Mills v. Pope

• Decision Date: 04 November 1931
• Docket Number: 6785.
• Citation: 4 P.2d 485,90 Mont. 569
• Parties: MILLS v. POPE et al.
• Court: Montana Supreme Court

4 P.2d 485

90 Mont. 569

MILLS v. POPE et al.

No. 6785.

Supreme Court of Montana

November 4, 1931

Rehearing Denied Nov. 4, 1931.

Appeal from District Court, Yellowstone County; O. F. Goddard Judge.

Action by J. J. Mills against John Phillip Pope and others. From the judgment, defendant Lillian V. Smith appeals.

Reversed and remanded, with directions.

Wm. V Beers, of Billings, for appellant.

Tansie & Simmons, of Billings, for respondent.

FORD J.

This action was brought to foreclose a mortgage executed December 15, 1925, by John P. Pope and wife to H. M. Langrack and Caroline Day, and subsequently assigned to plaintiff covering the southeast quarter of the northwest quarter of lot 3 of section 18, township 2 north, range 28 east. The complaint alleges that Lillian V. Smith, hereafter referred to as defendant, claims some interest in the premises, which is subsequent to plaintiff's mortgage.

Defendant answered, denying certain allegations of the complaint, and, by way of cross-complaint, alleged that on September 8, 1917, one Jackson executed a mortgage to the Merchants' National Bank on farm unit D of section 13, township 2 north, range 27 east, and that she is the owner thereof; that at the time of the execution of the mortgage and at the time of the assignment thereof to her there was a large dwelling house "located on and permanently resting upon said lands upon a stone wall"; that defendant Pope subsequently acquired title to the lands covered by her mortgage and thereafter, and, without her knowledge or consent, moved the dwelling house from the lands to and upon the lands covered by plaintiff's mortgage, thereby greatly depleting defendant's security. It is further alleged that on February 4, 1926, Pope was in default in the payment of interest on the mortgage, and, as security for the payment of the same, executed a second mortgage to her upon the lands covered by plaintiff's mortgage; that the second mortgage contained this provision: "This mortgage constitutes a first mortgage on the residence on the land herein mortgaged, said residence having been removed by said parties of the first part herein [Pope and wife] without any authority from or consent of the said party of the second part herein [Mrs. Smith] from the said Farm Unit 'D' according to the Farm Unit plan, to and upon the lands and premises herein mortgaged and said parties holding the first mortgage on the said lands and premises herein mortgaged knew of the removal of said house and knew that they had no right to a mortgage on same."

It is further alleged that the mortgage of plaintiff is in effect a renewal mortgage of one executed on August 30, 1919, by Pope and wife to Walter R. Day, and that the dwelling house in question was then located on farm unit D; that at the time of the execution of plaintiff's mortgage the agent of the mortgagees "knew and had known for a long time prior thereto that the dwelling house was formerly located on the said land owned by Madison B. Jackson and that it was covered by the mortgage executed by Jackson to the Merchants National Bank," and subsequently assigned to defendant. It does not appear when defendant and her predecessors in interest first learned of the removal of the dwelling house from farm unit D. It is alleged that the lands covered by the mortgage of defendant without the dwelling house is insufficient to satisfy the mortgage indebtedness, and that Jackson, Pope, and wife are insolvent.

Defendant sought judgment for the foreclosure of her mortgage on farm unit D and the dwelling house moved therefrom to the lands covered by plaintiff's mortgage; that farm unit D be sold, and, if the amount received from such sale was insufficient to satisfy the mortgage indebtedness, that the dwelling house be sold; that the purchaser thereof be given a reasonable time within which to remove the dwelling house; and that defendant's lien upon the dwelling house be declared prior to that of plaintiff.

Plaintiff's demurrer to the answer was sustained, and his motion to strike the cross-complaint was granted; defendant refused to further plead, and judgment of foreclosure of plaintiff's mortgage was entered. Defendant appeals from the judgment.

It is contended by defendant thatthe dwelling house was unlawfully removed from the lands covered by her mortgage, that such removal did not free it from the lien of her mortgage, and that plaintiff's rights are subsequent to her lien. The contention must be sustained.

A demurrer admits the truth of the facts well pleaded, and a motion to strike is in effect a general demurrer, and the allegation stricken will be deemed admitted. Downs v. Nihill, 87 Mont. 145, 286 P. 410.

The cross-complaint alleges that the agent and representative of the mortgagees, who obtained the note and mortgage in suit, at the time of the execution of the same, "knew and had known for a long time prior thereto that the dwelling house on the land on which he obtained the mortgage *** was formerly located on the lands owned by Madison B. Jackson and that the said dwelling house was covered by the mortgage" now owned by defendant. Plaintiff, as assignee, took the mortgage subject to all defenses as might have been available against it in the hands of the mortgagee. Here, the promissory notes, secured by plaintiff's mortgage, are payable to order and the law is settled in this state that "a negotiable instrument, payable to order, must be indorsed by the payee, in order to preserve its negotiability in the hands of a subsequent holder. A transfer without indorsement destroys its negotiable character, and the assignee takes it subject to all such defenses as might have been available against it in the hands of the payee." Cornish v. Woolverton, 32 Mont. 456, 81 P. 49, 108 Am. St. Rep. 598; First National Bank of New Castle v. Grow, 57 Mont. 376, 188 P. 907.

There is not any allegation in the complaint that the notes were indorsed by the payee, but it is alleged "that prior to the commencement of this action H. M. Langrack and Caroline Day assigned the said mortgage *** to the plaintiff herein and that the plaintiff herein is now and ever since has been the lawful...