63 Fla. 631 | Fla. | 1912
(after stating the facts) — The counsel for the appellants frankly state in their brief:
“As the court will observe the pleadings are carefully framed for the purpose of testing the validity of the Bank’s mortgage, and its priority over or equality with the mortgages of Mrs. Taylor without the expense and trouble of taking testimony. At the hearing no technical question relating to the sufficiency of the pleadings to present these question was raised, but the Judge was requested to and did decide the demurrer upon the merits. We shall therefore address ourselves directly to the questions mentioned above, as we have no doubt counsel for the Bank will do, as all parties desire a decision upon the merits.”
As we said in Burton v. McMillan, 52 Fla. 228, text 241,
We would first call attention to Section 2936 of the General Statutes of 1906, which is as- follows:
“2936. Sum Payable To Be Certain.- — -The sum payable is a sum certain within the meaning of this chapter, although it is to be paid:
1. With interest; or
2. By stated installments; or
3. By- stated installments, with a provision that upon default in payment of any installment of of interest, the whole shall become due; or
4. With exchange, whether at a fixed rate or at the current rate; or
5. With costs of collection or an attorney’s fee, in case payment shall not be made at maturity.”
It will be observed that the note for $2,250.00, pur
Having found that the note in question was negotiable, we must now determine whether or not, at the time it was purchased and taken by the appellee, it was overdue, as
“2985. Who Is Holder in Due Course. — A holder in due course is a holder who has taken the instrument under the following conditions:
1. That it is complete and regular upon its face;
2. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact;
3. That he took it in good faith and for value;
4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.”
As we have already seen, the note in question itself contained no provision to the effect that, upon default in payment of any installment if interest, which interest was payable quarter-annually, the whole sum of such note should thereby become due and payable, but the accompanying mortgage, given to secure the payment of the indebtedness, which was executed on the same day with the note and was assigned to the appellee at the same time that the note was endorsed to it, contains the following provision:
“The mortgagor agrees that the indebtedness covered •by this mortgage shall become immediately due and payable and this mortgage shall become immediately foreclosable, for all sums secured hereby, if the said indebtedness, or any part thereof, or the said interest, or any installment thereof, shall not be paid according to the terms of the said note, or if the mortgagor shall omit the
It may be well also to call attention to the fact that the mortgage expressly states that it “is intended to be, and is, a mortgage to secure payment of” the note therein described.
The appellants rely upon Graham v. Fitts, 53 Fla. 1046, 43 South. Rep. 512, 13 Ann. Cas. 149, which holds that “where a note evidencing a debt and a mortgage to secure its payment are executed at the same time in one transaction, and the mortgage refers to the note, they should be considered together in determining their meaning and effect.” Conceding the correctness of this holding, read, as it must be, in the light of the facts .stated in the opinion, we fail to see wherein it helps the contention of the appellants. In that case the note itself contained a provision to the effect that, upon default in payment of the interest, the entire sum of principal and interest should become due and payable, at the option of the payee in the note or of the legal holder thereof. Moreover, in that case, as a reading of the opinion readily discloses, the questions now before us for consideration and determination were not then presented to the court. As far back as Stewart v. Preston, 1 Fla. 10, 44 Am. Dec. 621, it was held that “as a general rule, the endorsement of the notes secured by a mortgage carries with it the mortgage,” the court deeming the principle so well settled that it stated it was not “necessary to cite authorities in support of it.” This being true, it necessarily follows, as is laid down in 1 Jones on Mortgages (6th eel.), Sec. R34, that “the debt being the principal think imparts its character to the mortgage.” In the same paragraph it is stated that “the mortgage rather is regarded as following the note, and as taking the same character; and it is the generally
Even if it be true, as was held in Hodge v. Wallace, 129 Wis 84, 108 N. W. Rep. 212, 116 Amer. St. Rep. 938, that “a note providing expressly that delinquency in payment of any interest 'shall cause the whole note to, immediately become due and collectible, becomes due in such case absolutely, not merely at the option of the holder, and one thereafter taking the note from the payee takes it subject to the equities between the original parties,” that would not prove decisive of the case at bar, for the reason that
It is not alleged in the bill that, at the time of the purchase of the note and mortgage by the appellee, it knew that there had been a default in the payment of interest, but the contrary is alleged. Upon this point see First National Bank of Waverly v. Forsyth, 67 Minn. 257, 69 N. W. Rep. 909, 64 Amer. St. Rep. 415. We would also refer, with approval, to National Bank of North America v. Kirby, 108 Mass. 497, text 500, from which we take the following excerpt:
“This note was due at the end of forty-eight months, and the interest was made payable annually. It was taken by the plaintiffs before maturity; but, upon it appearing that no interest had been paid for two years or more, the court was asked to rule that this alone amounted to a dishonor, and would subject the note to all defenses. It is to be noticed, that the fact relied on is only that the interest had not been paid; not that any knowledge of it was ever brought home to the plaintiffs beyond the fact that no payments were indorsed. The court declined to rule as requested; and we are of opinion that the mere fact that there appears to be no indorsement of one or more installments of interest will not justify the ruling asked for.
_If, as it is argued, it be true that the failure to pay interest ever as matter of law amounts to a dishonor of a note, it can only affect one who has knowledge of the fact. Payment of interest is not always indorsed, and other evidence is often relied on to prove it. Want of indorsement does not apprise the party, to whom such note is transferred, that there has been no payment; and when the note is only taken as collateral, and accuracy
It follows from what we have said that we have reached the conclusion that, upon the allegations in the hill in the instant case, which are admitted to be true by the demurrer, the appellee must be held to be a holder in due course of the promissory note, under the provisions of Section 2985 of the General Statutes of 1906, which we have copied above. In other words we are of the opinion'that the allegations of the bill show that, at the time such note was negotiated to the appellee, it “had no notice of any infirmity in the instrument or defect in the title of the person negotiating it,” and “that he became the holder of it before it was overdue.” We are strengthened in this conclusion by the provisions of Section 2989 of the General Statutes of 1906, which section is as follows
“2989. Infirmity in Instrument. — To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.”
We are clear that the allegations in the bill fail to show any “bad faith” in the action of the appellee in taking the note and mortgage. As is well said by Mr. Crawford in. his Annotated Negotiable Instrument Law (2nd ed.), page 54, discussing this section of such law: “The holder is not bound at his peril to be on the alert for circumstances which might possibly excite the suspicion of wary vigilance; he does not owe to the party who puts the paper afloat the duty of active inquiry in order to avert the im
As we have already seen, the fact that the interest was payable quarter-annually and that no payments thereof were endorsed on the note or accompanying mortgage did not make the note dishonored, it being positively alleged in the bill that, at the time of the purchase of the note, the appellee had no knowledge that there had been any default in the payment of interest, or that there was
The writer hereof is of the opinion that what has already been said is sufficient for the disposition of this appeal. He does not consider it necessary to consider the. contention of the appellants as to the effect of the constructive notice afforded to the appellee by the record of the $2,500.00 mortgage. However, he is in full accord with the views of the Chief Justice upon this point, who, at the request of the writer hereof, has briefly expressed them in writing, and the writer willingly makes such written statement, which here follows, a part of this opinion :
The record of the $2,500.00, bearing the same date as the $2,250.00 mortgage, covering the same property and being to the same original mortgagee, was constructive notice only that it was a lien not superior to, if of equal dignity, with the $2,250.00 mortgage. The fact alleged in the bill and admitted by the demurrer that the $2,500.00 mortgage was in reality executed some days after the execution of the $2,250.00 mortgage, was, at the time of the assignment, actually or constructively admittedly not known to the assignee of the $2,250.00 mortgage, and it is assumed that the record of the $2,500.00 mortgage indicated only that it was executed on the same day as the $2,250.00 mortgage, and to the same original mortgagee, and the assignee of the $2,250.00 mortgage apparently had no knowledge or notice of the facts that the $2,500.00 mortgage was in reality executed some days after the execution of the $2,250.00 mortgage, and was in substitution of the $2,250.00 mortgage.
The holder of the $2,500.00 mortgage took it with notice of the record of the $2,250.00 mortgage, which record apparently indicated that the $2,250.00 mortgage was at
It follows that all of the contentions of the appellants must be decided adversely to them, and that the order overruling the demurrer must be affirmed.