Gordon v. Mulhare

| Wis. | Nov 19, 1860

By the Court,

Cole, J.

It seems to us very clear that Heeran bad no right to satisfy and discharge of record tbe mortgage mentioned in tbe pleadings in this case. He bad already transferred and assigned that mortgage and tbe accompanying note, for a good and valuable consideration, to tbe respondents, to secure tbe payment of tbe debt be owed them. Tbe note and mortgage were not due, and there was nothing to show that they were not executed to secure a Iona fide indebtedness from Mulhare to Heeran. And tbe evidence incontestably proves that Heeran obtained from tbe respondents nearly two thousand dollars’ worth of merchandize upon tbe strength of these securities, at tbe time-be assigned and pledged them. Why, then, could not tbe respondents bold tbe note and mortgage to secure tbe payment of tbe amount advanced upon tbe strength of these securities, thus pledged before maturity for value and without any notice to tbe respondents of tbe character or purposes for which tbe note and mortgage were made ? Assume that tbe respondents had no right to bold tbe note and mortgage, under tbe circumstances, to secure tbe payment of any pre-existing indebtedness from Heeran, still in law and equity could they not bold them for tbe then contracted indebtedness for which tbe securities were thus pledged ? It seems to us there can be no kind of doubt about tbe right of tbe respondents to bold tbe mortgage and note for this purpose.. Wbat if tbe note and mortgage were executed under tbe circumstances and for tbe object stated by Mulhare in bis answer and testimony ? Suppose Heeran paid no value for tbem, and as between bim and Mulhare a court of equity would decree tbem to be delivered up and cancelled. Can a court of equity do tbis after tbe securities bave passed into tbe bands of innocent Iona fide holders for value before maturity, wbo bave made advances and sold merchandize upon tbe faitb and credit of these very obligations ? Clearly not. Mulhare gave tbe note and mortgage voluntarily. He clothed Heeran apparently with a good title to tbem. Tbe respondent sold goods to bim upon tbe supposition that be owned tbem. And if either party must suffer loss from Heeran’s fraud, equity requires that it should fall upon tbe appellant rather than tbe respondents, certainly to tbe amount of tbe debt contracted when these securities were pledged.

Tbe counsel for tbe appellant contended that tbe circuit court erred in admitting evidence to prove tbe amount of tbe debt contracted at tbe time tbe mortgage was pledged and assigned, and insisted that tbe debt could only bave been proven by tbe production of tbe notes themselves. We do not so understand it. Tbis was a proceeding to bave tbe satisfaction of tbe mortgage, which bad been entered of record, vacated and set aside. That satisfaction bad been entered by Heeran without any authority whatever. Tbe respondents were entitled to bave tbis discharge vacated and tbe mortgage declared a valid lien upon tbe mortgaged premises, upon showing tbe nature and character of their interest in it. They certainly could prove by parol tbe whole transaction, and tbe indebtedness for which tbe mortgage and note were pledged as security. When they came to foreclose tbe mortgage, it would be necessary to produce tbe notes or satisfactorily account for tbem. But they clearly established their interest in the mortgage, and their right to bave tbe discharge vacated. And it was not necessary to produce tbe notes for tbis purpose. There was ample evi-' dence that' tbe notes belonged to respondents, and there was no testimony to tbe contrary.

^ WaS ^ur^er insiste(l that the circuit court should, in proceeding, have adjudged that the mortgage was a lien only to the extent of the debt contracted at the time it was assigned and pledged. But it is manifest that it was not necessary to go into that matter in this case. When the mortgage is foreclosed, if ever it shall be, we presume the court will do right between all the parties, and give judgment of foreclosure only for the amount for which the respondents are entitled in equity to hold it as security.

The judgment of the circuit court is affirmed.