Co., § 805.

§ 789. A sheriff's certificate of redemption is not so far conclusive as to bar the redemptioner from showing that all the money had been paid and the whole property redeemed. Paige v. Smith, § 806.

§ 790. After the expiration of the time allowed by law to redeem land sold under a foreclosure decree, a bill of review to open the decree and reverse the decision will not be entertained. Burley v. Flint, § 807.

§ 791. If a party appeals within the time allowed for the redemption of land sold by judicial sale, he loses no right by not having paid or tendered the redemption money within the time limited. Mason v. Northwestern Ins. Co., § 808.

§ 792. The redemption of a homestead by an assignee in bankruptcy does not inure to the benefit of the bankrupt. Swenson v. Halberg, §§ 803–811.

§ 793. If a junior mortgagee has paid incumbrances for the protection of the estate, the person redeeming is required to add the amounts so paid to the mortgage debt, both because the estate is benefited to that amount and because the holder of the mortgage, by paying such incumbrance, is subrogated to the claim. McCormick v. Knox, $812.

794. A subsequent mortgagee, redeeming after a sale upon foreclosure, but before this is completed by the expiration of the time for redemption, becomes assignee of the mortgage and is entitled to interest at the rate it bore. Dodge v. Fuller, § 813.

§ 795. All persons having a legal interest in the mortgaged property, or in the mortgage, should be made parties to a suit to redeem. Dexter v. Arnold, §§ 814-820.

§ 796. Trustees invested with the legal estate, rather than the cestuis que trust, are the proper parties to redeem land held under a mortgage. Ibid.

$ 797. All the heirs of the mortgagor should be before the court in case of a redemption of a mortgage. Ibid.

§ 798. Heirs of the mortgagee are generally indispensable parties to a redemption of a mortgage. Ibid.

$799. In Rhode Island, where the mortgagee has never taken possession, the mortgage belongs to his personal representative, and in such case the presence of the heir may be dispensed with. Ibid.

[NOTES.-See §§ 821-836.]

265

BRINE v. INSURANCE COMPANY.

(6 Otto, 627-640. 1877.)

APPEAL from U. S. Circuit Court, Northern District of Illinois.

STATEMENT OF FACTS.- The insurance company filed a bill to foreclose a mortgage on land in Chicago. The grantors in the mortgage afterwards conveyed to Walker, who sold, but did not convey, to Ida R. Brine, who died, leaving as her heir Ida W. Brine. After selling to Mrs. Brine, Walker conveyed to Pearce, in order that $6,000 which Mrs. Brine owed him might be held by Pearce as security for a debt of Walker's to a bank. All the persons interested were made defendants. The final decree allowed the defendants one hundred days to pay the mortgage debt, and if not paid the master was instructed to sell the lot for cash. From this decree Ida W. Brine appealed.

§ 800. Interest coupons are distinct contracts, and when due and unpaid bear interest.

Opinion by MR. JUSTICE MILLER.

We will notice the errors assigned in their order. 1. The money borrowed of the insurance company was evidenced by a bond for the principal sum of $7,000, and the semi-annual interest by coupons attached to said bond; and the court allowed interest on such of these coupons as were due and unpaid; and this is asserted to be error. We have decided more than once in this court that such instruments are so far distinct contracts for the payment of money, that when they become due they bear interest, and may be sued on separately from the bond. Cromwell v. County of Sac, 96 U. S., 51. 2. It is objected that complainant was allowed in the decree premiums paid for insurance of the house covered by the mortgage. The deed of trust required the grantors to keep the property insured for the benefit of complainant; and, when they failed to do this, we think the sum paid by the trustee for such insurance is a proper charge, and a lien under the trust deed.

3. By reason of the conveyance of the lot to Pearce, after Walker had sold to Mrs. Brine, and received $5,000 of the purchase money, the appellant, her heir, insisted that, before final decree in favor of the complainant, the right to the equity of redemption under the trust deed should be ascertained and settled by the court, as between her and Pearce, in order that, if she paid the insurance company's debt, she might know what she was getting for it. For this purpose she made application to be permitted to file a cross-bill; but she did not pay, or offer to bring into court, for the use of the company, the money which was due on the mortgage. The court refused to delay the decree in favor of the complainant for this purpose, but by the decree allowed any of the defendants to pay the money found due within a hundred days, and thus prevent the sale; and it also ordered that, if the lot sold for more than the debt, interest and costs, the excess should be paid into court. The rights of these parties to the surplus could then be litigated.

In this we are of the opinion the court did precisely what equity and equity practice required. The complainant's debt was due and was undisputed as a lien on the lot paramount to all others; and the complainant had no interest in the controversy between appellant and Pearce, and should not have been delayed until the end of a long suit for a specific performance, which could not affect the right of the complainant to have its money out of the lot. While these errors are pointed out by the counsel for the appellant in his brief, but little is said about them; and in the full and able arguments, oral and printed,