Day v. Day ex rel. Stroudsburg Bank

The opinion of the Court was delivered by

The fact that the Stroudsburg bank, the beneficial plaintiff below, was the owner and bona fide holder of bonds secured by the mortgage in suit, prior to and at the time the entry of satisfaction was made, has been conclusively established by the verdict. It is not pretended that the claim of the bank, for which the notes were assigned and held as security, has ever been paid ; and unless there was error in the rejection of evidence or in the charge of the Court, the verdict is right and the judgment entered thereon should not be disturbed. There was no error in rejecting the offers of evidence referred to in the first, second, and third specifications. In the absence of authority from the board of directors, the president of the bank had no power to make an agreement such as the defendants proposed to prove. It was beyond the sphere of his official duties as president; and it is not pretended that he was authorized by the board to thus release the security held by the bank. The offer to prove that Mr. Saylor met the board of directors in session, and conferred with them in relation to the indebtedness of Hay & Saylor, and pi’oposed to secure them, &c., was too vague and indefinite, as well as immaterial and irrelevant.

*303There was, perhaps, technical error in charging as complained of in the fourth specification ; but, upon the undisputed facts of the case, the defendants below were not prejudiced thereby. As a general proposition it is undoubtedly true that satisfaction by one or more co-mortgagees is good as to all, but this principle applies only where the mortgagees continue to be the holders of the note or obligation secured by the mortgage. Where the debt or instrument secured by the mortgage has been assigned, and the mortgagor is aware of that fact, he must pay, not to the mortgagee, but to his assignee. Under such circumstances, payment to the mortgagee and entry of satisfaction by him is simply a nullity as to the bona fide owner of the security ; and a subsequent purchaser of the mortgaged premises, with actual or constructive notice of the facts, takes the land subject to the mortgage. In Jones on mortgages, Vol. 2, sec. 956, it is said, that in making payment on a mortgage the debtor should always require the production of the note or bond secured by it, otherwise it may turn out that this evidence of the debt has been assigned, or perhaps that a formal assignment of the mortgage has been made and recorded; and, although the mortgagor is protected in making payment to the mortgagee until he has received notice of the assignment of the mortgage, yet this notice may be constructive, as well as actual, and the debtor al ways incurs much risk in making payments without having actual knowledge that the person to whom he makes payment actually holds the mortgage at the time.

It is, moreover, an undisputed fact that Day & Saylor were not merely co-mortgagees at the time the latter acknowledged satisfaction of the mortgage. They were then the owners, by conveyance, of the land bound by the mortgage. So far as their interest in the mortgage was concerned, it had already merged in the fee acquired by the deed of reconveyance ; but neither the reconveyance nor the entry of satisfaction could, in the least degree, affect the bank as assignees of a portion of the bonds secured by the mortgage. In addition to all this it is a fact, patent upon the face of the deed of reconveyance, that Day & Saylor assumed the payment of all the outstanding bonds secured by the mortgage. It is very clear, therefore, that neither one of the mortgagees, nor both of them together, had any power to satisfy the mortgage so as to impair thereby the security of the bank. Hence it follows, in view of the fact established *304by the verdict, that the error complained of in the fourth specification was harmless.

There was no error in charging, as complained of in the fifth specification, that, “by the reconveyance from Day & Woodring to Day & Saylor, the intention of the parties was to keep alive the mortgage given to secure the payment of the bonds, but not for the bénefit of Day & Saylor, and that of this fact Davis & McMurtry, terre tenants, had constructive notice.”

It is very evident from the deed itself that such was the intention of the parties ; and it is equally clear that all the terre tenants are affected with constructive, if not actual, notice of everything contained in the deed. It was directly in the line of the title they acquired, and whether it was recorded or not at the time they purchased, it was their duty to see and examine it, and the presumption is that they did do so. This leads to the conclusion that they knew the parties from whom they were purchasing had assumed the payment of the outstanding bonds. It was, therefore, their duty to inquire and satisfy themselves that the bonds had been paid. They had no right to rely upon the statement, written or oral, of their vendors, Day & Saylor. Having agreed to take up the bonds as consideration in part of the reconveyance to them, they practically occupied the position of” obligors. If the terre tenants failed to insist upon the production of the outstanding bonds or other satisfactory evidence that they were paid, they assumed a risk the consequences of which they must bear.

The remaining assignments of error are to the charge of the Court in relation to the effect of the entry of satisfaction, and the subject of notice to the terre tenants of the want of authority in Day & Saylor, or either of them, to satisfy the mortgage. We fail to discover any error in the charge of the learned judge in relation to either of the matters embraced in these assignments, and hence they are not sustained. The instructions on all the essential points in the case were so full and accurate that it is unnecessary to notice the specifications in detail.

Judgment affirmed.