Bettle v. Tiedgen ( 1906 )

Ames, C.

Tiedgen owned a tract of land upon which he executed a mortgage to secure a promissory note payable to the Omaha Loan & Trust Company. After the note had become due and had lost its negotiable character under the law merchant, the payee assigned it to the Boston Safe Deposit & Trust Company, soon after executing also to the latter company a formal assignment of the mortgage. Subsequently the Boston company sold and transferred the note and mortgage to the plaintiffs, who are still the lawful holders of them, but without formal assignment, except as already mentioned.. The defendant Reimers became the owner of a second mortgage on the land and foreclosed it upon the equity of redemption, of which he became tbe purchaser at judicial sale after the daté of the transfer and assignment first above mentioned, but before the assignment was made of record in the county, and without knowledge or notice of it. Nor- did he ever know of it actually or constructively, or of either of the sales and transfers of the securities, until after he had in good faith paid the amount of the mortgage debt to the payee named in the instrument, the Omaha company, unless he was charged with notice by the record of the assignment several months after he had acquired title to the equity of redemption, in manner aforesaid, and his Sheriff’s deed had been made of record, and he had gone into possession of the land. The Boston company, at all times after it had disposed of the paper, was the agent of its assignee, the plaintiffs, for its collection, and payment to it would have discharged the debt, but the Omaha company became insolvent, and never remitted the money paid to it by Reimers for the satisfaction of the lien.

The facts thus briefly stated and their legal effect, as thus indicated, are, as we understand, not in dispute. They gave rise to the first of two questions presented by this record of the dismissal by the district court of an action to foreclose the mortgage. The case reached this court by appeal. 'This question, which was debated at length by counsél both in their briefs and orally at the bar, is whether Reimers is a subsequent purchaser within the meaning of section 16, ch. 73, Comp. St. 1903, and, as such, charged with constructive notice of the transfer of the paper by the record of the assignment before he made his payment. There is good reason for regarding him as such. This court held in Ames v. Miller, 65 Neb. 204, that an assignment of a mortgage is, without doubt, a “deed” within the meaning of section 46 of the statute, because it affects the title to, and transfers an interest in, real estate, and is entitled to be made of record by the provisions of the act. This being so, one who purchases a release or surrender of the interest and becomes also entitled to an instrument of record evidencing that fact must, under the circumstances of the case at bar, be regarded as a subsequent purchaser of it and bound by record notice that his vendor had already parted with his title thereto. It will be observed that section 39, ch. 73, .supra, exempts from the constructive notice of the record of the mortgage three classes of persons only, namely, mortgagors and their heirs and personal representatives; but a purchaser of the equity of redemption who does not become obligated for the payment of the mortgage debt is a mere volunteer, who may or may not afterwards purchase, also, the outstanding lien or interest, and whose intention in that regard the mortgagee or his assigns can have no certain means of ascertaining. In fact, it was admitted in argument that for a considerable time after Reimers acquired the equity of redemption he had no fixed or formed intention with respect to the payment of the mortgage lien in suit, and for that reason expressly declined to enter into an agreement for the extension of the debt. Under such circumstances he can hardly be regarded as a “personal representative” of the mortgagor, who is still living and a party to the suit. We think that, in view of the decisions of this court, a mere purchaser of the’ equity of redemption of mortgaged lands is given all the protection that the statute was designed to afford him, if he is permitted to deal with safety with one who appears by the record to be the owner of a mortgage securing a nonnegotiable debt. Eggert v. Beyer, 43 Neb. 711.

The remaining question is one of fact, concerning which, however, the evidence is not conflicting, viz.: Was the Omaha company an agent of the Boston company for the collection of the debt in controversy, it being admitted by counsel, as Ave understand them, that such an agent would have possessed authority to bind the plaintiffs also? This question should, Ave think, be ansAvered in the affirmative. The transaction and manner of dealing between the Omaha company and the Boston concern, briefly stated, Avas this: The former executed its obligations, called “debentures,” to the latter for a loan, of money, and deposited Avith the latter a very large1 number of notes, secured by mortgages to itself, as collateral security for the loan. The collateral notes appear not to have been indorsed and delivered under the law merchant, and that fact in this instance is significant, but were transferred by an assignment embodying a guaranty of collection of the principal, and of subsequently accruing interest thereon, and evidently not intended, or having the legal effect, to give the paper currency in the market. The arrangement extended over a considerable term of years. Tin1 course of business between the parties which seems to have been contemplated, though not set forth in detail, by their written contract was that, whenever any of the pledged obligations became due, or were about to become so, they were returned to the Omaha company, which was afforded an opportunity for 60 days to secure their payment or renewal, and to substitute with the Boston company new and underdue obligations in their stead. The business of making loans, collections and renewals was carried on by the Omaha concern and in its name exclusively, formal assignments not being made of record, and the connection of the Boston company with the paper, or its name even, not being made known to the borrowers and mortgagors or other persons Avith whom the Omaha company dealt. A very large volume of business A\ras carried on for a longtime in this way, and this was the Avay in Avhich the mortgage in suit was dealt with, except that after the Omaha company became insolvent, or it Avas about to become so, the assignment mentioned above was executed and filed for record. The undertaking by and between the two corporations was a joint enterprise for mutual gain very closely resembling a partnership. The Boston company furnished the money capital for a definite share of the profits under the name of interest, and for the residue thereof the Omaha company conducted the business, and, as between the parties, incurred, to the extent of its financial responsibility, the sole risk of loss.' The principles applicable to such an association are elementary and familiar. Each member is obligated by the conduct of every other in the transaction of the affairs of the concern.

We are therefore of the opinion that the judgment of dismissal was not erroneous, and recommend that it be affirmed.

Oldham and Epperson, CC., concur.

By the Court: For the reasons stated in the foregoing opinion, it is ordered that the judgment of dismissal be

Affirmed.