the benefit of the mortgage security.252

When the various

notes secured by the mortgage are transferred to different persons, a question arises as to the respective priorities of those persons in case the mortgaged land is not sufficient to pay all the notes in full. In some states the rule has been adopted that, if the notes in the hands of different persons mature at different times, as is usually the case, they are entitled to priority, as regards the benefit of the mortgage, in the order of their maturity.253 In other states, the assignees of the different notes are entitled to share in the proceeds of the mortgaged land in proportion to the amounts of their respective notes, without reference to the time of their maturity.254 The rights of the assignees of the notes in this respect may also be controlled by an express stipulation in

252 Page v. Pierce, 26 N. H. 317, Kirchwey's Cas. 630; Sargent v. Howe, 21 Ill. 148; Anderson v. Baumgartner, 27 Mo. 80; Studebaker Bros. Mfg. Co. v. McCargur, 20 Neb. 500; Patrick's Appeal, 105 Pa. St. 356; Miller v. Rutland & W. R. Co., 40 Vt. 399, 94 Am. Dec. 414. 253 Grapengether v. Fejervary, 9 Iowa, 163, 74 Am. Dec. 336; Isett v. Lucas, 17 Iowa, 503, 85 Am. Dec. 572; Wood v. Trask, 7 Wis. 566, 76 Am. Dec. 230; Mitchell v. Ladew, 36 Mo. 526, 88 Am. Dec. 156; State Bank v. Tweedy, 8 Blackf. (Ind.) 447, 46 Am. Dec. 486; Minor v. Hill, 58 Ind. 176, 26 Am. Rep. 71; Winters v. Franklin Bank of Cincinnati, 33 Ohio St. 250; Funk v. McReynold's Adm❜rs, 33 Ill. 481; Wilson v. Hayward, 6 Fla. 171; Anderson v. Sharp, 44 Ohio St. 260.

But even where this rule is recognized, if the mortgage provides that, on default in payment of one of the notes, all shall become due, upon such default all are entitled to share equally. Bushfield v. Meyer, 10 Ohio St. 334; Pierce v. Shaw, 51 Wis. 316; Whitehead v. Morrill, 108 N. C. 65. Contra, Leavitt v. Reynolds, 79 Iowa, 348; Horn v. Bennett, 135 Ind. 158, 24 L. R. A. 800.

254 Donley v. Hays, 17 Serg. & R. (Pa.) 400; Parker v. Mercer, 6 How. (Miss.) 320, 38 Am. Dec. 438; Penzel v. Brookmire, 51 Ark. 105, 14 Am. St. Rep. 23; Jennings v. Moore, 83 Mich. 231, 21 Am. St. Rep. 601; Perry's Appeal, 22 Pa. St. 43, 60 Am. Dec. 63; Dixon v. Clayville, 44 Md. 573; Lovell v. Cragin, 136 U. 8. 147; Eastman v. Foster, 8 Metc. (Mass.) 19.

the mortgage, or by an agreement made at the time of assigning a note, as to the order of priority.255

Occasionally, though not usually, the view has been taken that a mortgagee who assigns one or more of the notes, retaining the balance, cannot claim to share in the benefit of the mortgage security as against his assignee, since he is presumed to have been paid by the latter the value of the notes assigned,256 and it seems to be agreed that a contract to this effect is to be presumed from the fact that the mortgage is assigned with the notes.257 Likewise, if the mortgagee is a surety for the payment of the note, he cannot claim a part of the benefit of the mortgage as against his assignee.258

§ 534. Transfer of mortgage without debt.

Even in the states which adhere to the common-law view of a mortgage, the assignment of the mortgage merely, or of the mortgagee's interest in the land, without an assignment of the debt, or of the note or bond evidencing the debt, transfers, at most, the bare legal title, which the assignee will hold in trust for the owner of the debt.25 259 In the states which

255 Walker v. Dement, 42 Ill. 272; Granger v. Crouch, 86 N. Y. 494; Morgan v. Kline, 77 Iowa, 681; Norton v. Palmer, 142 Mass. 433; Ellis v. Lamme, 42 Mo. 153; Howard v. Schmidt, 29 La. Ann. 129; Chew v. Buchanan, 30 Md. 367; McLean's Appeal, 103 Pa. St. 255. 256 Parkhurst v. Watertown Steam Engine Co., 107 Ind. 595; Knight v. Ray, 75 Ala. 383. Contra, Dixon v. Clayville, 44 Md. 573; Donley v. Hays, 17 Serg. & R. (Pa.) 400; Patrick's Appeal, 105 Pa. St. 356; Keyes v. Wood, 21 Vt. 331.

257 Bryant v. Damon, 6 Gray (Mass.) 564; Foley v. Rose, 123 Mass. 557; Langdon v. Keith, 9 Vt. 300; Solberg v. Wright, 33 Minn. 224; Miller v. Washington Sav. Bank, 5 Wash. 200.

258 Whitehead v. Morrill, 108 N. C. 65; Fourth Nat. Bank's Appeal, 123 Pa. St. 484, 10 Am. St. Rep. 538.

259 Welsh v. Phillips, 54 Ala. 309, 25 Am. Rep. 679; Farrell v. Lewis, 56 Conn. 280; Sanger v. Bancroft, 12 Gray (Mass.) 365; Williams v. Teachey, 85 N. C. 402; Collamer v. Johnson, 29 Vt. 32; Barrett v. Hinckley, 124 III. 32, 7 Am. St. Rep. 331, Kirchwey's Cas. 634.

A transfer by the mortgagee of his interest in the land, without

have adopted the lien theory, the assignment of the mortgage, or conveyance of the land by the mortgagee, without reference to the debt, is regarded as a mere nullity.200

§ 535. Freedom of transfer from equities.

If the note or other obligation secured by the mortgage is not negotiable, the assignee thereof, like any other assignee of a non-negotiable chose in action, takes it subject to all equities and defenses which existed as between the original parties, such as illegality, failure of consideration, part payment, and the like.201 In some cases, however, one who makes and delivers a mortgage in favor of another person, which is valid on its face, is estopped, as against an assignee of such mortgage, to assert the invalidity of the mortgage.262

the debt, is, even in some of these states, regarded as an absolute nullity. Devlin v. Collier, 53 N. J. Law, 422; Delano v. Bennett, 90 Ill. 533; Lunt v. Lunt, 71 Me. 377; Ellison v. Daniels, 11 N. H. 275. But sometimes, apparently, a conveyance by the mortgagee of the land is construed as intended to transfer the mortgage debt also. Woods v. Woods, 66 Me. 206; Connor v. Whitmore, 52 Me. 186; Ruggles v. Barton, 13 Gray (Mass.) 506; Dearnaley v. Chase, 136 Mass. 290.

260 Jackson v. Bronson, 19 Johns. (N. Y.) 325, Kirchwey's Cas. 629; Peters v. Jamestown Bridge Co., 5 Cal. 334, 63 Am. Dec. 134; Jordan v. Sayre, 29 Fla. 100; Johnson v. Cornett, 29 Ind. 59; Merritt v. Bartholick, 36 N. Y. 44, Finch's Cas. 1113; Swan v. Yaple, 35 Iowa, 248; Greve v. Coffin, 14 Minn. 345 (Gil. 263), 100 Am. Dec. 229; McCammant v. Roberts, 87 Tex. 241; Perkins v. Sterne, 23 Tex. 561, 76 Am. Dec. 72. 261 Matthews v. Wallwyn, 4 Ves. 118, Kirchwey's Cas. 643; Vredenburgh v. Burnet, 31 N. J. Eq. 229; James v. Morey, 2 Cow. (N. Y.) 246, 14 Am. Dec. 475; Ingraham v. Disborough, 47 N. Y. 421; Crane v. Turner, 67 N. Y. 437; Moffatt v. Hardin, 22 S. C. 9, Olds v. Cummings, 31 Ill. 188, Kirchwey's Cas. 662; Nichols v. Lee, 10 Mich. 526, 82 Am. Dec. 57; Mott v. Clark, 9 Pa. St. 399, 49 Am. Dec. 566; Horstman v. Gerker, 49 Pa. St. 282, 88 Am. Dec. 501; Fish v. French, 15 Gray (Mass.) 520; Moffett v. Parker, 71 Minn. 139, 70 Am. St. Rep. 319.

262 Webb v. Commissioners of Herne Bay, L. R. 5 Q. B. 642, Kirchwey's Cas. 649; Com. v. City of Pittsburgh, 34 Pa. St. 496, 520; Mc

The question whether the assignee of the mortgage takes free from the equities of others than the mortgagor is determined by the general rule prevailing in the particular jurisdiction as to the rights of assignees of choses in action. The more usual rule is that the assignee of any non-negotiable chose in action takes it free from any latent equities in favor of persons other than the obligor, since he has no means of knowing where to inquire as to such equities, and this rule has been applied in favor of the assignee of a mortgage.

263

In some cases the view is taken that, since the mortgage is merely an incident to the debt, if the note secured is negotiable, the benefit of the rule applicable to negotiable instruments will extend to the mortgage, and render it enforceable for the full amount, without reference to equities existing between the original parties;264 but in others it is held that the negotiability of the note secured is immaterial, and that the assignee of the mortgage, whether by mere transfer of

Masters v. Wilhelm, 85 Pa. St. 218; First Nat. Bank v. Stiles, 22 Hun (N. Y.) 839; State Bank v. Flathers, 45 La. Ann. 75. And see Bickerton v. Walker, 31 Ch. Div. 151. But see, to the contrary, Davis v. Bechstein, 69 N. Y. 440, Kirchwey's Cas. 691; Hill v. Hoole, 116 N. Y. 299.

268 Goldthwaite v. First Nat. Bank of Montgomery, 67 Ala. 549; Silverman v. Bullock, 98 Ill. 11; Vredenburgh v. Burnet, 31 N. J. Eq. 229; Moffett v. Parker, 71 Minn. 139, 70 Am. St. Rep. 319; Losey v. Simpson, 11 N. J. Eq. 246; Mott v. Clark, 9 Pa. St. 399, 49 Am. Dec. 566. The New York rule is that the assignee takes subject to such equities. Bush v. Lathrop, 22 N. Y. 535; Trustees of Union College ▼. Wheeler, 61 N. Y. 88, Kirchwey's Cas. 681.

264 Carpenter v. Longan, 16 Wall. (U. S.) 271, Kirchwey's Cas. 675; Paige v. Chapman, 58 N. H. 333, Kirchwey's Cas. 679; Burhans v. Hutcheson, 25 Kan. 625, 37 Am. Rep. 274; Duncan v. City of Louisville, 13 Bush (Ky.) 378, 26 Am. Rep. 201; Webb v. Hoselton, 4 Neb. 308, 19 Am. Rep. 638; Kelley v. Whitney, 45 Wis. 110, 30 Am. Rep. 697; Taylor v. Page, 6 Allen (Mass.) 86; Keyes v. Wood, 21 Vt. 331; Pierce v. Faunce, 47 Me. 507; Barnum v. Phenix, 60 Mich. 388; Thompson v. Maddux, 117 Ala. 468. Compare Blumenthal v. Jassoy, 29 Minn. 177. See 1 Daniel, Neg. Inst. (4th Ed.) §§ 834-834b.

the note or otherwise, takes subject to all existing equities, in favor of the mortgagor at least.205

536. Record and notice.

Assignments of mortgages are usually regarded as being within the operation of the recording acts, this being sometimes expressly provided by the statute.266 The require ment that the assignment shall be recorded does not, however, render an unrecorded assignment invalid, but merely prevents the assignee in such an assignment from asserting any rights as against persons who acted on the assumption that the mortgage still belonged to the mortgagee.267

An ordi.

265 Baily v. Smith, 14 Ohio St. 396, 84 Am. Dec. 385, Kirchwey's Cas. 667; Tabor v. Foy, 56 Iowa, 539; Kleeman v. Frisbie, 63 Ill 482; Johnson v. Carpenter, 7 Minn. 176 (Gil. 120).

266 Connecticut Mut. Life Ins. Co. v. Talbot, 113 Ind. 373, 3 Am. St. Rep. 655; Merrill v. Luce, 6 S. D. 354, 55 Am. St. Rep. 844; Robbins v. Larson, 69 Minn. 436, 65 Am. St. Rep. 572; Bacon v. Van Schoonhoven, 87 N. Y. 446; Bank of Indiana v. Anderson, 14 Iowa, 544, 83 Am. Dec. 390; Pepper's Appeal, 77 Pa. St. 373; Henderson v. Pilgrim, 22 Tex. 464. But see Reeves v. Hayes, 95 Ind. 521; Watson v. Dundee Mortgage & Trust Inv. Co., 12 Or. 474.

The word "conveyance" in a recording act has been held to include an assignment of mortgage. Decker v. Boice, 83 N. Y. 220; Merrill v. Luce, 6 S. D. 354, 55 Am. St. Rep. 844; Burns v. Berry, 42 Mich. 176. Contra, Mott v. Clark, 9 Pa. St. 399, 49 Am. Dec. 566; Watson v. Dundee Mortgage & Trust Inv. Co., 12 Or. 474.

267 Purdy v. Huntington, 42 N. Y. 334, 1 Am. Rep. 532; Greene v. Warnick, 64 N. Y. 220; Bridges v. Bidwell, 20 Neb. 185; Sprague v. Rockwell, 51 Vt. 401.

If the mortgagee purchases the land after assigning the mortgage. a subsequent purchaser from him cannot claim that the mortgage was, as against him, extinguished by merger, on the ground that, because the assignment was not recorded, he had reason to believe that the mortgage belonged to the mortgagee at the time when the latter owned the land. Purdy v. Huntington, 42 N. Y. 334, 1 Am. Rep. 532; Oregon & Washington Trust Inv. Co. v. Shaw, 5 Sawy. 336, Fed. Cas. No. 10,556; 1 Jones, Mortgages, § 482. Contra, Bowling v. Cook, 39 Iowa, 200. Compare International Bank of Chicago v. Wilshire, 108 Ill. 143.