Neidig v. Whiteford

Alvey, J., delivered the opinion of the court. There can be 110 question but that Neidig, by releasing the mortgage from Weddle, reciting payment of the mortgage debt, lost the benefit of the lien or charge created by that mortgage, although the mortgage debt may not, in fact, have been paid. And it is equally certain that the release is *not susceptible of parol explanation in order to connect the released mortgage with that subsequently executed by Lechlider to Neidig, of the same property, for $4,000, and thus to create an equity by which the latter mortgage may be allowed to overreach the judgment in favor of Whiteford, of the 24th of July, 1856, and take precedence of it in the distribution of the proceeds of the mortgaged property. By the release, the ¹⁸⁴ mortgagee lost the priority of lien created by the first mortgage, and the second mortgage must be postponed to all liens attaching to the property prior to its date.

Woollen v. Hillen, 9 Gill, 185 . If, therefore, Whiteford’s judgment created a valid lien, and remains unsatisfied, it takes precedence of Neidig’s mortgage, and is entitled to have, under the arrangement made by the insolvent trustee with the purchaser, the proceeds of sale of the mortgaged property applied to its payment. Upon this judgment two questions arise : 1st. What was the true character and object of the judgment ? and 2nd.

Whether it has been paid and discharged by the subsequent course of dealing between the parties thereto. ■ x. It is now settled that a judgment, as well as a mortgage, may be taken to secure future advances and liabilities when such is a constituent part of the original agreement under which it was entered; and any future advances, not exceeding the amount of the judgment made thereunder, will be covered thereby. The question, therefore, is, was there a definite and certain agreement entered into at the time of confessing the judgment by Weddle, that it was to secure future advances or balances on account between the parties? We think this question must be answered in the negative.

The judgment itself furnishes no evidence that such was its character and object. On the contrary, it would rather show that it was rendered to secure a then subsisting debt. It was for $3,500, with interest thereon from the day of its date. Weddle was, at the time of confessing the judgment,*indebted to Whiteford in or about the amount for which the judgment was rendered; and Weddle swears positively that it was not intended to secure future advances, or balances, but was given as collateral security for his then indebtedness to Whiteford.

And this is corroborated by the order filed on the 1st of September, 1857, whereby the parties stated, that on settlement of open accounts between them on that day they ascertained a balance of $1,466, to be due to Weddle, “ which is to be credited on the judgment for thirty-five hundred dollars, confessed by said James W. Weddle in favor of the said James Whiteford, for an antecedent indebtedness.” This paper was signed by both parties, and the judgment was released to the ¹⁸⁵ extent of $1,466, the amount then admitted to be found due to Weddle on settling accounts. If the judgment were really taken to secure future advances or balances, it would seem natural to suppose that the language of this order of the 1st of September, 1857, would have been different, and such as would have aptly characterized the judgment. It is true, Whiteford himself swears that the judgment was taken solely for the purpose of securing balances that might be ascertained to be due from time to time on account current. But his evidence, looking to his relation to these proceedings, cannot be allowed to outweigh all the other facts and circumstances of the case.

Besides, he is excepted to as an incompetent witness, and Neidig being dead, and his administratrix a party contestant of the claim, we think the exception well taken, under the Act of 1864, ch. 109; and his testimony, or at least so much of it as was elicited on his own examination, must, therefore, be excluded. And upon the whole evidence, legally before us, we fail to discover any thing sufficient to overcome the prima facie character of the judgment, the positive testimony of Weddle, and the other corroborative circumstances of the case. We conclude, therefore, that the judgment was intended only as collateral security for the indebtedness of Weddle to Whiteford at the time of its rendition. 2. Supposing the judgment to be so intended, and not to secure future advances, or balances on account, the question *then is, has it been discharged.

The amount for which it was rendered as security, was kept in the account, and there has been no reference made in ascertaining the balances to the judgment whatever. The account was a continuous one, commencing before the date of the judgment, and terminating in May, 1857. Large and numerous credits were entered in the account between the parties since the date of the judgment, amounting to many times more than sufficient to pay and extinguish the balance due on the account at the time the judgment was rendered. What is the effect of these credits, in the account, on the judgment?

The judgment was taken as collateral security only, and it follows, if the principal debt for which it was intended as security be paid, the judgment is functus officio, and is no longer capable of being enforced. This is the legal consequence. The question, therefore, resolves it ¹⁸⁶ self into one of application of payments. And in reference to the principle governing such a case as this, the law is clear.

The general rule is, that the debtor has the right, if he so elects, to make the application of payments in the first instance, and