Henderson v. Pilgrim

• Decision Date: 01 January 1858
• Parties: THOMAS HENDERSON AND OTHERS v. THOMAS J. PILGRIM AND OTHERS.
• Court: Texas Supreme Court

22 Tex. 464

THOMAS HENDERSON AND OTHERS

v.THOMAS J. PILGRIM AND OTHERS.

Supreme Court of Texas.

1858.

The assignees of a mortgage upon land, acquire by such assignment, no rights which they can enforce against the land in the hands of bona fide purchasers, for a valuable consideration, without notice.

A purchaser, who, after using proper diligence to inform himself of all the facts, has dealt in good faith with a mortgagee, without notice of a previous assignment, is entitled to protection.

It is the duty of the assignee of a mortgage upon land, to make his assignment a matter of record; and if he fail to do so, he should suffer, rather than the subsequent purchaser, who is deceived by appearances, and who has no notice or record to guide him.

An assignment of a mortgage upon land, is such an instrument, within the meaning of our registry laws, as ought to be recorded, to make it effectual against subsequent purchasers, for a valuable consideration, without notice.

The record of a mortgage, made to secure the payment of a note, payable to the mortgagee, or order, does not operate in favor of the assignee of the note and mortgage, against a subsequent purchaser, for a valuable consideration, from the mortgagor and mortgagee.

Where a party, not connected with the business, stated to the purchaser that there was a mortgage on the land, and that he had heard that the claim was held by some one in New Orleans, this would not operate as notice of the assignment of the mortgage; especially when, from the information given to the purchaser, he may as readily have supposed, that reference was had to a previous claim to the mortgage, which had been settled, as to the plaintiff's assignment.

If the purchaser has paid the whole purchase money, by the payment of judgment debts of the vendor, in such manner that the judgment creditors are satisfied and the vendor released from responsibility, he is just as much a purchaser for value, as though he had paid the purchase money in cash.

The right of the assignee, under the assignment, is not a naked legal right, upon which he can insist to the overthrow of equities in others. It is only because equity treats the mortgage as a security, and as incidental to the debt, that the assignment of the debt carries with it the mortgage, as a continuing lien upon the land.

And where the assignee permitted more than a year to elapse, during which he left it in the power of the mortgagee to practice a fraud upon others, he cannot invoke the aid of a court of equity, for relief against purchasers without knowledge of the assignment, who have paid a valuable consideration.

APPEAL from Gonzales. Tried below before the Hon. Fielding Jones.

The note for ten thousand dollars, deposited with the appellants, was payable to William Means, or order. The other facts are stated in the opinion.

Mills and Batchelor, for appellants. 1st. We say that Wm. Means did not, in fact, release the mortgage of the 14th April, 1856. His relinquishment applies, in language and in fact, to the deed of trust, because his release says, the “““deed of trust” of the 14th April, 1856. This is important, because there was a deed of trust and mortgage, on the same land, of the same date. Chenault's evidence of what Wm. Means meant, can have but little weight, in a case like this, it being one of peculiar features. Again, to infer that his release was intended to apply to the mortgage, will be presuming that Wm. Means intended a fraud upon the plaintiffs, the holders of the mortgage and note, which the law will not suppose.

2d. The mortgage and note being outstanding in the plaintiffs, can the mortgagee, Wm. Means, affect it, in any way, by his release to F. B. Means? If the mortgagee has transferred the note, he cannot afterwards convey the land. A deed from the mortgagee is not enough; it must appear that the debt passed to the grantee, or that he had a right to transfer the debt; his deed, as to the debt and mortgage, passed nothing. Bell v. Morse, 6 N. H. 205; Dick v. Mawry, 9 Sm. & Marsh. 448; Parker v. Kelly, 10 Id. 184.

The assignment of the mortgage, so far divests the title of the mortgagee, that he has no power to discharge the mortgage, or any part of it. McCormick v. Digby, 8 Blackf. 99.

The lien lasts as long as the debt; nothing but payment, or release by one who controls the debt, will discharge it. Morse v. Clayton, 13 Sm. & Marsh. 373.

No man can release or transfer a right which he has not. 4 Greenl. Cruise, Dig. 114.

Wm. Means's release, if applied to the mortgage, was a fraud; and if this be shown, plaintiff's claim is good against the appellees. Trenton Banking Co. v. Woodruff, 1 Green, Ch. 117.

The appellees claim to be purchasers without notice. To this, we answer, the mortgage and note were on record in the proper county; of this, they had notice; and also, that the note was negotiable, and due 14th April, 1857. They cannot be such, in this case; there was no merger of the legal and equitable estates, in any of the vendors, at the time of the purchase, and in the same right.

F. B. Means mortgaged to Wm. Means, on the 14th April, 1856. The latter assigned the note and mortgage to the plaintiffs, on the 26th March, 1857. Afterwards, on the 31st March, 1858, Wm. Means released to F. B. Means. On the 1st April, 1858, Wm. and F. B. Means conveyed to the appellees, Pilgrim and Stewart, with warranty. Where is the merger? There can be no merger, unless the two estates (the mortgage and fee), unite in one and the same person, and in the same right.

Upon the assignment to the plaintiffs, they became mortgagees, and F. B. Means, mortgagor; and Wm. Means had no estate, of any kind, in the land. When Wm. Means released to F. B. Means, it passed nothing as to the mortgage; under the authorities above cited, the plaintiffs, still holding the rights of the mortgagee. Wm. Means's deed to Pilgrim and Stewart passed nothing, for he had divested himself of all title, by the assignment; the deed of F. B. Means passed only his interest, as mortgagor, to Pilgrim and Stewart. As the assignment, by the mortgagee, to the plaintiffs, was prior to the release of the mortgagee, Wm. Means, to the mortgagor, the estates or interests of the mortgagee and mortgagor, never became united in the mortgagor, F. B. Means; and not subsisting at any time in him, could never unite and merge in the fee. Pratt v. Bank of Bennington, 10 Vt. 293;Hunt v. Hunt, 14 Pick. 374; Forbes v. Moffat, 18 Ves. 384.

The cases of James v. Johnson (overruled in James v. Morey, 2 Cow), 6 Johns. Ch. 419; Starr v. Ellis, Id. 393; and Mills v. Comstock, 5 Id. 214, on which the appellees rely, show, in each of them, that the merger of the two estates was complete, long before the assignment was made by the mortgagee; in this case, the assignment was before the pretended merger.

3d. Again, the interest of the mortgagee was, that he held the land as security for his debt; a chose in action, transferable and assignable by indorsement of the debt; and any prior transfer, as in this case, would bind any subsequent transfer, or release of the same to third persons. Priority of right must give preference. Muir v. Schneck, 3 Hill, 228;Taylor v. Bates, 5 Cow. 376;Bradley v. Root, 5 Paige, 632.

The release to F. B. Means (which we deny applies to the mortgage, but to the trust), and the conveyance of Wm. Means to appellees, are all subject and subordinate to the rights of the plaintiffs under the first assignment. Van Rensselaer v. Stafford, Hopkins, Ch. 569; Stafford v. Van Rensselaer, 9 Cow. 316;Poillon v. Martin, 1 Sandf. Ch. 569;Peabody v. Fenton, 3 Barb. Ch. 451.

The above New York decisions must have increased weight, since this court, in Dunlap v. Wright, 11 Tex. 597, said the decisions of that state have increased authority here, because, in that state the mortgage is regarded as but a mere security for the debt.

4th. Our law nowhere requires the assignment of the mortgage and note to be recorded. The cases contemplated by Hart. Dig. art. 2767, are, where the statute first requires them to be recorded: if so required, then they must be recorded, to take effect as to third persons. It is a general principle, that no instrument gains any validity by being recorded, unless the law first requires it to be.

The article in question (Hart Dig. art. 2767), manifestly applies to original, primary titles, contradistinguished from derivative titles at common law. 2 Bl. Com. 327. The latter transmit an interest already created, while the former create estates. The language of our recording acts, most obviously applies to deeds, instruments, etc., primarily creating estates, not derivative.

The registry acts of Pennsylvania are equally comprehensive as ours, indeed, more so; for the first deed or conveyance is, by their statute, held fraudulent and void, unless, etc.; yet the courts of that state, holding to the true nature of a mortgage, declare that the assignment of it, is the assignment of a chose in action, and not strictly of an estate; it is not within the registry acts, and derives no additional validity from being recorded. Craft v. Webster, 4 Rawle, 242.¹ What fortifies this conclusion, is, that the assignment of a mortgage is not within the statute of frauds, for it will pass by assignment of the debt. Green v. Hart, 1 Johns. 580;Clearwater v. Rose, 1 Blackf. 137. Hence, all subsequent purchasers are bound to take notice of the negotiable note and mortgage, especially as the same was negotiable in this case, and liable to be transferred to third persons. The assignment of the note is not required to be recorded. An assignment of the note, is so far an assignment of the mortgage, that the assignment of the latter, without the former, is a nullity, in law and equity.Jackson v. Bronson, 19 Johns. 325.

The $10,000 note being negotiable, that fact, in view of the appellees, was equivalent to an express stipulation in the mortgage, that it was given...