183 N.E. 188 | Ohio Ct. App. | 1932
This case originated in the municipal court of Cincinnati, wherein judgment was rendered *331 in favor of the plaintiffs, which judgment was affirmed by the court of common pleas of Hamilton county, and is now presented to this court on error from the judgment of the court of common pleas.
Morris and Freda Dennis executed a note for $4,000, payable in installments of $25 per month, to Eugene Adler, and gave Adler a chattel mortgage to secure the payment of the note. The note provided for acceleration upon default of any installment, at the option of the payee.
At the time of the execution and delivery of the note Morris was heavily indebted to creditors, and the giving of the note and mortgage was without consideration and to protect the Dennises, who have since gone into bankruptcy, in which proceeding their obligation upon the note has been discharged.
After the installments were in default, the note and mortgage were assigned to Samuel Rotter for a valuable consideration.
The instant suit is a foreclosure of the chattel mortgage.
There was no fraud upon the mortgagors in taking the mortgage. The facts are conclusive in showing that the mortgage was given to protect the mortgagors, or at least Dennis, the husband, from the just claims and acts of his creditors.
The plaintiffs in error rely upon Baily v. Smith,
While the note in the instant case provided for acceleration, it was only at the option of the payee of the note upon default of an installment. No such option was ever exercised, for the very good reason that it was understood between the parties that no payments *332 were to be made on the note which had been given without consideration.
Rotter, the assignee, was therefore a bona fide holder in due course of the mortgage as well as the note, for value and without notice of any claimed infirmity therein.
Baily v. Smith, supra, has been definitely limited by subsequent decisions to a strict application to facts similar to those in that case. The decision is out of harmony with the majority of cases throughout the country. First National Bank ofWapakoneta v. Brotherton, Trustee,
We adopt the language of Judge Richards in the case of AshlandBldg. Loan Co. v. Kerman, supra, on page 132 [
In any event, the mortgagors cannot be now heard to disclaim the effect of an instrument they voluntarily executed and which has caused another to innocently part with a valuable consideration.
The judgment of the court of common pleas, affirming the judgment of the municipal court, is affirmed.
Judgment affirmed.
HAMILTON and CUSHING, JJ., concur.