Marling v. Nommensen
127 Wis. 363
Wis.
1906
Check Treatment
Dodge, J.

Appellant contends for reversal upon two theories : First, that the debt secured by plaintiffs mortgage is paid and the mortgage, therefore, discharged; and, secondly, on the ground that she is estopped to set up such mortgage against appellant, even if the debt be not paid. The first ground is fully negatived by our former decisions. The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time or to such owner’s authorized agent. If the recipient of the money is not actually authorized the payment is ineffectual, unless induced by unambiguous direction from the owner or justified by actual possession of the note. This rule applies generally to all negotiable paper independently of the existence of any mortgage or other security. 3 Randolph, Com. Paper, §§ 1444, 1450; Bartel v. Brown, 104 Wis. 493, 80 N. W. 801; Kohl v. Beach, 107 Wis. 409, 83 N. W. 657; Loizeaux v. Fremder, 123 Wis. 193, 101 N. W. 423; Biggerstaff v. Marston, 161 Mass. 101, 36 N. E. 785; Murphy v. Barnard, 162 Mass. 72, 38 N. E. 29; Bromley v. Lathrop, 105 Mich. 492, 63 N. W. 510; Church Asso. v. Walton, 114 Mich. 677, 72 N. W. 998; Hollinshead v. Stuart & Co. 8 N. Dak. 35, 77 N. W. 89; Manhattan Co. v. Reynolds, 2 Hill, 140; Mitchell v. Bristol, 10 Wend. 492; Williams v. Jackson, 107 U. S. 478, 2 Sup. Ct. 814. Certain eases cited to support effectiveness of payment to original mortgagee as against unknown assignee do not deal at all with negotiable instruments, and, therefore, *368are without applicability. Van Keuren v. Corkins, 66 N. Y. 77; Barnes v. Long Island R. E. Exch. & Inv. Co. 84 N. Y. Supp. 951. Some contention is made that appellant assumed the debt, and that the payment to Herman must be deemed to have been made by her, thus subjecting her to the principle above stated. We are clear, however, that the premise to this reasoning is incorrect. The clear meaning of the receipt given at the time of bargaining for the premises was that appellant might, at her election, buy the premises subject to the mortgage, in that case assuming the debt, or might buy clear of the mortgage upon payment of the entire sale price to the realty company. Beyond dispute she elected to do the latter and, therefore, never became liable for the debt as between herself and her grantor. We do not understand the finding that said written receipt contained words of assumption to mean that appellant agreed to assume. If that be the meaning, it would be contrary to the undisputed evidence.

Turning, then, to the second ground of defense, we must first overrule some contention in appellant’s favor based on sec. 2241, Stats. 1898, declaring void any unrecorded conveyance as against a subsequent purchaser “whose conveyance shall first be duly recorded,” for the reason that appellant’s conveyance, whether the release from Herman or the warranty deed from the Milwaukee Eealty Company, was not recorded until after plaintiff’s assignment. Fallass v. Pierce, 30 Wis. 443; Potter v. Stransky, 48 Wis. 235, 4 N. W. 95; Girardin v. Lampe, 58 Wis. 267, 16 N. W. 614; Butler v. Bank of Mazeppa, 94 Wis. 351, 68 N. W. 998; Friend v. Yahr, 126 Wis. 291, 104 N. W. 997. The real question to be considered is whether the statute above mentioned excludes all other adverse effect than that which it denounces against one who neglects to place his conveyance on record.' It must be confessed that the final opinion in Fallass v. Pierce seems to proceed very much on that assumption, and some facts which might in that case have been urged as arousing estoppel *369in pais were passed over, and the earlier conveyance sustained notwithstanding. Nevertheless the subject was not discussed, and the case is rather suggestive than decisive. In Potter v. Btranslcy, while the earlier unrecorded conveyance was sustained because the later one was not recorded, as an independent ground, .the court dwelt with some industry on the presence of facts which excluded reliance by the second purchaser upon the absence of any record of prior conveyance; and in Butler v. Bank of Mazeppa there is intimation that a negligent purchaser might be affected by an estoppel outside the terms of the statute. Girardin v. Lampe and Friend v. Yahr both presented situations falling within the terms of the statute, the later conveyances being recorded before the earlier ones.

A moment’s reflection must convince one that a prior purchaser may, by failure to record his conveyance, certainly in connection with other facts and circumstances, become es-topped to rely on it against one whom he has led to believe and act upon its nonexistence, although he should afterwards get his conveyance on record before the later one. Certainly, if the assignee stood by and declared his nonownership to one-about to buy or pay a mortgage to the original mortgagee, he-would be estopped afterward to assert his assignment. The-question, therefore, is whether such acts of either omission or commission are here presented as bring plaintiff within the general doctrine of estoppel. That general doctrine is that he who acts inconsistently with the truth under such, circumstances that, as a reasonable person, he ought to anticipate that another is likely to change his position in reliance on such conduct, will be estopped to assert the truth to the injury of such other. Two Rivers Mfg. Co. v. Day, 102 Wis. 328, 78 N. W. 440; Frels v. Little Blacke F. M. Ins. Co. 120 Wis. 590, 597, 98 N. W. 522. The question presented, then, is whether plaintiff’s act in not recording her assignment could have been anticipated by her as likely to induce *370belief in others that Herman still owned it and lead them to act accordingly. Since the adoption of the system of public registry of conveyances, the custom of prompt registration has been so nearly universal that omissions may well be considered neglect of those precautions customarily taken to assert a grantee’s rights in the land, and people generally have become accustomed to believe that all rights will so appear and to act confidently on that assumption; hence such conduct is to be expected by one holding an unrecorded conveyance. The land in question was held by a dealer in real estate, so that the likelihood of its sale was apparent to plaintiff. She must realize that, in event of sale, the record advertised Herman as the person to whom a purchaser must apply, either to clear the title from the lien of the mortgage or for information as to the validity or amount of that lien, and, therefore, negligently placed it in Herman’s power to deceive or mislead a purchaser, whe, both by law and by custom, would have the right to rely on the record. Her withholding her assignment from record was a persistent declaration to all persons dealing merely with the title to realty that Herman owned the mortgage. Of course, as to one dealing with the debt evidenced by a negotiable note, the actual possession by her of ■such instrument changed the situation; but that has no application to appellant.

The efficacy of a discharge by the record holder of a mortr ■gage in favor of one dealing with the land in reliance thereon is a subject of some conflict of authority, as stated in Whipple v. Fowler, 41 Neb. 675, 687, 60 N. W. 15, where cases on both sides are cited, and the rule favoring such efficacy is ¡adopted, in which view the following decisions concur: Swartz’s Ex’rs v. Leist, 13 Ohio St. 419; Cram v. Cotrell, 48 Neb. 646, 67 N. W. 452; Bullock v. Pock, 57 Neb. 781, 78 N. W. 261; Ogle v. Turpin, 102 Ill. 148; Havighorst v. Bowen, 214 Ill. 90, 73 N. E. 402; Williams v. Jackson, 107 U. S. 478, 2 Sup. Ct. 814. In the recent case of Friend v. *371Yahr, 126 Wis. 291, 104 N. W. 997, while the decision might have rested upon the statute absolutely avoiding the unrecorded assignment of the mortgage, the subject of estoppel was discussed, and the concurrence of this court with the line of decisions above cited was declared. We still adhere to that view, and feel convinced that plaintiff is estopped to deny Herman’s continued ownership and authority to discharge this mortgage as against a purchaser of the property in good faith relying upon the public records. We can find nothing to impugn appellant’s good faith. She paid the full price for the land in reliance upon her attorney’s examination of an abstract from the records showing only a mortgage to Herman, his discharge of which was delivered at the same time. The consistency of just such acts with entire good faith is fully declared in Friend v. Yahr, as also the immateriality of the fact that the note and mortgage were not exhibited to her. We must therefore conclude that appellant holds the land in question discharged from the lien of plaintiff’s mortgage.

By the Gourt. — Judgment reversed, and cause remanded with directions to enter judgment in accordance with the prayers of appellant’s counterclaim, as to her, and for further proceedings according to law.