Newman v. Fidelity Savings & Loan Ass'n

128 P. 53 | Ariz. | 1912

CUNNINGHAM, J.

The appellants base their argument for a reversal, in part, upon the premise that the release of the Jackson mortgage was a forgery. "We do not deem it necessary to consider whether or not a falsification of a public record made under the circumstances disclosed by the record in this case is a forgery. We concede that the act of Stallard releasing the Jackson mortgage, while it and the note secured by it were assigned by him and in the possession of his assignees, was fraudulent, and deprives any person having knowledge of the fraud from reaping any benefits therefrom. The appellee does not fall within such class, however, as it is agreed that appellee had “no knowledge of the assignment of the said mortgage at the time of making the loan, nor any knowledge whatsoever concerning the same, other than as disclosed by the records.” Knowledge of the assignment would be essential to charge appellee with knowledge of the fraud in releasing the mortgage. Without the assignment in existence, no fraud could have been perpetrated by a release of a mortgage by the mortgagee.

The solution of the question does not depend upon the fraudulent act of Stallard releasing the assigned mortgage; but it depends upon notice of the existence of such assignment.

It is argued that the appellee had no actual notice of the assignment, and that the assignment was not of record when it acquired its lien on the property, and that the records disclosed, at the time the appellee made the loan and took its mortgage, that the Jackson mortgage had been regularly released by the mortgagee more than two months prior thereto.

Stallard, by his fraudulent release of the assigned mortgage, could not affect the rights of his assignees to enforce the mortgage lien, as between the parties to such contract of assignment. On the other hand, the appellee has the right to presume that public records speak the truth and to act thereon in all matters affected by instruments required by law to be recorded. If the law requires or provides for the recording of certain instruments, and they are not recorded, a party searching the records is justified in concluding that no such instrument exists, and the law bears him out in the presumption.

Is the assignment of a mortgage such an instrument as the laws require to be recorded to charge persons dealing with the mortgaged property with notice of such assignment, is the question presented for our solution.

Paragraph 735, Civil Code of Arizona, provides: “No instrument affecting real estate is of any validity against subsequent purchasers for a valuable consideration, without notice, unless recorded in the office of the recorder of the county in which the same lies, as provided by law.” The same statute has existed in Iowa since 1851, as section 1211 of the revision of that date. McClain’s Ann. Code Iowa, see. 3112. The only difference appearing is this: Instead of the words “as provided by law” in our code, in the Iowa code appear these words, “as hereinafter provided”—no difference in substance. The courts of Iowa have been frequently called upon to construe that section of their code in reference to assignments of mortgages; holding, in effect, that such assignment is an instrument affecting real estate and must be recorded in order to be valid against subsequent purchasers for value without notice, and that a mortgagee is such purchaser. Bank of Indiana v. Anderson, 14 Iowa, 545, 83 Am. Dec. 390; Parmenter v. Oakley, 69 Iowa, 389, 28 N. W. 653; Livermore v. Maxwell, 87 Iowa, 706, 55 N. W. 40; Jenks v. Shaw, 99 Iowa, 604, 61 Am. St. Rep. 256, 68 N. W. 900; Central Trust Co. v. Stepanek, 138 Iowa, 131, 128 Am. St. Rep. 175, 15 L. R. A., N. S., 1025, 115 N. W. 891.

The construction placed upon this statute by the courts of Iowa is very persuasive to us, but we are not left altogether to such persuasion. Paragraph 1135, Civil Code of Arizona of 1901, requires, upon payment of fees, to be recorded “deeds, grants, transfers and mortgages . . . which have been acknowledged,” and paragraph 1136, Civil Code of Arizona of 1901, requires “every recorder must keep: . . . (10) An index of assignments of mortgages, . . . assignors, . . . ‘when and where recorded.’ (11) An index of assignments of mortgages, . . . assignees, . . . ‘when and where recorded.’ ” Thus conclusively indicating the policy of the law is, that assignments of mortgages must be recorded as instruments affecting real estate in order to protect the holder of such assignment against subsequent purchasers without notice. Although the statute does not in express terms use the words “assignments of mortgages,” yet such requirement does appear by clear implication; also, the use of the word “transfer” in paragraph 1135, supra, is a word broad enough as therein used to include assignments of mortgages. 38 Cyc. 939.

A negotiable note passes by indorsement carrying with it the mortgage collateral thereto. A bona fide holder of a negotiable note before maturity takes it clear of all equities; but when a note is secured by a mortgage not assigned of record, where the registration laws require such recording, in order to import notice, and the mortgagee thereafter discharges it of record, and the property is purchased or money loaned thereon, by third persons relying upon such discharge, secured by a later mortgage or conveyance, the lien of such later mortgage or conveyance will take priority over the lien of the older mortgage. Torrey v. Deavitt, 53 Vt. 331; Howard v. Ross, 5 Ill. App. 456; Bank of Indiana v. Anderson, 14 Iowa, 544, 83 Am. Dec. 390; Livermore v. Maxwell, 87 Iowa, 705, 55 N. W. 37; Connecticut Mut. L. Ins. v. Talbot, 113 Ind. 373, 3 Am. St. Rep. 655, 14 N. E. 586; Williams v. Jackson, 107 U. S. 478, 27 L. Ed. 529, 2 Sup. Ct. Rep. 814; Friend v. Yahr, 126 Wis. 291, 110 Am. St. Rep. 924, 1 L. R. A., N. S., 891, 104 N. W. 997; Merrill v. Hurley, 6 S. D. 592, 55 Am. St. Rep. 859, 62 N. W. 958; Merrill v. Luce, 6 S. D. 354, 55 Am. St. Rep. 844, 61 N. W. 43; Swasey v. Emerson, 168 Mass. 118, 60 Am. St. Rep. 368, 46 N. E. 426; Central Trust Co. v. Stepanek, 138 Iowa, 131, 128 Am. St. Rep. 175, 15 L. R. A., N. S., 1025, case note, 115 N. W. 891.

The reason for the rule depends entirely upon the statutory enactments requiring the assignment to be recorded to import notice. Every person is presumed to know the law, and its requirements. A mistake as to the requirements of the law is no excuse for a failure to meet its requirements.

A mortgagee is presumed to be the legal owner and holder of a mortgage, and the evidence of the debt secured thereby, and, in the absence of actual or constructive notice to the contrary, the mortgagee holding a recorded deed from the mortgagor must be presumed to act with authority in entering a release of such mortgage upon the record. It is a fair inference to be drawn from the record that the mortgage interest, or lien title, became merged in the superior title conveyed by the deed.

A bona fide encumbrancer without actual notice of the fraudulent release of a mortgage may absolutely rely upon the record, and will be protected by the record against the assignee of a prior mortgage, when the assignment has not been recorded until after the release has been entered by a person appearing authorized from the record to enter such release, by the express words of the statute (paragraph 735, supra) and the authorities above cited. When one of two innocent persons must suffer from the wrongs of a third person, that one who made the wrong possible must bear the burden, rather than the other who is without fault.

The express provisions of paragraph 735, supra, made the assignment of the mortgage void as to the appellee’s mortgage, without notice, unless such assignment was recorded.

The judgment of the lower court is affirmed.

FRANKLIN, C. J., and ROSS, J., concur.

NOTE.—As to assignment of mortgage and its effect, see note in 14 Am. Dec. 512.