89 W. Va. 659 | W. Va. | 1921
The decree complained of on this appeal determines questions of priority between the Citizens National Bank of Connellsville, assignee of notes secured by a deed of trust and also of an interest in a mortgage, on the one hand, and the Commonwealth Trust Company of Pittsburgh, a subsequent mortgagee of the same property on which the assigned debts were secured, on the other, in favor of the bank and cancels releases of the deed of trust and prior mortgage, executed by the original creditor.
The property involved is about 30,000 acres of coal made up of numerous small tracts consolidated, one-sixth of which was owned by Joseph B. Barnes, one-half by Alfred J. Cochran and the residue by James R. Barnes. After Joseph E. Barnes and Cochran had encumbered their interests by the deed of trust and prior mortgage, all of the interests in the coal became vested in Josiah V. Thompson, who organized a corporation known as the Harrison-Doddridge Coal and Coke Company, and conveyed the entire body of coal to it. That company executed the subsequent mortgage upon the entire property to the Commonwealth Trust Company to secure an issue of bonds amounting to $4,000,000.00.
On July 6, 1907, Joseph E. Barnes executed a mortgage by which he conveyed his undivided one-sixth of the property to Jasper Augustine, to secure a debt of $150,000.00, evidenced by the provisions and covenants of the mortgage and not otherwise. No notes are mentioned or described in it. By a formal deed, dated October 26, 1907, and properly acknowledged, Augustine assigned four-fifteenths of the
On December 11, 1907, Cochran conveyed his undivided one-half of the property to John Bassel, trustee, to secure his twenty notes for the sum of $10,000.00 each, made and delivered to Augustine. This instrument was likewise recorded in both of said counties. On the day of its execution, Cochran assigned four of the notes to Markell, as collateral security for the same notes for security of which the Barnes mortgage was partially assigned, two $16,000.00 notes and one $18,000.00 note, held by Markell for the bank, none of which have been paid, and all of which were duly presented for payment and protested for non-payment.
Augustine, on January 14, 1910, executed releases of both the mortgage and deed of trust, which were recorded in both counties December 21, 1910. He swears he executed them by mistake, superinduced by misrepresentation and fraud on the part of Thompson, who, before the date of these transactions, acquired the property subject to the indebtedness thereon. Thereafter, July 26, 1912, Thompson conveyed it to the Harrison-Doddridge Coal and Coke Company, and, on August 1, 1912, that company executed said $4,000,000.00 mortgage.
As the notes secured by the deed of trust and the mortgage differ in point of status, the assignment of the former not having been recorded, while that of the other was, and the deed of trust' being a mere security for a debt, while the mortgage vested the legal title to the property in the mortgagee, they will be separately considered.
A debt secured by -a deed of trust is a mere chose in action, wherefore an assignment thereof is not required to be recorded. It is not included in the terms “goods and' chattels,”
The original trust creditor, after having assigned the debt, cannot validly release the lien and thus destroy the right of his assignee therein. Fleshman v. Hoylman, cited; Taylor v. Godfrey, 62 W. Va. 677; 2 Jones on Mortgages, sec. 957. This rule is applicable to judgments and mortgages securing payment of notes and bonds. Crumlish v. Railroad Co. and Fidelity Co. v. Railroad Co., 32 W. Va. 244; Clarke v. Hogeman, 13 W. Va. 718; First National Bank v. McGraw, 85 W. Va. 298, 311.
Upon the inquiry as to the effect of a release by the original trust creditor upon the relative rights of the assignee and a purchaser of the property upon which the debt is secured, without notice of the assignment and in reliance upon the recorded release, the propositions above stated are not decisive, nor strongly persuasive. The distinction between two claimants of the secured debt or the debtor and an as-signee' of the debt, on the one hand, and a .purchaser of the property on which it was secured and an assignee, on the other, is very clear. The subjects of controversy or conflicting claims, though related, are entirely different. To the purchaser, the recorded deed of trust is constructive notice, as is also the release. If the release is as broad in its scope as the deed of trust and specifically covers all of its possible elements, the purchaser ought to be protected by it, and this view is sustained by authority. The vendor’s lien involved in Turk v. Skyles, 45 W. Va. 82, described no note for the unpaid purchase money, although one had been executed. The vendor holding that note joined the vendee in the execution .of a deed of trust on the land, and thus released or con
In jurisdictions in which an assignment of the deed of trust or mortgage is not required to be recorded, the as-signee of the note or bond, under such circumstances, is protected and. the purchaser takes the property subject to his right. Bamberger v. Geiser, 33 Pac. 609; Lee v. Clark, 89 Mo. 556; Trust Co. v. Shaw, 5 Sawyer (U. S.) 340; Reeves v. Hayes, 95 Ind. 521; James v. Morey, 2 Cow. (N. Y.) 246; Dixon v. Hunter, 57 Ind. 278; Hasselman v. McKernan, 50 Ind. 441; People’s Trust Co. v. Tonkonogy, 144 App. Div.
To bring the assignment of the mortgage within the requirements of the recording acts and thus give force and effect to a recorded assignment thereof, the distinction between a mortgage and a deed of trust, in point of character, is relied upon. It is contended that, to give it effect as against a subsequent purchaser for value and without notice, the assignment must be recorded, because it • is a conveyance of an estate in land, and, therefore, comes within the statute. Of course, a mortgage vests the legal title conditionally in the mortgagee, while a deed of trust puts it in a trustee. At common law, upon a default in payment of the amount due upon a mortgage, the title vests unconditionally in the mortgagee, subject only to an equity of redemption in the mortgagor, of which the law takes no notice. In case of default in payment of a debt secured by a deed of trust, no change occurs in the title. The property merely becomes liable to sale under the power of sale conferred upon the trustee. This difference, substantial and important in some' respects, does not justify a distinction between a mortgage and a deed of trust, in the construction of the recording statute. A trust creditor is a purchaser within the meaning of that statute. The estate in the property is held by the trustee for his benefit, just as firmly and completely as a mortgagee would hold it. He has the equitable estate within his power, through the trustee’s possession of the legal title, for his use. That amounts to an interest in the property and an assignment of it is as much a conveyance of land as is an assignment of a morgage. An assignment by a trust creditor would not pass the legal title, as an assignment of a mort
But for statutory modification of the common law respecting mortgages, the contention for distinction between assignments of deeds of trust and mortgages might be forceful in this connection. As to this, it is unnecessary to express an opinion, beyond the suggestion just made by way of argument. At common law, a mortgagor, after having made default, vesting the legal title in the mortgagee absolutely and unconditionally, could not reacquire it by mere payment and the taking of a simple release. To obtain it, he was required to go into- equity by bill for a decree restoring it by conveyance or otherwise, or to take a voluntary reconveyance from the mortgagee. Jones, Mort., 7th Ed., sec. 889, citing numerous authorities.' This is no longer necessary. By force of the statute, secs. 1 to 4 of ch. 76, inclusive, the estate is revested in the mortgagor by the signing and acknowledgment of a release. The effect of this is to make a mortgage a mere security for the mortgage debt. That the release statute applies to mortgages is clear. The lien of a mortgage is a lien “created by conveyance”, mentioned in section 1. Section 4 provides that, by execution of the release, the lien “shall be discharged and extinguished and the estate, of whatever kind, bound or affected thereby, shall' be deemed to be vested in the former owner or those claiming under him, as if such lien had never existed.”
There may be a difference between the assignment of the note or bond secured by a deed of trust or a mortgage and assignment of the lien itself, or rather of the deed of trust or mortgage. In the former case, the note or bond is the immediate and direct subject of the contract and the assignment carries the security, only in equity, not at law. The as-signee obtains no legal interest in the land. He obtains a mere equitable interest in the mortgage, enforceable only in the name of the holder thereof. Clarke v. Havard, 122 Ga. 273; Kleeman v. Frisbee, 63 Ill. 482; Grassly v. Reinback, 4 Ill. App. 341; Warren v. Homstead, 33 Me. 256; Barnes v. Boardman. 149 Mass. 106; Olcott v. Crittenden, 68 Mich. 230; Bailey v. Winn, 101 Mo. 649; McCammant v.
It falls within the terms of the recording statute. Section 4 of chapter 74, Code, makes every “contract in writing, * * * made for the conveyance or sale of real estate, or a term therein of more than five years”, as valid as if it were a deed conveying the “estate or interest embraced in the contract.” Section 5 of that chapter requires “Every such contract; every deed conveying any such estate or term, and every deed of gift or deed of trust or mortgage, conveying real estate or goods and chattels”, to be recorded. Mortgages and deeds of trust convey estates and interests in real estate and goods and chattels. Assignments thereof pass them from the creditors to third parties or strangers to the or
For the distinction between an assignee of the lien and an assignee of notes described in it, as regards right respecting an innocent purchaser of the property, Turk v. Skyles and Bank v. Harman, cited, may properly be invoked as authority. The following observations made by Judge Staples in the latter case were approved by Judge Brannon in the former: “If the deed from M. G. Harman to Asher W-Harman had mentioned the existence of a negotiable note, it might have become the duty of Mrs. O’Toole, before purchasing, to call for its production; the failure of the parties to produce it might justly have led to a strong suspicion that
In the case of the mortgage involved here, there was an assignment of the lien itself, by a formal deed. That carried an estate or interest in the land, wherefore, as has been shown by ample authority, the deed of assignment was recordable, and, if not recorded, would have been void as against a subsequent purchaser for value and without notice, and the release by Augustine good against the bank, in the controversy between it and the trust company. But it was recorded and constituted constructive notice to the trust company, that the bank was the owner of four-fifteenths of the mortgage, in consequence of which Augustine could validly release only the remaining eleven-fifteenths thereof. This conclusion makes obvious the correctness of the decree as to the mortgage.
Perceiving no error in the decree either as to the notes or the mortgage, we will affirm.
Affirmed.