Blumenthal v. Jassoy

• Citation: 12 N.W. 517,29 Minn. 177
• Parties: BLUMENTHAL AND ANOTHER v JASSOY.
• Decision Date: 06 June 1882
• Court: Supreme Court of Minnesota (US)

29 Minn. 177

12 N.W. 517

BLUMENTHAL AND ANOTHERvJASSOY.

Supreme Court of Minnesota.

Filed June 6, 1882.

DICKINSON, J.

The defendant executed to one Ferdinand Jassoy her negotiable promissory note, and, at the same time, as security for its payment, executed and delivered a mortgage upon real estate, which was recorded in the office of the register of deeds. Before maturity of the note the payee transferred the same to these plaintiffs, by indorsement, they then having actual knowledge that the note was secured by such mortgage. Prior to the maturity of the note the defendant in good faith paid the same to the payee, Jassoy, she believing him to be the holder of the note and mortgage, and having no notice that the fact was otherwise. Thereupon Jassoy satisfied the mortgage, and the satisfaction was recorded before maturity of the note. At the maturity of the note payment was demanded of the defendant by the plaintiffs, which being refused, this action was brought for a recovery upon the note. A recovery was had and defendant appealed. If the note, upon which the action was brought, had not been secured by mortgage, there could have been no doubt as to the right of the indorsee to recover upon it, notwithstanding payment had been made to the payee before maturity. Story, Prom. Notes, 384; Burbridge v. Manners, 3 Camp. 193.

The fact that the performance of the personal obligation of the maker of the note was secured by mortgage did not change the character of the contract, or affect the negotiability of the note. It still expressed the obligation of the maker to pay the sum of money named, absolutely and at all events, at maturity, to the payee or to his indorsee, and still possessed the qualities of commercial paper. This was necessarily decided in numerous cases, where the question directly involved was as to whether the collateral security possessed the quality of negotiability, so that it might be enforced at the suit of a bona fide assignee before maturity, notwithstanding equities existing in favor of the mortgagor as against the mortgagee.

The decisions maintaining the negotiable property of such collateral securities necessarily rested upon the ground that the principal contract, to which the securities were incident, was negotiable, and that the collateral securities partook of the same character. Thus the proposition which we here maintain as to the negotiability of the note is directly supported by the following among other decisions: Carpenter v. Longan, 16 Wall. 271; Reeves v. Scully, Walker's Ch. (Mich.) 248; Dutton v. Jones, 5 Mich. 519;Taylor v. Page, 6 Allen, 86;Croft v. Bunster, 9 Wis. 503;Andrews v. Hart, 17 Wis. 297. See, also, Olds v. Cummings, 31 Ill. 188;Walker v. Dement, 42 Ill. 273;White v. Sutherland, 64 Ill. 181;Janes v. Smith, 22 Mich. 360, where the same proposition is recognized.

In citing these cases as authority upon the question here involved, we are not to be regarded as assenting to the doctrine that the collateral security passes to the bona fide assignee free from equities existing between the...