Marling v. Milwaukee Realty Co.

• Decision Date: 23 February 1906
• Citation: 106 N.W. 844,127 Wis. 363
• Parties: MARLING v. MILWAUKEE REALTY CO. ET AL.
• Court: Wisconsin Supreme Court

127 Wis. 363

106 N.W. 844

MARLING

v.MILWAUKEE REALTY CO. ET AL.

Supreme Court of Wisconsin.

Feb. 23, 1906.

Appeal from Circuit Court, Milwaukee County; Lawrence W. Halsey, Judge.

Action by Celia Marling against the Milwaukee Realty Company and others. From a judgment for plaintiff, defendant Emma Nommensen appeals. Reversed.

On November 3, 1897, the defendant Milwaukee Realty Company executed its negotiable note and a mortgage securing the same upon certain premises in Milwaukee, to Henry Herman. Said note was guarantied by the defendants Agnew and Maynard. On December 10, 1897, Herman duly transferred said note and mortgage to the plaintiff, delivering the same to her with a written assignment, which she thereafter always retained, but did not record the assignment until April 17, 1903. July 5, 1902, the Milwaukee Realty Company agreed on a sale of said property to the appellant. She paid $10 down, and received a receipt in the following words: “July 5/02. Received of B. Nommensen Ten Dollars to apply on purchase of No. 180 Chambers St. (40 X 60 ft.) Total purchase price of said premises being $2950. net. There being on said premises a mortgage of $1800, which said Nommensen or his assigns agrees to assume as part of the purchase price of said premises. The balance of said purchase price shall be paid as follows: $240. July 7/02, $320. July 8/02 & $580. August 30/02, or the said Nommensen may pay all of the balance of said purchase price, viz. $2940 on or before Sept. 1st/02. Said contract and abstract of title will be furnished at any time on demand, all deferred payments to bear interest at the rate of 6% per annum. A. D. Agnew.”

Appellant notified the realty company of her election to pay the whole purchase price, and receive a clear title to the premises, and on September 12, 1902, paid the balance then remaining, together with interest, amounting to $2,402. Her attorney, who accompanied her, examined the abstract, and discovered the mortgage in question running to Henry Herman, and the realty company, acting by Agnew, delivered Herman's release. The attorney asked for the note and mortgage, and was told that Herman would send them to Agnew within a few days, whereupon appellant could call for them. On such assurance, title was accepted in reliance on the abstract and the release, a warranty deed being made by the realty company to appellant. Such release of mortgage and the deed were recorded, respectively, May 8, 1903. and July 6, 1903. The release was obtained by Agnew from Henry Herman by payment to him of the amount of the mortgage by the Milwaukee Realty Company. He informed Agnew that he did not then have in his possession said note and mortgage, but promised to obtain it within a few days. In the spring of 1903 Herman absconded, a defaulter. Appellant has been in possession of the premises by the collection of rents ever since the purchase in July, 1902. None of the defendants had any knowledge of the transfer of the mortgage to plaintiff, nor had plaintiff any knowledge of the purchase of the premises by appellant or of the payment of the mortgage to Herman. She had never given Herman any authority to collect it. Plaintiff commenced this action to foreclose said mortgage, demanding deficiency judgment against defendants Milwaukee Realty Company, Maynard, and Agnew. Appellant set up the discharge, both as a defense and as a counterclaim, with prayer for quieting her title against plaintiff. Upon findings substantially in accordance with the facts above stated, judgment was entered in accordance with the prayer of the complaint, from which the defendant Nommensen appeals.Lenicheck, Fairchild & Boesel, for appellant.

Turner, Hunter, Pease & Turner, for respondent.

DODGE, J. (after stating the facts).

Appellant contends for reversal upon two theories: First, that the debt secured by plaintiff's mortgage is paid and the mortgage, therefore, discharged; and, secondly, on the ground that she is estopped to set up such mortgage against appellant, even if the debt be not paid. The first ground is fully negatived by our former decisions. The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time or to such owner's authorized agent. If the recipient of the money is not actually authorized, the payment is ineffectual, unless induced by unambiguous direction from the owner or justified by actual possession of the note. This rule applies generally to all negotiable paper independently of the existence of any mortgage or other security. 3 Randolph, Com. P. §§ 1444, 1450; Bartel v. Brown, 104 Wis. 493, 80 N. W. 801;Kohl v. Beach, 107 Wis. 409, 83 N. W. 657, 50 L. R. A. 600, 81 Am. St. Rep. 849;Loizeaux v. Fremder, 123 Wis. 193, 101 N. W. 423;Biggerstaff v. Marston, 161 Mass. 101, 36 N. E. 785;Murphy v. Barnard, 162 Mass. 72, 38 N. E. 29, 44 Am. St. Rep. 340;Bromley v. Lathrop, 105 Mich. 492, 63 N. W. 510;Church Ass'n v. Walton, 114 Mich. 677, 72 N. W. 998;Hollinshead v. Stuart & Co., 8 N. D. 35, 77 N. W. 89, 42 L. R. A. 659;Manhattan Co. v. Reynolds, 2 Hill, 140;Mitchell v. Bristol, 10 Wend. 492;Williams v. Jackson, 107 U. S. 478, 2 Sup. Ct. 814, 27 L. Ed. 529. Certain cases cited to support effectiveness of payment to original mortgagee as against unknown assignee, do not deal at all with negotiable instruments, and, therefore, are without applicability. Van Keuren v. Corkins, 66 N. Y. 77;Barnes v. L. I. Real Estate Exch. & Investment Co. (Sup.) 84 N. Y. Supp. 951. Some contention is made that appellant assumed the debt, and that the payment to Herman must be deemed to have been made by her, thus subjecting her to the principle above stated. We are clear, however, that the premise to this reasoning is incorrect. The clear meaning of the receipt given at the time of bargaining for the premises was that appellant might, at her election, buy the premises subject to the mortgage, in that case assuming the debt, or might buy clear of the mortgage upon payment of the entire sale price to the realty company. Beyond dispute, she elected to do the latter and, therefore, never became liable for the debt as between herself and her grantor. We do not understand the finding that said written receipt contained words of assumption to mean that appellant agreed to assume. If that be the meaning, it would be contrary to the undisputed evidence.

Turning, then, to the second ground of defense, we must first overrule some contention in appellant's favor based on Section 2241, Rev. St. 1898, declaring void any unrecorded conveyance as against a subsequent purchaser “whose conveyance shall first...