Lead Opinion
The hearing is on a bill filed by the complainant to compel the discharge of a mortgage executed by Freeling H. Potter and wife to defendant, and on a cross-bill filed to foreclose the mortgage. The complainant has succeeded to the title of Potter. The facts
“Should any default be made in the payment of the said interest, taxes, assessments, or any part thereof, on any day whereon the same is made payable, as above expressed, and should the same remain unpaid and in arrears for the space of 30 days, then and from thenceforth- — -that is to say, after the lapse of said 30 days — -the aforesaid principal sum of five hundred and fifty dollars, with all arrearages of interest thereon, and all taxes, assessments, and — unpaid, shall, at the option of said obligee, his executors, administrators, or assigns, become and be due and payable immediately thereafter, although the period above limited for the payment thereof may not then have expired, anything hereinbefore contained to the contrary notwithstanding.”
The note and mortgage were assigned to the defendant June 14, 1887, and possession of the same delivered to her. She has since retained possession of the securities at her home in Skaneateles, N. Y. At about the date of the maturity of the coupons, the defendant was accustomed to detach the coupons, and send them forward to Walker & White and the Michigan Mortgage Company, Limited, for collection. The assignment of the mortgage to defendant was not recorded until April 13, 1894.
October 3, 1888, Potter and wife sold the mortgaged
It appears that the defendant, Mrs. Campbell, became a stockholder in the Michigan Mortgage Company, Limited, in 1891. The court below decreed a discharge of defendant’s mortgage, and stated the reasons as follows:
“The course of dealing between Mrs. Campbell and the Michigan Mortgage Company, Limited, in submitting to the company the interest coupon notes for collection as they matured, her neglect to record her assignment until after the execution of the second mortgage of $700, April 1, 1892, and the fact that she was a member and stockholder of the partnership association Michigan Mortgage Company, Limited, at the date of the execution of the said $700 mortgage, estop her from challenging the authority of said company to receive payment on her mortgage, inasmuch as the reception of such payment by said company was an act within the scope of its authority.”
Defendant, Mrs. Campbell, appeals.
The original bill asserts, and apparently bases the claim for relief on the statement, that the Michigan Mortgage Company, Limited, was duly appointed by the defendant, Mrs. Campbell, as her duly-authorized agent to receive, accept, and account for any and all moneys received in payment upon said mortgage, either as interest or principal; and avers payment to her agent, the mortgage company, for the defendant. The sworn answer of defendant denies such agency. The bill does
We are at a loss to understand how the fact that the defendant is a stockhol4er in the Michigan Mortgage Company, Limited, affects her right to assert that the officers of the company exceeded their authority in accepting payment of the mortgage. To the extent that she contributed to the stock of the corporation it may be said that she risked her investment, and relied upon the honesty of the managers; but beyond this the company was not her agent by mere force of the fact that she was a stockholder.
If the note and mortgage were negotiable, it follows that the complainant has not made a payment to one either in fact or apparently clothed with authority to
In Littlefield v. Hodge, 6 Mich. 326, it was held that a note in form negotiable is none the less negotiable when secured by a mortgage containing provisions not repugnant to it. We apprehend the test in such cases is, are the provisions' of the mortgage such as to introduce uncertainty as to time or amount? What elements of uncertainty inconsistent with negotiability here exist, if any ? Is there such uncertainty as to time as renders the note nonnegotiable ? It seems to me very clear that the answer must be in the negative. Carlon v. Kenealy, 12 Mees. & W. 139; German Mut. Ins. Co. v. Franck, 22 Ind. 364; Walker v. Woollen, 54 Ind. 164 (23 Am. Rep. 639); Cota v. Buck, 7 Metc. (Mass.) 588 (41 Am. Dec. 464); Kiskadden v. Allen, 7 Colo. 206; Dobbins v. Oberman, 17 Neb. 163; Ernst v. Steckman, 74 Pa. St. 13 (15 Am. Rep. 542); Charlton v. Reed, 61 Iowa, 166; Chicago Railway Equipment Co. v. Merchants’ Nat. Bank, 136 U. S. 268; Cisne v. Chidester, 85 Ill. 523. In Garlon v. Kenealy it was determined that a note payable in installments, subject to a condition that, on default being made in payment of the first installment, the whole amount shall become due, is assignable within the statute 3 & 4 Anne, chap. 9. Parke, B., in deciding the point, said: “Almost every note payable by installments has such a condition. It is not a contingency; it depends on the act of the maker himself, and on his default it becomes a promissory note for the whole amount.” In Ernst v. Steckman a note payable 12 months after date,
In Dobbins v. Oberman the note read: “On March 1, 1883, for value received, I promise to pay to Anna M. Wilson, or order, four hundred dollars, with interest from this date. This note shall become due immediately upon Anna M. Wilson delivering possession to me of the northwest quarter of section 12,” etc. ' This instrument was held negotiable, the court finding that it contained a promise to pay to Anna M. Wilson, or order, a sum certain absolutely and at all events; and adding: “It matters not, then, that it also contains a promise to pay sooner than the general date of payment upon the happening of an uncertain event.”
In Chicago Railway Equipment Co. v. Merchants’ Nat. Bank, 136 U. S. 268, it was held that a recital that the note in suit was one of a series, and that, in default of payment of any one of the series, the note in suit should become due, did not render the note nonnegotiable, the same containing a promise to pay at a certain definite date, at which it became due at all events. The case contains a review of the authorities and an interesting discussion by Mr. Justice Harlan.
The present case is unlike Brooks v. Hargreaves, 21 Mich. 254, as in that case the maturity of the note depended upon the volition of a third person not a party to the note. In Story v. Lamb, 52 Mich. 525, an option was given to the payee to take possession of the property which was the consideration of the note in case of default, or demand payment of the note, the title to the property being retained in the payee. In this respect the case is like Harkness v. Russell, 118 U. S. 663, which case is distinguished in Chicago Railway Equipment Co. v. Merchants’ Nat. Bank, 136 U. S. 282. In Second Nat. Bank v. Wheeler, 75 Mich. 546, the payee was given the right to extend the time or renew. Conrad Seipp Brew
There is no uncertainty as to the amount stipulated to be paid. The engagement to pay all taxes and assessments adds nothing to the obligation of the mortgagor. The obligation rests upon him independently of any stipulation on the subject, and his failure to meet the obligation gives the mortgagee the right to discharge the lien for the purpose of preserving his security, and add the amount to the mortgage debt. 2 Jones, Mortg. §§ 1137, 1683; Connecticut Mut. Life Ins. Co. v. Bulte, 45 Mich. 122. It is a radical mistake, therefore, to consider this an obligation to pay the mortgagee so much in addition as the taxes and assessments amount to. The obligation is, in the first instance, to pay to the public authorities authorized to receive the amount, and it is only by implication, if at all, that the indebtedness is ever to be added to the mortgage.
At the time this mortgage in question was executed there was, under the law, no duty resting upon the mortgagee to pay the tax on any portion of the mortgaged premises, and we think it cannot be said that subsequent legislation which for a time relieved the mortgagor of a portion of the burden, and imposed it upon the mortgagee, should be so construed as to render an instrument nonnegotiable which was, when made, negotiable. As the parties then viewed it, there was no uncertainty as to the amount. The case differs from Carmody
The question of priority between the mortgages of Mrs. Nichols and defendant is also involved. The mortgage of Mrs. Campbell was prior in point of time, and was duly recorded. If Mrs. Nichols is to be given priority, it must be because the record showed this mortgage in Edwin E. White, and because she received an assignment of a mortgage executed by the Michigan Mortgage Company, Limited, which Edwin E. White signed as treasurer. The mortgage company listed the Wilson mortgage and others, and stated that it was good security. The letter accepting this mortgage was as follows: “I think the $?00 mortgage, Grand Traverse county, would suit me if all right, and prompt payment of interest; but, of course, I must trust to you and your judgment. I send check at this date.” This letter was sent to Mr. White, and in response to it the Wilson mortgage was inclosed her. She undoubtedly assumed that there was no prior incumbrance. Had she examined the record, she would have discovered a mortgage to Mr. White. She must, therefore, be held bound by notice of this. The case is
The decree of the court below will be reversed, and the mortgage of Mrs. Campbell be declared a subsisting claim against the maker of the note, and a lien upon the realty, entitled to priority over the mortgage of Mrs. Nichols. Appellant will recover costs in both courts, limited, however, to costs in a single suit.
As bearing upon this question, see, also, Pritchard v. Kalamazoo College, 83 Mich. 587; Cook v. Foster, 96 Mich. 610; Gibbs v. Johnson, 104 Mich. 130.
Concurrence Opinion
We concur in the above