Bartlett vs. Gale and others, 4 Paige Ch. 503

The Chancellor. The defendants’ counsel is wrong in supposing that the whole answer must be taken together as evidence, and that the complainant cannot avail himself of the admissions in one part of it, without being also bound by the statements and allegations in other parts of the same answer. This is not so, even where the complainant calls for an answer on oath; except as to those parts of it which are responsive to the bill.

But where an answer on oath is waived, although as a pleading the complainant may avail himself of admissions and allegations in the answer which go to establish the case made by the bill, such answer is not evidence in favor of the defendant for any purpose. There is no doubt., in this case, as to the complainant’s right to the surplus upon the sheriff’s sale beyond the amount which was due on the execution ; or to so much of such surplus as will be sufficient to pay the amount of his mortgage.

The mortgage was a specific lien upon the land; and that being sold under a prior encumbrance, the lien of the mortgage attached upon the surplus monies raised on that sale. The sheriff had no right to pay such surplus monies to G. R Gale, the mortgagor, or to discharge the purchaser from the payment thereof, on his order, when he knew that the complainant had a specific lien thereon by virtue of his mortgage. According to the decision of the court for the correction of errors, in the case of Astor v.

Hoyt, (5 Wendell’s Rep. 603,) the mortgagor in possession is to be considered as the real owner of the land, subject to the specific lien of the mortgage. He might therefore discharge the surplus monies arising on the sale, except that part thereof upon which the complainant’s mortgage was a specific lien ; or he might assign the surplus to the purchaser, as was done in this case, in payment of antecedent debts. But the purchaser takes the surplus charged with the prior equity of the specific lien of the mortgage thereon. It is not pretended in this case that J.

Gale, the purchaser at the sheriff’s sale, was ignorant of the complainant’s lien upon the surplus by virtue of his mortgage ; although it is probable he thought he could deprive him of his equitable rights by getting a discharge from the mortgagor for such surplus. And the registry of the mortgage was a constructive notice to every person dealing with G. B. Gale as. the owner of the farm, or as entitled to the surplus monies arising on the sheriff’s sale. Again; as J.

Gale was permitted to retain the surplus monies in satisfaction of pre-existing debts merely, he would not be entitled to retain it as against the complainant’s specific lien, oven if he had neither actual or constructive notice of such lien. (Coddington v. Bay, 20 John. Rep. 637.) And the surplus monies in this case never having been paid by the purchaser, they are an equitable lien upon the land, in the hands of J. Gale, to the extent of the complainant’s mortgage. The defendant, J.

Gale, has no legal or equitable claim to have the encumbrances on the farm, which were prior to the judgment under which he purchased, deducted from the amount of his bid. He knew of the existence of the Westervelt mortgage, and was himself the owner of the Bailey judgment at the time of the sale. He therefore bid with the full knowledge that the land in the hands of the purchaser would be liable for the payment of those encumbrances. The deputy who sold the property swears he thinks that J. Gale supposed the prior encumbrances were to be deducted from the amount of his bid.

But the facts testified to by this witness show that J. Gale himself did not so understand it; for, at the time he was bidding on the farm, he said there was a mortgage in New-York of about $1500, which he should have to pay off. This was undoubtedly said to prevent others from running up the property ; and is wholly inconsistent with the idea that he supposed the purchaser was to have the amount of the mortgage deducted from his bid.

And the certificate of sale, executed by the sheriff and filed in the clerk’s office, is conclusive to show that at the time of the sale he did not put up the property for sale upon the condition that the prior encumbrances were to be paid out of the purchase money; as the certificate was given for the whole amount bid, leaving the prior encumbrances a lien upon the premises, to be paid by any creditor who might wish to redeem, in addition to the $3100 mentioned in the sheriff’s certificate.

The giving such a certificate would be a fraud upon creditors having a right to redeem, if the sheriff did in fact sell the property upon the condition of having the prior encumbrances paid out of the purchase money. The certificate is the only legal evidence, which has been given in the present case, as to the terms of the sale, or the actual amount of the bid. And the sheriff’s present supposition as to what the purchaser then thought, cannot now be received to falsify his official certificate, given at the time of the sale.

If the farm was put up for sale on the condition that the prior encumbrances were to be paid out of the purchase money, Horton and Dunning, who were bidders, would undoubtedly have recollected the fact; as it was out of the usual course on such sales. The defendants did probably suppose they could so manage in relation to the surplus monies as to defeat the complainant’s equitable right to have his mortgage satisfied out of the same. But from the evidence in the case, I do not believe J.

Gale bid upon the farm under the supposition that the purchaser was to take it discharged of the previous liens, or that they were to be paid out of the purchase money bid on the sale.

There must be a decree in favor of the complainant, declaring the amount due on his mortgage to be a specific lien upon the surplus of the bid at the sheriff’s sale, after deducting from the amount of the bid the balance of the execution which had not been satisfied by the sale of the personal estate; and that the purchase money, to the extent of the complainant’s lien thereon, not being paid or otherwise secured, it is an equitable lien upon the farm in the hands of the defendant J, Gale, and is entitled to a preference in payment over the debts due from G. B. Gale to J.

Gale, which were neither a specific or a general lien upon the farm at the date of the complainant’s mortgage. It must be referred to a master to compute the amount due to the complainant for principal and interest on his mortgage; and the defendants must pay the amount reported due, and the interest thereof, within twenty days after the confirmation of the master’s report, together with the costs of the complainant in this suit. And in default of such payment, the farm, or so much thereof as may be necessary to pay the amount reported due, with interest and costs, may be sold by a master for that purpose.