Clay v. Banks , 71 Ga. 363 ( 1884 )

Hall, Justice.

This immense record, covering one hundred and forty-eight printed pages, and out of which issued three separate hills of exceptions, makes but one controlling question, viz: whether the purchaser of land encumbered with a mortgage, which he agrees to extinguish, in order that one which he executes in favor of the vendor to secure the remainder of the purchase money may have priority, can afterwards, instead of satisfying the first mortgage, take an assignment of it to himself, and by pledging it to a third person, who had no notice of the contract with the vendor, as security for a loan, displace and postpone the lien of the last mortgage, in violation of the contract; and whether this assignment is not an extinguishment in favor of the last mortgage. We are of opinion that this question must be answered in the affirmative; and further, that the question of notice, so far as respects the rights of the vendor, under this view of the case, becomes immaterial, as to any claim set up by the present holder of the assigned mortgage, as against the junior mortgage. It is familiar learning that the assignee of a chose in action, other than promissory notes, bills of exchange, etc., takes it subject to the equities existing at the time of the transfer between the original parties, and to such as subsequently arise, unless notice be given to the party bound. Row vs. Dawson; Ryall vs. Rowles, 2 W. & T. Lead. Oases, 1531 et seq. Clay, the assignee of the older mortgage, already had the title to the land, and when he became the owner of the mortgage, the incumbrance was, eo instanti, merged in the title. As a general rule, a party cannot be said to hold a lien upon his own property. This is never allowed, except where equity intervenes and keeps the lien outstanding to protect the title, and thereby prevent a failure of justice. 91 U. S. R., 413. The purpose of this assignment accords with this principle. Clay took it that the lien of the mortgage which had been foreclosed by a decree might be kept “ alive, for the protection or defence of any title acquired by him or his assigns to the lands covered by the same.” ' This plainly appears from the terms of the assignment. Dickson vs. Williams, 129 Mass., 182, is directly upon the question of merger, under circumstances similar to those made by this case. In Carlton vs. Jackson, 121 Mass. R., 592, 596, it was distinctly laid down, as a rule applicable to a transaction like this, “ that Avhen the money is paid by one whose duty it is, by contract or otherwise, to pay the mortgage, it is a release, though in form it purports to be an assignment. Brown vs. Lapham, 3 Cush., 551; Braman vs. Dowse, 12 Cush., 227. “The subsequent assignment of the mortgage” by the party whose duty it was to extinguish it, “ could give no title” to the assignee, “ as against the plaintiff.”

The only difference between this case and ours is, that in that there was a written obligation in the, deed conveying the premises, binding the grantee to extinguish the mortgage; in ours that obligation rested in parol, and it is insisted here that the cases, as to notice, are, for this-reason, clearly distinguishable. The record of the deed was notice binding upon subsequent assignees; in this case, there could be no snob notice. Even if notice were necessary, in order to defeat a subsequent assignment and a sale made under a process that was extinguished, there are circumstances quite sufficient here to have put Mr. Mills, the ultimate assignee, upon inquiry and to affect his conscience with direct, which is more effectual for this purpose than constructive notice, implied from the record of an instrument. Jordan vs. Pollock, 14 Ga. R., 145.

In Platt vs. The Bank of Bennington et al., 10 Vt., 293, (S. C. 33 Am. Dec. 201,) the supreme court of that state held that the assignee of a mortgage by the.assignment became a mortgagee, and the original mortgagee had no estate left in the land; and if he afterwards by quit-claim acquired the interest left in the mortgagor, he did not obtain thereby an estate which merged in that of the assignee, but that the failure of the assignee to record his assignment did not postpone the lien of his mortgage to that of a mortgage made by the assignor after the date of the assignment and quit-claim, even though the subsequent mortgagee had no notice of the assignment.

It follows from this that the judgment of the lower court, granting a new trial to Mills and refusing the complainants in the original bill a decree of foreclosure upon the mortgaged premises, was erroneous. The decree must be modified to this extent: Mills should be given the right to redeem the premises as to complainants’ mortgage, with liberty to proceed against Clay, his assignor, not only for the amount of this decree, but for any other amount Clay may be found indebted to him, and for which he holds the assignment of the decree foreclosing the first mortgage. As between Olay and Mills, the assignment of the same is not an extinguishment of the debt. The complainants are not entitled to hold the decree that was rendered in their favor against Clay; between him and them there is no privity; and when the complainants’ claim under their mortgage is satisfied, Wilkins is entitled to have the amount received on this account credited on the personal decree in favor of complainants against him. The decree to be entered on the findings of fact by the jury must conform to these directions.

It is our opinion that the act of the general assembly of 1880, allowing mortgages to be foreclosed in equity, Code, §3979 (a), conferred fuller powers on the court by this mode of procedure than it had at law, and that, in addition to the foreclosure, a personal decree may be rendered against the mortgagor. It is a well established rule that when the court of equity takes jurisdiction for one purpose it holds it for all others necessary to the final settlement of all questions involved in the litigation between the parties growing out of and connected with that subject-matter. If the act was not designed to obviate the necessity of a suit at law to cover any deficiency that might exist, after exhausting the mortgaged property, then it seems to us that it was without any purpose other than the useless multiplication of remedies to accomplish an object that could have been as well obtained without as with it.

Judgment reversed.