Bon v. Graves
| Decision Date | 12 January 1914 |
| Citation | 216 Mass. 440,103 N.E. 1023 |
| Parties | BON v. GRAVES et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Jan 12, 1914.
Lee M Friedman and Friedman & Atherton, all of Boston, for complainant.
Williams & Copeland and Harold P. Williams, all of Boston, for defendants.
The plaintiff, who asserts that he is the holder of a second mortgage, seeks to set aside a foreclosure made by the holder of an earlier mortgage covering most of the same land described in the plaintiff's mortgage. There is no contention that the first mortgage was not valid. The only attack upon it is directed against the validity of its foreclosure. But the defendant contends that on several grounds the plaintiff is not entitled to maintain his bill.
The mortgage under which the plaintiff claims was given in the first instance under these circumstances: Robert S. Brown in March, 1911, was arrested upon an indictment, and one Friedberg and another entered into a recognizance in the penal sum of $3,500 for his appearance. Friedberg was an attorney at law, practicing in Boston, and acted as attorney for Brown. In September, 1911, this mortgage was given by Margaret L. Brown, wife of Robert, to Friedberg to indemnify the latter for his liability as surety upon the recognizance. It is not necessary to determine whether this transaction was illegal under rule 4 of the common law rules of the superior court, which forbade Friedberg as an attorney at law to 'become bail or surety in any criminal proceeding in which he is employed,' for the reason that it does not appear that the plaintiff when he took assignment of the mortgage, knew that Friedberg was attorney for Brown at the time he became surety for him. Hence it must be assumed in his favor that in this respect he was a bona fide holder of the note and mortgage, and if so, it was valid in his hands notwithstanding its possible original infirmity. Taylor v. Page, 6 Allen, 86.
The question then presented is whether, when a mortgage and note are given for one consideration and purpose, viz., as indemnity for suretyship on a bail bond, they can be transferred by the first holder before his suretyship is discharged to a third person under an oral agreement that they are to be held as security for another and different obligation of the original mortgagors, and confer upon the transferee the same security and rights against a prior mortgagee as he would have had if the second mortgage had run directly to him. This point is not decided by Joslyn v. Wyman, 5 Allen, 62, Stone v. Lane, 10 Allen, 74, Upton v. South Reading Bank, 120 Mass. 153, and cases of that class, where a mortgage having been satisfied, the mortgagor orally has agreed that it shall stand as security for a new loan, and later has come into equity to get the mortgage discharged. In such cases it has been held that he cannot be given affirmative relief against the holder of the mortgage without paying the new obligation manifestly required by equity and good conscience. This rule has been applied in Taft v. Stoddard, 142 Mass. 545, 8 N.E. 586, to a second mortgagee seeking to redeem, who took his security with knowledge of similar facts as to a first mortgage. Nor is this a case where the condition of the mortgage at the time of its transfer to the plaintiff had been performed, and the plaintiff relies upon an assignment as a reissue of a dead instrument as in Douglas v. Stetson, 159 Mass. 428, 34 N.E. 542, 38 Am. St. Rep. 442, and Flye v. Berry, 181 Mass. 442, 63 N.E. 1071, where it was held that such an instrument was of no avail against an earlier mortgagee.
In the case at bar the note and mortgage were given as indemnity or security against a liability assumed by Friedberg, the payee and grantee. Before the obligation had been satisfied to secure which the mortgage had been given, and therefore while it possessed all its initial vitality, it was transferred by Friedberg at the request of the original mortgagor to the plaintiff as security for a loan to the original mortgagor. It was a note for a fixed amount in the ordinary form, secured by mortgage and issued as collateral for the performance of one obligation, and before its satisfaction transferred to a third person at the request of the makers as collateral for a different obligation. This violated no rule of law. The mortgage was not conditional upon the discharge of the mortgagee as surety upon the bail bond, but upon the payment of the note, which itself was held as collateral. The release of the note from its use as collateral by its first holder, before its payment or discharge, and its transfer by him to a new creditor of the maker at the latter's request, carried with it the mortgage security. The fact that the obligation for which the note and mortgage first were given was discharged after the transfer to the plaintiff was of no consequence. Before that discharge, the note and mortgage and ceased to have any relation to that obligation and had become collateral to a different one. The plaintiff's legal title on the record is perfect. There is no equity in the mortgagor under these circumstances which would enable her to dispute the rights of the plaintiff under his mortgage. He took it as security at the mortgagor's request from one in whose hands it was outstanding before it had been paid. The defendant, holding under an earlier mortgage, stands no better in this respect than would the mortgagor. The note and mortgage continued as valid collateral in the hands of the plaintiff for the purpose for which he received them under these circumstances. As he has become the absolute owner of this collateral, he is entitled to enforce whatever rights belong to a mortgagee. See Whitney v. Metallic Window Screen Mfg. Co., 187 Mass. 557, 560, 73 N.E. 663.
But it is contended by the defendant that the plaintiff's title is defective in another respect. The title of Margaret L Brown, the plaintiff's mortgagor, came through a deed from Annie B. Nelson, who was the grantee in a deed from George A. Brown, which recited that the grantor had affixed his seal and that it was sealed in the presence of attesting witnesses, but in truth it did not have a seal affixed thereto. This fact appeared upon the registry of deeds. Margaret L. Brown, however, with her husband, after the deed to her from Annie B. Nelson, lived in the only house situated upon the premises described in the deed, although there was no evidence as to the use made by her of other portions of the premises. It follows from the taking of possession under this deed, invalid for want of a seal, that she became at least a disseisor of the premises which the deed purported to convey to her. Bellis v....
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