an execution was duly issued and placed in the hands of said Collins, as constable of said township; that thereupon said Collins levied upon the goods described in relators' mortgage, and advertised the same for sale on the - day of September, 1889; that thereupon, on said day, said Collins, as such constable, sold said goods so mortgaged to these relators to said firm of Hildebrand & Fugate, who bid the amount of their said judgment, and thereupon, over the written notice and protest of these relators, 546 delivered said goods to said firm of Hildebrand & Fugate, who immediately took the same out of said county and converted them to their own use. They became wholly lost to these relators, whereby relators further say said goods so mortgaged to them, and so sold by said Collins to said Hildebrand & Fugate, were of the value of $400, and said Collins wholly failed and refused to require said purchasers to comply with the terms of relators' said mortgage, but then and there unlawfully, negligently, and carelessly, and without any regard to the conditions of his bond, and in breach thereof, and disregarding his duty as such constable, then and there diverted the same from the security and payment of said notes, and then and there unlawfully delivered said mortgaged goods to said firm of Hildebrand & Fugate, to the damage of the relators in the sum of $300, for which they demand judgment, and for all other proper relief."

Copies of the constable's official bond declared upon, and of the mortgage or bill of sale referred to in the complaint, are filed as exhibits with the same.

The bill of sale or mortgage reads as follows:

"Know all men by these presents that William T. Spradling, of Rush county, in the state of Indiana, have this day bargained and sold, and do hereby bargain and sell, unto Robert Hutchinson, Elihu Price, and J. C. Green, of Rush county, for the sum of two hundred and twenty-five dollars, to him in hand paid, the receipt whereof is hereby acknowledged, the following described personal property, to wit: The stock of hardware, situate in storeroom on lot No. 6 in J. W. Green's addition to Arlington, Indiana. This indenture is to indemnify the mortgagees as sureties for the mortgagor to Jacob Beckner, as herein specified hereafter.

"The condition of this bill of sale is, that whereas the said William T. Spradling is indebted to said Jacob Beckner in the sum of two hundred and twenty-five dollars, evidenced by his promissory notes dated January 23, 1889, payable September 1st and December 25, 1889, after date, without 547

any relief

from valuation or appraisement laws, said notes being for the sum of one hundred and one hundred and twenty-five dollars: Now, if the said William T. Spradling shall well and truly pay said notes at maturity, with all interest due thereon, then this instrument shall be void, otherwise to remain in force. It is agreed and understood by the parties hereto that said William T. Spradling shall retain possession of said property hereby sold until said notes hereby secured become due, and, if said notes are not paid promptly at maturity, said Robert Hutchinson, Elihu Price, and J. C. Green shall then have the right to take and keep possession of said property, wherever it may be found, without any process of law, and the same shall become the absolute property of said Robert Hutchinson, Elihu Price, and J. C. Green, and the said William T. Spradling hereby expressly agrees not to remove said property from the place where it now is without the consent of said Robert Hutchinson, Elihu Price, and J. C. Green, nor to sell, assign, or lease the same without such consent; to use such property well, keep the same insured in some reliable company, and in good repair, and, in case of default being made in any one of these conditions, or if the property shall be levied on by execution from any court, or shall come into the hands of any administrator, guardian, executor, assignee, trustee, or commissioner to be sold, then, and in either of such cases, the mortgagees shall have the right to take immediate and unconditional possession of the same for their own use forever. "Witness my hand and seal this 5th day of April, 1889. (Signed) "WILLIAM T. SPRADLING."

Then follows the acknowledgment.

To the complaint the appellants each separately demurred, and, as a cause of demurrer, alleged that said complaint did not state facts sufficient to constitute a cause of action. The demurrers were each overruled, and the appellants excepted. Issues were joined, the cause was tried by the court, and there was a finding and judgment for the appellee against 548 the appellants in the sum of $240.65, this being the amount of the indebtedness for which the appellee's relators were bound as sureties, with interest.

The appellants moved for a new trial, assigning, as a cause therefor, that the finding was excessive. The motion having been overruled, the appellants again excepted, and hence this appeal.

The overruling of the demurrers and of the motion for a new trial are assigned as error. We shall notice these in their order.

First, then, was the complaint sufficient to withstand the demurrer? It is provided by statute as follows: "Goods and chattels pledged, assigned, or mortgaged as security for any debt or contract, may be levied upon, and sold on execution against the person making the pledge, assignment, or mortgage, subject thereto, and the purchaser shall be entitled to the possession, upon complying with the conditions of the pledge, assignment, or mortgage": Rev. Stats. 1881, sec. 722.

Under this provision of the statute, it has been frequently decided that when property thus mortgaged, pledged, or assigned is levied on, the levy is only upon the interest which the mortgagor has in such property after the payment of the mortgage, etc., or, in other words, upon the equity of redemption, but that, for the purpose of the levy and sale of such interest, the officer may take the property in possession as against both the mortgagor and the mortgagee: Sparks v. Compton, 70 Ind. 393; Hackleman v. Goodman, 75 Ind. 202; Louthain v. Miller, 85 Ind. 161; Slifer v. State, 114 Ind. 291; McDaniel v. State, 118 Ind. 239.

But, while this right to take the property in possession on the part of the officer has been thus fully recognized, it is true, also, that it is the duty of such officer to exercise due care for the protection of the interest of the mortgagee in the property, and that he is prohibited, not only from diverting 549 such property from the security of the mortgage, but from doing anything which has the effect of diminishing its value as such a security: Syfers v. Bradley, 115 Ind. 345. And if, in such case, the mortgage has been duly recorded, the officer is bound to take cognizance of the same without any other notice: McDaniel v. State, 118 Ind. 239.

In the case just cited, it is also held that an officer who levies upon property thus mortgaged, and sells it upon an execution, the lien of which is junior to that of the mortgage, must hold it until the terms of the mortgage have been complied with by the purchaser, and, if he fails to do this, he is liable on his official bond for any damage sustained by the mortgagee.

With these principles so well settled by the decided cases, it would seem to admit of but little difficulty to arrive at a correct and proper solution of the question before us. We think it inevitable that the action of the trial court must be sustained unless the principles involved in the case at bar form some exception to the general doctrine enunciated in the cases cited. This we understand the appellants to concede, but their counsel

claim that such an exception does exist here, in the fact that the relators have not yet lost anything by reason of their suretyship, as disclosed by the complaint.

The instrument relied upon is an indemnity mortgage, given to indemnify the relators against any loss on account of their being sureties on certain notes. It seems that as between the mortgagor and mortgagee, at least, the authorities make some distinction between mortgages purely indemnifying in their provisions, and those containing a promise, or condition, binding the mortgagor to the payment of the debt. In the former class, there can be no recovery until the mortgagee has actually paid the debt for which he is surety; while in the latter, the mortgage may be foreclosed whenever the principal makes default in the payment of the debt, without reference to whether the mortgagee has actually paid out anything or not. In such cases, the failure to 550 pay on the part of the mortgagor, when the debt is due, is held to constitute the breach in the condition of the mortgage, and the mortgagor may proceed at once to make the money out of the mortgaged property, and apply it to the payment of the debt for which he is liable as surety: Catterlin v. Armstrong, 101 Ind. 258; Reynolds v. Shirk, 98 Ind. 480; Bodkin v. Merit, 86 Ind. 560; Strong v. Taylor School Tp., 79 Ind. 208; Gunel v. Cue, 72 Ind. 34; Devol v. McIntosh, 23 Ind. 529; Johnson v. Britton, 23 Ind. 105; Weddle v. Stone, 12 Ind. 625; Loyd v. Marvin, 7 Blackf. 464; Brandt on Suretyship, 2d ed., sec. 221, et seq.

In some degree, we think, these principles may be applied to suits of the character of the one under consideration, the officer, for the time being, occupying the position of the debtor.

An examination of the mortgage in this cause will disclose that by its condition Spradling was bound to pay the notes upon which the relators were sureties at a time certain, viz., January 23, 1889, and December 25, 1889, respectively. This condition, we think, makes the instrument more than a strictly indemnifying contract.

In the case of Devol v. McIntosh, 23 Ind. 329, the court, quoting approvingly from Gilbert v. Wiman, 1 N. Y. 550, 49 Am. Dec. 359, says: "When the instrument deviates the least from a simple contract to indemnify against damage, even where the indemnity is the sole object of the contract, and where, in consequence of the primary liability of other persons, actual loss may be sustained, the decisions of our courts, although by no means uniform, have gradually inclined toward fixing the rule to be

one of actual compensation for probable loss; so that, in contracts of that character, it may now be considered a general rule, both in this country and in England."

The bill of sale in the present case permits the mortgagor to retain the possession until default be made in payment. It also provides that if the mortgaged property shall be levied on, etc., this, as well as a default in payment, shall entitle 551 the mortgagees to take immediate possession without process of law, and the same shall become the absolute property of the mortgagees.

These conditions had been broken at the time of the sale; at least, the one in reference to a levy by an officer had been broken. The mortgagees were therefore entitled to the immediate possession. The constable knew of the existence of the mortgage, and of its terms. He knew it, as the complaint avers, from actual information and notice, and the law conclusively presumes that he knew it from the records.

By the terms of the mortgage, the mortgagees had also become the holders of the legal title to the property: Lee v. Fox, 113 Ind. 98; Ross v. Menefee, 125 Ind. 432.

In addition to these facts, it is averred that the mortgagor and principal of the notes is wholly insolvent and unable to pay the debt. The liability of the relators to pay the debt for which they were sureties is therefore fully shown by the averments of the complaint, which the demurrer admits. Where this is the case, the mortgagee need not wait, before he can maintain his action, until he has paid the debt or incurred actual loss: Walling v. Lewis, 119 Ind. 496; Brandt on Suretyship, 2d ed., sec. 221.

If this were an action, therefore, between the mortgagees and the mortgagor to foreclose the mortgage, there can be no doubt but that the right to foreclose would be fully established.

The appellants insist, if we understand their counsel correctly, that the rules, as between mortgagor and mortgagee, of an indemnity mortgage cannot be applied in measuring the liability of an officer charged with the commission of a tort; and that as to such officer there can be no recovery on his official bond until it has been shown that the party complaining has been actually damnified.

We cannot see, however, upon what principle the officer can be held as exempt. He was expressly forbidden by law, as we have seen, from delivering the property until the terms 552 of the mortgage had been complied with: Syfers v. Bradley, 115 Ind. 345; McDaniel v. State, 118 Ind. 239. He must be held to know that a liability had accrued to the mortgagees by the

AM ST. REP., VOL. L.-20