Brown v. Yarbrough

• Decision Date: 29 January 1923
• Docket Number: 23005
• Court: Mississippi Supreme Court
• Parties: BROWN v. YARBROUGH

94 So. 887

130 Miss. 715

BROWN v. YARBROUGH

No. 23005

Supreme Court of Mississippi

January 29, 1923

1 MORTGAGES. Statute providing penalty for failure to cancel mortgage after payment penal and strictly construed against party aggrieved.

Section 2781, Code 1906 (Hemingway's Code, section 2285), which among other things provides that any mortgagee or assignee of a mortgagee or cestui que trust, of real or personal property, having received payment of the mortgage indebtedness, who shall upon the notice prescribed by such statute from the party in interest, fail to enter satisfaction upon the margin of the record of such mortgage shall forfeit to the party aggrieved the sum of fifty dollars and any additional damages he may have suffered not exceeding the mortgage indebtedness, to be recovered in an action, is a penal statute and should be strictly construed against the claim of party seeking to recover such penalty.

2 MORTGAGES. Assignment by mortgagee to creditor to secure indebtedness carries title to mortgage indebtedness.

The assignment of a mortgage by the mortgagee to his creditor, to secure an indebtedness due by him to the latter, carries with it the title to the mortgage indebtedness, if that be the intention of the parties, even though such intention is not expressed in the writing evidencing such transfer.

3 MORTGAGES. Assignor of mortgage held not liable to penalty for failure to cancel after payment.

The failure of a mortgagee to comply with the said statute, who has assigned his mortgage and the indebtedness secured thereby as collateral security for his own indebtedness to another, does not make him liable for the penalty prescribed by such statute because of the fact the legal title to both the mortgage indebtedness and the security being in another such mortgagee is without power to enter the satisfaction in the margin of the record required by the statute.

4. MORTGAGES. Assignor of mortgage held without power to cancel after assignment.

By virtue of section 717, Code 1906 (Hemingway's Code, section 496), the assignee of a chose in action gets the legal title thereto with the right to sue thereon, and therefore the assignment of a mortgage indebtedness and the mortgage to secure the same confers the title thereto on the assignee, and the right in him to sue thereon, and therefore such mortgagee is without power to comply with the said section 2781, Code of 1906 (Hemingway's Code, section 2285), requiring the mortgagee on notice to enter satisfaction of such mortgage on the margin of its record; and this is true even though such assignee has only the naked legal title.

HON. W. H. POTTER, Judge.

APPEAL from circuit court of Madison county, HON. W. H. POTTER, Judge.

Action by I. N. Brown against L. H. Yarbrough. From a verdict for defendant, plaintiff appeals. Affirmed.

Affirmed.

R. S. Powell and Powell & Harper, for appellant.

First: It is not disputed in this case that I. N. Brown gave the deed of trust to secure L. H. Yarbrough; second: It is not disputed that the said deed of trust was properly recorded; third: It is not disputed that said deed of trust had been fully paid; fourth: It is not disputed that I. N. Brown gave L. H. Yarbrough notice to cancel this trust deed; fifth: It is not disputed that L. H. Yarbrough acknowledged receipt of this notice and promised to cancel as requested; sixth: It is not disputed that said L. H. Yarbrough did not cancel said trust deed until after suit brought; seventh: It is not disputed that the deed of trust had been assigned as collateral security by L. H. Yarbrough to J. L. Hart, and that this fact was known to I. N. Brown, before the institution of the suit, but there is no evidence in the record to show that the note which the deed of trust secured had been transferred.

We contend that under the terms of the statute, section 2781, Code 1906, supra, that it was the duty of the mortgagee, cestui que trust the assignee, or either or all of them upon notice being given to have marked the deed of trust satisfied on the margin of the record as required by law. The appellee claims that the deed of trust having been assigned, it was the duty of the assignee alone upon receiving notice to mark the trust deed satisfied.

In support of our contention that it was the duty of the said cestui que trust to mark the trust deed satisfied notwithstanding the assignment of the trust deed, we say that this question has been decided by this court in our favor in the case of Coon v. Robinson, reported in 110 Miss. 700.

It is true that this point is not specifically decided in so many words in this case, but if the court will examine the record in this case to-wit: 18105 filed January 30, 1915, it will find that the identical point was made in that case as is made here, for in that case as shown by the record, the deed of trust and note had been assigned by the cestui que trust and the plaintiff had notice of such assignment before bringing suit and yet this court held that the original cestui que trust was liable when he failed to mark the trust deed satisfied, notwithstanding the same had been assigned. Suppose the statute in this case had stated upon proper notice it should be the duty of Tom, Dick or Harry to satisfy the trust deed when notified to do so. Can it be doubted that upon proper notice it would have been the duty of either or all of them to have satisfied the trust deed. Even when the description of the property is void still the statute must be complied with. Pierce v. Pinkston, 90 Miss. 216.

We come now to the case as to whether or not the original cestui que trust is relieved of the duty imposed upon him by the statute to mark the trust deed satisfied of record after notice to him, by virtue of the fact that the deed of trust had been assigned previously to J. L. Hart, and that appellant had notice of such assignment. In the case of Aetna Insurance Co. v. Smith McKinnon & Son, 117 Miss. 336, this court in defining the interest which the assignee acquired by having an insurance contract assigned to him as collateral security says:

"The proof in the record shows that the insured has never ceased to be the real owners of the policy, and that the only interest of the assignee was merely such an interest as the holder of collateral security acquires in the thing given as a security, a mere equity. The legal title and ownership of the policy still remained in the insured."

In the case of Life Insurance Co. v. Humphreys, 122 Miss. 591, this court in reference to the case of Aetna Insurance Company v. Smith, 117 Miss. 732, says: "Of course the rule was applied there to an insurance policy, and it may be reasonably said that there is a difference in the two kinds of contract, but we think the same principle is involved in the contract here as in the insurance contract, and therefore we are constrained to hold that the stipulation against assignment in the case before us contemplated only a complete unconditional assignment of the ownership of the commissions, and did not contemplate and intend an assignment as collateral security."

It will be seen from this case that where a contract is collaterally assigned that the assignor does not cease to be the real owner of the contract and that the only interest of the assignee is merely such an interest as the holder of collateral security acquires in the things given as a security, to-wit: a mere equity; that the legal title and ownership of the contract still remains in the assignor notwithstanding such assignment.

So in this case L. H. Yarbrough notwithstanding the assignment of the trust deed as collateral security was still the legal and beneficial owner of the same and that J. L. Hart, the assignee only acquired by the assignment a mere equity. Can it be said then under the statute that L. H. Yarbrough being the party with whom we contracted and the party who also held the beneficial interest and legal title to the deed of trust and never parted with the same? Can it be said that he was not the proper party to be notified to cancel the deed of trust? The court will understand that J. L. Hart under the decision above referred to, never had anything more than a mere equity and when the deed of trust was paid as it admittedly was in this case, his connection with the contract ceased and it would seem that L. H. Yarbrough who was the party who owned the contract and who was also the legal holder of the paper, would be the first one that we should call upon to mark satisfied the trust deed which he himself had placed of record.

We call the court's attention further to the fact that the record is silent as to whether or not the notes secured by the deed of trust was ever in fact assigned at all. For these reasons we ask that the case be reversed and remanded.

George Butler, for appellee.

It is not disputed that the deed of trust had been assigned as collateral security by Yarbrough to Brown by written endorsement on the deed of trust made before the recordation thereof, and that this assignment was recorded along with the deed of trust and that this fact was known to Brown before October 2, 1920. And it is not disputed but what Hart held this paper and deed of trust at the time the demand was made and the suit instituted. As we understand it, counsel now makes no point but what the deed of trust was properly assigned of record, but rather contend that both in law and in equity the assignment could only be made by transferring the debt securing the deed of trust rather than the deed of trust itself.

There is no merit in this contention. A similar contention is the case of West v. Union Naval Stores Company, 116 Miss. 743.

There as here the assignment was made on the original deed of...