Court Opinion

ID: 7969534
Source: CourtListenerOpinion
Date Created: 2022-09-09 00:53:51.754145+00
Date Added: 2024-06-11T16:34:44.207234
License: Public Domain

CANTY, J.
(dissenting). I cannot concur in the foregoing opinion. "The doctrine laid down in Johnson v. Carpenter, 7 Minn. 120 (176), is wholly out of joint with commercial usage. The rule that the negotiability of the note does not impart negotiability to the mortgage securing it is carried far enough in holding that, as against the assignee, the mortgagor may set up any defense which he had against the mortgagee while the latter held the note and mortgage, but that, if the mortgagee indorses away the note before maturity, the mortgagor pays him thereafter in his own wrong. If, while the mortgage is in the hands of the mortgagee, it is for any reason invalid, and .in fact no mortgage, it is one thing to say that an indorsement of the *479note will not impart validity to the mortgage. It is quite another thing to say that a perfectly valid mortgage shall not follow the note ■of which it is the mere incident, but shall remain in the hands of the mortgagee, to be destroyed by the blind and heedless action of the mortgagor, when he insists on paying the wrong instrument. There is a vast difference between imparting life to a dead thing and killing a live thing. The majority cite, as authority for their position in this case, decisions from New York in cases where the mortgage secured nothing but a nonnegotiable bond, which is a very different matter. See 1 Pingrey, Mortg. § 1004; 15 Am. & Eng. Enc. Law, 855, note 3; Id. 860. As far as I can discover, New York has never held that the same rule applies to the case of a negotiable note secured by a mortgage and indorsed and transferred before maturity. But in Trustees of Union College v. Wheeler, 61 N. Y. 88, 106, 107, the court intimated that it did not, and in Gould v. Marsh, 1 Hun, 566, the court held it did not. In the cases of Hostetter v. Alexander, 22 Minn. 559, Oster v. Mickley, 35 Minn. 245, 28 N. W. 710, and Smith v. Parsons, 55 Minn. 520, 57 N. W. 311, the defense of the mortgagor related to the inception of the note and mortgage; and in the case of Watkins v. Goessler, supra, page 118, 67 N. W. 796, the ■assignment of the note and mortgage before maturity was a breach •of trust’, the assignee taking them in bad faith, in which case the subsequent assignment of them to the plaintiff therein did not cure it. It seems to me that this court went far enough in these cases. In all of these cases it was simply held that an invalid, paid, or dead mortgage could not be validated or reinstated by the indorsement of the note, even though the mortgage was a mere incident of that note. But to hold that the mortgage is not such a mere incident, but can be paid separately and apart from the note, and without any regard to the possession of the same, is going very much further.
Neither does G. S. 1894, § 4183, have anything to do with the questions here discussed. That -section simply means that there must be something else besides the recording of the assignment of the mortgage to give the mortgagor notice. This point is most ■effectually disposed of in Burhans v. Hutcheson, 25 Kan. 625, 631, where the court says:
“Counsel for defendants say that, conceding the correctness of the general doctrine laid down in Carpenter v. Longan, 16 Wall. 271, yet *480the adoption of section 3, c. 68, Comp. Laws 1879, has placed a legislative restriction upon the negotiability of all mortgages executed since its adoption, and that this statute throws upon the assignee of negotiable paper secured by real-estate mortgages the burden of personal notification to the maker of the mortgage of the change of ownership, if he would cut off future payments to the mortgagee. Our attention is called to Johnson v. Carpenter, 7 Minn. 120 (176), and to Van Keuren v. Corkins, 66 N. Y. 77, interpreting a statute lilce ours. In Johnson v. Carpenter the mortgage is treated as a chose in action standing alone. In Van Keuren v. Corkins the suit was upon a bond and mortgage, and it does not appear that the bond was negotiable. * * * Section 3 speaks of the recording of the assignment of the mortgage, and does not by its terms refer to negotiable paper; and it seems to us a strained interpretation to hold its provisions applicable, where a debt is evidenced by a negotiable note, secured by mortgage upon real estate, when such mortgage is merely ancillary thereto, and follows the note wherever it goes, deriving its character from such instrument. A better interpretation, and one clearly more in accord with the law of mortgages in this state, is that such section has reference only to a mortgage standing alone, or one securing debts and notes of a nonnegotiable character. Under this interpretation, section 3 of the statute is not nugatory, but has ample room for operation.”
In my opinion, the judgment appealed from should be affirmed.