Advance Thresher Co. v. Hogan

Citations

• 74 Ohio St. (N.S.) 307

Syllabus

<p>Mortgage to secure notes maturing at different times — Mortgagee given power to elect in application of payments — If mortgaged property insufficient to satisfy debts — Surety on note held to notice of provisions of mortgage — Equitable relation of creditor, debtor and surety — Default of one note matures all, when — Rights of surety — Mortgages—Promissory notes.</p> <p>1. Where parties to a mortgage given to secure the payment of several notes maturing at different times have provided in the instrument that the mortgagee may elect as to the application of payments in case the proceeds of a sale of the mortgaged property are insufficient to satisfy the entire debt, the court upon foreclosure will, as between mortgagor and mortgagee, order application of money arising from sale in conformity with such election if made in proper time.</p> <p>2. Such election is not too late if made by proper demand prior to the trial.</p> <p>3. Where two of the notes so secured contain a clause that they, with others, are secured by mortgage given by the mortgagor to the creditor, and are signed by a third party as surety for the debtor, such surety will^ be held, in the absence of circumstances showing the contrary, to have had notice of the provisions of the mortgage respecting the application of payments, and to have contracted with reference thereto.</p> <p>4. The primary equity growing out of the relation of creditor, . debtor and surety, is that the creditor be paid what is due him; that he does not lose this equity as against the surety except by misconduct to the latter’s prejudice. So that, when the creditor in the original contract has received a mortgage covering the entire debt, and a personal guaranty on a part of it, the presumption is, in the absence of circumstances showing the contrary, that he has taken the personal guaranty as additional protection for his debt. This presumption is strengthened where it appears that the creditor, at the inception of the debt guar