Johnson Brothers & Co. v. Gabriel A. Taylor. JOHNSON BROTHERS & Co. v. GABRIEL A. TAYLOR. The right to set off one judgment against another can not be defeated by the plaintiff, in the later judgment, making an assignment of his expected judgment to a third party. SPECIAL TERM.-The facts sufficiently appear in the decision. E. M. Johnson, for plaintiffs. Worthington & Matthews, for defendant. SPENCER, J. The facts of this case are these: Morse & Coleman sued out an attachment against Benjamin F. Bruce, and gave bond, with Gabriel Taylor as surety, to indemnify the defendant in the attachment. On motion, the attachment was dissolved, but Morse & Coleman recovered a judgment in the action for $1,033.33. Bruce brought an action against Morse & Coleman and Taylor, on the attachment bond, in which Taylor alone was served with process, for improperly suing out the attachment, and recovered a judgment therein for $520. On the day when the verdict was rendered in this action against Taylor, Bruce made an assignment of the expected recovery to the present plaintiffs. The court, on application being made by Taylor and the other parties for a new trial, consented to grant the same, unless a remittitur was entered by the plaintiffs, which was done, reducing the verdict to $500, for which judgment was afterward rendered. Both judgments were rendered in this court. Subsequently a motion was made by Taylor, with the assent of Morse & Coleman, to offset the latter judgment against the former pro tanto. The motion was resisted by Johnson Brothers & Co., who claim as assignees of Bruce. The court, however, allowed the set-off, ordered the judgment of Bruce to be entered satisfied, perpetually stayed its collection, and ordered a credit to the amount of it (saving $100 allowed to the attorneys for obtaining it), to be entered on the judgment in favor of Morse Samuel Beresford v. Wm. Wallace Ward, et al. & Coleman against Bruce. This allowance, however, was granted, as expressed in the order, without prejudice to the rights of Johnson & Brothers under their assignment. I am not disposed in any wise to question the propriety of this order. Although the judgments were not strictly between the same parties, and could not, therefore, ordinarily form the subject-matter of a set-off, yet the parties (Morse & Coleman) entitled to receive the amount due upon the one, were the parties, as principals, primarily bound to pay the other. They were bound to shield Taylor from the payment of it, and had assigned to him in equity for that purpose. It was equitable and proper, therefore, as between these parties, that the one judgment should be set-off against the other. If this decision be correct, it settles the right also as against the present plaintiffs; and there can be no doubt that the set-off would have been allowed, without a reservation of their rights, had they been parties to the record, so as to be absolutely bound by the motion and order. Morse & Coleman had an equity to set-off the one demand against the other, it would not be defeated by an assignment to Johnson Brothers. The equity attached, eo instanti, there was a recovery against them, and the assignment to Johnson & Brothers could take effect no sooner. It was a chose in action of the kind which could not be assigned, either at law or in equity, until after it became a debt by the recovery, and the moment it became such a debt, the right of set-off attached. At this point of time, the assignor became subject to the equity of Morse & Coleman, and could not transfer a better right than he himself possessed. Judgment, therefore, will be rendered for the defendant. If SAMUEL BERESFORD v. WM. WALLACE WARD, ET AL. 1. Mortgage notes, whether for principal or interest, are to be paid from the mortgage fund in the order of the maturity of such principal, or interest. Samuel Beresford v. Wm. Wallace Ward, et al. 2. In case of a mortgage to A., securing two negotiable notes of same date and maturity-the one payable to A. and the other to B.-and the transaction shows that an equality between A. and B. was intended, then A. can not claim a superior equity as against C., who has become a bona fide purchaser of the note from B., without notice of such equity. 3. The vendor's lien for purchase-money is not waived by the taking of a mortgage on the premises, unless there are accompanying acts and cirstances showing an intent to rely exclusively upon the mortgage lien. SPECIAL TERM.-On motion to distribute the proceeds arising from a sale of mortgaged premises. The facts are sufficiently stated in the decision. Bates & Scarborough, for plaintiff. A. H. McGuffey, for J. L. Ross. Ball & Skinner, for Smith & Gilbert. SPENCER, J. The questions which arise in this case are presented upon a motion to distribute the proceeds of sale of mortgaged premises, on an order of this court. The facts, as admitted on the hearing, are these: Samuel Beresford, being the owner of the premises, contracted to sell them to Archibald Miles upon certain payments to be made by him, of which $2,000 remained yet to be made. On the - day of May, 1853, Miles sold them to Ward for the sum of $8,000, and Beresford made a warranty deed to Ward, conveying the premises to him for the consideration, as expressed, of $8,000. On the same day, Ward executed to Beresford a mortgage upon the same premises, in which it is expressed that the conveyance is executed to secure the payment of a portion of the purchase-money of the aforementioned lots." The condition of this mortgage was: "That if Ward should pay to Beresford, his heirs, or assigns, the sum of $6,000, with semi-annual interest thereon, according to the tenor of six promissory notes of even date, for $1,000 each, as follows: Two of $1,000 each, payable in two years from date, to the order of said Beresford; two of the same amount, payable 66 Samuel Beresford v. Wm. Wallace Ward, et al. in two years from date, to the order of Archibald Miles; and two of the same amount, payable in three years after date, payable also to the order of Miles-the said deed was to become void." Provided, also, that "if said Ward should cause to be paid to said Beresford, or Miles, or their order, the sum of $428.58 upon each, or any of the aforesaid lots, then as to such lot, or lots, the deed was to become inoperative, and the sum, or sums, so paid were to be credited to said Ward." Miles assigned both notes due in two years, before maturity, to the defendant, Ross, for full value, and who does not appear to have had any notice of any superior equity in Beresford. He also assigned the three year notes, before maturity, for value, to Smith & Gilbert, who are also holders without notice of Beresford's equity, except so far as the title papers themselves disclose it. The premises not being sold for enough to pay off all the debt, it is to be decided how the fund is to be apportioned, or distributed. At the time when the petition was filed, it was supposed that the fund would be sufficient to pay all the mortgage money, and therefore both petition and answers were framed with reference to that expectation, treating the parties as having no other claims than resulted from the mortgage itself. It having been ascertained, however, by the sale, that the security will be insufficient to pay all, or, in fact, to pay in the order that the notes become due, the plaintiff asks leave to amend his petition so as to set up his claim to a vendor's lien. The motion to amend is resisted by one of the defendants, on the ground that it comes too late. So long as the fund remains in court undisposed of, and the rights of the parties with respect to it remain unadjudicated upon, it is not too late to allow either party to present the entire equity of his case when justice requires it. The power of amendment under the code is liberally granted, and should be exercised, in furtherance of justice, whenever necessary, and where the just rights of others are not prejudiced by it. In this case the amendment will be allowed, so as to present the plaintiff's entire claim upon record. Samuel Beresford v. Wm. Wallace Ward, et al. The first question to be considered is, what are the rights of the parties as presented upon the mortgage itself, standing alone. Treating the instrument as a mortgage proper, it can not be doubted that under the decision in 13 Ohio, 240, The Bank of United States v. Covert, and others, it must be so applied, in the characteristic language of Judge Lane, as "to secure the gales first due❞—i. e., in the first instance, to pay the semi-annual interest due upon all the notes, prior to the maturity of any of them; the interest due upon the threeyear notes, up to the time of the maturity of the two-year notes, to share with them pari passu; and the notes due in two years to be first paid, in equal proportions, before any thing is applied on the three-year notes. It is claimed, on the part of Smith & Gilbert, that the rule laid down in that case is not applicable to the present, because it is said the instrument referred to is not a mortgage, but a deed of trust, and must therefore be so applied as to secure all the debts pro rata. Let the character of the instrument be what it may, in strictness of law, it was intended as a security merely, to operate by way of mortgage, and, like a mortgage, to be applied as the notes became due, and as their payment might require. It differs in every respect from an ordinary deed of trust, given to secure debts due to different persons, and payable at different times, when it may be supposed all expect to be placed on an equal footing. It purports to be a mortgage given for purchase-money, payable at different times, and as to which it necessarily establishes a right of priority in payment. On the other hand, it is claimed by the plaintiff, that the rule should not be applied as to him, because, as is said, he has a vendor's lien upon the premises, for his purchase-money, notwithstanding the mortgage. That in any event his equity was superior to that of Miles; and the defendants, who claim through Miles, can not occupy any better position than he could. I can readily suppose, that as between Beresford and Miles, it was not intended that the former should in anywise give way to the latter, until his whole |