Appeals of Fourth National Bank

Citations

• 123 Pa. 473
• 16 A. 779
• 1889 Pa. LEXIS 671

Syllabus

<p>1. When a mortgage is taken as security for a number of notes and the mortgagee afterward becomes insolvent, neither a creditor of the bank attaching some of the notes, nor the assignee of the bank itself, can receive payment ont of the proceeds of the mortgaged premises, insufficient to pay all, until one holding others of the notes under indorsement from the bank before maturity is fully paid.</p> <p>(«) A bank discounted a customer’s notes secured by a mortgage, and before their maturity transferred some of them to A. and others of them to B., as collateral security, and afterwards became insolvent and made an assignment for tiie benefit of creditors.</p> <p>(6) The indebtedness secured by the notes held by A. was paid by other collateral, but before the notes were turned over to the assignee of the bank, they were attached at the suit of another creditor for a debt of the bank, and a contest then arose in the distribution of the proceeds of the mortgaged premises.</p> <p>2. Neither the rights and equities of the attaching creditor, nor those of the assignee of the bank, were higher in degree than the rights and equities of the bank itself in whose place they both stood.</p> <p>3. Upon the notes attached in the hands of A. the bank was under no liability, while upon the notes held by B. it was still liable as a surety by virtue of its indorsements.</p> <p>4. Wherefore, neither the attaching creditor nor the bank’s assignee had the right to receive payment upon the notes in the hands of A. until the notes held by B., upon which the bank stood as surety, were paid in full.</p> <p>5. Donley v. Ilays, 17 S. & R. 400, and Hodge’s App., 84 Pa. 359, and other kindred cases, distinguished; the principle of Himes v. Barnitz, 8 W. 39, and Worrall’s App., 41 Pa. 524, followed.</p>