Manchester Federal Savings & Loan Ass'n v. Emery-Waterhouse Co.

Under well-established principles, surplus funds in the hands of a mortgagee, after foreclosure of a power of sale *237mortgage and satisfaction of the secured indebtedness and expenses, are the property of the mortgagor, subject however to encumbrances and liens existing at the time of foreclosure. Such liens attach to the surplus proceeds in equity, in the same order of priority and with the same effect as they bound the mortgaged premises before the foreclosure. Markey v. Langley, 92 U. S. 142, 145; Wiggin v. Heywood, 118 Mass. 514; Smart v. Burgess, 35 R. I. 149. Thus the surplus after…