Geib v. Reynolds

35 Minn. 331 | Minn. | 1886

Mitchell, J.

The application of a few familiar principles to the facts of this case furnisbes an easy solution of the points raised on this appeal.

1. A promissory note given for an antecedent debt does not discharge the debt, unless expressly given and received as absolute payment ; and the burden of proof is upon the party asserting the fact to show that it was so given and received, the presumption being to the contrary. 2 Pars. Cont. 756; Leake, Cont. 890; Nightingale v. Chafee, 11 R. I. 609; Hutchinson v. Swartsweller, 31 N. J. Eq. 205. See, also, Keough v. McNitt, 6 Minn. 357, (513;) Goenen v. Schroeder, 18 Minn. 51, (66;) Donnelly v. Simonton, 13 Minn. 278, (301.)

In this case there is no evidence that plaintiff’s intestate, Thole, took the new note and mortgage in payment of the debt secured by the first. It is true that Dieting, the mortgagor, says he “gave Thole a new note and mortgage in payment of the first note and mortgage he held;” but this is a mere conclusion, without a fact to support it. On the contrary, the transaction shows clearly that the new note and mortgage were given merely for the purpose of securing the same debt, on longer time, and at a lower rate of interest.

2. A mortgage secures a debt, and not the evidence of it. Hence no change in the form of the evidence of the debt, or in the mode or time of payment, — in fact, nothing short of actual payment of the debt, or an express release, — will operate to discharge the mortgage. The mortgage remains a lien until expressly released, or until the debt it was given to secure is paid. Jones, Mortg. §§ 924, 925, and cases cited. This is so both as between the parties and as to a subsequent purchaser. Jones, Mortg. § 927; Brinckerhoff v. Lansing, 4 John. Ch. 65, (8 Am. Dec. 538.) Of course we are not speaking of cases where the doctrine of estoppel by conduct would apply.

3. Although Livingston Quaekenbush, the agent of the subsequent mortgagees, Eeynolds and Benjamin Quaekenbush, found the first “Thole” note and mortgage in the hands of Dieling, the mortgagor, the mortgage remaining unsatisfied of record, he had no right to assume, without investigation, that it was paid. The record of the unsatisfied mortgage was constructive notice to him of all the rights and equities of the mortgagee under it. It was sufficient to put him upon inquiry, and whatever puts a person upon inquiry, is, in equity, notice to him of all the facts which such inquiry would have disclosed. If he saw fit to act without an examination of the records, which would have disclosed the fact that the mortgage was not discharged, he did so at his peril. Jones, Mortg. § 927; Bolles v. Chauncey, 8 Conn. 389; Harrison v. New Jersey R. & T. Co., 19 N. J. Eq. 488; Boxheimer v. Gunn, 24 Mich. 372.

4. Hence the subsequent mortgagees in this case, having become such anterior to the cancellation of the first Thole mortgage, are not innocent purchasers without notice, and stand in no better position than Dieling, the mortgagor. They acquired their rights before the discharge of record of the “Thole” mortgage, and not upon the faith of that discharge. They are not, therefore, in position to insist that they are injured by annulling that discharge. When a prior mortgage has been, by fraud or mistake, discharged of record, a subsequent mortgagee, who became such anterior to such discharge, cannot claim to be injured by setting aside the release, and restoring the mortgagee to his rights. Downer v. Miller, 15 Wis. 612; Robinson v. Sampson, 23 Me. 388; Cansler v. Sallis, 54 Miss. 446.

5. It is a familiar rule that if the holder of a mortgage take a new mortgage as a substitute for a former one, and cancel and release the latter in ignorance of the existence of an intervening lien upon the mortgaged premises, equity will, in the absence of some special disqualifying fact, restore the lien of the first mortgage, and give it its original priority. Jones, Mortg. § 971; Bruse v. Nelson, 35 Iowa, 157; Cobb v. Dyer, 69 Me. 494; Hutchinson v. Swartsweller, supra; Robinson v. Sampson, supra; Barnes v. Mott, 64 N. Y. 397; Pom.Eq. Jur. § 849.

6. The fact that the mortgage was released in ignorance of the existence of the intervening lien is deemed such a mistake of fact as to entitle the party to relief, and this although such intervening lien was of record at the time. Bruse v. Nelson, supra; Cobb v. Dyer, supra; Banta v. Vreeland, 15 N. J. Eq. 103.

7. Mistake may not only be expressly established, but it may be inferred .from circumstances, and from the nature of the transaction. In this case, Thole being dead, there was no evidence that he released his original mortgage in ignorance of these intervening mortgages, except as it may be inferred from the transaction. But while a court cannot infer facts not proved, yet it is at liberty to draw all the inferences which logically and naturally follow from the facts proved. It is not to be presumed that Thole would have discharged his first mortgage, and accepted the second one as security for $2,000, had he known of the existence of these other mortgages, amounting to $3,100, upon property worth only $2,500. The court had a perfect right to infer that he would not have made this release had he known of these intervening liens, and a court of equity will grant relief on the ground of mistake, not only when the mistake is expressly proved, but also when it is fairly implied from the nature of the transaction. 1 Story, Eq. Jur. § 162; Barnes v. Mott, supra; Hyde v. Tanner, 1 Barb. 75; Cobb v. Dyer, supra; Stimpson v. Pease, 53 Iowa, 572, (5 N. W. Rep. 760;) Wyche v. Greene, 11 Ga. 159, 172; Bruce v. Bonney, 12 Gray, 107, (71 Am. Dec. 739.)

The court below was therefore right in restoring the lien of .plaintiff’s mortgage, and giving it priority over those of defendants.

Judgment affirmed.