49 Mo. App. 32 | Mo. Ct. App. | 1892
Lead Opinion
The defendant, Mrs. Eddy, is the bona fide assignee for value of a non-negotiable promissory note and deed of trust securing same. The note was given to Silas L. Craig by John Hall, and by Craig
December 1, 1885, Craig sold to Hall the southwest quarter of the southwest quarter, and the southeast quarter of the southwest quarter, and took note and .deed of trust for $700, due in two years, to secure purchase money. He recorded the deed of trust, January 13, 1886. January 15, 1886, Craig assigned in writing and delivered said note and deed of trust to Mrs. Eddy who paid value in good faith. October 15, 1887, Hall conveyed back to Craig (as he supposed but in reality to one Seals), by quitclaim deed, all the land he bought of him, for the consideration of the $700 note (theretofore assigned and delivered to Mrs. Eddy unknown to Hall), and some other land. Hall demanded his note of Craig, but was put off from time to time till May 17, 1890, when Craig gave him a receipt. Seals had no interest in any of the transactions in this case. He was merely Craig’s shadow, Craig using his name instead of his own.
May 1, .1888, Craig borrowed of Gilbert and Gay $1,000, and to secure same gave (through Seals) deed of trust oh the southwest quarter of the southwest quarter. On the same day he gave a second deed of trust to Bartlett Bros, for $100. Neither of these beneficiaries had actual knowledge of the note and deed of trust which had been assigned to Mrs. Eddy, but relied on Craig’s assurances that the title was clear.
May 1, 1888, Seals conveyed to Craig by warranty deed the southeast quarter of the southwest quarter, and Craig on the same day conveyed same tract by warranty deed to Joseph L. Dunning, Dunning relying
December 10, 1889, Seals conveyed to Craig, by warranty deed, the southwest quarter of the southwest quarter, which, as shown above, had been mortgaged to Cilbert & Cay to secure $1,000 and to Bartlett Bros, to secure $100. December 20, 1889, Craig conveyed, by warranty deed to the plaintiff, the southwest quarter of the southwest quarter, representing that the Hall-Eddy note was paid. August 15, 1890, plaintiff got notice of the assignment to Mrs. Eddy.
November — , 1890, plaintiff purchased at sale, under the Dunning deed of trust to Cilbert & Cay, the southeast quarter of the southwest quarter, and also purchased at sale under the Seals deed of trust to Bartlett Bros, the southwest quarter of the southwest quarter.
In the foregoing transactions of Craig, since his assignment to Mrs. Eddy, he was acting fraudulently and in bad faith.
The question presented by these facts is whether Mrs. Eddy, as assignee, can subject the land in plaintiff’s hands to the lien of the deed of trust securing the note assigned to her. Formerly, at common law, the assignment of choses in action was not recognized. Whatever vitality it had came from equity, and the remedy of the assignee on the instrument was in equity
But the statutes of Missouri, -beginning at an early day, made alterations in the law as it stood before its enactment. I will notice these. In 1825 the statute was that it should not be in' the power of an assignor to release a demand after he had assigned it; provided, however, that the defendant could make the same defense against the assignee that he could have made against the assignor if the note had remained in his possession when the defense accrued. The case of Bates v. Martin, 3 Mo. 367, arose under this statute. In that case the note was assigned and delivered, and afterwards the payor paid the sum due on the note to the assignor. The court held (construing the foregoing statute) that the defense of payment accrued while the assignee held the note; that before the payor paid the money he should have seen that the payee still retained the note, and that it was the duty of the payor to look after his note, and to know that he pays his
There is a qualification to be made to the foregoing general statement. It is this: Those, who, by their relation to the payor could compel him to make good their loss, would be entitled to enforce for their protection the right which would exist in the payor if he were sued. It has even been held that judgment creditors
This is in keeping with the principle, asserted in some quarters, that the equities of third parties are not available against the assignee, for, in the instances given, the parties are not properly third parties; they assert, by right, the defenses of the payor. Some of the authorities state the proposition in its full breadth and without qualification, that the equities of third parties cannot be allowed to affect the assignee; and such authorities, holding this extreme, are combated by others. But I know of none that permit the equity of third persons to affect the assignee when such equity is not, or cannot be, connected with the instrument or debt assigned. The case in 61 N. Y. 122 (Trustees Union College v. Wheeler), is an exhaustive and leading one on this subject, and it upholds the doctrine that equities of third persons are available against the assignee; but in that case it is expressly said that the doctrine extends only “to all dealings and acts on the part of the assignor towards those persons whose rights and interest are embraced within the mortgage.''’ And
If Craig had retained the land it would -unquestionably have been subject to the lien of the mortgage, for Craig could not, of course, claim that the note had been paid, or that the deed of trust was satisfied. So if Craig and his grantees, down to plaintiffs, had conveyed by quitclaim deeds the land would still have been liable to the lien of the deed of trust in the hands of either of them, for by holding under quitclaim deeds they could not claim to be innocent purchasers (Hope v. Blair, 105 Mo. 90), since, the law does not require an
So I consider that the registry statute does not affect the case. And the question finally is, which of the parties have the better equity: The assignee for
By Hall releasing and quitclaiming the equity of redemption to Craig, the mortgagee, there was no merger of the two estates, as Craig, thus holding the two estates, had assigned his interest in one of them; equity would never permit a merger under such circumstances. 2 Washburn on Real Property, 564, sec. 1.
The fact, that Craig more than three years after he had assigned the note to Mrs. Eddy, and more than a year after the deeds of trust to Gilbert & Gay had been executed, made an entry of satisfaction of the Hall deed of trust on the margin of the record, can have no effect on the rights of the parties. Rice v. McFarland, supra, and authorities cited.
The judgment of the circuit court is affirmed.
Concurrence Opinion
(concurring). — I shall express as shortly as I can the view which I entertain in respect to the principal question which has been discussed in this case by each of my associates. It is a general principle that a quitclaim deed is notice of pre-existing equities. But it is not notice of such equities as are required by the statute to be registered; that is, spread upon the records, except where given for value. Stoffen v. Schroeder, 62 Mo. 147; Stevens v. Hume, 62 Mo. 473; Mann v. Best, 62 Mo. 401; Ridgeway v. Holliday, 57 Mo. 444; Campbell v. Gas Co., 84 Mo. 352; Fox v. Hale, 74 .Mo, 315; Andrews v. McPike, 86 Mo. 293; Sharp v. Cheatham, 88 Mo. 498; Munson v. Eddy, 94 Mo. 504. Manifestly, the transaction between Hall and Craig, by which the former discharged the note, was a fraud on the part of the latter as to Mrs. Eddy’s rights.
The facts constituting Mrs. Eddy’s equities in part were that she was the owner and holder of the note under an assignment from Craig at the time of the transaction between Hall and Craig, and that, owing to the nature of such equities, they could not be spread upon the records, and were not, for that reason, within the registration statutes. It is not controverted that, as between Mrs. Eddy, the assignee, and Craig, the assignor in equity, the note and deed of trust remained unaffected by the discharge of Hall. Craig was estopped as against Mrs. Eddy to set up his fraud in discharging Hall.
Bartlett holds by mesne conveyances under the quitclaim deed from Hall to Seals, and, according to the authorities just cited, the former acquired the land subject to the pre-existing equities of Mrs. Eddy. Bartlett occupies in respect to Mrs. Eddy’s equities precisely the same position that Craig or Seals did. He took the land with notice of the equities of Mrs. Eddy
I, therefore, concur in the conclusion reached by Judge Ellison.
Dissenting Opinion
{dissenting). — It seems the material facts of this controversy may be thus stated: On December 1, 1885, Hall executed to Craig a non-negotiable note of $700, due two years from date, and, to secure the same, Hall made a deed of trust on eighty acres of land. About six weeks thereafter, Craig, for value, assigned the note and security to defendant Eddy, who then was a non-resident, and who never gave any notice of the assignment to Hall. In October, 1887, Hall, behoving Craig yet the owner of the note and mortgage, paid off the same by a reconveyance of the land to Craig (or rather to one Seals for Craig). Prom Seals through several intermediate conveyances, the said eighty acres was purchased by and the title lodged in plaintiff Bartlett. The parties from whom Bartlett purchased the land had secured the same in entire good faith, and after being advised by Hall and by Craig that the old note and deed of trust of Hah to Craig had been fully satisfied. In making these representations Hall was entirely innocent, but the bad faith and villainy of Craig throughout the whole transaction is manifest.
The matter for determination then is, who of these parties must suffer; shall it be Eddy, the holder of the Hall note and mortgage, or shall it be Bartlett, the, in fact, good-faith purchaser?
I. In this discussion let us assume this controversy to rest between Hall, the payor and mortgagor, and Eddy, the assignee thereof. Hall, without notice of Eddy’s purchaser, paid Craig and took from Craig an acknowledgment of satisfaction of the debt and
It is clear, then, if this was a suit on the debt by Eddy, the assignee, against Hall, the debtor, it would be a good defense that Hall, before the notice of the assignment, had paid Craig, the assignor. And it would seem equally manifest that such payment to Craig would, likewise, bar an action for the foreclosure of the mortgage. The debt and the mortgage are for this purpose, at least, inseparable. “When the note is
II. But it is contended, on the faith óf Rice v. McFarland, 34 Mo. App. 404, that the payment of the debt by Hall to Craig after the assignment -to Eddy, but before notice of such assignment, was not, strictly speaking, a payment and satisfaction of the debt, but that the debt remained to support the mortgage security then in the hands of the assignee; that, while Eddy could not enforce the note against Hall (because of the payment to Craig before notice), yet that the mortgage security remained intact and enforceable in the hands of the assignee, Eddy. It seems to be the notion that from Hall’s payment to Craig (when he thought and had the right to conclude Craig still the owner of the note and mortgage) a sort of undefined equity arose in Hall’s favor, which would serve to defeat Eddy’s action on the note, but would not destroy a right to enforce the mortgage. After a very thorough investigation and consideration of the authorities, I feel that we ought to recede from the position thus practically taken by us in the above-cited cáse. If, when Eddy took from Craig an assignment of the debt and mortgage, it was intended to deprive] Craig of] the power and authority to receive payment thereof, it was the duty of Eddy to give notice of the assignment to Hall, so that he would not be deceived into paying to the wrong party; and, until such notice was given (or Hall was in some way informed), he [Hall] was justified in regarding Craig still the owner, or as agent of the owner, and a payment by him under such circumstances was a payment to the agent of an undisclosed principal. 2 Wharton on Cohtracts, sec. 342. By taking an assignment of the debt and mortgage from Craig, but failing
III. The rule in this state that, though an action on the debt be barred by the statute of limitations, yet a suit on the mortgage may be maintained (Wood v. Augustine, 61 Mo. 51; Booker v. Armstrong, 93 Mo. 58) does not impair the position taken in this case. The barring of an action by the statute of limitation is not payment of the debt. It only affects the remedy, the
IY. Some reference is made to section 2390 (E. S. 1889) as denying to Oraig, before notice to Hall of the assignment, power to accept payment or satisfaction of the debt. Said section reads: “ It shall not’be in the power of the assignor of a demand, after the assignment, to release any part of it,” etc. It would seem that this section of the statute was not intended to reach a case like this, where, though there was an assignment of the demand as between the assignor and assignee, yet it-was not effective as against the debtor without notice. However, any doubt must be put at rest when section 8161, Eevised Statutes, is considered. That statute reads: “ In actions on assigned accounts and non-negotiable instruments, the defendant shall be allowed every just set-off or other defense which existed in his favor at the time of his being notified of such assignment..”
As opposed to this view some-reference is made to the case of Bates v. Martin (3 Mo. 367) and St. Louis Perp. Ins. Co. v. Cohen (9 Mo. 421). These cases are correctly quoted as holding that payment of a nonnegotiable note by the debtor to the payee, but after an assignment to a third party (of which the debtor had no notice), is no defense to the maker of the note in- a suit by the assignee. But, as to what weight should be given these cases, it must be remembered that they were decided on the peculiar condition of the statute law at that time. The then statute law of Missouri in express words took the matter of assigned bonds and notes out. of the general rule applicable to the assignment of other choses in action, and only left the obligor or maker the right to set up the defenses he had- when the assignment was made. R. S. 1825, p. 143; R. S.
As I read these cases and this legislation, the law, as it was under the old statutes, has been changed, and the common law as it was before the act of 1825 practically restored. And we have it now as expressed by Judge Scott in Ins. Co. v. Cohen, supra (9 Mo. 442): “ As to choses in action or paper non-negotiable the assignee takes it subject to all the defenses the maker may have against it before notice of the assignment. To the assignee of the chose in action, the rule caveat emptor applies. * * * An assignment operates per se as an equitable transfer of the debt. Notice is indispensable to charge the debtor with the duty of payment to the assignee, so that if without due notice he pay the debt to the assignor he will be discharged from the debt.” Murdoch v. Finney, 21 Mo. 139.
It, therefore, results from the foregoing considerations that Hall’s payment to Craig had the effect not only to satisfy the debt, but as well to extinguish the mortgage security on the land now held by Bartlett. In thus deciding we are not forced to concede this defense as available to Craig, when he subsequently procured the title. Eor it may be well said that he,
In my opinion, then, the judgment, on the agreed statement of facts should have been for plaintiff, and not for defendants; and, therefore, I must dissent from the opinion of my associates.