7 Div. 653. | Ala. | Jun 17, 1926
This is the second appeal in this cause. Federal Land Bank v. Branscomb,
Upon remandment of the cause following a reversal of the former decree on demurrer, the bill was amended in material respects, the salient features of which amendment, in connection with a brief synopsis of the original bill, appear in the report of the case. From, a decree sustaining demurrers to the bill as amended, complainant prosecutes this appeal.
The opinion upon former appeal rested upon the assumption that the respondent Federal Land Bank was an innocent subsequent mortgagee by reason of its reliance upon the record satisfaction of the mortgage made by one shown by the record to be the proper *244 person to enter such satisfaction. But the amendment to the bill makes an entirely different case.
It is now made to appear that the record was not so satisfied and reliance had thereon at the time of the negotiation of the loan, but that the Federal Land Bank knew the mortgage executed to Wilson by Calhoun and transferred to complainant had not been paid, furnished the funds out of the loan with which to pay the same, and in fact that such funds were paid by said bank to Wilson in payment thereon, whereupon and simultaneously therewith said Wilson entered satisfaction of the indebtedness upon the margin of the record. That the bill shows complainant the holder in due course for value before maturity of the negotiable note and the mortgage which secures the same, both of which had been duly transferred to complainant, is not questioned.
Counsel for appellee are impressed that the pivotal point in the case, adversely to the equity of the bill, is its failure to aver that the negotiable character of the note appeared upon the record or that the bank had notice thereof.
The result of this appeal, however, must turn upon the principle recognized in the recent case of Federal Land Bank v. Corinth Bank Trust Co.,
"Where complainant, prior to purchase, knew there was outstanding unsatisfied mortgage on the property, and paid mortgage to one shown to be, record owner, entry of satisfaction and release being made subsequent to such payment, complainant could not claim to be bona fide purchaser against one to whom notes secured thereby were negotiated by mortgagee; complainant being bound to ascertain whether mortgagee still held the notes at time of payment."
The bill as amended is brought within the influence of this last noted authority, and the principle therein stated is applicable whether the record of the mortgage gave notice that the notes secured thereby were negotiable or not. That was immaterial.
"The person taking the discharge is bound to ascertain whether the mortgagee still held the notes at the time he discharged the mortgage. The notes in such case become the evidence of the mortgagee's authority to enter satisfaction of the lien." 2 Jones on Mortgages, § 814, p. 290, as quoted in Corinth Bank Case, supra.
This rule is recognized by the authorities generally.
"Payment without obtaining a surrender of the instrument is at the risk of the party making the payment, except where the instrument is nonnegotiable." 8 Corpus Juris, 581.
See, also, Sherrill v. Merchants' Bank,
The bill was not subject to the demurrer interposed.
Let the decree be reversed and the cause remanded.
Reversed and remanded.
ANDERSON, C. J., and SAYRE, GARDNER, MILLER, and BOULDIN, JJ., concur.