48 Iowa 199 | Iowa | 1878
I. The contest in this case is between two mortgagees, to determine which one of them holds the paramount lien, and is to be settled mainly upon the testimony relating to one or two points of the case. The questions of law involved in the case, we think, will present no great difficulty in their solution.
Baker and wife executed to Inman a mortgage to secure certain promissory notes. The records of the county show that the mortgage was fifed on the 8d day of November, 1874. On the 17th of the same month Inman gave the notes to plaintiff as collateral security upon an indebtedness held by plaintiff against him, and, on the same day, confessed a judgment thereon. Subsequently, and after this suit was commenced, plaintiff caused the notes to be sold upon an execution issued on the judgment, and became purchaser thereof.
On the 9th day of November, 1874, Wells took a mortgage from Baker and wife upon the same land described in plaintiff’s mortgage, to secure money loaned to Inman. Prior to the loan Inman exhibited an abstract to Wells’ agent upon which the mortgage securing the notes transferred by him to plaintiff did not appear. He undertook to give a first mortgage security for the money borrowed, and represented the land to be free of incumbrances, exceqjt such as were to be discharged by the money borrowed of Wells. Of the fraud of Inman in this transaction, there exists no question. It is not shown that plaintiff had notice thereof, and it appears that when he received the notes as collateral security he had
On the 25th day of December, 1874, Inman, upon the application of an agent of Wells, executed a release of the mortgage securing the notes transferred to plaintiff. This was done without the authority, assent or knowledge of plaintiff.
II. Plaintiff insists that the satisfaction of the mortgage by Inman was void. This branch of the case first demands our attention.
III. But Wells insists' that the testimony establishes the fact to be that plaintiff had not received the note as transferee at the time the discharge of the mortgage was entered. His agent, who procured from Inman the discharge, testifies with some degree of positiveness, that, at tli.e time, the notes •were exhibited to him by Inman. He did not read them, nor have them in his hands, - but he thinks the notes were shown to him. On the other hand, plaintiff testifies that he received the note in December before the release was executed. Another witness, with more explicitness and equal positiveness, testifies to the same facts. The preponderance of the testimony very satisfactorily establishes the truth to be, that plaintiff had received the notes before Inman discharged the mortgage.
Y. The notes were first. delivered to plaintiff as collateral security. He finally claims, in an amended petition, the absolute title to the notes acquired under a sheriff’s sale. Wells now insists that the title was not passed by the sale. Let this be admitted. What, we must then inquire, is the interest which plaintiff holds in the notes ? He has possession of the notes which were received as collateral security. If the sale is void, he is not, in the absence of fraud on his part, and of complaint on the part of the makers of the notes, to be regarded as having no interest in them, but will be presumed to hold them under the original agreement as collateral security. This conclusion disposes of this point of the case.
The equities of which the assignee is presumed to have
The notice upon 'which Wells relies arises under rules peculiarly applicable to the transfer of contracts. The notice which will determine the priority of a mortgage arises under the statute applicable to the registry of instruments affecting real estate. Now it cannot be that fraud of a mortgagee, in procuring the registry of a mortgage, will affect the right of the holder of a promissory note to enforce it. The rules of the law will not imply that the assignee has notice of matters other than those between the parties. Crosby v. Tanner, 40 Iowa, 136. The holder of the note may enforce it. If this beso, he may enforce the mortgage, for it accompanies the debt and exists while the debt exists. If the plaintiff may recover on the note he may also enforce the mortgage.
What notice does the record of the mortgage impart? That it was filed on a certain day. Prom that day, if sufficient in other respects, it becomes a lien. The record imparts no notice as to the circumstances under which the mortgage was executed and delivered.
The. plaintiff, as assignee, must take notice of equities affecting the validity of the note existing between the original parties; but he is not presumed to have notice of the equities of third persons against the security of the note.
AAre conclude that plaintiff is not chargeable with the fraud of Inman in putting the mortgage under which plaintiff claims upon the record, so that it became a prior lien to AArells’ mortgage. This is the fraud which AArells claims defeats plaintiff’s mortgage.
ArII. It is insisted that the notes were passed to plaintiff
YIII. Wells insists that- the transfer of the notes conveyed to plaintiff the equitable title only; that he held it by an equitable (iHsirjnment, which would not convey with it the mortgage. The plaintiff holds .as an assignee by delivery. It cannot he said that lie holds under an equitable assignment. The assignment is sufficient in law to transfer the note, subject, however, to the equities of the other party.
IX. Wells insists that-, as fraud has been shown on the part of Inman, plaintiff must show t-liat he took the note without- notice of the fraud and for value. This rule would he applicable if the fraud complained of was in the note. It is in putting the mortgage upon record so that it became the first lieu, and does not pertain to the note. The burden is upon Wells to show plaintiff’s knowledge of the fraud, not upon plaintiff to show that he had no notice thereof.
XI. Objections to plaintiff's right to enforce his mortgage, founded upon the form of the acknowledgment, and the fact that the date of Wells’ mortgage was prior to the day plaintiff’s was recorded, are urged upon our attention. It is sufficient to say that the acknowledgment is sufficient-, and that if plaintiff had notice that Wells’ mortgage was executed before his own, the record informed him that it was subsequently iilocl for record, which dete.mined that it was a junior lien.
Reversed.