177 Mo. App. 100 | Mo. Ct. App. | 1914
This is a suit in equity wherein the plaintiff prays the cancellation of two notes of $400 each and a chattel mortgage given to secure same, or, if the court will not cancel said notes, but finds that plaintiff owes anything thereon, that then the sum due thereon be ascertained so that plaintiff may pay same, and that such other and further relief may be granted as will be meet and just.
The chancellor heard the evidence and, refusing to cancel the two notes, rendered judgment against plaintiff on them in favor of the defendant bank as an innocent holder for value, but directed the cancellation of the chattel mortgage. The bank appealed.
Plaintiff brought the suit against the defendant bank and one Jeff Gentry. The material facts out of which it grew are these:
Gentry sold plaintiff a jack and received in payment therefor the two notes in question, and to secure said notes, took a chattel mortgage on said jack and on other personal property owned by plaintiff.
The notes and chattel mortgage were given March 15, 1911, and the chattel mortgage was duly recorded March 28, 1911. On May 12, 1911, before either of the notes were due, Gentry assigned them to the defendant bank as collateral security to secure the payment of a note of $800 which he gave the bank on that date. After the two notes in controversy fell due according to their terms, by reason of the nonpayment of interest, the bank began pressing plaintiff for payment and was threatening to foreclose the
The chattel mortgage contained the following provision: “Said Gentry by accepting this mortgage does hereby guarantee said Jack to be a reasonably sure foal getter, and also guarantees said jack to be capable and willing and able to cover mares that maybe brought to him for service. This mortgage is given to secure the purchase price of said Jack. ’ ’
It was pleaded in the petition that Gentry, the payee in said notes, warranted and guaranteed said jack to be a good foal getter-, and to be capable and willing to serve mares that might be brought to him for service, and that all of said facts were fully set forth in said chattel mortgage; but that there is and was a breach of said guaranty and warranty, in that said jack was not a reasonably good foal getter, and was not capable, willing and able to serve mares that might be brought to him for service, and was wholly worthless for any purpose whatever. And the decree of the chancellor specifically found these facts to be true. No complaint is made of this finding.
Defendant contends, however, that the chattel mortgage was merely incident to the notes and partook of their negotiability; and, inasmuch as the court found that the defendant bank took said notes discharged of any equities to which they were subject while in the hands of Gentry, the bank also took said chattel mortgage free from such equities. Consequently, defendant argues that the court erred in destroying the chattel mortgage.
The soundness or unsonndness of this contention, and the consequent disposition to be made of the case, hinge upon the question whether or not the chattel mortgage in this case, which on its face, and as one of its express conditions, assorts and carries equities between the mortgagor and mortgagee, so far partakes
In the case before us, the bank can claim no title to, or lien upon, the mortgaged property except through the chattel mortgage. And as this contains an express provision in regard to Gentry’s warranty and guaranty, this may be said to have given the bank notice of this guaranty as one of the conditions of the mortgage. In the Hagerman case, supra (91 Mo. l. c. 532), the court said: “Generally, it may be stated as a rule on this subject that where a purchaser c'annot make out a title but by a deed which leads him to another fact, he shall be presumed to have knowledge of that fact.” In National Bank of Commerce v. Morris, 114 Mo. 255, l. c. 261, it is said: “There is no question and there can be none as shown by the authorities cited by counsel that where a paper,, contract or agreement is referred to in a mortgage, that all persons claiming under such mortgage where it had been duly recorded take with notice of the paper, contract or agreement referred to. [Munson v. Ensor, 94 Mo. 504; Brownlee v. Arnold, 60 Mo. 79; Lewis, Adrnr., v. Ins. Co., 3 Mo. App. 372; Railroad v. Atkison, 17 Mo. App. 484.]” If one claiming under a mortgage is bound by the terms and provisions of a separate instrument referred to but not incorporated therein, then certainly he is still more firmly bound by the provisions and conditions plainly written and expressed in the mortgage under which he claims. [See also on this point, Stoy v. Bledsoe, 68 N. E. 907, l. c. 909; Sill v. Pate, 82 N. E. 356, l. c. 359.]
Now, while a note and mortgage securing it and executed at the same time are usually considered as parts of one and the same contract or transaction yet
The express provision of the chattel mortgage that it was given to secure the purchase price of the jack and that Gentry, “by accepting this mortgage” guarantees the jack, is as much one of the conditions of the chattel mortgage as any other condition therein. That being the case, the bank ought not to claim the benefit of the other conditions therein while at the same time ignoring and repudiating this condition. In Fox v. Windes, 127 Mo. 502, l. c. 511, 512, it is said that “he who accepts a benefit under an instrument must adopt the whole of it, conforming with all its provisions, and renouncing every right inconsistent with them. . . . No man can be permitted to claim inconsistent rights with regard to the same subject, and anyone who claims an interest under an instrument, is bound to give full effect to that instrument as far as he can. A person cannot accept and reject the same instrument, or, having availed himself of it as to part, defeat its provisions in any other part;, and this applies to deeds, wills, and all other instruments whatsoever. [2 Herman on Estoppel and Res
In 16 Cyc. 791 it is said: “A person claiming under a deed containing a condition, exception, or reservation, is bound thereby and cannot take the conveyance without assuming its obligations.” [See, also, Walker v. Frazier, 2 Rich. Eq. 99; Hadley v. Pickett, 25 Ind. 450.]
In Linnville v. Savage, 58 Mo. 248, l. c. 254, 255, it was held that while the assignee of a note secured by a mortgage may be entitled, in a suit on the note, to a personal judgment against the maker, without regard to the equities between the maker and the original payee, still, when the assignee seeks the enforcement of his claim under a mortgage, he occupies an entirely different situation and is in no better or no worse position than the person from whom the mortgage' was acquired by assignment. One who seeks to enforce an equity, must take it subject to prior equities. The law governing mercantile paper has no application to cases of this character. Under the law, the assignee could not be bound by any equities between the original payee and the maker, so far as the notes are concerned. But the deed of trust or mortgage to secure these notes was made no better or worse by the transfer. While the language referred to in the Linville case may be broader than our decisions now warrant, if applied to a mortgage containing no express provision in it or to an assignee wholly without notice, it certainly is applicable where the mortgage contains such provision.
In Jones on Chattel Mortgages (5 Ed.), sec. 501, it is said: “The assignee of a mortgage and the note secured by it is a purchaser in the same way that a mortgagee is a purchaser. The assignee without notice stands upon the same footing as a bona-fide mortgagee. He is entitled to the same protection as any bona-fide grantee without notice. He is entitled to
So also in 2 Cobbey on Chattel Mortgages, see. 648, it is said: “An assignee takes free from all equities in favor of the mortgagor, if the mortgage secured negotiable paper not due when the assignment was made.” But in all the cases cited in support of the rule, the equities were secret or latent, and there were none in which the equity arose out of an express provision contained in the mortgage.
Cases from Illinois cited by respondent are not safe guides to follow on the question involved since that State follows a different rule from ours on the question of a mortgage partaking of the negotiability of the note it secures. And the same is true of cases cited from Minnesota. But, in all the decisions of our State as well as of those announcing the same rule, to-wit, that the assignee of negotiable paper secured by mortgage takes the latter freed from equities the same as the note, it will be observed that the language used was in reference to equities not expressed on the face of the mortgage.
But appellant contends that there had been no breach of warranty at the time the assignment was
It is true that by the Negotiable Instruments Act, section 10022, Revised Statutes 1909, the holder, in due course, of a negotiable instrument is one who takes such instrument complete and regular on its. face, before due, in good faith, for value and without notice, at the time it was negotiated, “of any infirmity in the instrument or defect in the title of the person negotiating it;” and that by section 10026, to constitute notice of such infirmity or defect actual knowledge must exist or knowledge of such facts as will make the act of taking the instrument amount to bad faith. But this applies only to the notes in question, and does not cover the chattel mortgage in this case. The trial court gave
The judgment is affirmed.