85 Minn. 240 | Minn. | 1902
An action to determine adverse claims to certain real estate. Respondent in her answer claimed a lien upon the property as assignee of a certain mortgage executed by appellant and her husband to one Coleman. For reply, appellant alleged that the premises in question were her homestead, that her husband had deserted her, and that, if she executed the note and mortgage, she did so upon the false representation of Coleman that it was a release which it was necessary to execute in connection with her husband in order that she might hold her homestead. The trial court submitted special findings to the jury, who found specially
In disposing of this case we shall assume that respondent is entitled to recover if her assignor, T. M. Koon, was so entitled. Respondent admits the mortgage was a mere chose in action, and that the assignee acquired no greater rights than the mortgagee himself possessed, unless she is protected by the special finding as to negligence. We are therefore only required to determine what effect that finding has upon the rights of respondent or her assignor. To state the proposition more tersely: Who is to suffer? The innocent purchaser for a valuable consideration, or appellant, who was induced to execute this mortgage through false representations, and in its execution was negligent in not discovering the nature of the papers?
Respondent invokes the rule of equity that, as between one who has contributed to a fraud and a purchaser without notice, the courts will protect the innocent. We think the rule has no application to the facts of this case. By a long line of decisions, from Johnson v. Carpenter, 7 Minn. 120 (176), down to Moffett v. Parker, 71 Minn. 139, 73 N. W. 850, it has been held, and recognized as the settled law of this state, that a mortgage is a chose in action, and, upon assignment, subject to the equities existing in favor of the original parties. As between appellant and the mortgagee there can be no question but that the mortgage could be set aside upon the ground that it was fraudulently obtained. While there are cases wherein a mortgagor may be estopped from denying the execution of a mortgage in the hands of an innocent purchaser, they rest upon the principle that the mortgagor has such an interest in the execution of the mortgage, has obtained some benefit therefrom, or has wilfully practiced some fraud, which, in equity and
Judgment reversed.