same date, on a tract of land in Orange. On the 1st May, 1830, A. Peck executed and delivered to Samuel M. Dodd a mortgage to secure the payment of a note given by Peck to Dodd, for $2400, payable to Peck or order, on demand, with interest. This second mortgage covered the tract contained in the first mortgage and another tract of land. On the 15th February, 1831, A. Peck conveyed both tracts to William Peck and Elijah C. Pierson; and it would seem that William Peck and Elijah C. Pierson afterwards conveyed to John Peck the second tract mortgaged to Dodd, and which was not mortgaged to Condit. Samuel M. Dodd died in October, 1831, and administration of his personal estate was granted to Caleb Baldwin and Jemima Dodd. On the 26th August, 1836, the administrators of Samuel Dodd released the lot secondly described in their mortgage from the operation and lien of their mortgage. The answer of the administrators says, that the release was made to the owners thereof according to law; and that the release was made with the knowledge, approbation and consent of A. Peck and of Samuel M. Condit. Afterwards, on the said 26th August, 1836, (in the language substantially of the answer,) the said Samuel Condit made and entered into an agreement in writing under his own hand and seal to and with the defendants, of the date last mentioned, whereby he stipulated and agreed, for the considerations therein expressed and referred to, to and with the defendants, (the administrators,) that the said Dodd mortgage should be considered and held as the first lien on the lot described in the mortgage to Condit, notwithstanding the prior date. and execution of his, Condit's mortgage. The answer says, that this agreement was made and entered into by Condit with a full knowledge that the said defendants had made the said release, and with the full knowledge and approbation of the said A. Peck, William Peck and Elijah C. Pierson. The agreement states the two mortgages, and that he, Condit, had agreed, for certain good causes and considerations, to give priority to the Dodd mortgage; and then, in consideration of the premises and of $1, to him paid, consents, covenants and agrees to and with the said administrators of Samuel M. Dodd, deceased, that the Dodd mortgage shall be considered and held to be the prior lien. In

April, 1840, a judgment for $1114, 94, and in October, 1840, another judgment for $2500 were recovered by John Taylor, both against A. Peck, C. R. Akers, Elijah C. Pierson, Samuel Condit and William Peck. On the 20th October, 1840, Jonas Smith recovered a judgment against A. Peck, William Peck, Lewis Dodd and Samuel Condit, survivors of Samuel M. Dodd, for $794 53; and other judgments for large amounts were recovered, in 1841, against the said Peck, Pierson and Condit. In February, 1842, Jonas Smith recovered another judgment against A. Peck, William Peck, and Lewis Dodd, deceased, for $761 83; and on the same day, John Taylor recovered a judgment against A. Peck, C. R. Akers, Elijah C. Pierson, Samuel Condit and William Peck, for $1976 64; and on the 10th May, 1842, Isaac Baldwin recovered a judgment against William Peck, Elijah C. Pierson and Samuel Condit, for $1652 19. On the 20th September, 1842, Samuel Condit, by an assignment endorsed on the said Mortgage given by A. Peck to him, stating his assignment to have been made for a valuable consideration to him paid by the complainants, assigned his said mortgage to the complainants and the note referred to therein. On the 15th February, 1843, the complainants, as assignees of the Condit mortgage, filed their bill for the foreclosure of that mortgage and the sale of the premises under it, as the prior incumbrance, making the administrators of Samuel M. Dodd parties defendants as subsequent mortgagees. These defendants set up the agreement of Condit before stated, that the Dodd mortgage should be considered the prior incumbrance.

There can be no doubt that if Condit had not assigned his mortgage, but had himself filed the bill for foreclosure, the court would have given effect to his agreement under seal, if produced by the administrators of Dodd, that the Dodd mortgage should be considered and held to be the first lien; whether that agreement was considered as only a covenant or as something more. Nor can there be any doubt that the assignee of a bond and mortgage takes them subject to all equities existing in favor of the mortgagor against the mortgage. But the question involved in this case is whether, when there are two mortgagees, one prior and the other subsequent, and the subsequent mortgagee

takes from the prior mortgagee a writing under seal that the subsequent mortgage shall be considered and held to be the prior incumbrance, but no change is made in the registry of the mortgages, and the mortgagee whose mortgage is prior in date and registry afterwards assigns his mortgage to a bona fide assignee without notice of the agreement between the two mortgagees, the subsequent mortgage is to be considered the prior incumbrance as against such assignee. This is the statement of the question on the supposition that the subsequent mortgagee setting up the agreement and the assignee of the mortgage first in execution and registry are both innocent. On this question, I am strongly inclined to the opinion that the bona fide assignee of the mortgage first in execution and registry, without notice of the agreement between the mortgagees, has the better equity; and that the mortgage so assigned to him should be decreed to be, in his hands, the first incumbrance; and that the subsequent mortgagee should be left to his action against the first mortgagee for a breach of covenant. If such an agreement should be held to be equivalent to the actually putting the second mortgage first, notwithstanding the registry to the contrary, then the second mortgagee, by procuring such an agreement and permitting the registry to remain unchanged, puts it in the power of the first mortgagee, and is active in so putting it in his power, to inflict a loss on an innocent assignee of the first mortgage. No diligence on the part of any one about to take an assignment of the first mortgage would protect him, or apprise him of danger. If he goes to the mortgagor to inquire of him if he has any equities against the mortgage, he is answered No, and that the money is all due. If he goes to the records, he finds that the mortgage he is about to take is the first incumbrance. These are the only sources of inquiry to which he can apply. The information he receives is satisfactory, and he takes the mortgage. When he comes to foreclose his mortgage, if the second mortgagee produces an agreement between him and the first, that the second mortgage shall be considered and held to be the first, I think the assignee could truly and justly answer that that did not make it the first; that the first mortgagee still kept it in its place as the first, in breach of his agreement, and that he, the second mortgagee,

must resort to his remedy on the agreement. Indeed, I do not see that, unless there be a change in the registry, there could be any thing but a covenant between the two mortgagees. The recording of such an agreement would not have the effect of putting the second mortgage first as against third persons. What could lead a third person, searching for mortgages against a mortgagor and the priorities of them, to look for an agreement between the mortgagees inverting the order of registry. There has been no effort on the part of the defendants to question the bona fides of the assignment to the complainants, or their want of notice. It seems, on the contrary, to be admitted by the answer. Under these circumstances, and supposing the defendants to be equally innocent in other respects, the loss, I think, should fall, (if any is to be sustained,) on the defendants, the second mortgagees. They should be left to their remedy on the covenant. On principle, the case seems to me to be with the complainants; and several adjudged cases referred to on the argument sustain the principle. In Murray and others against Lylburn and others, decided by Chancellor Kent, 2 John. Ch. Rep. 441, one Winter held certain lands in trust. The cestui que trust filed a bill against Winters, the trustee, charging him with a breach of trust; and obtained an injunction restraining him from acting as trustee, and from selling any of the trust estate or assigning any securities. Winter, notwithstanding, sold part of the trust estate to Sprague, and took his bond and mortgage for the purchase money, and afterwards assigned Sprague's bond and mortgage to Lylburn. The question was whether Lylburn, the assignee, was accountable to the cestui que trust for the bond and mortgage, as Winter, the assignor, would have been had he kept it. No doubt the bond and mortgage in the hands of the assignee, Lylburn, were subject to any equities existing in favor of Sprague, the mortgagor, against Winter, the mortgagee and assignor. But the bond and mortgage in Winter's hands were subject to another equity; not an equity of the mortgagor, but an equity of a third person, the cestui que trust, who could have subjected them, in Winter's hands, to the trust; as, in the case before us, the administrators of Dodd might, by virtue of the agreement, have postponed Condit's mortgage to

them, if it had remained in Condit's hands. The question was, whether the bond and mortgage, in the assignee's hands, was subject to such an equity of a third person, not a party to them, because they were subject to it in the hands of the assignor. The Chancellor said, that the rule that the assignee of a chose in action takes it subject to the same equity it was subject to in the hands of the assignor is generally understood to mean the equity residing in the obligor or debtor, and not an equity residing in some third person against the assignor. That one about purchasing a bond from the obligee can always go to the obligor and ascertain what claims he may have against the bond; but that he may not be able, with the utmost diligence, to ascertain the latent equity of some third person against the obligee; that he has no object to which he can direct his enquiries; and that, for this reason, the claim of the assignee without notice was preferred in the late case of Redfern v. Ferrier, 1 Dow, 50, to that of a third party setting up a secret equity against the assignor; thus sanctioning the decision in Dow, in which Lord Eldon said that if it was not to be so no assignments could ever be taken with safety. The case we have in hand is much stronger in favor of the bona fide assignee than the case put by Chancellor Kent. The holders of the Dodd mortgage are chargeable with permitting the registry to remain unaltered to mislead an innocent person; and besides, they have a covenant from the other mortgagee which was broken by his assignment, if the assignment is good and the mortgage first in execution and registry is entitled to preference. In Moore v. Holcombe, 3 Leigh 597, Holcombe sold land to Moore, and took no security for the purchase money. Moore then sold the land to F. and took his bond for the purchase money; then assigned the bond to a bona fide assignee having no notice of Holcombe's claim to a lien on the land for the purchase money due from Moore to him. It was held that though the bond, in the hands of Moore, the assignor, might have been subject to Holcombe's equity, yet that Holcombe could not assert his equity against Moore's assignce of the bond; that though a bond in the hands of an assignee is subject to any equity of the obligor, it is not subject to any equity of a third person not party to the bond of which he had no