Page:Federal Reporter, 1st Series, Volume 9.djvu/193

178 FEDBBAIi BEFOBTEB. �The facts disclosed are: �That Mrs. Flanagin, the complainant, in 1872, was the owner of two mort- gages on land in Talbot county.Maryland, viz.,the one mentioned in this suit which may be called the " Thompson " mortgage, and another which may be called the " Johnson " mortgage. Her husband being pressed for money, she, at his request, assigned in blank both o£ these oiortgages and the bonds they were intended to secure, and gave them to him to be disposed of. Failing in an effort tosell them outright, he applied to the Easton National Bank to loaa him, $7,000 on them as collateral security. ihis the bank agreed to do on condition that he should execute a note payable at six months, with two other persons as sureties. He did execute such a note for $7,000, dated December 16, 1872, at six months, payable at a bank in Philadelphia, and over the com- plainant's signature on eaeh m oi-tgage was written: �"I hereby assign, transfer, and set over the within mortgage and the accom- panying bond, with all interest thereon, to the president,, directors, and Com- pany of the Easton National Bank of Maryland, as collateral security for the payment of a note discounted December 16, 1872, in f avor of Winiam S. Flan- agin, for $7,000, indorsed by E. D. Johnson and Hedge Thompson." �The mortgage and bonds were then delivered to the bank's attorney, and Flanagin received the proceecls of the discounted note. Before this note be- came due Flanagin notifled the bank that he would not be able to pay it at maturity, and asked for a renewal with the same collaterals and sureties. The bank granted his request and consented to renew, but informed him that as the note had been placed in a Philadelphia bank for collection he mnst take it up there. This he did, and a few days afterwards went from Philadelphia to Easton, and there received the proceeds of the renewal note. Thereafter re- newals were granted to him by the bank, upon his solleitation, every six months until March, 1876, when the note then maturing laid over and remains vmpaid. �Of the two mortgages thus assigned to the bank, the Johnson mortgage was a second mortgage, and in' 1876 Ridgaway; the holder of the first mortgage, filed his bill on the equity side Of the Talbot county court, making Flanagin and his wife, the bank, and other persons having an interest in the land, defend- ants, and obtained a decree for a sale. A sale was made by a trustee, and after paying the Ridgaway claim there remained a balance in his hands applicable to the payment of the second mortgage. Mrs. Flanagin then claimed that bal- ance, and for the first time disputed the title of the bank, and insisted that, as the mortgages were pledged to secure a particular note of ■ $7,000 of a cer- tain date, described in the written assignment indorsed on the mortgages, and as that particular note had been paid, the bank could not hold the mortgages as security for notes subsequently discounted, to secure Which she had never authorized them to be pledged, nor ratified the pledgihg of them. She claimed that the balance of the fund after paying the first mortgage should be audited to her, and not to the bank. This claim was resisted by the bank, and the iseue was raised by proper exception^ to the accounts of the auditor distrib- nting the fund, and was passed npon by the county court. The court's order is to be found in the record flled in this case, and in this langauge: ��� �