Rossiter v. Merriman, 80 Kan. 739

80 Kan. 739 | Kan. | 1909

The opinion of the court was delivered by

Johnston, C. J.:

Although the plaintiff challenges

the finding- of fact as to the purchase and ownership ,of the Selby notes it is not open to reconsideration, because the evidence on which it was "based was not preserved and there was no motion for a new trial.

There remains the question whether the facts found -’justified the ruling that the plaintiff was not entitled to a foreclosure of the Merriman mortgage. That mortgage.was legally executed, duly recorded, and it, as well as the claim which it secured, had been purchased by and was the property of the plaintiff. The mortgage had never been discharged by payment or release. The lien of the mortgage was prior to that acquired under the Selby mortgage; and of that fact the junior mortgagee had abundant notice. Aside from priority of record, there was a recital in the Selby mortgage that it was executed subject to the Merriman mortgage, previously given. The plaintiff was denied a foreclosure of this mortgage, not because of waiver, extinguishment or satisfaction, but because the note for the payment of which the security was given had become merged in the personal judgment rendered in the city court of Coffeyville.

It may be assumed, as the trial court found, that the judgment of the city court was valid and is a subsisting obligation. It is also clear that when the Merriman note was reduced to judgment it became merged in the judgment and could not thereafter be made the foundation of a subsequent cause of action. (Price v. Bank, 62 Kan. 735; Remington v. Hudson, 64 Kan. 43; Redden v. Bank, 66 Kan. 747.) However, the merger and extinguishment of the note did not discharge the debt nor extinguish the mortgage. The form of the debt was changed, but the debt itself, for which the mortgage was security, remained in full force. The debt secured by the mortgage is the primary obligation between the parties, and the note is no more than the primary evidence of that_debt.' The note and mortgage are not so closely tied together" that' a creditor mtist sue on both in the same action. He may bring an action against the debtor wherever he may be found, but can only foreclose, the mortgage in the jurisdiction where the land lies. He may obtain a personal judgment on the note alone without- waiving .his rigjrt to foreclose on his mortgage. (Lichty v. McMartin, 11 Kan. 565; Investment Co. v. Law, 62 Kan. 193.) The supreme court of Indiana has held it to be well settled that a recovery of a judgment on a note is no bar to an action to foreclose the mortgage. (O’Leary v. Snediker, 16 Ind. 404; Jenkinson v. Ewing, 17 Ind. 505; Conyers v. Mericles et al., 75 Ind. 443.) In Iowa it was held that “the holder of a note secured by a mortgage may take judgment upon the indebtedness at law without thereby waiving or releasing the lien of the mortgage, and may subsequently, if he sees fit, bring his action £o foreclose such lien within the life of the j udgttient thus procured.” (Gilman v. Heitman, 137 Iowa, 336; 347.)

The giving of a new note for the one that was secured by the mortgage does not take the debt out of the .security unless that was'the intention of the-parties, and 'this is upon the theory that the thing secured is the debt rather than the. evidence of the debt. In Priest et al. v. Wheelock, 58 Ill. 114, where the effect of taking judgment upon a note was considered, it was said that “that instrument was given to secure the debt, and it was immaterial what form it’ assumed, whether an account, note, or judgment. The substance, and not the mere form, is regarded in equity, and hence the pledge was to secure payment of the money, and not a mere extinguishment of the note by the debt assuming another form. Because the judgment extinguished the note, it does not follow that the mortgage was discharged, or the lien it created on the premises was extinguished. The lien of the mortgage on the lot-still continued, to secure the payment of the debt then evidenced by the jud'gmenf.” j (Page 116.) In section 936 of volume 1 of the sixth edition of Jones on Mortgages there is a statement of the general rule, well supported by authorities, that “the merger of the note in a judgment does not extinguish the debt, and the mortgagb continues a lien until it is satisfied or the judgment is barred by the statute of limitations.” (See, also, Riley’s Adm’r v. McCord’s Adm’r, 24 Mo. 265; Macomb Sewer-pipe Co. v. Hanley, 61 Minn. 350; Torrey v. Cook, 116 Mass. 163; Cissna and Others v. Haines and Others, 18 Ind. 496; Kempner and Blum v. Comer, Fairris & Dial, 73 Tex. 196; Denistoun v. Payne, 7 La. Ann. 333; 23 Cyc. 1195; 20 A. & E. Encycl. of L. 959; Wiltsie, Mort. Forecl. § 328.)

Coming to the question of pleading, it is contended by the defendant company that the note upon which, the plaintiff relied had ceased to exist as an evidence of indebtedness and did not furnish a basis^of recovery.. The note, being merged in the judgment,-'was no longer an evidence of the debt, and therefore it could hot be ' used as a ground of action. Thereafter the judgment was the only evidence of the debt secured by the mort--. gage, and if the plaintiff had no other foundation for this action than the original note he would necessarily fail. In his petition he pleaded the note and mortgage, without mentioning the fact that the note had been reduced to judgment. In the answer of the com-' pany, however, the judgment was set out, and in his. reply the plaintiff referred to this judgment and expressly averred that it had been sold and assigned to him. On the allegation that the judgment came to him by assignment testimony appears to have been taken, as there is a specific finding of the referee that the receiver of the loan company not only sold and transferred the note and mortgage to the plaintiff but at about the same time the judgment based on the note was assigned to him. In this way the judgment was. brought in issue. It is true that the plaintiff made other allegations inconsistent with the existence and transfer of the judgment, where he alleged that the act. creating the city court was invalid and also that the judgment had been set aside in that court. Notwithstanding these inconsistent theories of the plaintiff the-debt in the form of the judgment was brought into the pleadings and was considered by the trial court, and on these averments and the evidence under them the-rendition as well as the assignment and transfer of the-.judgment were found as'facts by the trial court. / On these facts and the authorities cited the plaintiff is •'entitled to recover the debt evidenced by the judgment ■•and to a foreclosure of the mortgage given to secure the debt. The lien of that mortgage is prior- and paramount to that of the Cable Company, which, as we have >seen, was taken subject to the plaintiff’s mortgage. .

. The judgment of the district court is therefore reversed. and the cause remanded, with directions to render judgment in accordance with the views herein ■expressed.