Sixth Ward Building Ass'n, No. 5 v. Willson

Miller, J., delivered the opinion of the Court. It appears from this record that Benjamin Price and William (1. Price executed seven mortgages of leasehold property to the appellant. Three of them purport on their face to have been executed and acknowledged on the 20th of January, 1872, with the proper affidavits of the mortgagee, but they were not recorded until the 4th of January, 1878.

The other four purport to have been executed on the 13th of September, 1872, but no affidavits were made to them and the acknowledgments were not complete in form nor signed by the magistrate. In this condition they were recorded, also on the 4th of January, 1873, but the mortgagee subsequently withdrew them from record, made the affidavits to them and procured the certificates of acknowledgment to be perfected by the magistrate, and had them again recorded on the 18th of January, 1873. On the 3rd of January, 1873, the day before either of these instruments were recorded, the Prices executed a deed of trust of all their property to Willson, with power to sell the same and divide the proceeds amongst all their creditors, and this deed was recorded on the day of its date. ⁵¹⁰ The trustee proceeded to advertise the property embraced in these mortgages for sale, the advertisement stating the sale would be made under and by virtue of this deed of trust. The appellant, then on the 23rd of January, 1873, filed its bill against the trustee and the Prices, for an injunction to restrain this sale, and praying that the defendants may be compelled to execute such papers as may be necessary to perfect the complainant’s title under these seven mortgages, and that the mortgagee may be declared to have priority and preference over the deed of trust and for general relief.

After the injunction had been granted, .the trustee and the two Prices filed their answers in which they severally insist upon the invalidity of all these mortgages, and aver that the three first mentioned were executed and delivered in November, 1871, and that the dates in them ■ and in the certificates of acknowledgment have been fraudulently altered to their present form, and that the.four last mentioned were executed and delivered about the 12th of March, 1872, and that the dates now appearing in them were also inserted long after their delivery to the complainantand they further aver that all of them are inoperative and void as against the creditors of the grantors in the deed of trust, and that in respect thereto, the Building Association,-the mortgagee, stands only in the position of an ordinary unsecured creditor. The parties then entered into an agreement, that the trustee should proceed to sell under his advertisement, and that such sale should pass to the purchaser all the title of all the parties to this suit, and that the proceeds after payment of expenses shall be brought into Court to be substituted in the place and stead of the property, and to await final decree and distribution, the rights of all the parties to the suit being transferred from the property to the proceeds, and all the parties to have the same rights against the proceeds that they might have against the property. Upon this the trustee proceeded to sell and re ⁵¹¹ ported his sale to the Court, and the auditor thereupon stated an account showing that the net proceeds, after paying expenses and a prior mortgage which the parties agreed should be deducted therefrom, amounted to 01178.28, and this sum was deposited in Court in pursuance of the agreement above stated. The cause was then referred to the auditor under another agreement to state an account distributing this fund, and to take testimony, and that the cause shall be determined on the pleadings and testimony so taken and the account or accounts so stated, the parties to have the right to except to the testimony and accounts in the same manner as if the same had been taken and stated in the usual course.

Under this agreement the auditor took testimony relating mainly to the alteration of the dates of the mortgages, and then stated two accounts, one awarding the fund to the trustee to be distributed under the deed of trust, and the other to the mortgagee, but recommended the adoption of the former. As to the question of fact thus presented, we are of opinion upon a careful examination of the testimony that it fails to establish such a fraudulent alteration of the dates as to render the mortgages void for that reason. In this we agree with the appellant’s solicitor, but the other positions which he lias taken and argued with much zeal and ability, we cannot sustain. One of his main positions is that the trustee is not only not a purchaser for value, but stands simply in the place of the grantors and in no wise represents the rights of their general creditors.

He treats the case as one entirely between the mortgagee and the mortgagors, as between whom he insists the former is entitled in equity to have the mortgages enforced as valid contracts and the fund applied to their payment, irrespective of the rights of creditors to enforce their claims against the property in the hands of the purchaser. He concedes, if this position be sustained, the purchaser may be placed ⁵¹² in the predicament of holding the property liable to the enforcement against it of the claims of these creditors by attachment or by execution on judgments which they may obtain against the grantors, bur insists the purchaser must take care of himself as he purchased only the title of the parties to the suit. A Court of Equity, however, will not allow purchasers to be placed in such a condition when it can be prevented. That the purchaser here had every reason to suppose he was acquiring an unencumbered title, free not only of all claims under these mortgages, but also of all claims of the creditors of the mortgagors, there can be no doubt.

By the agreement under which the sale was made it was stipulated the title of the mortgagee should be sold as well as that of the mortgagors and trustee, and that the proceeds of sale should stand in the place of the property. That agreement, with the one under which the case was referred to the auditor, would go a great way to prevent the