Cosgrave v. McAvay

• Decision Date: 11 January 1913
• Parties: COSGRAVE v. MCAVAY
• Court: North Dakota Supreme Court

139 N.W. 693

24 N.D. 343

COSGRAVE v. MCAVAY

Supreme Court of North Dakota

January 11, 1913

Appeal from the District Court of Kidder County, Winchester, J.

Affirmed on rehearing had.

Judgment affirmed. Respondent recovered costs of this appeal.

James A. Murphy, R. G. McFarland, and Samuel Whaley, for appellant.

Rights of parties to this action are to be determined by laws of Minnesota, because parties resided there at time notes mortgage, and assignment were made, and note payable in Minnesota. 7 Cyc. 639, 640, note 55; 1 Dan. Neg. Inst. p 658, et seq.; Central Trust Co. v. Burton, 74 Wis 333, 43 N.W. 141; Newman v. Kershaw, 10 Wis. 333.

Recording of assignment of mortgage not notice to defendant of transfer of papers and title. Minn. Gen. Stat. 1894, § 4183; N.D. Rev. Codes, 1905, § 6167.

Notes secured by mortgage upon land in another state do not change rule. Central Trust Co. v. Burton, 74 Wis. 333, 43 N.W. 141; Cubbedge v. Napier, 62 Ala. 518; Caldwell v. Edwards, 5 Stew. & P. (Ala.) 312; Talbot v. Chester, 2 Chester Co. Rep. 57.

The law of place of performance prevails. 22 Enc. Law, 2d ed. 1325; Newman v. Kershaw, 10 Wis. 333.

Note and mortgage are separate contracts. First Nat. Bank v. Flath, 10 N.D. 281, 86 N.W. 867.

Assignment of mortgage does not involve question of title and is governed by place where made. Jones, Mortg. 473, 474, 961, 27 Cyc. 1282; Minn. Gen. Stat. 1894, sec. 4183. Olson v. Northwestern Guaranty Loan Co. 65 Minn. 475, 68 N.W. 100.

Payments made to original mortgage in ignorance of assignment of mortgage are valid, and extinguish mortgage. Pickford v. Peebles, 7 S.D. 166, 63 N.W. 779; Reid v. Kellogg, 8 S.D. 596, 67 N.W. 687; McVay v. Tousley, 20 S.D. 258, 129 Am. St. Rep. 927, 105 N.W. 932; Barry v. Stover, 20 S.D. 459, 129 Am. St. Rep. 941, 107 N.W. 672.

This rule is the general rule. 27 Cyc. 1316. (Minn.) Citizens' State Bank v. Julian, 153 Ind. 655, 54 N.E. 390, 55 N.E. 1007; Olson v. Northwestern Guaranty Loan Co. 65 Minn. 475, 68 N.W. 100; Hostetter v. Alexander, 22 Minn. 559; Johnson v. Carpenter, 7 Minn. 176, Gil. 120.

(N. Y.) Barnes v. Long Island Real Estate Exch. & Invest. Co. 88 A.D. 83, 84 N.Y.S. 951; Pettus v. McGowan, 37 Hun, 409; New York L. Ins. & T. Co. v. Smith, 2 Barb. Ch. 82; Reed v. Marble, 10 Paige, 409; Wolcott v. Sullivan, 1 Edw. Ch. 399; Ely v. Scofield, 35 Barb. 330.

(Pa.) Foster v. Carson, 147 Pa. 157, 23 A. 342, 159 Pa. 477, 39 Am. St. Rep. 696, 28 A. 356.

Van Keuren v. Corkins, 66 N.Y. 77; Foster v. Beals, 21 N.Y. 247; Armstrong v. Combs, 15 A.D. 246, 44 N.Y.S. 171; Lamb v. Story, 45 Mich. 488, 8 N.W. 87; 52 Mich. 525, 18 N.W. 248; White v. Miller, 52 Minn. 367, 19 L.R.A. 673, 54 N.W. 736.

Entry of personal judgment for money, upon a decree for sale, a nullity. Thompson v. Dale, 58 Minn. 365, 59 N.W. 1086.

S.E. Ellsworth, Stanley & Phelps and Jesse Van Valkenburg, for respondent.

Parties making and taking mortgage upon land in another state are presumed to contract with reference to the laws of the state where the land lies. Stark v. Olsen, 44 Neb. 646, 63 N.W. 37.

Bona fide holders of negotiable note and mortgage, for value, and in due course, is protected as against payment made to original payee. First Nat. Bank v. Flath, 10 N.D. 281, 86 N.W. 867; Stark v. Olsen, 44 Neb. 646, 63 N.W. 37; Burhans v. Hutcheson, 25 Kan. 625, 37 Am. Rep. 274.

Ordinary precaution requires the production of the notes, when payment is sought to be made. Klindt v. Higgins, 95 Iowa 529, 64 N.W. 414.

The law of the place where the land lies governs as to title and the enforcement of the lien. 1 Jones, Mortg. 5th ed. p. 593; 22 Enc. Law, 2d ed. p. 1337; Bronson v. St. Croix Lumber Co. 44 Minn. 348, 46 N.W. 570; Manton v. Seiberling, 107 Iowa 534, 78 N.W. 194.

OPINION

GOSS, J.

This action is brought to foreclose a real estate mortgage. Defendant executed and delivered to J. G. Lund, of Minneapolis, Minnesota, his promissory note for $ 1,000, dated February 20th, 1906, due February 20th, 1911, bearing interest at 6 per cent per annum according to five coupon notes. The principal note contained a permission to pay $ 100, or any multiple thereof, on any interest payment date. These notes were secured by this mortgage upon land in Kidder county, North Dakota, duly acknowledged and there recorded. On April 19th, 1906, the notes were transferred for value by indorsement thereon by Lund, payee, to plaintiff, Cosgrave, accompanied by a written assignment of the real estate mortgage, which assignment was recorded in the office of the register of deeds of Kidder county April 24th, 1906. With the above loan and mortgage was also executed another loan between the same parties, of the same amount, on the same terms, and secured by a mortgage on another quarter section. Defendant paid Lund the interest for the first two years on each of these mortgages, as the interest became due, and received from Lund the interest coupon notes. Defendant had no notice or actual knowledge that Lund had assigned these notes and mortgages until a considerable time after he had paid Lund in full for both loans, under the supposition that Lund, the original mortgagee and payee, still owned all the notes and mortgages. Lund had previously sold to defendant the lands mortgaged. All parties, defendant, plaintiff, and Lund, were at all times mentioned herein residents of Minnesota; defendant residing at Frontenac, the other two in Minneapolis. On July 30th, 1907, defendant paid Lund $ 400 due on the note and mortgage in suit, and obtained Lund's receipt therefor. Again, on November 13th, 1907, defendant paid $ 1,000, to apply on the notes and mortgages, for which Lund receipted; and on September 1st, 1908, defendant paid him $ 660, receiving from Lund a receipt in words as follows: "Balance due on mortgage, $ 660. Received payment in full for mortgage." Defendant testified he made these payments, "supposing that Lund owned the notes and mortgages," and that he made the payments to Lund in person; that he did not ask to see the notes and mortgages, and was not informed that Lund did not own them; that on February 18th, 1908, at the time of making the last payment, he asked Lund for a release of the mortgage, and was informed that "it would take a few days for that, to send it up here and have it returned." "He said they were up here at Steele, and it would take a few days before he could return it to me," speaking of the release of the mortgage. That defendant did not ask for the notes, assuming that the release of the mortgages, as he says, "covered everything." Several weeks after the final payment, Lund delivered defendant an abstract of title to the land in question, from an examination of which defendant first learned of the assignment of the mortgages to plaintiff. Defendant then demanded of Lund a release of the mortgages, but none was given, and thereafter, in July, 1908, Lund died. Lund never told plaintiff any of the money was received by him in satisfaction of the mortgage in suit. After the due date of the third interest coupon, plaintiff started foreclosure proceedings, declaring, under the terms of the mortgage, the aggregate of the principal and interest immediately due and payable.

The evidence therefore establishes that payment in full was made by the mortgagor to the mortgagee, and without actual knowledge of any assignment of the mortgage and negotiable notes by the mortgagee, but with the assignment of record in a foreign state where the land was situated. Does such payment discharge the debt and release the mortgage? In this connection the defendant by answer pleads the laws of Minnesota, "that the record of an assignment of a mortgage upon real estate shall not, in itself, be notice to the mortgagor of such assignment so as to invalidate any payment made by such mortgagor," and that the payment to Lund under the circumstances pleaded, and as above recited, under the laws of Minnesota, operated to discharge the debt and mortgage; also that all the parties were residents of Minnesota, that the notes and mortgage evidenced a Minnesota transaction having been there executed and delivered, and there performable, being there payable, and that the Minnesota law should be applied, and the debt decreed discharged and the mortgage declared satisfied. In support of the answer defendant has offered in evidence § 4183 of the General Statutes of Minnesota of 1894, reading:

"Record of assignment of mortgage--not notice to mortgagor.

The recording of an assignment of a mortgage shall not, in itself, be deemed notice of such assignment to the mortgagor, his heirs, or personal representatives, so as to invalidate any payment made by them, or either of them, to the mortgagee."

Defendant has also offered in evidence as the construction placed upon such statute by the supreme court of Minnesota, the decision of that court in Olson v. Northwestern Guaranty Loan Co., reported in 65 Minn. 475, 68 N.W. 100. Plaintiff respondent, on the contrary, contends that the Minnesota law is not controlling, but that the provisions of § 6167, Rev. Codes, 1905, and other statutory provisions of this state, should control the action here brought, as affecting title to real property here situated. Sec. 6167, Rev. Codes, 1905, reads:

"When the mortgage is executed as security for money due, or to become due, on a promissory note, bond, or other instrument designated in the mortgage, the record of the assignment of the mortgage is not, of itself, notice to a mortgagor, his heirs, or personal representatives, so as to invalidate any payment made by them, or either of them, to the person holding such note, bond, or other instrument."

It is noticeable that the Minnesota and North Dakota statutory...