Appeal of Morgan

Opinion,

Me. Justice Williams :

The application to approve the execution of the mortgage by the appellant as administratrix, is one that is addressed to the equity side of the court and must be determined on equitable principles. The question to be considered is, what ought in good conscience to be done upon the facts of this case ? If this question was to be settled upon the claims of Mountney, the mortgagee, to the consideration of a chancellor it should be dismissed, for the testimony shows him to have acted in bad faith, and to be entitled at the date of this application to little, if anything, from the estate which the appellant represents. If the bills for board and washing which he owes to the estate and to Mrs. Morgan, -were fairly settled and applied on the debt due for the building of the house, it is doubtful whether there would be any of it left. But the equities are to be settled between Metzgar, the assignee of the mortgage, and the appellant. The assignment of the mortgage by Mountney to Metzgar was made on December 14, 1874, and it passed such right as the assignor then had. A purchaser of a non-negotiable instrument is bound to make inquiry of the maker before purchasing, and is fixed with notice of any defence by way of payment, or growing out of the original equities, which inquiry would have brought to his notice. If Metzgar had inquired of Mrs. Morgan before his purchase, he would have learned of the agreement of Mountney to apply his board bills upon the debt represented by the mortgage as payment pro tanto, and of the agreement that his accruing bills should be applied in like manner. He would also have learned that Mountney had continued to board with her up to that date, and that his bills, though not indorsed upon the mortgage, were a payment upon it. As these facts could have been learned by inquiry, Metzgar must be treated as having knowledge of them when he took an assignment of the mortgage, and the equities between him and the appellant must be settled on that basis.

The court below found that Mountney was indebted for three years’ bills unpaid at the date of Morgan’s death. The same testimony shows with equal clearness that- the bills accruing after that were to be applied to the same debt. The computation should be made, therefore, to the date of the mortgage, instead of to the death of Morgan, and would make the amount then due as follows :—

Alleged cost of house.........$2,299 19

Board to date of mortgage, nearly forty-one months, at $20..............$817 00

Washing do. at $2 . . ■..... 82 00

Interest............ 89 90

■-- 988 90

Due at date of mortgage, if payments had been properly applied..........$1,310 29

After the date of the mortgage, and before the assignment to Metzgar, Mrs. Morgan paid to apply upon the mortgage the additional sum of $104, made up of board $94, washing $10, which, by the same general agreement, he was bound to indorse. This should have been indorsed before the assignment, but, as we have seen, the assignee is fixed, with notice of the payment and takes subject to it.

We adopt the general view of this case which the court below seems to have entertained, but we go still farther, as we recognize only the equities of the assignee. We therefore ascertain the amount due when the mortgage was given and confirm and ratify it for that sum; but we find that the further sum of $104 was paid upon it before the assignment and thafthe assignee had notice of such payment. He must take it, therefore, subject to such payment. The mortgage is therefore ratified, on petition of the assignee, for $1,310.29, subject to an indorsement as of December 14, 1874, of the sum of $104 paid at that date.

Let the decree of confirmation be amended accordingly.