Moran v. Roberge

| Mich. | Feb 27, 1891

Grant, J.

Complainant was the holder of a promissory-note for $114.37, secured by a mortgage on real estate, and filed his bill to foreclose the mortgage. Defendants Roberge and Schram were the makers of the note. The mortgage given as security was executed by Roberge to defendant Sweet and Asa Fuller. Defendant Wallace was made a party as a subsequent mortgagee. Decree was entered for complainant, and defendant 'Wallace alone appealed.

There is but little, if any, dispute as to the material facts in the case, which are as follows: October' 15, 1879, Roberge and Schram bought from one John H. Tucker a saw-mill for $800. Fuller and Sweet had a claim upon it for $685.63. Roberge and Schram executed six promissory notes, aggregating $800, the total purchase price. Five of these notes were made payable to Fuller and Sweet, and the sixth, the note in question, to John H. Tucker. It was payable in three years from date, with interest at 7 per cent. The mortgage covered the six notes, which were described in the mortgage as—

“Six promissory notes, bearing even date herewith, executed by John B. Roberge and Alexander Schram to said parties of the second part.”

The bill is in the usual form of a foreclosure bill, except that it alleges a mistake in the description of the note in question, and prays for a correction of the mistake. Tucker was present at the execution of this mortgage, was one of the witnesses to it, and shortly after-wards transferred the note to one Ransom Bartlett, who in turn sold and transferred it to complainant. There was written across the face of this note the words, “Secured by mortgage.” Roberge and Schram sold a half interest in the mill to one John Hopson, and arranged with Fuller and Stveet for the payment of the first five notes by Hopson. Hopson paid them. The note in suit has not been paid; at least the testimony does not show this fact, and the burden of proof in this respect was upon the defendants. June 8, 1888, Roberge deeded the land to Schram, who on the same day executed a mortgage for $450 to one William Cooper. August 28, 1888, this mortgage was assigned by Cooper-to defendant Wallace, who claims to be a tona fide purchaser without notice of complainant's note and his interest in the mortgage.

On December 20, 1887, defendant Eoberge presented a petition to the circuit court for the county of Tuscola, in which he set forth this mortgage, and stated that the debt secured thereby had been fully paid and satisfied, and on the same day the court entered upon its journal a certificate that the debt secured by said mortgage was fully paid and satisfied, and ordered the same to be discharged, and declared fully paid and satisfied. This proceeding was in pursuance of Act No. 3, Laws of 1887 (3 How. Stat. § 5705). Schram applied to the firm of A. D. Slaght & Co. for a loan upon this land. Slaght & Oo. acted as the agents for Mr. Cooper in effecting the. loan. Before this loan was made, a member of this firm by the name of Carson saw defendants Eoberge and Schram about the mortgage to Sweet and Fuller. He does not remember particularly what Schram said, but says Eoberge told him—

“That he had obtained a discharge of the mortgage; that his house burned up, and that the discharge was burned in the house before it had been recorded.”

Mr. Carson also saw the proceeding in the circuit court, and the action of the court in declaring the mortgage paid and ordering its discharge. No other efforts were made on behalf of Mr. Cooper to ascertain whether the Sweet and Fuller mortgage had been paid or discharged.

Whether or not this mortgage was in fact discharged depends upon the effect to be given to the . testimony of defendant Eoberge and John O. Green, whose testimony on this point it is necessary to give quite fully. Eoberge testifies substantially as follows:

“I obtained a discharge of this mortgage about a year after I had bought of Sweet and Fuller. It got lost in the fire. It was in the trunk that burned up in that fire. I obtained the discharge through Mr. Green, an attorney. Mr. Hopson and Mr. Green obtained it for me. Green acted for me in procuring this discharge from Fuller and Sweet, and delivered it to me as a discharge of this mortgage. It purported to be signed by Sweet and Fuller. It was witnessed and acknowledged.”

Mr. Green testified as follows:

“ Fuller and Sweet executed a discharge of this mortgage to Roberge. I saw the discharge. It was drawn up in the ordinary form of a discharge, describing the mortgage, and where it was recorded. It was signed by Fuller and Sweet. I think I examined it to see whether it was properly executed., I think it was. They were in Ohio. I had the discharge made out for them to sign. I think the discharge was in accordance with the laws of this State, but I think there was some question about the clerk’s certificate in Ohio, — something of that kind, but I don’t remember just what it was now. I handed it to Roberge just as it was.”

The only other evidence showing the discharge is a letter written by the witness Green on November 9, 1887, to the attorney who prepared and filed the petition for Mr. Roberge to secure the order of discharge from the court. It reads as follows:

“My Dear Sir: This man Roberge wants a mortgage discharged in your county. I got him a discharge in ’81, and he kept it at home, and did not record it, and it was burnt up in the fire of ’81; and, as I was the attorney for Fuller and Sweet, and got him the discharge, I am a good witness for him to satisfy the court, as I have no interest in the matter, and he resides in your county, and the court is handy for you; and by petition to the court he can get a legal discharge, as Fuller is dead. I think this would be the best way to clear off the mortgage, as Roberge’s and my evidence would be sufficient. I am glad to hear you are in practice, and remain your friend.”

Upon this evidence the conclusion is irresistible that a full discharge of this mortgage was executed and delivered. Of this fact the second mortgagee, Mr. Cooper, had notice; and his assignee, the defendant "Wallace, is entitled to the benefit of that notice. Subsequent mortgagees without notice may rely upon the evidence of discharge as shown by the record. A discharge is only conclusive as to those who purchase in good faith. A discharge may be recorded, and still the mortgage be not discharged. A subsequent mortgagee with notice of that fact will not be protected by the record. It is not necessary that the discharge be recorded in order to.protect a subsequent purchaser or mortgagee. When such an one receives reliable information, upon which he relies, that a mortgage has been discharged, he will be protected if it turns out that the mortgage was in fact discharged. The defendant Wallace was so informed. He in good faith acted upon such information, and his rights, therefore, are paramount to those of the complainant.

There was nothing upon the record to show that any other person aside from Sweet and Fuller had any interest in the mortgage given to them. It is also quite apparent that there was no mistake in the mortgage itself. Tucker was present when the notes and mortgage were drawn, and they were evidently drawn in the manner they were with the full understanding of the parties. It follows, therefore, that complainant may proceed with his foreclosure as against Schram, but subject to the mortgage of the defendant Wallace, who will recover costs in both courts.

The other Justices concurred.