Donaldson v. Grant

• Decision Date: 14 July 1897
• Docket Number: 802
• Court: Utah Supreme Court
• Parties: JOHN BAXTER DONALDSON, APPELLANT, v. FRANK A. GRANT ET AL., RESPONDENTS

49 P. 779

15 Utah 231

JOHN BAXTER DONALDSON, APPELLANT, v. FRANK A. GRANT ET AL., RESPONDENTS

No. 802

Supreme Court of Utah

July 14, 1897

Appeal from the Third district court, Salt Lake county. Hon. John A Street, Judge.

Action by John Baxter Donaldson against Frank A. Grant and others. From judgment for defendants plaintiff appeals.

It appears from the evidence and findings in this record that the plaintiff was a resident of London, England, at the time of the transactions mentioned in the pleadings, and that the defendants resided in Salt Lake City, Utah; that in 1891 the plaintiff and defendant Bache agreed to engage in the business of loaning money at the last-named place; that the plaintiff was to obtain the money to be loaned, and Bache was to make the loans, and they were to share equally in the profits of the business; that in the latter part of the same year and in 1892 the plaintiff transmitted to Bache at different times amounts aggregating $ 10,800, and on January 25, 1892, the latter loaned of that amount $ 2,000 to defendant Grant, and took his note for it, payable in five years from its date, with annual interest at 7 per cent., and a mortgage on Grant's real estate to secure it. The note contained the following provision: "If default be made in the payment of any of the interest after it becomes due or failure to comply with any of the conditions or agreements contained in the mortgage given herewith, then said principal sum, with the accrued interest thereon, shall, at the option of the holder of the note, become due and payable, and shall be collected without further notice. This note and accompanying coupons are to draw interest at the rate of ten per cent. per annum after maturity until paid." The mortgage contained covenants for the payment of taxes assessments, and insurance, and against waste. It appears that Grant knew at the time he received the money from Bache that it was furnished by the plaintiff. On January 27, 1892 Grant executed a deed of the land to Bache, containing a statement that the conveyance was subject to the mortgage, in consideration of which the latter deeded him other land valued at $ 2,200, and agreed to surrender the note sued on, making the consideration $ 4,200. Soon after making the loan, Bache assigned the note sued on, with the mortgage, to Donaldson, and on February 23, 1892, forwarded the same, with the assignment thereon, to the plaintiff; and in the letter accompanying them he informed the plaintiff the record title was in the writer's name, but, if plaintiff desired, he could record the assignment, and that would take it out of the writer's power to release the mortgage; that, if they were left in his name, it would be easier to release the mortgage than if the assignment was recorded. It further appears that the plaintiff received the note, mortgage, and assignment in March, 1892, and held them without recording the assignment until the 10th day of October, 1895; that on July 20, 1892, Bache, to whom the mortgage was made, entered a release of the mortgage on the records, and declared it paid and discharged, and communicated the fact to Grant; that Grant then demanded his note, and Bache stated that Donaldson had it, but he would return it, and that no demand for payment was made upon Grant for more than three years, nor had he any information that the note was not regarded as paid and discharged; that, upon the maturity of the interest coupons, plaintiff sent them to Bache for collection, and permitted them to remain in his hands unpaid for about two years, and at no time did he communicate with Grant. It further appears that on July 5, 1894, Bache, for a valuable consideration, executed to Glen Miller a trust deed of the property mortgaged, to secure the payment of his promissory note to defendant MacCord for $ 1,400; that it was duly recorded on the 8th day of August, 1894, and has never been satisfied; that on July 12, 1895, Bache conveyed the same land to the defendant Mulvey in consideration of a credit of $ 1,000 on $ 5,000 indebtedness owed by the former to the latter, which was duly recorded on July 12, 1895; and that Mulvey in good faith credited to Bache the $ 1,000. It further appears that Bache left the United States prior to the institution of this action, and has remained away, and that he was insolvent.

Affirmed.

Frank Pierce, for appellant.

The law does not require an assignment of a mortgage to be recorded to import notice. II Devlin on Deeds, § 627; 20 Am. and Eng. Ency. 528; II Demblitz on Land Titles, § 126, 127, note; II Cof. U. 1888, § 2611, 2613, 2644, 2645; Bamberger v. Geiser, 33 P. 611; Oregon Trust Co. v. Shaw, 5 Sawyer 336; Watson v. Dundee Investment Co., 8 P. 551; I Jones on Mortgages, Sec. 814; Lee v. Clark, 89 Mo. 556; Williams v. Keyes, 90 Mich. 290; Storth v. McCain, 85 Cal. 304; Boone on Mortgages Sec. 92, note 10; O'Mulcahy v. Holley, 28 Minn. 31; Burhans v. Hutcheson, 25 Kan. 625; Joerdan v. Schrimpf, 77 Mo. 386; DeBruhl v. Maas, 54 Tex. 464; Kerhane v. Smith, 97 III. 159; Dunn v. Snell, 15 Mass. 485; Potter v. Stransky, 48 Wis. 244; Johnston v. Carpenter, 7 Minn. 183; Kelley v. Whitney, 45 Wis. 110.

In order to overthrow the long established rule that title to securities passes with an assignment and delivery of the note, the controlling statute ought to be very clear and positive in requiring the record of an assignment of a mortgage. Oregon Trust Co. v. Shaw, 5 Sawyer 336; Watson v. Dundee Investment Co., 8 P. 551; Reeves v. Hayes, 95 Ind. 527.

Mortgagee cannot release the mortgage after the assignment. This is fraud. Trust Co. v. Shaw, 5 Sawyer 340; Lee v. Clark, 89 Mo. 556; Joerdan v. Schrimpf, 77 Mo. 386; I Jones on Mortgages, secs. 814, 961, 962; Murphy v. Barnard, 44 Am. S. R. 340; Williams v. Keyes, 30 Am. S. R. 438. The note is negotiable. II Compiled Laws of Utah, 1888, secs. 2,841-49.

Such additional words as the note contains relate to the prompt payment of the note, and are not "any other contract." II Compiled Laws of Utah, 1888, § 2,847. It is not different from the note described in 8 Utah 219, except it contains the clause "or failure to comply with any of the conditions or agreements contained in the the mortgage given herewith." Smith v. Williamson, 8 Utah 219.

This clause is not different from those contemplated in II Compiled Laws of Utah, 1888, sec. 2,846; Hughitt v. Johnson, 28 F. 865; Bank v. Ry., 25 F. 809 (811); Bank v. Taylor, 25 N.W. 81; Schlesinger v. Arline, 31 F. 648; I Daniel on Negotiable Instruments, sec. 61, and notes, p. 77, 4th ed., 62 a.

Morris L. Ritchie, E. E. Ritchie and M. E. McEnany, for respondents.

Section 2613 C. L. U. 1888 provides that--

"Every conveyance of real estate * * * not recorded * * shall be void as against any subsequent purchaser, etc."

Section 2644 reads: "That the term 'conveyance' as used in this act, shall be construed to embrace every instrument in writing by which any real estate, or interest in real estate is created, aliened, mortgaged or assigned, except wills and leases, etc." "It is settled everywhere that unrecorded assignments of mortgages are void as against subsequent purchasers whose interests may be affected thereby, and whose conveyances are duly recorded, provided such assignments are embraced by the recording acts." Connecticut Mutual L. I. Co. v. Talbot, 113 Ind. 373.

To the same effect we cite the following cases: Van Kenren v. Corkins, 66 N.Y. 77; Westbrook v. Gleason, 79 N.Y. 25; Brewster v. Carnes, 103 N.Y. 562; Ladd v. Campbell, 56 Vt. 529; Swartz v. Leist, 13 Ohio St. 419; Yerger v. Barz, 56 Iowa 77; Henderson v. Pilgrin, 22 Tex. 464, 476; Jones on Mortgages, sec. 472; Girardin v. Lampe, 58 Wis. 267; Palmer v. Bates, 22 Minn. 532; Merchant v. Woods, 27 Minn. 396; Turpin v. Ogle, 4 Bradwell 611; Trademen Bldg. Asso. v. Thompson, 31 N. J. Eq. 536. And substantially to the same effect: Lewis v. Kirk, 28 Kan. 497; Jackson v. Reed, 30 Kan. 10; Lee v. Birmingham, 30 Kan. 315.

The note in question is non-negotiable.

The conditions and provisions in the mortgage are prohibited in a negotiable instrument by Par. 2847 S. 7 of the Compiled Laws of Utah, 1888, vol. 2. Brewing Co. v. McKittrick, 86 Mich. 192; Cayuge National Bank v. Purdy, 56 Mich. 7; Altman v. Frawler, 70 Mich. 57; Altman v. Ritterschof, 68 Mich. 287; Wright v. Traver, 73 Mich. 287; National Bank v. Wheeler, 75 Mich. 546; Garretson v. Purdy, (Dak.) 14 N.W. 100; Scaub v. Story, 45 Mich. 488; First National Bank v. Larsen, 60 Wis. 206; Woods v. North, 84 Pa. St. 407; Jones v. Raditz, 27 Minn. 240; Bank v. Trenton, 63 Miss. 38; Hardin v. Olsen, 14 F. 705; Bank v. Bynum, 84 N.E. 24; Ned v. Newman, 60 Ind. 584; Lime Rock Co. v. Hewitt, 60 Me. 407; Brooks v. Hargraves, 21 Mich. 25; Miller v. Riddle, 1 Ames on Bills and Notes, 76; 1 Parson on Notes and Bills, p. 42; 1 Daniels on Negotiable Instruments, pp. 34-51; Byles on Bills, 70; Cook v. Satterlee, 6 Cow. 108; Austin v. Burris, 16 Barb. 643; Kellan v. Schopes, 26 Kan. 310.

ZANE, C. J., delivered the opinion of the court. BARTCH and MINER, JJ., concur.

OPINION

ZANE, C. J.

The plaintiff insists that the court erred in holding that the note sued on was not negotiable. The mortgage given to secure it contains covenants for the payment of taxes, assessments and insurance, and against waste; and the maker stipulated in the note that, upon his failure to "comply with any of the conditions or agreements contained in the mortgage, the principal sum, with the accrued interest, should, at the option of the holder, become due and payable, and should be collectible, without further notice." The stipulation made a failure to pay taxes, assessments, or the premium for insurance on the property, or a failure to pay damages on...