23 F. 165 | U.S. Cir. Ct. | 1885
The complainant brings bis bill in equity, seeking a decree of foreclosure of a mortgage on real estate. On the twenty-seventh of June, 1879, Isaac Bonebrake and wife executed a negotiable bond to one J. W. Stover for $500, payable in five years, at the National Bank of Chester County, Pennsylvania, with interest, payable semi-annually at the same place, and for which coupons were attached; and to secure the same, executed a mortgage on 160 acres of land in Allen county, Kansas. Stover immediately placed the mortgage on record, and then sold and transferred the bond and mortgage to one David Hurd, who soon thereafter, and on the sixteenth day of August, 1879, sold and transferred them to this plaintiff, who thereby became the bona fide holder of the same. Immediately after the execution and delivery of the mortgage, Bonebrake and wife sold and conveyed said real estate to one Boydston, subject to said mortgage, and who in turn sold the land to one Likes, who, on the eighteenth day of August, 1879, sold and conveyed it to defendant David Sheer. At the time Sheer bought the property there was no assignment of the mortgage on record, and Sheer had no knowledge of the transfer and sale of the bond and mortgage, and Stover falsely ropre
It appears to have become the established doctrine that a mortgage given to'secure a debt is but an incident to the debt and partakes of its negotiability. Carpenter v. Longan, 16 Wall. 271; Burhans v. Hutcheson, 25 Kan. 626; Kellogg v. Smith, 26 N. Y. 20; Keohane v. Smith, 97 Ill. 156. From this rule it would naturally follow that while its negotiable character existed the purchaser would take the security as he does the debt to which it is the incident, free of equities and defenses existing between the original parties. The bonafide purchaser, in such case, obtains vested rights to the debt and the security. How far are his rights liable to be divested by reason of the registry laws concerning real estate ? Must he put upon the records his assignment of the mortgage, or in default thereof remain in constant danger of the mortgagee, at any time wiping out his security with a stroke of the pen ? The statute of this state declares that the recording of an assignment of a mortgage does not of itself impart notice to the mortgagor, so as to invalidate any payment made by him, his heirs or personal representatives, to the mortgagee. Section 3, c. 68, Laws 1879. This statute evidently requires actual notice to 'the mortgagor of the assignment, to protect the rights of the assignee against payments by the mortgagor to the mortgagee.. But the supreme court of Kansas has construed this provision as not applying to mortgages given to secure negotiable paper. Burhans v. Hutcheson, 25 Kan. 626. In any event, the grantee of the mortgagor is not included in the terms of the statute, and it may well have been intended that a subsequent purchaser of the real estate should be charged with notice of all the record shows at the time of his purchase. Jones, Mortg. § 473; Belden v. Meeker, 47 N. Y. 307; Van Keuren v. Corkins, 66 N. Y. 77.
This great array of authorities has been examined and cited by reason of a supposed conflict on this question, and there are some cases, I believe, in Michigan and Wisconsin, and a dissenting opinion in Bank v. Anderson, supra, giving to a mortgage securing a negotiable debt the same protection in the bands of bona fide holders as the note itself. Put in reason, as well as by the great weight of authority, I think the doctrine before announced is fully established. At the same time it must be kept in mind that the record which will protect the subsequent purchaser is the record as ha finds it, and not as he makes it, or procures it to be made. For instance, take the case of Cornog v. Fuller, supra. The court say: “When Fuller purchased the laud he had no notice that the Hall note was unpaid, and in the possession of plaintiff. He saw upon the records the satisfaction of the mortgage,” etc. In the case of Insurance Co. v. Eldredge, 102 U. S. 545, when the insurance company made its loan the deed of trust to secure the notes held by Eldridge was released.
Brewer, J., concurring.