Wildsmith v. Tracy

80 Ala. 258 | Ala. | 1885

CLOPTON, J.

The note and mortgage were signed, the execution of the mortgage acknowledged before a proper officer, and both were left in the possession of the payee of the note. The formal signing and acknowledgment of a conveyance, and possession of the grantee, are prima faeie sufficient proof of delivery. Not only does a presumption of delivery arise on the facts, but Mrs. Wildsmith, one of the mortgagors, and the witness, Tegner, testify, in express terms, to a delivery, and the testimony of the other mortgagor shows, that it was intentionally put in possession of the mortgagee. The evidence leaves no room to doubt a delivery, sufficient to impart vitality; and subsequent efforts to annul the contract, or subsequent demands for the return of the note and mortgage will not defeat a prior completed delivery.

It is manifest on the evidence, that as between the complainants and the payee of the note, the defense is available ; and would be sustained against the transferree if the note was non-negotiable. The bona fide sale and transfer of a negotiable note, before maturity, in the usual course of business, for a valuable consideration and without notice, creates in the transferree a paramount right of action against the maker; and frees and discharges the note of all defects, equities and defenses, to which it was subject before its acquisition by the holder. — Capital City Ins. Co. v. Quinn, 73 Ala. 558. The uucontradicted and unrebutted evidence shows, that Fitzgerald, the transferree, purchased the note before maturity, and paid a valuable consideration therefor without notice of any defense or infirmity, or equity between the immediate parties, lie was under no legal obligation to inquire of the makers whether there was any defense or any defect in the note. lie testifies that he never saw or heard of the notice published in the newspaper ; he did not reside in Birmingham where it was published; and such publication is not sufficient notice unless brought home to him by positive proof, or by proof of circumstances, which authorize the inference of knowledge. The transfer to Seals, bearing date one day prior to the officer’s certificate of acknowledgment, but the same date as the mortgage, which was attested by two witnesses, is alone insufficient. Knowledge of circumstances, that would excite suspicion in the mind of a prudent man, or gross negligence, will not alone defeat the purchaser’s right of action. Bad faith in the purchase, or such gross negligence as is evidence of bad faith must be shown. Fitzgerald having proved that he acquired the note for value before maturity, want of notice is presumed, and the onus is on the complainants to show notice. — Capital City Ins. Co. v. Quinn, 73 Ala. 558; Murray v. Lardner, 2 Wal. 110; 1 Dan. on Neg. Ints, § 796.

It is insisted that the transaction by which Fitzgerald acquired the note is usurious. If a note, which is made for the accommodation of the payee, to enable him to raise money, is discounted at a higher rate than legal interest, it is usurious. But was the note in question made for the accommodation of the payee, in the legal meaning of accommodation paper? From the allegations of the bill, and the evidence of Wild-smith himself, it appears that the note was given in consideration of the patent to the “Tracy Switch,” which Tracy sold and agreed to assign to him. The blank transfer, endorsed on the mortgage, with the knowledge and consent of Wildsmith, tends co show his knowledge of Tracy’s intention to raise money by the negotiation of the note, but not in the nature of a loan by Wildsmith, or by the person to whom it might be transferred. The transaction, as set forth in the bill, was that Tracy agreed to sell to complainants the patent for the States of Kansas and Mississippi for the sum of sixteen hundred dollars, for which amount the complainants were to execute a note and mortgage on land, and Tracy was to assign the patent for those States to them. In pursuance of this agreement, the note and mortgage was executed. The transaction had all the elements of a contract. It did not have its inception in a loan of money, or forbearance of a debt, but in the purchase of the patent. The note and mortgage were intentionally delivered, though such delivery, we do not doubt, was procured by the fraud of Tracy. lie could have brought an action on the note, though such action could have been defeated by setting up the defense of fraud. The distinguishing test is, whether the note never had an existence as between the immediate parties, ■ because there was no intent to deliver, and no delivery in fact. The weight of the evidence sustains the conclusion that there was an intentional delivery, relying upon Tracy’s promise and agreement to make the assignment of the patent; and, as we have said, there was a delivery in fact: lienee the efforts of complainants, on becoming dissatisfied, to rescind or annul the trade. When the maker of a note has intentionally issued it, subsequent efforts to rescind the contract can not defeat its prior inception, or destroy its negotiability, though the issue was procured by the fraud of the payee. — Harper v. Wilson, 63 Bart. 237. A note, which has an existence, in the hands of the payee, may be sold or bought, and its transfer, at a discount greater than the legal rate of interest, is not usurious, when not a device to avoid the statute. And when a purchaser for value takes a negotiable note, secured by a mortgage, discharged of all defenses, and freed from infirmity, and all equities, to which it was subject in the hands of any prior holder, the mortgage being a security and an incident, is in his hands entitled to the same protection accorded by the commercial law to the note. — Saltmarsh v. P. & M. Bank, 17 Ala. 768; Noble v. Walker, 32 Ala. 156; Hawley v. Bibb, 69 Ala. 52; Carpenter v. Longan, 16 Wal. 271.

An assignment of the mortgage with apt words to pass the legal title is not necessary. The assignment of the note carried with it the mortgage security; and the statute confers on any person who, “ by assignment or otherwise, becomes entitled to the money thus secured,” authority to execute the power of sale given to the grantee. — Code, § 2198.

Affirmed.