Jarvis-Conklin Mortg. Trust Co. v. Willhoit

• Decision Date: 27 February 1897
• Citation: 84 F. 514
• Parties: JARVIS-CONKLIN MORTGAGE TRUST CO. v. WILLHOIT.
• Court: U.S. District Court — Eastern District of Tennessee

84 F. 514

JARVIS-CONKLIN MORTGAGE TRUST CO. v. WILLHOIT.

United States Circuit Court, E.D. Tennessee.

February 27, 1897

Brown &amp Spurlock, for complainant.

W. G H. Thomas and W. T. Murray, for defendant.

SEVERENS District Judge.

The defenses to the mortgages (several cases having been heard and the questions being substantially the same in all of them) are threefold. The first is presented upon this situation of the facts: The acknowledgement of the mortgages in question was taken by one who had some agency in the soliciting or procuring of the loans covered by the mortgages. He seems to have been an intermediary between the borrower and the lender, and he, as notary, took the acknowledgement in, I believe, all of these cases. It is contended on the part of those who here resist the mortgages that an acknowledgement so taken is void. It is contended that he was not in such a situation of indifference as that he was competent to take the acknowledgement. These mortgages were given to secure notes which have passed into the hands (in every instance) of bona fide holders for value, and without notice of the infirmity (if it be such) in the mortgage, arising from the fact of a person, who was incompetent to take the acknowledgment, having taken it. Now my opinion on that branch of the case is, very clearly, that, inasmuch as there was nothing upon the face of the mortgage to indicate to anybody that there was incapacity in the notary to take this acknowledgement, and the note secured by the mortgage having passed into the hands of bona fide holders, this objection to the validity of the instrument cannot be taken for any purpose by those who executed the instrument. To hold otherwise would, in my opinion, establish a facility for the grossest frauds, and, besides, would leave the consequences of there being a possible question of the competency of the officer taking the acknowledgment open to attack, and the validity of the title of vendees and mortgagees be exposed for all time (unless it be barred by the statute of limitations) to collateral attacks. I think it would be a doctrine that would be extremely injurious to the public; that would unsettle titles, and make them insecure, and the subject of distrust; and, without making any holding upon this subject other than that which the present situation requires, namely, that bona fide holders of paper secured by a mortgage fair upon its face, and duly recorded, there being nothing whatever, either upon the face of the instrument, or known collaterally, which should impair the validity of the instrument, must be protected, I hold that this defense cannot be sustained.

With respect to the defense of usury, I have already definitely expressed my opinion. It is contended that the notes secured by the mortgages (while they are drawn and purport to bear interest at the rate of 6 per cent.) in a certain contingency would draw interest at the rate of 12 per cent. This construction is reached by what seems to the court a rather technical interpretation of the provisions of the notes, which, taken together, under the general rule of construction that all parts of an instrument are to be brought into view when construing any part, clearly show that no such intention was present to the minds of the parties to the instrument; and I am clearly of the opinion that the taking of 12 per cent., under any circumstances or any condition, was not thought of by the parties to the instrument, and, if the court is able to say that on an examination of the instrument, it is able to say that that is the proper construction of it, upon the presumption that the parties intended a valid contract.

Another question, and the most serious one, is the objection raised to these mortgages on the ground that they are transactions between a nonresident corporation (of the state of Missouri in this instance) and local borrowers of money in Tennessee. The nonresident corporation had never complied with the provisions of the act found in chapter 122 of the Acts of Tennessee for 1891, which provides that every nonresident corporation shall first become registered in this state before it shall be authorized to do business; and the act then affirmatively provides, in the next section, that the corporation shall not do business in the state until these conditions have been complied with. I state the gist of the matter, without professing to state the exact terms of the statute. The statute then goes on to prescribe that any one violating the provisions of that act shall be punished by a fine of not less than $100 nor more than $500. It is contended by counsel for the defendants that these...