62 Mo. 455 | Mo. | 1876
delivered the opinion of the court.
This was a proceeding to foreclose a mortgage under the statute.
On the 17th day of January, 1870, Samuel F. Cowan sold and conveyed by warranty deed, to the defendant Smith, the land described in the mortgage sought to be foreclosed, .for the sum of $3,000. The defendant paid $1,800 in cash, and for the remaining $1,200 made and delivered his negotiable promissory note of that date to said Cowan, payable on the 25th day of December, 1870, and to secure the payment of the same, executed said mortgage. At the date oí
The defendant, Smith, had no knowledge of this mortgage at the time of his purchase, and he first learned of its existence on the 25th day of March, 1870, when Eloyd notified him that Cowan had made default in the payment of his first note. Smith then saw Cowan, and it was agreed between them that Smith should raise $500, and Cowan should raise the balance necessary to pay off said note. In pursuance of said agreement, Smith paid $500 to Floyd on the 25th day of May, 1870, which was credited on Smith’s note to Cowan ; but Cowan failed to raise any money whatever. It was then further agreed between them, that Smith should become responsible on the Floyd notes to the extent of the balance on his note to Cowan for $1,200, not then due, and thus extinguish his indebtedness to Cowan. Cowan then stated to him that the mortgage had not been recorded, and should not be, but the note was not surrendered. Time was given on the balance of the first note, as is shown by the date of payment, and Smith subsequently paid the whole of the Floyd notes, and had satisfaction of the mortgage entered of record.
On the 9th day of August, 1870, the plaintiff, Logan, loaned to Cowan the sum of $1,200, taking a note from him therefor, and a transfer of Smith’s note for $1,200 as collateral security, being informed by Cowan that it was secured by the mortgage before mentioned. This mortgage was never recorded, nor was it delivered to Logan, and it appears from the evidence to have been lost.
Soon after this transaction Cowan became insolvent. Smith was notified of the transfer of his note to the plaintiff, a short time prior to its maturity, and before any payments were made by him on the Floyd notes, other than that of $500 on May 25th, 1870, which was indorsed on the note; but as
On the foregoing facts it is contended by the defendant, that the plaintiff was not entitled to judgment, first, because he could not be regarded as a bona fide holder of the Smith note, inasmuch as he took it as collateral security ; and second, because the mortgage was not negotiable, and the plaintiff could not acquire by the simple transfer of the note any greater right to enforce the mortgage security than Cowan had.
Objection is made to the form of judgment, but we think it is without foi’ce.
In support of the first position, we have been referred to the case of Goodman vs. Simmonds (19 Mo., 106). That case goes only to the extent of declaring, that one, who takes negotiable paper as collateral security for a pre-existing debt, will hold it subject to all the equities existing between the original parties. It is otherwise in the case at bar. Logan took Smith’s note as collateral security, not for a pre-existing debt, but for a debt created at the time, and on the faith thereof, with notice of no equities, and he thereby undoubtedly became a holder for value. (1 Pars. Notes and Bills, 224.)
The second point made by the defendant presents a more intricate question. The plaintiff had an undoubted right to collect the whole amount due on the note transferred to him by Oowan, regardless of the existence of any light in the defendant at the time of its transfer to have it disehai'ged in the manner agreed upon between himself and Cowan.
It is well settled, that, unless the mortgage has been in some way separately extinguished, as by release for instance, the transfer of the note carries the mortgage with it as an incident. The mortgage itself is not a negotiable instrument, and cannot be transferred as such, but the indorsee of the note acquires a right to the security afforded by it by reason of the stipulation contained in the mortgage itself, that the property‘conveyed by it may be subjected to the payment of the full amount which the payee, or any indorsee, shall be entitled to recover as the holder of the note.
In the language of Justice Swayne, in Carpenter vs. Longan (16 Wal., 271-3), “the contract as regards the note was, that the maker should pay it at maturity to any bona fide indorsee, without reference to any defenses to which it might have been liable in the hands of the payee. The mortgage was conditioned to sectire the fulfillment of that contract.”
The plaintiff here, being unaffected by the agreement between Cowan and Smith, has the same right in the mortgage which Cowan would' have had at the date of the transfer, if no such agreement had ever been made. To state the matter generally, the indorsee of a negotiable note, who takes it discharged of the equities to which it was subject in the hands of the payee, acquires the same right in a mortgage given to secure it, which the payee would have had, if no equities had ever existed against the note.
We do not understand the ease of Linville vs. Savage to deny this. The spirit of that case is, that the indorsee for value, before maturity of a negotiable note, which was subject to no equities in the hands of the payee at the time of the transfer, cannot acquire any greater right in a mortgage, given to secure it, than the payee had. That is, if the land conveyed by the mortgage was subject to prior liens in favor
In the present case, there are no equities affecting the character or value of the security itself, and the only question is, whether the security passed to the plaintiff as indorsee of the note.
In Linville vs. Savage, it was conceded that the security passed to the holder of the note, but the question was, how much security did the mortgage afford ? Was it subject to a prior lien iu favor of a third party as against the indorsee of the note ?
If the laud conveyed iu the mortgage made by Smith to Cowan had been, at the institution of the present suit, subject to a vendor’s lien in favor of Floyd, of which Cowan had notice, and the plaintiff had not, and the plaintiff was seeking to enforce his mortgage as a prior security, because he took without notice of such lien, the precise question passed upon in Linville vs. Savage, would be presented. Such, however, is not the case.
The plaintiff being a tona fide holder of the note in suit, and as such entitled to the benefit of the mortgage made to secure ir, the judgment of the circuit court was right, and will therefore be affirmed. Judges Wagner andNapton concur. Judge Sherwood concurs in the result. Judge Tories absent.