Pomperaug Realty Corp. v. Schulte Real Estate Co.

Plaintiff mortgagor assigned to defendant mortgagee two bonds and mortgages as additional security in the event of default under the main mortgage. The agreement provided that upon such default defendant might foreclose the *1081main mortgage, or apply the proceeds of sale of the security in reduction of the principal thereof, or both.

Default occurred and, clearly, defendant then might have sold the security and applied it in reduction of the principal indebtedness. However, without doing so, defendant foreclosed the main mortgage. Indeed a defense in the foreclosure action that it should be…