New England Mortg. Sec. Co. v. Hirsch

• Decision Date: 29 April 1892
• Citation: 96 Ala. 232,11 So. 63
• Parties: NEW ENGLAND MORTGAGE SECURITY CO. v. HIRSCH ET AL.
• Court: Alabama Supreme Court

11 So. 63

96 Ala. 232

NEW ENGLAND MORTGAGE SECURITY CO. v. HIRSCH ET AL.

Supreme Court of Alabama

April 29, 1892

Appeal from chancery court, Russell county; JOHN A. FOSTER Chancellor.

Suit by Hirsch Bros. against Thomas Moody and wife, the New England Mortgage Security Company, and others, to foreclose a mortgage given by Moody and wife to complainants as a second mortgage, after one to said company, which was afterwards settled, and a release given, and a new mortgage taken on the same premises. Judgment for complainants. The New England Mortgage Security Company appeals. Affirmed.

The bill in this case was filed by the appellees against Thomas Moody and wife and the appellant and others, and sought to foreclose a mortgage executed by said Moody and wife to the complainants on January 15, 1886. The bill averred that the New England Mortgage Security Company, the appellant in this case, had some interest in the land sought to be sold under the foreclosure by reason of a mortgage to the said company. In the answer to the bill of complaint by the New England Mortgage Security Company, it was disclosed that in December 1881, Thomas H. Moody and wife executed a mortgage to the New England Mortgage Security Company to secure an indebtedness due to said company from Moody and wife. The mortgage executed by Moody and wife to the complainants, Hirsch Bros which was executed January 15, 1886, recited the execution of the mortgage to the New England Mortgage Security Company in December, 1881, and was made subordinate to this prior mortgage. InMarch, 1887, the indebtedness of said Moody to the New England Mortgage Security Company was settled, and a new note and mortgage to secure the same were executed bearing date March 10, 1887; and a release of the indebtedness secured by the mortgage of December, 1881, was executed by the New England Mortgage Security Company, and was placed on the record book in which the mortgage was recorded. All contention, as raised by the bill and the answers thereto, was whether the execution of this release and the execution of the new note and mortgage of March 10, 1887, displaced the priority of the mortgage of December, 1881, over Hirsch Bros.' mortgage of January 15, 1886. On the final submission of the cause on the pleadings and proof the chancellor decreed that the mortgage given to Hirsch Bros. on January 15, 1886, had priority over the mortgage given to the New England Mortgage Security Company on March 10, 1887, and that the execution by the latter of the note and mortgage on March 10, 1887, and the release amounted to a settlement of the mortgage debt as evidenced by the note and mortgage executed in December, 1881, and granted the relief prayed for by the complainants.

Caldwell Bradshaw and Watts & Son, for appellant.

Norman & Son, for appellees.

MCCLELLAN J.

While it is the law that the mere taking of a new note and mortgage, the debt evidenced by the former and the property embraced in the latter being the same, will not discharge or displace the lien of an existing mortgage, it is equally well-settled law that, where the new transaction involves the payment and satisfaction of the first mortgage, the mortgagee's rights are dominated by intervening liens of third persons, liens acquired subsequently to the execution of the first and prior to the execution of the second mortgage. Boyd v. Beck, 29 Ala. 703; Helmetag v Frank, 61 Ala. 67; 2 Jones, Mortg.§ 927 a; 15 Amer. & Eng. Enc. Law, pp. 869-871; Bolles v. Chauncey, 8 Conn. 389; Walters v. Walters, 73 Ind. 425. And whether the taking of the second mortgage is a payment of the first depends upon the intention of the parties. When no receipt is given as for the amount secured by the first mortgage, and no release thereof is executed, the presumption is that the later notes and mortgage were not intended to pay and discharge the earlier. When such receipt is given or release executed, the contrary presumption obtains. But this is only a prima facie presumption. It may be met and overturned, whatever the form of the paper writing relied on as evidencing...