Hand v. Kemp

92 So. 897, 207 Ala. 309, 1922 Ala. LEXIS 116

• Court: Supreme Court of Alabama
• Decided: April 13, 1922
• Docket: 7 Div. 122.
• Status: Published

Opinion

SOMERVILLE, J.

Under the conditions shown by the record, the plaintiff, as transferee of a nonnegotiable note secured by mortgage, was entitled to foreclose the mortgage so soon as it was in default, and his note was entitled to priority of payment as against the other notes retained by the mortgagee. Knight v. Ray, 75 Ala. 383; Brewer v. Atkeison, 121 Ala. 410, 25 South. 992, 77 Am. St. Rep. 64.

But, since the note was nonnegotiable, being for the payment of cotton only, the maker—the mortgagor—was entitled to notice of its transfer; and if, without such notice, he paid the note and discharged his obligation to the mortgagee, that payment was binding on the transferee, and effectually barred his right to proceed against the maker. Hart v. Freeman, 42 Ala. 568; Vann v. Marbury, 100 Ala. 438, 442, 14 South. 273, 23 L. R. A. 325, 46 Am. St. Rep. 70.

The evidence shows without dispute that the maker, Haygood, had no notice of the transfer of one of his notes to the plaintiff, Pland, and, further, that he satisfied his-entire mortgage obligation, including all of the secured notes, by reconveying the mortgaged property to the mortgagee, who thereupon entered a satisfaction of the mortgage-on the mortgage record. This wfis, of course,, a fraud on the transferee, Hand. But since-the mortgagee was the only proper person to-receive payment, so far as the record showed, and since he was ostensibly clothed with the-authority, and burdened with the duty, of entering^ satisfaction of record, any third person, who might buy the land in reliance upon that entry, and without notice of the outstanding transferred note, would unquestionably be-protected against the claim of the transferee, as he would against any other outstanding secret equity. Vann v. Marbury, 100 Ala. 438, 445, 14 South. 273, 23 L. R. A. 325, 46 Am. St. Rep. 70; Ogle v. Turpin, 102 Ill. 148. Had the note been a negotiable instrument, it might have been incumbent on a subsequent purchaser to inquire whether the note had been transferred, as observed in Vann v. Marbury, 100 Ala. 445, 14 South. 273, 23 L. R. A. 325, 46 Am. St. Rep. 70.

As against tire mortgagee, Hardeman, it may, of course, be conceded that, when' the land was reconveyed to him by the mortgagor, it remained subject to the lien of the note in the hands of the transferee, whose claim could not be defeated by Hardeman’s entry of satisfaction. So, also, the lien would have been enforceable against the land in the hands of any subsequent purchaser from Hardeman, who was chargeable with notice of its existence. Vann v. Marbury, 100 Ala. 446, 14 South. 273, 23 L. R. A. 325, 46 Am. St. Rep. 70. But, as against a bona fide purchaser for' value from Hardeman (and this defendant is shown to have been such a purchaser), such an equity cannot be asserted. And, if it be conceded that the equity could have been, and was, converted into a legal estate by the process of mortgage foreclosure, as affected by Hand, his failure to place on the record some evidence of his acquired title, which would carry constructive notice to a subsequent purchaser, is clearly a bar to his assertion of title against any purchaser for value who has no actual notice thereof.

As a matter of law, therefore, plaintiff was not entitled to recover against this defendant, whatever remedy he may have against Hardeman, and the instructions and rulings of the trial court were free from error. The several assignments of error relating to rulings on the evidence are not argued in brief, and must be treated as waived.

Let the judgment be affirmed.

Affirmed.

ANDERSON, C. J., and McCLELLAN and THOMAS, JJ., concur.