City Council v. Ryan , 1885 S.C. LEXIS 28 ( 1885 )

The opinion of the court was delivered by

Mr. Justice McIver.

[Omitting his statement of the case.]

The correctness of the conclusion reached below is so satisfactorily shown by the reasoning employed and the authorities cited by Master Hanckel, confirmed and endorsed as they are by the Circuit judge, that but little is left for us to add. There can be no doubt that at the time of the issue of the fire loan bonds which constituted the consideration of the bond and mortgage under which the lot in question was sold, the records, which was the proper source for the lender to go to to obtain such information, showed that the mortgage to the trustee, which is now claimed to be a prior lien, was fully satisfied and discharged by the mortgagee, or a’ather by one who stood in his place. This entry of satisfaction may or may not have been fraudulently done; but, .even conceding that it was fraudulent, we do not see how it. could affect the rights of the City Council unless they had notice of such fraud. The fact that they had such notice is negatived by the findings of the master, which are not only fully concurred in by the Circuit judge, but are likewise sustained by the evidence, and therefore, according to the well-settled rule, we are bound to conclude that the City Council had no such notice.

And when to this is added the further finding of fact, equally well sustained by the evidence, that the means of making such fraudulent entry of satisfaction (if indeed it was so) was afforded by the negligence of Thomas E. Byan, the mortgagee, there cannot be a doubt about the result; under the wise and well-settled principle of equity “that where one of two innocent parties must suffer loss, it must fall on the party who, by incautious and misplaced confidence, has occasioned it or placed it in the power of a third party to perpetrate the fraud by which the loss has happened.” Thomas E. Ryan, being the legal owner and holder of the bond and mortgage, was the proper person to receive payment and enter satisfaction ; and when he endorsed his name, under his seal, on the back of the mortgage, as the master finds that he did do, he placed it in the power of any person into whose hands the mortgage might fall to write above his name an acknowledgment of payment and a discharge of the mortgage, as was in fact done. There cannot be a doubt, therefore, as to whose negligence caused the loss.

But, as we have said, the case has been so fully considered and so satisfactorily disposed of that it is not necessary for us to enter into any further discussion of it, but will confine ourselves to a brief consideration of the several grounds of appeal. The first ground clearly cannot be sustained, inasmuch as it appears that the issues of law and fact were, by consent, referred to the master; and this would amount to a waiver of the right to a jury trial, if indeed such a right could ever have been claimed. The second ground raises mere questions of fact which have been disposed of by what we have already said. The third ground cannot be sustained: First, because it does not appear, and in fact the contrary does appear, that the blank above the mortgagee’s name was ever filled but once; second, because the act of the mortgagee, in endorsing his name upon the mortgage and parting with the possession of it, afforded the opportunity and the means of perpetrating the very fraud which appellants allege has been committed; and whether so intended by the mortgagee or not can make no difference.

The fourth ground rests upon the proposition that a satisfaction of a mortgage must be executed in the presence of two subscribing witnesses. The statute in reference to the satisfaction of mortgages, as found in the Greneral Statutes of 1872, p. 427—8, the law which was in force at the time of this transaction, does not require two witnesses, and we see no ground upon which the proposition contended for can be maintained. The fifth ground rests upon the assumption of fact that the minor mortgagees were in possession at the time the entry of satisfaction was made, but the evidence shows the contrary to be the fact; and we are utterly at a loss to conceive what the statute of uses has to do with the question. At the time the entry of satisfaction was made, the cestui que trust, Thomas J. Ryan, was alive, and the minor defendants had no interest whatever in the mortgage. The sixth ground also rests upon assumptions of fact not sustained by the evidence, and cannot therefore be maintained.

The judgment of this court is that the judgment of the Circuit Court be affirmed.