30 Ind. App. 677 | Ind. Ct. App. | 1903
This action was brought by appellee Warren M. Yeager to foreclose a mortgage upon certain lands, in the complaint described. A special finding of facts was made, and a conclusion of law stated thereon, to the effect that the plaintiff was entitled -to a foreclosure of the mortgage against all defendants. Bo defendants except appellants made any defense to the action. They excepted to the conclusion of law and assign error thereon.
It will be observed from the foregoing facts that the legal title to the mortgage in suit was in Harris on and after December 26, 1893. On Eebruary 23, 1894, the notes were
Appellants are shown by the finding to have paid a valuable 'consideration for the real estate conveyed to them. The appellee was therefore required to allege and prove, in order to foreclose the mortgage against them, that they had “actual knowledge” of the unrecorded assignment. Citizens Bank v. Julian, supra; Union Cent. Ins. Co. v. Dodds, 155 Ind. 365. So far from showing such knowledge, it is hy the finding expressly negatived. If knowledge of the record of the mortgage and of the fact that no release appeared thereon were treated as sufficient to put appellants upon inquiry, yet it affirmatively appears that they made the inquiry suggested hy such facts, and were unable to learn, because of the duplicity-of the holder of the record title to the mortgage in suit, of any outstanding equity thereto or therein. If such inquiry was" prosecuted, as it
“When the owner of a fee becomes absolutely entitled in his own right to a charge or encumbrance upon the same land, with no intervening interest or lien, the charge will, at law, merge in the ownership and cease to exist. Hnder like circumstances a merger will take place in equity, where no intention to prevent it has been expressed, and none is implied from the circumstances and the interests of the party; and a presumption in such a case arises in favor of the merger.” Pomeroy, Eq. Jurisp. (2d ed.), §790. Appellants had a right to presume that such merger had taken place, and that their 'deed conveyed a clear an unencumbered title to them, and the holder of an unrecorded assignment of the mortgage is in no position to invoke equitable aid against them. Holding a secret equity, he had it in his power to prevent any one being misled. Failing to record his assignment, he must, as against those who were, on the faith of the record, induced to part with their property, bear the loss. Pugh v. Highley, supra.
Judgment reversed, and cause remanded, with instruction to restate conclusion of law and render judgment thereon for appellants.