Fernandez v. Tormey
Before: Britt
Synopsis
Mortgage—Indemnity—Assignment of Securities.—A mortgagee, whose mortgage purported to indemnify him against any loss which he might sustain on account of an assignment of securities made by him to secure a debt of the mortgagor to a third party, must have sustained actual loss, as distinguished from liability therefor, resulting proximately from the assignment, in order to vest him with any right of action upon the mortgage on account of such assignment. .
In.—Pledge—Title of Pledgor.—The securities having been assigned and held by way of pledge for the payment of the mortgagor’s note, the title of the mortgagee, as pledgor, was not divested merely by force of the assignment; and he cannot claim to have sustained loss, by reason of the assignment, to the extent of the face value of the securities.
Id.—Liability of Mortgagor—Face Value of Securities.—The mortgagor cannot be held liable for the face value of the pledged securities, there having been no sale thereof, and no agreement that the mortgagor should become responsible for their face value to the mortgagee, security therefor not being within the terms of the indemnifying mortgage, interpreted in the light of the surrounding circumstances.
Id.—Prospective Operation of Indemnity.—The natural import of a mortgage by way of indemnity is to indemnify against contingent loss not yet accrued; and agreements for indemnity are to be construed as having a prospective operation, when a different intent is not expressed.
In.—Action upon Pledged Securities—Conversion.—The action of the pledgee in suing upon the assigned securities, for the purpose of collecting the money due thereon, is lawful, and cannot constitute a conversion thereof by him.
Id.—Depreciation in Value of Securities.—The mere decline of the securities in market value, which is not attributable to the assignment thereof by way of pledge, and which so far as appears would have been the same had the assignment not been made, cannot be held as a loss for which the mortgagor is liable.
Id.—Enforcing Object of Mortgage—Parol Agreement.—The mortgagee can enforce the mortgage only to accomplish the object for which it was made; and where the terms of the mortgage properly interpreted, show that it was intended to indemnify against the consequences of a pledge, it cannot be enforced as securing some other and different engagement of the mortgagor resting in parol.
Id.—Note Accompanying Mortgage for Indemnity.—The fact that a note absolute in form purports to be secured by a mortgagee, which is expressly made by way of indemnity, is unimportant, and does not determine the liability of the mortgagor.
Id.—Delay of Pledgee $o Sue—Pleading.—The mortgagee canhot recover upon the indemnifying mortgage for loss caused by failure of the pledgee of the securities to sue earlier thereupon, without alleg ing and proving such loss.
BRITT, C. Suit to foreclose a mortgage executed to Bernardo Fernandez, the plaintiff, by defendant Patrick Tormey, on August 23, 1893. At that time the Union Stock Yard Company of San Francisco, a corporation, was indebted to Fernandez, in the sum of $50,742.12, to fall due, with accruing interest, on August 28, 1893; which indebtedness was evidenced by the-promissory note of a certain third person, a mortgage of lands-securing the same, and a contract in writing whereby said corporation had assumed and agreed to pay the amount unpaid on said note to Fernandez, and he had released the original maker thereof from personal liability thereon.
Said Tormey, having occasion to raise a considerable sum of money, borrowed $45,135.60 from one John A. Stanly, and $16,-000 from the Commercial Bank of Vallejo. On said August 23, 1893, the following transactions occurred at the office of said Stanly: Tormey and Fernandez—the latter acting for the accommodation of the former-—executed two joint notes, for the-sum of $8,000 each, to the said Commercial Bank, payable with interest one year from date, and to secure one of them Fernandez made to the bank a mortgage of land owned by him; as security for the other Fernandez and Tormey made a mortgage to the bank of lands owned by them as tenants in common; Tormey executed his note to Stanly for said sum of $45,135.60; and Fernandez made to one Henry Rogers a formal written as[517]si gum en t of the aforesaid note, mortgage, and contract of the stock yard company, he being informed that Eogers took the same as pledgeholder to secure the said note of Tormey to Stanly; Tormey also deposited with Eogers, for the same purpose, ■other evidences of debt to a large amount. At the same time and place Tormey made to Fernandez the note and mortgage on which the latter sues in this action.
It is first stated in this mortgage that for the purpose of securing payment of a promissory note dated August 23, 1893, copied at length, by which in terms Tormey promised to pay Fernandez the sum of $62,742.12 on or before two years after date, with interest, etc., the mortgagor mortgages to the mortgagee certain described tracts of land. It is then provided that “This mortgage and the note secured hereby are given to secure the said Fernandez against any loss which he may ever sustain by reason of the. transfer and assignment by him to Henry Eogers of” the aforesaid obligations of the stock yard company, particularly described; also, “to indemnify and save the said Fernandez harmless from any loss or liability which he may ever sustain by or on account of the execution by him” of said notes and accompanying mortgages for $16,000 to the Commercial Bank. It was further stated in the mortgage that said assignment to Eogers was given as security for the payment of Tor-me/s note to Stanly, and that said notes to the Commercial Bank were given for money advanced by the bank to Tormey. The mortgage was read to Fernandez and he made no objection to any of its provisions.
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