Citizens' State Bank of Noblesville v. Julian

• Decision Date: 29 June 1899
• Citation: 55 N.E. 1007,153 Ind. 655
• Parties: CITIZENS' STATE BANK OF NOBLESVILLE v. JULIAN et al.
• Court: Indiana Supreme Court

153 Ind. 655

55 N.E. 1007

CITIZENS' STATE BANK OF NOBLESVILLE

v.JULIAN et al.¹

Supreme Court of Indiana.

June 29, 1899.

On Rehearing.

Appeal from circuit court, Delaware county; O. J. Lotz, Special Judge.

Action by the Citizens' State Bank of Noblesville against Jacob B. Julian and others. Judgment against defendant Julian, and for defendants Amanda T. Whitson and another, and plaintiff appeals. Affirmed.Gavin, Coffin & Davis, for appellant. D. W. Howe and Ryan & Thompson, for appellees.

JORDAN, C. J.

Appellant commenced this action in the Jay circuit court on June 1, 1893. The venue thereof was subsequently changed to the Delaware circuit court. The purpose of the suit was to recover a personal judgment against Jacob B. Julian upon certain promissory notes executed by him, and to obtain the foreclosure of a mortgage on certain lands in Jay county, Ind., executed to secure the payment of said notes. The plaintiff in its complaint also set up and demanded the right to redeem the mortgaged premises from the lien of a senior mortgage. All of the defendants, except Jacob B. Julian, Amanda T. Whitson, and the Elm Peeler Oil Company, filed disclaimers. The two last-named defendants filed answers to the complaint. On the issues joined, there was a trial by the court, and a special finding of facts and conclusions of law in favor of these two defendants. A personal judgment was rendered in favor of appellant against Julian on the notes for $8,950. The right of appellant to foreclose its mortgage, or to redeem from the lien of the senior mortgage, was denied by the court.

The errors assigned are in respect to the conclusions of law on the facts found, and upon the action of the court in denying appellant's motion for a new trial. The material facts as found are substantially as follows: On July 27, 1876, Jacob B. Julian was the owner in fee simple of the undivided one-half of 80 acres of land situated in Jay county, Ind. On that day he executed to one George H. Bonebrake three promissory notes, payable in bank, each for $1,000, due in 3, 9, and 15 months, respectively, after date, bearing interest at 10 per cent. per annum. On the same day Julian and wife, to secure the payment of these notes, executed to Bonebrake the mortgage in suit upon his interest in the aforesaid 80 acres of land. This mortgage was duly recorded, within the time provided by law, in the recorder's office of Jay county, Ind. On July 29, 1876, for a valuable consideration, Bonebrake sold and assigned these mortgage notes by indorsement to the appellant, the Citizens' State Bank of Noblesville. There was no assignment of the mortgage by Bonebrake to appellant other than that which resulted from the assignment of the notes secured thereby. No record of any kind was ever made of such indorsement upon any of the records in the recorder's office of Jay county, Ind., nor was any assignment of said mortgage ever recorded in the latter office. On January 11, 1877, one William T. Macy sold and assigned to Calvin W. Diggs certain notes secured by a prior and duly-recorded mortgage on the lands in question, executed in 1874, which mortgage was a valid lien on the lands in controversy at the time Julian became the owner thereof. On March 18, 1877, Diggs, as the holder of said senior mortgage and the indebtedness secured thereby, instituted an action in the Jay circuit court to recover a judgment on his said notes and to foreclose the mortgage securing them. To this action Bonebrake was made a party defendant, as a junior mortgagee, but appellant was not made a party to that action, and had no notice of its pendency. In that action, Diggs recovered a judgment on his notes, and a decree foreclosing his mortgage, and ordering the sale of the mortgaged premises in satisfaction of the judgment recovered. On April 7, 1877, the land was sold by the sheriff under this decree to Diggs for the sum of $1,150.72. Diggs, at the time he purchased at the sheriff's sale, had no knowledge or notice that Bonebrake had assigned the note secured by the junior mortgage to appellant. After the expiration of the year allowed for redemption, Diggs, it seems, received a sheriff's deed conveying the land to him under said sale. The latter held this real estate until May 24, 1881, when he sold and conveyed it by warranty deed to James Moorman for a valuable consideration. The latter, at the time of his purchase of the land from Diggs, had no notice of the assignment, in the manner stated, of the Julian mortgage by Bonebrake to appellant. Moorman, after holding the land for several years, died the owner thereof, and his last will and testament was, on the 4th day of October, 1888, duly probated in the Randolph circuit court. By his said will, Moorman devised to certain devisees, including the heirs of Nancy Thomas, one of her heirs being the appellee Amanda T. Whitson, all of his lands situated in Wayne and Jay counties, Ind., embracing the real estate in controversy. After the will of James Moorman was probated, a partition suit was instituted in March, 1889, by the devisees of the said Moorman, and partition of the real estate so devised by him was ordered, and a part thereof was set off jointly to certain ones of his devisees, including the appellee Amanda T. Whitson, and the land now in controversy was embraced in and set off in said partition. This partition was duly confirmed by the court. Afterwards, in the Wayne circuit court, in September, 1889, proceedings to partition the land which had been previously set off in the Randolph circuit court to certain devisees of said Moorman, including the appellee Amanda T. Whitson, were instituted, to which all of the persons interested in the lands sought to be partitioned were made parties. The court in this latter action awarded partition of said lands among the parties, and the commissioners appointed by the court set off and assigned in severalty to the appellee Amanda T. Whitson, as her moiety of the lands embraced in said partition proceedings, the real estate which is now involved in this action. This partition was duly confirmed by the Wayne circuit court. The first and second conclusions of law, upon the facts found by the court, are to the effect that Calvin W. Diggs, James Moorman, and the appellee Amanda T. Whitson were innocent purchasers of the real estate described in the complaint, and that plaintiff was not entitled to foreclose its mortgage against said lands, and that the latter are not liable to the said mortgage lien.

There are but two principal questions involved in this appeal: First. Was appellant, as the assignee of the mortgage notes from Bonebrake, required to enter of record an assignment of such mortgage after the taking effect of the act of the legislature which was in force on the 2d day of July, 1877? Second. If the above question be answered in the affirmative, is the appellee Amanda T. Whitson, under the facts, entitled to be protected against appellant's mortgage, as a good-faith holder or owner of the lands in controversy?

The act of 1877, requiring the assignment of mortgages to be recorded, was approved March 6th of that year, and went into effect, as previously stated, on July 2d following. The provisions of that statute are embraced in sections 1107, 1108, Burns' Rev. St. 1894 (sections 1093, 1094, Rev. St. 1881; sections 1093, 1094, Horner's Rev. St. 1897). These sections are as follows:

“Sec. 1107. Any mortgage of record, or any part thereof, may be assigned by the mortgagee, or any assignee thereof, either by an assignment entered on the margin of such record, signed by the person making the assignment and attested by the recorder, or by a separate instrument executed and acknowledged before any person authorized to take acknowledgments, and recorded on such margin, or in the mortgage records of the county, in which case such assignment shall be noted in such margin by the recorder, by reference to the book and page where such assignment is recorded. And after such entry is made of record, the mortgagor and all other persons shall be bound thereby, and the same shall be deemed a public record. And any assignee or his personal representative may enter satisfaction or release of the mortgage, or the part thereof held by him of record as aforesaid.

Sec. 1108. And in a suit to foreclose said mortgage, it shall be sufficient to make the mortgagee, or the assignee shown by said record to hold an interest therein, defendants. And all persons failing to cause assignments to them to be made or put of record in the manner aforesaid, unless they cause themselves to be made parties pending the action, shall be bound by such decree as may be rendered, the same as if they had been parties to the suit. And any purchaser at judicial sale of the mortgaged premises, or any part thereof, under such decree, or claiming title under the same, buying without actual notice of any assignment not thus of record, or of the transfer of any note, the holder whereof was not a party to the action, shall hold the said premises, so purchased, free and discharged of such lien: provided, however, that any assignee or transferee may redeem said premises, like any other creditor, during the period of one year allowed by statute after such sales.”

At the time of the assignment of the notes by Bonebrake to appellant, the bank, on July 29, 1876, and at the time of the foreclosure of the senior mortgage by Diggs, and the purchase of the said mortgaged premises by him at the sheriff's sale, there was no law, according to the decisions of this court, which required the assignment of a mortgage to be recorded upon the public records, thereby making such recording constructive notice to any and all persons concerned. Therefore, previous to the enactment of the above statute, in 1877, a party who was an equitable assignee of a mortgage, as was appellant, could not be deemed to be guilty of laches in failing to record...