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William Wait.

A treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 4) online

. (page 79 of 107)
Online LibraryWilliam WaitA treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 4) → online text (page 79 of 107)
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receive the earnings of the road until the mortgagees sliould take it or
the proper judicial authority intervene, su(rh i^osseasion gives the right
to the M'hole fund derived therefrom and i-enders it, tliereforc, liable to
the creditors of the company as if no mortgage existed. Oilman v.
lllinois,etc., Tel. Co., 91 U. S. (1 Otto) 603;

A creditor l)y note and mortgage may obtain judgnicnt on the note
and subject other property of his debtor to its payment. Karnes v.
Lloyd, 52 111. 113.

Where a creditor of an estate represented insolvent, whose claim
is partly secured by mortgage, has his whole claim allowed, and



MORTGAGE. 583

receives a divideud upon the wliolu, lie waives iiis security hy tlie
mort<;a<j:o. /looker v. Olmstead. 6 Pick. 481.

§ IT. Rights and liabilities of purchasers. Tlio purchaser of
niortii;aged })r(jperty, Nvlio assumes the payment of the mortgage debt,
becomes personally liable therefor. Scldatre v. Greaud, 19 La. Ann.
125. But the liability of the grantee does not discharge the grantor
from his liability also to the mortgagee. Meyer v. Lathrop^ 10 Hun,
GG ; Calvo v. Davies, 8 id. 222. Where he assumes the payment of
a portion of the mortgage debts, as a part of the purchase-money,
the amount so assumed becomes his personal debt. But the residue
does not, although he may be compelled to ])ay the same to save his
property. Hence a general payment, made by the purchaser on the
mortgage debts, will be first applied to the portion for which he is
personally liable. Snyder v, Rohuison^ 35 Ind. 311; 9 Am. Rep.
738. One who purchases j^remises covered l)y an undischarged mort-
gage, to secure tbe payment of notes, where he has knowledge of facts
sufficient to put a prudent man on inquiry, and the mortgagee is
well known and easily accessible to him, and when inquiry would have
elicited information that the mortgage was still in force as between the
original parties, cannot claim to be a purchaser without notice of the
equities of the mortgagee, simply because the mortgagor has possession
of and exhibits to him the notes described in the mortgage ; such pur-
chaser stands in no better position than the mortgagor himself. Box-
heimer v. Gunn, 24 Mich. 372. A sale by the sherift' of property,
without mentioning any mprtgage, conveys a title subject to a mort-
gage, if the mortgage be a valid lien, and the sheriff is not a trespasser
by such sale in general terms, though the property be subject to an in-
cumbrance. But when the property is sold subject to an incumbrance,
of course the purchaser cannot contest or deny the validity of the in-
cumbrance. Porter v. Parmley, 52 IS". Y. (7 Sick.) 185. A deed in
the nature of a mortgage to secure the payment of certain enumerated
debts creates an incumbrance on the whole property conveyed for the
whole of the indebtedness secured. If the mortgagor sells a portion of
the land thus incumbered to a purchaser who had constructive, though
not actual, notice of the mortgage, and transfers the notes of the vendee
for the purchase-money, to one of the mortgage creditors, to be applied
to the reduction of the mortgage debts, the payment of such notes by
the purchaser to one of the mortgage creditors does not release the
land thus sold from the mortgage, unless it was so agreed between the
purchaser and the parties to the mortgage. Colhy v. Cato, 47 Ala.
247. A purchaser at a sale under a judgment, or mortgage which is a
lien upon the equity of redemption merely, is presumed to bid only to



584 MORTGAGE.

the value of such equity, and the land purchased is the primary fund
to pay the amount duo on the prior bond and mortgage. Hanger v.
State, 27 Ark. 667. And on a sale under mortgage of a leasehold of a
mill, and the machinery mentioned in the schedule attached, will pass
other maeliinery put into the mill after tlie execution of the mortgage.
Ladley v. Creighton, 70 Penn. St. 490.

If the mortgagee indulges tlie mortgagor for a consideration until,
he becomes insolvent, such indulgence will make good the title of a
purchaser from the mortgagor ; but if without any consideration he in-
dulges him, such indulgence, unless the facts show fraud, will not re-
lieve the title of the purchaser from the incumbrance of the mortgage.
Fry V. Shehee, 55 Ga. 208.

The actual possession of land, by a purchaser holding a bond for a
deed from his vendor, is notice of his rights to one taking a mortgage
on the land from the vendor, and the mortgagee will take a lien only
on the vendor's right. DooUttle v. Cooh, 75 III. 354. On the death of a
purchaser at a sale, made under a power contained in a mortgage, with-
out having completed the purchase, his executors may pay the pur-
chase-money, and take a deed to themselves as executors, in trust for
the persons interested in the estate ; and on the title conveyed by such
a deed, they may recover in ejectment against the mortgagor. Lewis
V. Wells, 50 Ala. 198. The purchaser at an irregular foreclosure sale
obtains all the rights of the mortgagee, including the right of possess-
ion. Hoffman v. Harrington, 33 Mich. 392. And one, wlu^ has re-
ceived the title to lands undejj an an-aiigeuicnt which in legal effect
made his rights no more than those of a mortgagee, is not thereby pre-
cluded from becoming a purchaser at a chancery sale on tlie foreclosure
by a third person of another mortgage, and holding the title like any
other purchaser ; and such a purchase would cut otf all previous equi-
ties of the other party. Moote v. Scriven, 33 Mich. 500.

No authority to commit waste upon mortgaged premises will be im-
plied from the object for which the property was purchased, nor from
the price agreed to be paid. Coggill v. Milhurii Land Co., 25 N. J.
Eq. 87. The purchaser of mortgaged ])i-emises at a sheriff's sale may
avail himself of the defense of usury against a prior mortgage, although
lie purchased subject to that mortgage. }Varioiek v. Marlatt, 25 N. J.
Eq. 188.

Where ten acres of ffi-owinjj: wheat was mortorajjced, and the mort-
gage duly recorded, and afterward the mortgagor, without the consent
or knowledge of the mortgagee, harvested, threshed, removed and sold
the wheat, and the j>un'has(M- converted it to his own use by mixing it
with other wheat, the purchaser was held liable to the mortgagee, for
the value of the wheat. Duke v. IStrlcklaud, 43 Iiid. 494.



• I MOliTGAGE. 585

ARTICLE VI.

EEGISTRY, NOTICE AND PRIORITY.

Section 1. In general. Successive mortgages duly registered take
effect, and avail as security in favor of their successive holders, accord-
ing to their priority of registration. Johnson v. Sta(j<j^ 2 Johns. 510;
Parker v. Wood^ 1 Dall. 436 ; Connohj v. Stewart^ 2 Bay, 5U9. And
tills is but carrj'ing out the doctrine of the effect of notice in equity,
the registration being constructive notice to all persons affected by it.
Grant v. Bissett, 1 Caines' Cas. 112 ; Doe v. Bank of Cleveland, 3
McLean, 140.

The record and lien of a mortgage commences the moment it is left
for record, indorsed by the recorder and entered upon the mortgage
index. Brookes' Aj?peal, 64: Penn. St. 127; Kessler v. State, 24 Ind.
313. But the index to the record of a mortgage forms no part of the
record, and is not essential to make the record eftecti\'e to charge subse-
quent purchasers with notice. Green v. Garrington, 16 Ohio St. 548 ;
Speer v. Evans, 47 Penn. St. 141. And the rule that priority of de-
livery to the recorder gives priority of lien is not affected by tlie fact
that the supposed lien of a prior unrecorded mortgage is excepted from
the covenants of warranty in a subsequent mortgage. Bercaw v. Cock-
erill, 20 Ohio St. 163. The function of the mortgage office and its
record is to preserve mortgages, and it does not follow that a direction
to record an act of donation in a book of donations creates and preserves
a mortgage in favor of tlie donee, the wife. Mortgages, to be preserved
and effective, as to third parties, must be registered in the books, and
in the manner prescribed by the law for that purpose. Succession of
Cordemolle v. Dawson, 26 La. Ann. 534,

A lien for unpaid purchase-money attaches eo instanti upon a con-
veyance of lands, pursuant to an executory contract for their sale, and
if a vendor at the time of the conveyance takes back a mortgage for
such purchase-money, it is a part of an indivisible transaction, and the
purchaser cannot give another lien which will take a priority to such
mortgage. Dusenbury v. Ilulhert, 59 N. Y. (14 Sick.) 541 ; Bolles v.
Carli, 12 Minn. 113, And a purchase-money mortgage purposely
destroyed before recording remains a valid and existing lien upon the
lands as between the parties and all others claiming with notice ; the
destruction of the paper evidence does not annihilate the lien, bloan
V. Tlolcomh, 29 Mich, 153. Courts of equity, notwithstanding the
recording act, will control and dispose of so much of the purcliase-
moiiey of land as remains unpaid, so as to protect a previous hona fide
YoL. lY.— 74



586 MOETGAGE.

purchaser by an unrecorded mortgage, so far as tliis can be done witli-.
ont infringing upon the equitable rights of the subsequent purchaser or
of third persons. W>/nn v. Carter, 20 Wis. 107. A statutory provis-
ion that a mortgage by a vendee, to secure pureliase-money, executed
and delivered at the same time with the conveyance, shall be preferred
to previous judgments against the vendee, applies only to a mortgage
given to the vendor, and not to a mortgage given to a third party who
has advanced the purchase money. Jleuisler v. JVickum, 38 Md. 270.
But it does apply to a mortgage given by a lessee for years to his lessor,
simultaneously with the lease to secure futui-e advances by the lessor.
Ahem V. TTh'ite, 30 ]\Id. 409.

When a Avife [jurchases real estate, pays the purchase-money, and
enters into possession, but receives no deed of conveyance, her title is
good as against a subsequent mortgagee. And it makes no diiference
whether the possession of the premises was the possession of the wife
or husband. Humphrey v. Moore, 17 Iowa, 103. But where two
mortgages of the same property, but to different mortgagees, were
executed and delivered at the same time, each expressly stating that it
M'as for part of the purchase-mone} , with the express understanding
between the parties tliat they should 'be equal liens on the land, and
neither entitled to priority over the other, but one is recorded prior to
the other, and is afterward assigned to a hona fide purchaser without
notice of the agreement, by force of the recording act such mortgage
is entitled to priority in the hands of the assignee. Greene v. Deal, 4
Hnn (?s\Y.), 703.

Wlien two or more mortgages are made simnltaneously, and so con-
nected witli each other tluit they may be regarded as one transaction,
they will be held to take effect in such order of priority and succession
as shall best carry out the intention and secure the rights of all the
parties. Pomeroy v. Lnttiny, 15 Gray (Mass.), -135. So, of two mort-
gages executed at the same time to secure the jiayment of two notes
maturing at different times, that is the prior lien wliich secures the
payment of the note first falling due. Isett v. Lucas, 17 Iowa, 503,
In Georiria two mortofajjes executed on the same dav, tlioui^h not at the
same time of day, will share ^?;'(9 rata in the ])rocecds of the sale of
the mortgaged ])ropertJ'. Jiussell v. Carr, 3S Ga. 450. The recording
of a deed aljsolute, made at the same time with a bond of defeasance,
the latter not being recorded, is sufficient to affect a subsequent incum-
brancer witli notice of the transaction, and he cannot complain that the
ab.solutc conveyance on the record is shown to be only a mortgage
which he is at liberty to redeem. Youny v. Thomjmm, 2 Kan. 83.

When a mortgage; is taken to socurc a pre-existing debt, the mort-



MORTGAGE. 587

ejagee does not become a purcliaser, in that sense which, being without
notice of a pre-existing equity, would cause his title to prevail over tliat
of the prior equitable claimant. Willard v. Jimnshurg, 22 Md. 200;
Wells \. 3£orrow, 38, Ala. 125; Spurlock y. Sallivan, 36 Tex. 511.
So a legal title under an unrecorded deed is good as against a subse-
quent mortgagee wdio received his mortgage as security for or in ])ay-
ment of a precedent debt, and who surrendered no security or parted
with no value. Qjtry v. White, 52 N. Y. (7 Sick.) 138; PancoaU v.
Duval, 26 N. J. Eq. 445. So, too, where the mortgagee of the ap-
parent interest of a partner, as tenant in common of property, purchased
w^ith partnership funds and used for partnershi]) purposes, but conveyed
to the partners as individuals, secures by such mortgage a preceflent
debt, without parting with any thing of value, his lien will be postponed
to that of subsequent creditors or incumbrancers of the partnership,
although he took without notice of the facts as to tne title. Iliscock
V. Phelps, 49 N. Y. (4 Sick.) 97.

A subsequent incumbrancer, chargeable with actual notice of a pre-
existing imperfect mortgage, will in equity be postponed to it, and it
is entirely unimportant Avhether the imperfection in the mortgage wdiich
would render it invalid and inoperative in a court of law arises from
the fact that it was not properly acknowledged, or not duly recorded,
or had not indorsed upon it an affirmation as to the nature of the con-
sideration which is required by statute. Johnston v. Ganhy, 29 Md.
211. But a mortgage signed in blank and given to an agent, by whom
it is afterward filled in and delivered, if admitted to be an equitable
lien, cannot prevail over equitable rights of another who has also the
legal title. Fox v. Palmer, 25 N. J. Eq. 416.

An equitable mortgage for a precedent debt has no equity superior
to that of a valid subsequent judgment at law. Between such con-
testants the first perfected lien should prevail. But where the consid-
eration, of the mortgage is paid at the time it is given, equity regards
the eqTiitable mortgagee as a hona fide purchaser. Wlieeler v. lurt-
land, 24 N. J. Eq. 552.

The rights of subsequent creditors against defective or unrecorded
mortgages will be protected, as well where the claim under such instru-
ments is asserted in a court of equity, as in a court of law. Sixth
Ward Building Assoc, v. Willson, 41 Md. 506. Proceedings to fore-
close an unrecorded mortgage do not constitute such a lis jpendens as
M'ould be notice to the purchaser of mortgaged property ; the notice
must be actual, such as would affect the conscience of the purchaser,
and charge him with fraud. Douglass v. McCrackin^ 52 Ga. 596.

If one who executes a mortgage upon lands to which he has no title,



588 mortgage;

witli covenants of seizin and title, afterward acquires title, it inures to
the beneiit of the mortgagee, and a record of such mortgage, prior to
the acquisition of title by the mortgagor, is constructive notice to a
subsequent purchaser in good faith, and under the recording act gives
it priority to his title. Te^tt v. 3£unson, 57 iST. Y. (12 Sick.) 97.

AYhere mortgaged premises have been sold in parcels at different
times, in the absence of any intervening equities, they will be resorted
to in the inverse order of alienation. McKbiney v. Miller, 19 Midi.
142. But this rule does not apply where the deed of alienation ex-
pressly subjects each tract to the incumbrance. The parcels are subjected
^ro rata. Briscoe v. Power, 47 111. 447.

§ 2. Effect of registry. The registration of a deed or mortgage
operates as a constructive notice upon all subsequent purchasers of any
estate, legal or equitable, in the same property. ParYist v. Alexander,
1 Johns. Ch. 394. But in order to have this effect, the instrument
must be such as is authorized to be recorded, and the registry must
have been made in compliance with the law, otherwise the registry
is to be treated as a mere nullity, and it will not affect a subsequent
incumbrancer or purchaser, unless he have such actual notice as would
amount to a fraud. Frost v. Beehman, 1 Johns. Ch. 2SS ; Worh v.
Harjjer, 24 Miss. 517. But an omission of the register to note tlie time
of receiving the deed for record, or to enter it in the index or alphabet,
will not invalidate the effect of the registration. McLarren v. Thomp-
son, 40 Me. 284 ; Curtis v. Lyman, 24 Vt. 338. A deed noted for
registration, though not actually recorded till subsequently to a prior
deed, which was received for record after the second deed, will take
precedence 'of such prior deed. Rwjyles v. WMlains, 1 Head, 141;
Dubose V. Young, 10 Ala. 365 ; Nichols v. Reynolds, 1 R. I. 30 ; Gill v.
Fauntleroy, 8 B. Monr. 177. But the recording o\ a subsequent mort-
gage is not notice to the pi'ior subsequent mortgagee, as to rights vested
under the prior mortgage. Blrnie v. Main, 29 Ark. 591 ; Hoy v.
Bramhall, 4 C. E. Green"(K. J.), 503 ; Iglehart v. Cram, 42 111. 261. ' It
will not operate as constructive notice of its existence to a first mortgagee,
80 as to iin])air the lien of the latter by his having executed, in
go(»d faitli, a release, without notice of existing equities on the part
of tiie former. Ward v. Ihujue, 25 N. J. E(]. 397. A mortgage
fairly given to secure a Jjona fide creditor cannot be affected by a
subsequent or even a cotemporaneous attempt to convey or incumber
])roperty so as to delay creditors. Sttllman v. Sfdl/nan, 21 id. 126.
A subsequent mortgage, if first recorded, M'ill create a pi-ior lien o/dy
where it is obtained and recorded in good faith, and without notice



MORTGAGE. 589

of the prior mortgage ; sucli notice, however, must be clearly proved.
Willard v. llamHhurg, 22 Md. 20G.

A mortgage given to secure future advances, duly regi-stered, is
good, not only as against the mortgagor, but is entitled to priority
over subsequent incuml»rances, for all advances made prior to notice
of the subsequent incumbrance. But it must be an actual not a con-
structive notice. ^Yard v. Cooke, 2 C. E. Green (N. J.), 93 ; Bis.sell v,
Kellogg, 60 Barb. 617. But where the advances are such as the one
party is not bound to make, or the other to accept, no lien is cre-
ated on the mortgaged premises as against a purchaser who puts his
deed on record before such advances are in fact made. Ladue v.
Detroit, etc., R. R. Co., 13 Mich. 3S0 ; RolnnHon v. Williams, 22 K.
Y. (S Smitli) 380.

An instrument executed and acknowledged in due form by the
holders of the legal title to real estate, which recites the execution
and recording of a mortgage on such property, the destruction of
the record of the mortgage by fire, the re-establishment of the record
according to law, and which admits a specific sum to be due on the
mortgage, which sum the parties thereby agree to pay in installments,
is itself a mortgage, and its recording is effectual to preserve the lien
upon the property. Hunt v. Jnnls, 2 Woods, 103. If there be a
separate registry for mortgages, the mortgage must be inscribed in
it. Fisher v. Tunnard, 25 La. Ajin. 179.

Where a mortgage and a conveyance of the same land is made on
the same day, and the mortgage is recorded, l)ut the conveyance is
not, and the mortgage is subsequently foreclosed and a sherilf's deed
executed to the purchaser, the grantee under the conveyance has no
rights in the land which could be conveyed to a third party. Ogden
v. Walters, 12 Kan. 282.

A covenant in the mortgage to keep the mortgaged premises insured
for the benefit of the mortgagee creates a specific equitable lien upon
the insurance money which is valid as against an assignee in bank-
ruptcy. The mortgage being recorded, the covenant acts xv^on the in-
surance as soon as affected, runs with the land and is notice to credit-
ors ; and no subsequent assignment can affect the rights of the mortga-
gee. It is not necessary that the policies be assigned, nor that the
mortgagee select the companies. And any acts of the mortgagor with-
out the consent of the mortgagee will not defeat the effect of the cov-
enant. Re Sands Ale Brewing Co., 3 Biss. 175. An unsatisfied and
recorded mortgage is valid against a subsequent purchaser of the mort-
gaged premises, to whom the mortgage was given at the time of the
purchase, to tak'.' to the record office and have it canceled, the mort-



590 MORTGAGE.

gage lia\^ng come into the mortgagor's hands, without the consent of
the moi'tgagee, and being unaccompanied by the bond it was given to
secure. Harrison v. iV^. J. R. R.^ etc., Co., 4 C. E. Green, 488.

§ 3. Priority between mortgages. As between two mortgages the
one first recorded is the prior hen. Ripley v. Harris, 3 Biss. 199 ;
Goelet V. 3£cManus, 1 Ilun (N. Y.), 306 ; Odd Felloios' Sav. Bank v.
Banton, 46 CaL 603. A mortgagee whose deed has not been regis-
tered, or lias been registered on a defective probate, has no priority
over any other creditor. Henderson v. MeGhee, 6 Heisk. (Tenn.) 55.
When a mortgagee causes liis mortgage to be recorded, he has done all
that is recj^uired of hiin to preserve his lien ; and all persons pur-
chasing from the mortgagor subsequently are bound at their peril
to take notice of the mortgage. Rice v. Deioey, 54 Barb. 455 ;
Palmer v. Palmer, 48 Yt. 69 ; Hxunjplireys v. Newman., 51 Me. 40 ;
Chadioichx. Turner, L. E.., 1 Ch. 310. Subsequent creditors cannot
complain of the transaction being fraudulent, unless they can show that
the object and intention of the conveyance was to perpetrate a fraud,
and avoid subsequent indebtedness. Hickman v. Perrin, 6 Coldw.
(Tenn.) 135 ; Roidh v. Spencer, 38 Ind. 393. But a mortgagee, who
takes his mortgage with knowledge of a prior lien, not recorded, will
not be permitted, by placing his mortgage on record first, to gain pri-
ority over the earlier lien. Matthews v. Everitt, 23 ]^. J. Eq. 473 ;
Verges v. Prejean, 24 La. Ann. 78; Butler v. Viele, 44 Barb. 166.
His mortgage will be postponed in favor of such prior mortgage in
such case even in the hands of his assignee without notice. Qmoverv.
Van Mater, 3 Green (X. J.), 481 ; Nice's Appeal, 54: Penn. St. 200.

Priority of» record will not give preference to one mortgage over an-
other given at the same time, and held by the same })erson. Such
mortgages in the hands of assignees are concurrent liens, payable rata-
bly out of the proceeds of the mortgaged premises, after ])ayment of
costs of both. Gansen v. Tomlinson, 23 N.J. Eq. 405. But the pri-
ority of two independent mortgages is generally determined by the
dates of their registry. Peychaud v. Citizens'' Bank, 21 La. Ann.
202 ; Harrinyton v. Allen, 48 Miss. 493 ; Boyce v. Shiver, 3 S. C. 515-

Where a husband and wife execute several morto^aj^es of the hus-
band's land to difPtirent persons, and she executes them at different
dates, the mortgage she first executes will have priority as to her in-
terest in the land, in case she survives the husband. Hoadley v. Had-
ley,4:S Lid. 452. And where the mortgagee transferred the note
secured by the mortgage, and afterward purchased the mortgaged
property, upon which, after entering satisfaction of the mortgage, lie
executed a second t(^ secure a Ji'irty who had no notice that the note



MORTGAGE. 591

was unpaid, it was held that the lien of the second mortgage was
superior to the first. Boioluig v. Cook, 31) Iowa, 200.

§ 4. Priority between debts secured by the same mortgage.

Different notes secured by the same mortgage are to be paid from the
mortgage fund in the order in which they become due. And it
makes no difference tliat the notes secured by mortgage were nego-
tiable. Nor will the priority of assignment change the order of appro-
priation. The Bank of tha United titatefi v. Covert, 13 Ohio, 2-10;
Murdoch \. Ford, 17 Ind. 52; Marine Bank v. Internationcd Bank^
9 Wis. 57.

Where a debtor executes several notes to his creditor, and gives a
deed of trust to secure their payment, and the first note being duly
paid, the creditor assigns the second note to a third person, without
assigning the deed of trust, and then assigns the third note to another
person, together with the deed of trust, the assignee of the second
note is entitled to the first satisfaction out of the trust fund. Gwath-
meys V. Ragland, 1 Rand. (Ya.) 46G.

Where a mortgage was executed for the purpose of securing the pay-
ment of all and every sum or sums of money then owing, or which
might thereafter become due and owing from the mortgagor to the
mortgagee, upon any note or notes negotiated or to be negotiated with
the morto^ao^ee, of which the mort^-ao-or mio-ht be either drawer or in-
dorser or otherwise however, and, upon sale of the mortgaged prem-



Online LibraryWilliam WaitA treatise upon some of the general principles of the law, whether of a legal, or of an equitable nature, including their relations and application to actions and defenses in general, whether in courts of common law, or courts of equity; and equally adapted to courts governed by codes (Volume 4) → online text (page 79 of 107)