Wilson v. Brabham

• Decision Date: 05 November 1923
• Docket Number: 11327.
• Citation: 119 S.E. 829,126 S.C. 273
• Parties: WILSON v. BRABHAM ET AL.
• Court: South Carolina Supreme Court

119 S.E. 829

126 S.C. 273

WILSON v. BRABHAM ET AL.

No. 11327.

Supreme Court of South Carolina

November 5, 1923

Appeal from Common Pleas Circuit Court of Bamberg County; R. W Memminger, Judge.

Action by George W. Wilson against Martha Brabham, Alma B. Barr, and the People's Bank. Judgment for plaintiff, and defendants appeal. Affirmed.

The master's report is as follows:

"This is an action started by the complaint of the plaintiff for the foreclosure of a real estate mortgage executed by the defendant Martha Brabham to the defendant People's Bank, dated January 12, 1918, payable October 15, 1918 given to secure her bond of even date, and assigned October 13, 1918, by the said People's Bank to this plaintiff. In the beginning the defendant People's Bank was not made a party. The defendant Mrs. Alma B. Barr was made a party on account of two mortgages over the same piece of property described in the plaintiff's mortgages, said two mortgages having been given to secure bonds of the same respective dates, and executed by the said defendant Martha Brabham to the said defendant Mrs. Alma B. Barr, the one bearing date December 23, 1919, and the other March 8 1920. Later for good cause shown as will be recited hereafter this special master issued an order making the said defendant People's Bank, a party; due process was then obtained upon said bank, which has come in and pleaded its cause, first by a demurrer, which was overruled by this court, later by its answer and testimony offered in its behalf. The defendant Martha Brabham is in default.

From the evidence and testimony I find the following facts: The plaintiff's mortgage was executed on the date set out above, and properly assigned to this plaintiff for full value on the date set out above. The assignment is executed on the mortgage itself and has never been recorded. More than a year later, or in December, 1919, the defendant Martha Brabham applied to the defendant Mrs. Alma B. Barr for a loan on the place, and represented that the said mortgage had been paid. Mrs. Barr's attorney requested the original paper from Martha Brabham, who claimed that it was at home, but could not be found after a search by her at the attorney's instigation. A complete satisfaction of the said mortgage was then prepared on a separate sheet of paper, and executed by the People's Bank as the original mortgagee, dated December 5, 1919, and was recorded on the face of the record of the mortgage before Mrs. Barr took either of her mortgages. The People's Bank was therefore made a party, because both the plaintiff and the defendant Mrs. Barr maintained that it had committed a wrong injurious to their rights in satisfying a mortgage which it neither owned nor held at the time, but had previously assigned, and was accordingly liable to the junior mortgagee, for any deficiency between the amount the property might bring at sale and the amount due the said junior mortgagee, after paying the taxes, costs, and amount due senior mortgagee. The bank offered a defense of no liability. The evidence is clear and uncontradicted that the plaintiff's mortgage is still outstanding, and that the president of the People's Bank made a mistake when he executed the satisfaction in question. Mrs. Barr's contention, however, is that her mortgages should be held first and second, and plaintiff's third, because she relied upon the recorded satisfaction, and plaintiff put it in the power of the bank or made it possible for the bank to execute the satisfaction by not recording his transfer. The only questions at issue then are: Which mortgage is a prior lien on the property? and should the People's Bank be held liable to the junior mortgagee for any deficiency in case the proceeds from the sale of the property are insufficient to pay all mortgages in full?

After comprehensive arguments by counsel for all parties concerned, careful consideration of the facts and the case as a whole, including a thorough review in my own mind of the authorities cited, I am unable to sustain the contention of Mrs. Barr, and am convinced that all decisions of our Supreme Court bearing at all on this question tend under such circumstances to place her mortgages second and third to that of the plaintiff herein, and that the greater weight of authority is to the effect that Wilson's mortgage is entitled to priority as a first lien over the property in question, and Mrs. Barr's mortgages rank second and third in accordance with their respective dates of December 23, 1919, and March 8, 1920, and I so hold.

It is an elementary principle which has been repeatedly determined by our courts, and is agreed upon in this case that an assignment of a mortgage is not required by law to be recorded. Mrs. Barr, however, contends upon the equally well-settled doctrine that, where one of two innocent parties must suffer by wrong of another, equity places that burden upon the one who makes it possible for the wrong to be committed. I cannot agree, however, that Wilson's failure to record his assignment was sufficient negligence in itself to preclude his rights. The mortgagor testified that her husband transacted her business, and Wilson took up his mortgage for him; certainly it was not incumbent upon Wilson to further notify her of his ownership of the papers. And I am not prepared to say that Wilson was bound to assume that the very party who assigned the mortgage to him might later execute its so-called satisfaction. In view of our laws and equity principles, it appears to be dangerous business to accept a mortgage satisfaction without the production of the mortgage itself. This is exactly what Mrs. Barr did. And in my opinion she relied too much upon the word of the mortgagor. There is no testimony that anybody ever approached the People's Bank for an investigation of the whereabouts of the first mortgage. Mrs. Barr could have done this, but she simply allowed Martha Brabham herself to present a satisfaction on a separate sheet of paper, which the bank obligingly executed for her without question, seeing from its books that it was not further interested. Of course this was clearly an innocent mistake on the bank's part with no intentional wrong to any one, and was in this instance signed in good faith beyond a shadow of doubt. But I can conceive of instances where a gross fraud could be perpetrated by an unscrupulous mortgagor and banker or other original mortgagee, under similar circumstances, if it were held in this case that Wilson's mortgage be now relegated to the background. Mrs. Barr could have gone further; she could have advertised for the purpose of ascertaining the correct facts as to this outstanding mortgage, and, along with the other usual expenses, the mortgagor would have been obliged to stand for this. In the absence of these additional precautions she could have declined the loan, but unfortunately she failed to follow either course, and acted simply upon the statement of the negress, Martha Brabham, mortgagor, that the debt was paid, and the paper at home or lost, and upon the alleged satisfaction of the bank which she allowed Martha Brabham to procure without any investigation by Mrs. Barr or her attorney. No blame whatever can be attached to Mrs. Barr's attorney who advised her in the transaction, because he did just what other reputable lawyers are doing daily, and this unfortunate situation would hardly arise once in a thousand cases.

But nevertheless, it remains true that, in my opinion, in view of our statutes relating to the satisfaction of mortgages of record and the decisions of the Courts of last resort, Mrs. Barr is not entitled to a priority, and to my mind the case of William & Co. against Paysinger, reported in 15 S.C. page 171, is conclusive of the question, and the astute counsel for Mrs. Barr failed even to offer any distinction, and I think...