First National Bank v. Vagg

MB. COMMISSIONEB FOBD

prepared the opinion for the court.

This is an action to foreclose a mortgage. The plaintiff in his complaint alleges that a note for seven hundred dollars ($700) and interest was made, executed and delivered by the defendants Vagg to the Saco Mercantile Company on October 16, 1916, indorsed by one R. P. Holcomb, and on October 28, 1916, sold, assigned, transferred and delivered by the Mercantile Company to plaintiff, who ever since has been and is now the owner thereof; that the note has not been paid; that it is secured by a real estate mortgage, executed and delivered by the Vaggs to the Mercantile Company on the twenty-eighth day of October, 1916; that plaintiff is the owner of said mortgage. The defendant, Federal Land Bank, is joined as the claimant of some interest in, or lien upon, the mortgaged premises alleged to be subsequent to plaintiff’s mortgage. Foreclosure of the mortgage is asked, as well as judgment on the note.

Defendants filed separate amended answers, each admitting the making, execution and delivery of the note and mortgage; that the mortgage is security for the note, the indorsement of the note by Holcomb, and that the Federal Land Bank claims an interest in the mortgaged premises; denying that this interest is inferior to plaintiff’s mortgage, and each denying the assignment of the note to plaintiff; that the mortgage is owned by plaintiff, and that the note has not been paid. Each defendant pleads affirmatively payment of the note; and the defendant Federal Land Bank sets forth a note in the sum of $2,250, given to it by the defendants Vagg on the fourth day of September, 1917, secured by a mortgage of same date, upon the premises covered by the plaintiff’s mortgage. The prayer of each answer is that the defendants be dismissed with their costs.

The plaintiff in its reply denies the payment of the note; admits the bank’s note and mortgage, but alleges that it was taken with knowledge of plaintiff’s prior mortgage, and subject thereto; and that the defendant bank had agreed to pay plaintiff’s mortgage. Findings of fact and conclusions of law were made and filed by the trial court in favor of the plaintiff and judgment entered thereon, from which judgment and order denying defendant’s motion for a new trial these appeals are prosecuted.

Counsel for defendants, in their brief, assert that there are but three questions involved in this appeal: (1) Was the note mentioned in plaintiff’s complaint paid? (2) Under the evidence submitted, and according to the facts apparent from the various offers of proof, was the plaintiff the owner of the mortgage? Or (3) Was R. P. Holcomb the owner of the mortgage and as such did he have the right to release it at any time he saw fit to do so?

The undisputed evidence in this case shows that the note for which the mortgage in question was given as security was indorsed, without recourse, to the plaintiff in this case, by the Saco Mercantile Company, on the twenty-eighth day of October,' 1916, for the sum of $700, and that the plaintiff has owned and held the note ever since; that Holcomb never did own said note or claim to own the same.

The defendant sought to prove in effect that at the same time the note was assigned to plaintiff, at plaintiff’s request, an assignment of the mortgage was drawn up to the indorser Holcomb, and delivered to the plaintiff by the Mercantile Company; that an officer of plaintiff told Holcomb plaintiff did not want the mortgage, and that Holcomb has satisfied the mortgage, which offer of proof was rejected and the evidence excluded by the trial court; and such ruling is assigned as error by the defendants.

The court found, among other facts, that the plaintiff is the owner and holder of said mortgage, and we think said finding is amply supported by the evidence in this ease. The assignment of a debt secured by mortgage carries with it the security. (Sec. 8261, Rev. Codes 1921.)

A mortgage is a conveyance within the meaning of the record laws of this state, though it is a conveyance of a chattel interest only. Title to it passes to an assignee by assignment of the debt or obligation secured by it; for the mortgage is but an incident—a security—and, independent of the debt, has no assignable quality. Such assignment is a mere nullity. Where there is no written evidence of the debt or obligation, the mortgage is evidence both of the debt and security for its payment. Nevertheless the debt is the principal thing, and the title to the mortgage must follow an assignment of it.’ (Cornish v. Woolverton, 32 Mont. 456, 108 Am. St. Rep. 598, 81 Pac. 4.) The mortgage being a mere incident of the debt, cannot be assigned separately from it, so as to give any beneficial interest. The incident may pass by a grant of the principal, but not the principal by a grant of the incident. (Jones on Mortgages, 7th ed., sec. 805, p. 274.) A mortgage, as distinct from the debt it secures, is not a thing of value nor a fit subject of transfer; hence an assignment of the mortgage alone without the debt is nugatory, and confers no rights whatever upon the assignee. (27 Cyc. 1286; Nagle v. Macy, 9 Cal. 426.) The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while the assignment of the latter alone is a nullity. (Jackson v. Blodget, 5 Cow. (N. Y.) 202, Jackson v. Willard, 4 Johns (N. Y.) 41, 43.) The mortgage can have no separate existence. When the note is paid, the mortgage expires. It cannot survive for a moment the debt which the note represents. (Carpenter v. Longan, 16 Wall. (U. S.) 271, 21 L. Ed. 313 [see, also, Rose’s U. S. Notes].)

It follows, therefore, that when the Saco Mercantile Company transferred the note for which the mortgage in question was security to the plaintiff herein, it thereby became the owner of the mortgage and any assignment thereafter of the mortgage to Holcomb was a mere nullity; the evidence of such assignment of the mortgage and of any agreement in relation thereto and of the satisfaction thereof by Holcomb, offered by the defendants, for the purpose of proving or disproving ownership of the mortgage, was wholly immaterial and properly excluded by the trial court.

Some of the evidence offered by -the defendants, and excluded by the court tended to prove waiver and estoppel, but neither was plead in the answers, nor was either relied upon by counsel in the trial of this case nor is either urged in this court.

The court also found “that said note has not been paid, nor has any part thereof, nor any interest thereon.” The defendant Frank J. Vagg testified that he paid the $700 note on the sixteenth day of September, 1917, together with all accrued interest thereon, to one Skjerseth, who was then the vice-president of the plaintiff bank; that he secured no receipt therefor, and did not receive the- note, for the reason that Skjerseth informed him that it was in another bank. R. P. Holcomb, a witness on behalf of the defendant, testified that on the seventeenth day of September, 1917, Skjerseth stated to him “that Vagg was in yesterday and paid that Mercantile.note that he owed.” It is undisputed in the evidence that the plaintiff bank had the note in its possession at the date of the trial, and there were no indorsements of payment thereon. Witness Sutherlin, who succeeded Skjerseth, testified that the note had not been paid. Said witness also testified that in the month of February, '1918, in a conversation with Vagg, he (Vagg) said: “I want you fellows to get your money”; and on the twenty-first day of November, 1917, Vagg told witness to write to the Federal Land Bank and advise them what it would take to pay off their mortgage. To the same effect is the testimony of witness Kahle, cashier of the plaintiff bank at that time, and Taylor, the president of the Mercantile Company at the time the note was made. Witness Sutherlin testified that some time in the month of February, 1918, the defendant.Frank J. Vagg admitted to him that he owed the bank the money, and defendant Frank J. Vagg in his application to the Federal Land Bank for a loan, made on the eighth day of May, 1917, sets forth this indebtedness due the bank. From the foregoing we cannot say that the evidence preponderates against such finding.

The defendants also assign as error the refusal of the trial court to permit them to introduce surrebuttal testimony. An examination of the record discloses that there was no new matter injected by the plaintiff in rebuttal, and the defendants did not ask leave to offer evidence in their original casé; furthermore, the defendants made not offer of proof and there is no way for this court to determine whether the testimony, if competent, would or would not have been material. We do not think the trial court abused its discretion in refusing to permit such testimony. (26 R. C. L. 1047, sec. 47; sec. 9349, Rev. Codes 1921.)

The defendants complain of two other findings made by the trial court, findings Nos. 16 and 17. In finding No. 16 the court found in part that “while in the second amended answer, the defendant The Federal Land Bank of Spokane, claims that it has a mortgage on the said premises to secure the payment of the said $2,250 and while there is some mention of the mortgage in the testimony, there is no evidence that a mortgage was actually given or is-held by the defendant the Federal Land Bank of Spokane. It does not claim any other interest.” The fact that the defendant Federal Land Bank held such mortgage is admitted by the plaintiff in its reply. In finding No. 17 the court found that “at the time the Federal Land Bank loaned said money to the Vaggs, it had actual knowledge of the fact that the plaintiff was the owner of the note and mortgage to the Saco Mercantile Co.”

Both of said findings we deem immaterial under the pleadings in this case, and while finding No. 16 may be erroneons, “it cannot be contended that because of an erroneous finding, a judgment otherwise proper and fully sustained by correct findings, must be set aside. Appellants must bear the burden of showing that there is not any correct finding which will sustain the judgment.” (In re Williams Estate, 52 Mont. 192, 204, Ann. Cas. 1917E, 126, 156 Pac. 1087.)

Behearing denied December 19, 1922.

We recommend that the judgment and order be affirmed.

Per Curiam: For the reasons given in the foregoing opinion, the judgment and order appealed from are affirmed.

Affirmed.