Citizens' Nat. Bank of Connellsville v. Harrison-Doddridge Coal & Coke Co.
| Decision Date | 29 November 1921 |
| Docket Number | 4059. |
| Citation | 109 S.E. 892,89 W.Va. 659 |
| Parties | CITIZENS' NAT. BANK OF CONNELLSVILLE ET AL. v. HARRISON-DODDRIDGE COAL & COKE CO. ET AL. |
| Court | West Virginia Supreme Court |
Submitted November 8, 1921.
Syllabus by the Court.
An assignment of a note or bond secured by a deed of trust mortgage, or vendor's lien and described in the instrument is not recordable, and the assignee thereof without having had it recorded, has superior right to the original creditor, a subsequent assignee and a subsequent purchaser for value, of the property on which it is secured in the absence of conduct on the part of such assignee amounting to an estoppel.
Until released by the assignee of such a note or bond, the deed of trust, mortgage, or vendor's lien is constructive notice of the lien by which it is secured, as against subsequent assignees and purchasers, notwithstanding a release thereof by the original creditor, and a court of equity will set aside such release on a bill by the assignee for enforcement of his equitable right to the lien.
A subsequent purchaser of real estate incumbered by such an instrument mentioning and describing notes or bonds as being secured by it, in order to be protected from them in his purchase, must ascertain that they have been paid or surrendered, else he purchases the property at his peril.
The statute requiring every contract for the conveyance of real estate or a term therein of more than five years, every deed conveying any such estate or term, and every deed of gift or deed of trust or mortgage to be recorded, Code, c. 74, §§ 4 and 5 (secs. 3834, 3835), does not contemplate recordation of an acquisition of title or right in real estate arising only in equity by mere implication from an express contract of assignment of a chose in action, nor the assignment of a chose in action to which equity annexes such right. It is limited to contracts, deeds, and other instruments passing such title or interest by express contract or conveyance.
An assignment of a mortgage, as contradistinguished from an assignment of a note or bond mentioned, described, and secured in it, is a conveyance of real estate or a contract for such conveyance, the former, if by deed, and the latter, if not; and, for protection against the mortgagee and a subsequent purchaser of the mortgaged property for value, the assignee must cause it to be admitted to record. If, in the event of his failure to do so, the original mortgagee has released the mortgage, and the release has been recorded, a subsequent purchase of the property for value and without actual notice of the assignment takes precedence over the right of the assignee.
Appeal from Circuit Court, Harrison County.
Suit by the Citizens' National Bank of Connellsville and others against the Harrison-Doddridge Coal & Coke Company, the Commonwealth Trust Company of Pittsburgh, and others. Decree for plaintiffs, and last-named defendant appeals. Affirmed.
Neely & Lively, of Fairmont, for appellant.
P. J. Crogan, of Kingwood, and Starling, Higbee & Matthews, of Uniontown, Pa., for appellees.
The decree complained of on this appeal determines questions of priority between the Citizens' National Bank of Connellsville, assignee of notes secured by a deed of trust, and also of an interest in a mortgage, on the one hand, and the Commonwealth Trust Company of Pittsburgh, a subsequent mortgagee of the same property on which the assigned debts were secured, on the other, in favor of the bank, and cancels releases of the deed of trust and prior mortgage executed by the original creditor.
The property involved is about 30,000 acres of coal made up of numerous small tracts consolidated, one-sixth of which was owned by Joseph E. Barnes, one-half by Alfred J. Cochran, and the residue by James R. Barnes. After Joseph E. Barnes and Cochran had incumbered their interests by the deed of trust and prior mortgage, all of the interests in the coal became vested in Josiah V. Thompson, who organized a corporation known as the Harrison-Doddridge Coal & Coke Company, and conveyed the entire body of coal to it. That company executed the subsequent mortgage upon the entire property to the Commonwealth Trust Company to secure an issue of bonds amounting to $4,000,000.
On July 6, 1907, Joseph E. Barnes executed a mortgage by which he conveyed his undivided one-sixth of the property to Jasper Augustine to secure a debt of $150,000, evidenced by the provisions and covenants of the mortgage, and not otherwise. No notes are mentioned or described in it. By a formal deed dated October 26, 1907, and properly acknowledged, Augustine assigned four-fifteenths of the mortgage to F. E. Markell, who is shown to have been the president of said bank, to secure notes executed by Joseph E. Barnes and others, on which he was liable as indorser and otherwise, amounting in the aggregate to about $40,000, according to a recital in the instrument. Both the mortgage and assignment were duly recorded in Harrison and Doddridge counties, in which the coal was situated, long before the mortgage to the Commonwealth Trust Company was executed.
On December 11, 1907, Cochran conveyed his undivided one-half of the property to John Bassel, trustee, to secure his twenty notes for the sum of $10,000 each, made and delivered to Augustine. This instrument was likewise recorded in both of said counties. On the day of its execution Cochran assigned four of the notes to Markell, as collateral security for the same notes for security of which the Barnes mortgage was partially assigned, two $16,000 notes and one $18,000 note, held by Markell for the bank, none of which have been paid, and all of which were duly presented for payment and protested for nonpayment.
Augustine, on January 14, 1910, executed releases of both the mortgage and deed of trust, which were recorded in both counties December 21, 1910. He swears he executed them by mistake, superinduced by misrepresentation and fraud on the part of Thompson, who, before the date of these transactions, acquired the property subject to the indebtedness thereon. Thereafter, July 26, 1912, Thompson conveyed it to the Harrison-Doddridge Coal & Coke Company, and on August 1, 1912, that company executed said $4,000,000 mortgage.
As the notes secured by the deed of trust and the mortgage differ in point of status, the assignment of the former not having been recorded, while that of the other was, and the deed of trust being a mere security for a debt, while the mortgage vested the legal title to the property in the mortgagee, they will be separately considered.
A debt secured by a deed of trust is a mere chose in action, wherefore an assignment thereof is not required to be recorded. It is n ot included in the terms "goods and chattels," as used in section 5, c. 74 (sec. 3835), of the Code. Turk v. Skiles, 45 W.Va. 82, 87, 30 S.E. 234; Fleshman v. Hoylman, 27 W.Va. 728; Tingle v. Fisher, 20 W.Va. 498; Bank v. Gettinger, 3 W.Va. 317; Kirkland, Chase & Co. v. Brune, 31 Grat. (Va.) 126. In this state and Virginia this doctrine has been enunciated, in most instances, in controversies between claimants of the secured debt, or between the assignee and the debtor, but it may have some bearing upon the relative rights of the assignee and a purchaser of the property upon which the debt is secured, taking it after a release by the trust creditor.
The original trust creditor, after having assigned the debt, cannot validly release the lien and thus destroy the right of his assignee therein. Fleshman v. Hoylman, cited; Taylor v. Godfrey, 62 W.Va. 677, 59 S.E. 631; 2 Jones on Mortgages, § 957. This rule is applicable to judgments and mortgages securing payment of notes and bonds. Crumlish v. Railroad Co. and Fidelity Co. v. Railroad Co., 32 W.Va. 244, 9 S.E. 180; Clarke v. Hogeman, 13 W.Va. 718; First National Bank v. McGraw, 85 W.Va. 298, 311, 101 S.E. 474.
Upon the inquiry as to the effect of a release by the original trust creditor upon the relative rights of the assignee and a purchaser of the property upon which the debt is secured without notice of the assignment and in reliance upon the recorded release, the propositions above stated are not decisive nor strongly persuasive. The distinction between two claimants of the secured debt or the debtor and an assignee of the debt, on the one hand, and a purchaser of the property on which it was secured and an assignee, on the other, is very clear. The subjects of controversy or conflicting claims, though related, are entirely different. To the purchaser the recorded deed of trust is constructive notice, as is also the release. If the release is as broad in its scope as the deed of trust and specifically covers all of its possible elements, the purchaser ought to be protected by it, and this view is sustained by authority. The vendor's lien involved in Turk v. Skiles, 45 W.Va. 82, 30 S.E. 234, described no note for the unpaid purchase money, although one had been executed. The vendor holding that note joined the vendee in the execution of a deed of trust on the land, and thus released or conveyed his lien to the trustee and creditor in the deed of trust, and then assigned the note. Upon this state of facts, the trust creditor, being in law a purchaser, was held to have a right superior to that of the assignee of the note, and this conclusion was based largely upon the fact that the reservation of the vendor's lien did not mention the note, and, for that reason, gave no notice of its existence. The only debt disclosed by the record, the obligation evidenced by the deed, was released, and the purchaser was under no duty to look beyond it. Such also was the holding in Bank v. Harman, 75 Va. 604, notwithstanding...
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