Merrill v. Luce
| Decision Date | 06 December 1894 |
| Citation | 61 N.W. 43,6 S.D. 354 |
| Parties | MARY E. MERRILL, Plaintiff and appellant, v. HERMAN N. LUCE et al., Defendant and respondent. |
| Court | South Dakota Supreme Court |
Appeal from Circuit Court, Lake County, S.D.
Affirmed
Winsor & Kittredge
Attorneys for appellant.
H. H. Keith, Robert J. Gamble
Attorneys for respondents.
Opinion filed Dec. 6, 1894
This appellant, as plaintiff in the court below, brought this action as assignee of a note and trust deed given to secure the same, which, for facility of expression, we shall, as counsel do, call a “mortgage.” The respondents Walker claim to hold the premises described in the mortgage as innocent purchasers from the respondent Luce, who was the mortgagor, and as redemptioners from the sale of the mortgaged premises under a previous foreclosure of said mortgage made by the mortgagees named in the mortgage. Respondents Potter and Parrish claim to he the innocent holders of a mortgage for $2,500, given on said premises, after such foreclosure sale, by said Luce; alleging that the $2,500 for which such mortgage was given was loaned for the purpose of, and was actually used in making the redemption of said premises from such foreclosure sale. The respondent, the American Mortgage & Investment Company was the original mortgagee or beneficiary in the trust deed. E. H. Jacobs, the trustee therein named, and S. W. Jacobs, his successor in trust, were officers of said American Mortgage & Investment Company. Matthew W. Daly was the general assignee of said mortgage and investment company, and respondent Lee the Sheriff who made the foreclosure sale. Other respondents who were named as defendants were alleged to severally claim interests in the mortgaged premises subordinate to those of appellant. Their rights were derived from, and must stand or fall with, those of the principal defendants and respondents, Walker. Upon the trial the court gave judgment against appellant upon findings of fact duly filed, and this appeal is from such judgment. The record is quite long, and only such portions of it will be referred to as have a bearing upon, and will assist in determining, the one main question: Did the foreclosure of this mortgage by the original mortgagee, under the facts disclosed, bar this subsequent action for the same purpose by appellant, as the alleged assignee thereof?
One line of appellant’s argument is based upon the theory that the mortgage note in this case was a negotiable note, so that when it passed to appellant before maturity, for a valuable consideration, she took it free from defenses of which she had no notice, and that the mortgage, as incidental thereto, partook of the same character of negotiability. Neither a copy nor the form of the note, nor a statement of what purports to be its contents, is given in the record. We shall therefore be compelled to assume, if necessary to support the judgment, that the note was non-negotiable, as every intendment and presumption consistent with the record is in favor of the correctness of the judgment. This is but another form of expressing the established rule that error will not be presumed, but must be affirmatively disclosed. Kent v. Dakota F. & M. Ins. Co., 2 S.D. 300, 50 N.W. 85 (1891), and cases there cited.
Respondents raise a question as to the efficacy of what is claimed as the assignment from the mortgage and investment company to appellant to invest her with the title to the note and mortgage; but, for the purpose of what we have now to say, we shall assume that by such assignment she became the real and legal owner of the mortgage. The assignment was in writing, but was not recorded until long after the foreclosure by the mortgagee, the redemption of the premises therefrom, the giving of the second mortgage to Parrish and Potter, and the conveyances under which the other respondents claim.
The facts, then, the legal effect of which we have now to determine, are these: The respondent the American Mortgage & Investment Company, and the mortgagee of the mortgage in question sold and indorsed the note which it was made to secure, and in writing assigned the mortgage itself, to appellant Merrill. Afterwards the said mortgagee foreclosed the mortgage, and sold the premises thereunder. During the year of redemption, Luce, the mortgagor, conveyed the mortgaged premises to respondent Walker. Prior to such conveyance to Walker, he, Luce, executed to respondents Parrish and Potter a mortgage upon the same premises for $2,500, which, it would seem, was made for the purpose of obtaining money to redeem the premises from the foreclosure sale. The money realized from this mortgage was paid to Walker, he taking the title to the premises, subject to said mortgage, and he used the money in making the redemption. Parrish and Potter furnished the money, and took the mortgage upon the understanding and belief that such redemption, when made, would leave the title in Walker, unincumbered by this mortgage, which had, in form at least, been foreclosed. Neither Luce nor Walker, nor the other respondents claiming under them, had any knowledge that the note and mortgage had been transferred by the mortgagee, the assignment not having been placed on record until long subsequently, nor did the appellant have any knowledge of such foreclosure until after it had occurred. The testimony was sharply conflicting as to whether the mortgagee or the appellant, as assignee, had possession of the note and mortgage during the time intermediate that of the assignment and the foreclosure sale and redemption. The fact is probably not important, except as it bears evidentially upon the good faith and diligence of Luce and Walker in treating the mortgage as properly and authoritavely foreclosed by the mortgagee, and in making redemption from the sale thereunder. The court finds as a fact that such redemption was made in good faith. If the fact of the presence of the note and mortgage as in the possession of the mortgagee during the progress of the foreclosure proceedings and at the time of the redemption is involved, it is sufficient to say that the evidence does not strongly preponderate against an affirmative conclusion. It may be proper to add that the distinct question of who had possession of the note and mortgage on the 3d day of June, 1887, the date of the foreclosure sale, was by the court submitted to a jury, who answered that they were then in the possession of the American Mortgage & Investment Company. In its findings of fact the court says that it “does not accept the verdict of the trial jury as binding, but disregards the same.” This is not equivalent to affirmatively finding otherwise, but might have been disregarded, because the court did not regard the fact as an issue in the case, or essential to its determination upon the theory upon which it decided the case. Respondents must therefore be considered as having acted in good faith, and without knowledge of any facts putting upon them the duty of further inquiry.
While not assigned as error, appellant in her argument raised the objection that the findings of the court did not pass upon all the issues, and are therefore inadequate to support the judgment rendered; but the neglected issues mentioned by appellant, such as whether appellant bought the note and mortgage as alleged in the complaint, whether they were properly assigned to her, and whether she was the owner of the same at the time of the alleged foreclosure by the mortgagee, became unimportant under the construction which the trial court evidently put upon the recording acts of this state. And this question—the effect of the failure to record the assignment of the mortgage upon subsequent bona fide purchasers of the mortgaged premises, who bought upon the strength of the record showing such mortgage to have been foreclosed or discharged by the mortgagee—we shall now examine as the pivotal point in this case....
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