90 Vt. 318 | Vt. | 1916
The plaintiff hands up in connection with the findings of the chancellor the transcript of the testimony, and the defendants claim that the transcript is not properly before us. This question we do not find it necessary to decide. We state the case as shown by the findings.
October 20, 1914, defendant Flynn bought of one Hanson a pair of horses for $500, giving Hanson a lien note for $400, and a horse valued at $100, on which defendant Ritchie had a mortgage. December 30th, Flynn gave Ritchie a chattel mortgage on the Hanson horses and other property, to secure an indebtedness to Ritchie amounting to about $1,200. Hanson was then pressing Flynn for payment and threatening to take the
The bill charges Flynn, Ritchie and Hanson with fraud and collusion, and this was claimed from the above facts and other details not recited; but the chancellor has found that there was no fraud. It is found however, in terms, that when the plaintiff took the chattel mortgage from Flynn and caused the Hanson lien .to be discharged, he had no knowledge of the chattel mortgage given by Flynn to Ritchie, and supposed that the Hanson horses were free from incumbrance except the lien note. But the chancellor finds that the mortgage to Ritchie was duly recorded in the chattel mortgage records, and that if the plaintiff had examined the records he could have readily found that such a mortgage had been given.
The facts reported are equivalent to a finding that the plaintiff paid the lien note at the request of Flynn, and upon an understanding with Flynn that he was to have a new security on the property released. So the plaintiff was not an intermeddler or a mere volunteer, and his payment of the first lien did not necessarily give priority to the second. If the payment was made under a material and excusable mistake of fact, and no rights of innocent parties have intervened, the first security will be kept alive as against the holder of the subordinate lien. It is distinctly found that the plaintiff had no knowledge of Flynn’s mortgage to Ritchie when he paid the lien note, and
The chancellor has found, and has apparently turned the ease upon, the facts that the Ritchie mortgage was properly recorded, and that the plaintiff could readily have learned from the records that such a mortgage had been given. The doctrine of constructive notice is not applicable; and we think the findings regarding the record do not constitute a defence. An examination of the records would have disclosed the incumbrance, but the question is whether an examination was required by the rule of diligence applicable to the case. This is not a ease where the relief of the plaintiff will cause an actual loss to the defendant. 'Ritchie has not increased his investment since the payment of the lien note, and a reinstatement of the security will simply leave him in his original position. He will lose nothing but the gain which would otherwise have accrued to him from the plaintiff’s mistake. Nothing short of very culpable negligence 'will bar relief in these circumstances. Parties who have paid prior liens at the request of the debtor in ignorance of the existence of subsequent incumbrances have been held entitled to the remedy of subrogation notwithstanding a failure to examine the records. Emmert v. Thompson, 49 Minn. 386, 52 N. W. 31, 32 Am. St. Rep. 566; Bruce v. Nelson, 35 Iowa 157. And see generally Wilkins v. Gibson, 113 Ga. 31, 38 S. E. 374, 84 Am. St. Rep. 204; Home Sav. Bk. v. Bierstadt, 168 Ill. 618, 48 N. E. 161, 61 Am. St. Rep. 146; Heisler v. Aultman, 56 Minn. 454, 45 Am. St. Rep. 486; Seeley v. Bacon, (N. J. Ch.) 34 Atl. 139; 2 Pom. Eq. Jur. §856.
We have cases in which it has been said that courts of equity will never afford relief where a party has acted in ignorance of facts which could have been ascertained by the exercise of due diligence and inquiry. The facts of these eases clearly
There is nothing in the facts of the case that shows Hanson to be a necessary party. His lien note has been paid and can-celled, and the priority of the new security given the plaintiff in lieu of a transfer of the lien note can be established without setting up Hanson’s former interest as a medium. Priority will be given this security only to the amount actually paid by the plaintiff.
Decree reversed and cause remanded with mandate that a decree be entered establishing the chattel mortgage given by Flynn to the plaintiff as a first lien on said horses superior to the mortgage of defendant Ritchie, and forever enjoining said Ritchie from asserting or enforcing his said mortgage against said property, and from disposing of the same in any manner, without first satisfying plaintiff’s said mortgage.