Christy v. Scott

• Decision Date: 23 May 1888
• Parties: J. M. CHRISTY, Defendant in Error, v. B. F. SCOTT, Plaintiff in Error.
• Court: Kansas Court of Appeals

31 Mo.App. 331

J. M. CHRISTY, Defendant in Error, v. B. F. SCOTT, Plaintiff in Error.

Court of Appeals of Missouri, Kansas City.

May 23, 1888

ERROR to Bates Circuit Court, HON. CHARLES W. SLOAN, Judge.

Affirmed.

Statement of case by the court.

This is an action of replevin, and grows out of the following state of facts: On the third day of March, 1883, W. A. Harris and James F. Harris executed to T. D. Rafter their chattel mortgage on the property in question to secure to said Rafter the payment of their promissory note to Rafter for the sum of $424.75. The property seems to have belonged to Wm. A Harris. There were payments made on said note, leaving a balance due and unpaid of about one hundred and seventy-two dollars. The conditions of the mortgage being broken the mortgagee took possession of the property, and advertised the same for sale pursuant to the terms of the mortgage. On the day set for sale the plaintiff desiring to purchase such property so notified Rafter, and the parties interested coming together an arrangement was perfected by which Harris sold privately his interest in this property to plaintiff for said sum of one hundred and seventy-two dollars, which was paid over to Rafter; and thereupon Rafter assigned in due form the note and mortgage to plaintiff. Plaintiff then resold the property to Harris, and took from him a new note and mortgage on said property for the sum of two hundred dollars. This occurred on the same day, February 27, 1886. Afterward, on the same day, plaintiff acknowledged satisfaction, on the margin of the record, of said first mortgage.

It further appears that there was a second mortgage on said property executed by Harris to the Aultman & Taylor Company bearing date July 23, 1883, to secure certain indebtedness of Harris to said company. This mortgage was also duly recorded. The defendant claims the right of possession to said property under said last-named mortgage.

On the trial of the issues herein the plaintiff, over the objection of defendant, was permitted to testify, that at the time he made the entry of satisfaction of the first mortgage he was wholly ignorant of the existence of the said second mortgage and that he would not have given such release receipt had he known the fact.

The cause was tried before the court without a jury. Judgment for plaintiff; from which defendant prosecutes this writ of error.

THOMAS J. SMITH, for the plaintiff in error.

I. The instructions given for plaintiff should not have been given. (1) The evidence did not show a sale of the property, but only an assignment of the security. (2) Instruction two was a mere abstraction, and the giving of that numbered three was error. Turner v. Loler, 34 Mo. 461; McDermott v. Donegon, 44 Mo. 85; Shaffner v. Leahy, 21 Mo.App. 110. (3) Instruction four was error, (a ) because there was no latent ambiguity in the release calling for any explanation. 1 Greenl. Evid. [5 Ed.] sec. 275; 2 Whart. Evid. [2 Ed.] sec. 936; Koehring v. Muemminghoff, 61 Mo. 403; Johnson Co. v. Wood, 84 Mo. 489. (b ) Parol testimony was not competent to contradict or rebut this record evidence. Cases cited above. (c ) There was no testimony introduced tending to rebut the proof of the release of the Rafter mortgage. Brown v. Ins. Co., 86 Mo. 51; Chastain v. Wright, 19 Mo.App. 165; Hollender v. Koetter, 20 Mo.App. 79; Edwards v. Meyers, 22 Mo.App. 481. (d ) The mortgage of Harris to the Aultman & Taylor Company having been put on record in 1883, plaintiff had notice of its contents, which, under our statutes, is more binding on him than actual knowledge. He could not, therefore, with reference to this mortgage under the law, have released the mortgage to Rafter under a mistake of fact.

II. Under the evidence, the finding and judgment in this case should have been for the defendant, the plaintiff in error here. (a ) The Rafter note had been paid off and the mortgage discharged, and the release thereof made a matter of record by the plaintiff himself. 2 Jones on Mort. [3 Ed.] secs. 943, 944; Mead v. York, 6 N.Y. 449; Champney v. Coope, 34 Barb. 543; Johnson v. Johnson, 81 Mo. 331; Christian v. Newberry, 61 Mo. 447; Bunn v. Lindsay, 95 Mo. 250. (b ) Plaintiff was not the owner of the property, nor did he have a right to immediate possession, and ought not, therefore, to have recovered judgment. Sheble v. Curdt, 56 Mo. 437; Fleming v. Clark, 22 Mo.App. 218. (c ) If plaintiff had any right against the property in dispute superior to the right of the Aultman & Taylor Company, it was only equitable, and would not support this action. Pilkington v. Trigg, 28 Mo. 95. (d ) Under the mortgage from Harris to Christy, plaintiff was not entitled to possession at time of suit, because there had been no breach of the conditions of this mortgage. Bennett v. Timberlock, 57 Mo. 449; Sheble v. Curdt, supra. This mortgage was also subsequent to the one under which defendant held the property.

III. The taking of the new note and mortgage and the acknowledgment of payment of the old, show that payment of the old note was what was intended, and what was done. 3 Rand. Com. Paper, p. 595, secs. 1512, 1513.

FRANCISCO & ROSE, for the defendant in error.

I. Christy took an assignment of the Rafter mortgage and note, in due form and in writing, and his title was legal, not equitable.

II. There had been a breach in the mortgage from Harris to Rafter, giving Christy a right to take possession of the property.

III. The release on the margin of the record of the Rafter mortgage was a mere receipt, which might be explained and rebutted by parol testimony in an action at law, and plaintiff was not bound to resort to a suit in equity to have it cancelled. Joerdens v. Schrimpf, 77 Mo. 387; Chappell v. Allen, 38 Mo. 213; Boone on Mort., sec. 155, p. 209; Bruce v. Nelson, 35 Iowa 157; Stimpson v. Pease, 53 Iowa 572; Lambert v. Leland, 2 Sweeny 218; Hutchinson v. Swartsweller, 31 N.J.Eq. 205; Shaver v. Williams, 87 Ill. 469.

IV. The Aultman & Taylor Company were not injured by Christy's negligence, even granting that there was negligence, and cannot ask to profit by it.

V. There had been a breach in the mortgage from Harris to Christy.

PHILIPS P. J.

There seems to have been no question made at the trial as to the integrity and fairness of the transactions between Harris, Rafter, and plaintiff. The evidence showed that one hundred and seventy-two dollars was the reasonable value of the property at the time. By that purchase plaintiff acquired all the right, title, and interest of Harris in the property. That was the equity of redemption of Harris as against Rafter, the mortgagee. And by the payment to Rafter of the amount of his debt, and taking an assignment thereof, with the mortgage, plaintiff acquired and became entitled to all the rights which Rafter had at the time of such assignment.

At law, and as to these parties, the complete title to this property became vested in plaintiff, and there would be a merger of the equitable in the legal title, both uniting in the same person. But it may be conceded, for the purpose of this controversy, that there having been no formal foreclosure of the first mortgage, conformably to its provisions, and the second mortgagee, the Aultman & Taylor Company, not having been parties consenting to the private sale and transaction between Harris, Rafter, and plaintiff, the right of said company to redeem against the first mortgage was not affected.

It would further follow that if the legal effect of the transaction between Harris, Rafter, and plaintiff, and the acts done by plaintiff, were to release said property from the operation of the first mortgage, the Aultman & Taylor Company mortgage would have priority over the last mortgage taken by plaintiff from Harris.

A brief reference to established rules will reduce this question to a simple solution. In Greenleaf's note to 1 Cruise 239, it is said: " In estates acquired by act of the parties, they merge or not, and mortgages are extinguished or not, according to the intent of the parties, as collected from the deed or the circumstances of the transaction; and when these furnish no evidence of the intent, from the interest of the parties." " Merger is not favored in equity, and is never allowed, unless for special reasons, and to promote the intention of the party. The intention is considered in merger at law, but is not the governing principle of the rule, as in equity." 4 Kent Com. 102. " A person becoming entitled to an estate subject to a charge, for his own benefit, may, if he choose, at once take the estate and keep up the charge." Forbes v. Moffat, 18 Ves. 390.

So it is said, in Thompson v. Chandler, 7 Greenl. 377: " If the purchaser of a right in equity to redeem a mortgage takes an assignment of it, this shall not operate as an extinguishment of the mortgage, if it is for the interest of the assignee to uphold it." See also, Gibson v. Crehore, 3 Pick. 475; Robinson v. Levitt, 7 N.H. 100.

Aside from the fact that the intention is not to be presumed to satisfy the first mortgage because its effect would be to let in the second mortgage, when plaintiff's money had satisfied it without any loss or prejudice to the second mortgagee, the absence of such intention affirmatively appears in this case from the act of the plaintiff in taking a formal assignment of the debt and mortgage. This, by all the authorities, is conclusive on the question of intention.

As the assignee of the debt and mortgage plaintiff could maintain replevin for the possession of the property. Kingsland & Ferguson Mfg. Co. v. Chrisman, 28 Mo.App. 308. Nor could it affect the right that he afterward resold the property to Harris and took a new mortgage.

The rule is well settled that, as...