212 Pa. 41 | Pa. | 1905
Opinion by
Joseph F. Tobias was the equitable owner of an undivided
We do not regard either of these positions as tenable. The appellant concedes that the several assignments made by Tobias were equitable mortgages on his undivided interest in the “ Old Oaks ” property, and acquiesces in the position of the court below that they have priority according to their respective dates. It is true that a mortgage paid by the mortgagor cannot be kept alive and retain its lien against subsequent mortgage and judgment creditors without notice. But as between the parties to the instrument, the mortgage may by agreement be kept alive and be enforced against the mortgagor for the amount of the loan secured by it. In Mitchell v. Coombs, 96 Pa. 430, a mortgage was given to a bank to secure a bond which was subsequently paid by the obligor, but the mortgage was retained by the bank as security for further discounts. In delivering the opinion of -this court, Mr. Justice Gordon says: “As to Coombs (mortgagor), Iris acquiescence in this arrangement (retention of mortg'ag'e to secure future advancements), would, no doubt, estop him from setting up the payment of the bond to defeat the mortgage, but as to his judgment creditors, the transaction was of no legal force. As to them the mortgage was satisfied, and no arrangement, not apparent on its face, would avail to continue its lien.” Loverin v. Humboldt Safe Deposit & Trust Co., 113 Pa. 6, was, as stated by the court, an attempt to keep alive a mortgage which had been paid by the mortgagors against a subsequent unpaid mortgage given by the same mortgagors upon the same premises. Of course, this could not be done, but in delivering the opinion Mr. Justice Paxson says : “ Where creditors are not concerned, there is perhaps no legal reason why it (keeping the mortgage alive) may not be done. Though actual payment discharges a judgment or other incumbrance at law, it does not discharge it in equity if there are interests which require it to be kept
It is therefore clear, we think, that the parties to a judgment or mortgage, as between themselves, may, by agreement, continue its lien notwithstanding payment in full has been made by the debtor. There is no reason why this should not be so. It is simply permitting the parties to exercise the right of contract which they unquestionably have. And such an agreement binds not only the parties to the instrument, but also subsequent creditors with notice. It is settled that a third party with notice is bound by a contract between the mortgagor and the mortgagee to keep alive the security. Such party has no standing in law or equity to demand that his mortgage, taken with notice, shall have precedence over a prior mortgage held to secure payment of a bona fide loan. This principle is supported by authority as well as by reason. In Nice’s Appeal, 54 Pa. 200, it is distinctly held that an unrecorded mortgage will avail, not only against the mortgagor, but also against his alienee and mortgagee with notice. In Mellon’s Appeal, 32 Pa. 121, Mr. Justice Strong speaking for the court says that notwithstanding the recording acts it has uniformly been held that an unrecorded mortgage ’is good as against the mortgagor, or anyone claiming under him with notice. And in Britton’s Appeal, 45 Pa. 172, it v'as held that a mortgage given for the purchase money of real estate, executed before, but not recorded until after judgments had been entered against the
We are of opinion that the parties to the assignment of December 18, 1897, could agree to beep it alive in order to secure further loans, and that the assignment was valid and had priority over a subsequent assignment by Tobias taken with notice of the agreement. It was found as a fact by the court below that'Baird, before making his loan to Tobias, had notice of the prior assignment to the Girard Trust Company, which was retained to secure the payment of the $7,000 loan made in December, 1900, and hence he is not in a position to dény its priority over his assignment made in February, 1901. And we also think that the assignment retained by the plaintiff company was effective to secure the full amount of the new • loan. This is on the same principle that the- parties could by agreement continue its validity to secure another loan. If the parties by contract could give the assignment life to secure another loan after the amount named in it had been paid, there is no reason why they could not at the same time stipulate the amount for which it was to remain a security. “We have no doubt,” says Paxson, J., in Peirce v. Black, 105 Pa. 342, “ that it is competent for the parties to a judgment, by their own agreement, to change the purposes for which it may be held.” And in Atwater v. Underhill, 22 N. J. Eq. 599, Depute, J., in delivering the opinion, says : “ A mortgage which has been satisfied may be given a new vitality by a redelivery by the mortgagor to the mortgagee, or a third person, upon a new consideration, or for a purpose different from that for which it was made.” The original loan to Tobias was paid, and, therefore, the assignment was no longer held to secure its payment. The assignor received another sum of money from the assignee for which the parties agreed that the instrument should remain a security. Tobias, the assignor, is not seeking to invalidate his contract and is not contesting the right of the plaintiff to retain the assignment to secure the payment of the larger loan, and why should Baird with notice of the sum
The decree is affirmed.