Court Opinion

ID: 6948524
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:28:28.829656+00
Date Added: 2024-06-11T16:08:00.128535
License: Public Domain

Soates, C. J. The only question presented is simply one of priority of mortgage lien. But its solution involves two other questions: first, whether the mortgage under which plaintiff claims that priority was paid and discharged. Second, the powers of the board of directors and cashier to discharge it, in the manner shown by the record. We are of opinion with the defendants upon all these questions, and will state some of the principles and reasons which we think support that conclusion. The mortgage debt is the principal thing and the mortgage a mere incident of it. Coffing et al. v. Taylor, 16 Ill. R. 472; Warner et al. v. Helm et al., 1 Gil. R. 231; 1 Hilliard on Mortg., Cap. 11, pp. 163,164; 1 Hilliard on Real Prop., Cap. 33, pp. 418, 419; Martin v. Mowlin, 2 Burr R. 969. The mortgagee, and his agents and servants, may deal with and do such acts in respect to such debt as may be usually done in relation to money transactions, verbally or by writing, without regard to the mortgage security. A transfer of the debt by assignment, or delivery of the note, would generally carry the mortgage in equity, and payment would discharge the mortgage lien. The necessity of acting under seal in relation to such a debt, depends upon the nature of the act as affecting the mortgage security or the title to the land, by assignment or release of the mortgage security. And this would be equally the case with individuals as with corporations. But so far as power and mode of action is concerned in transferring or collecting the debt or the note given for it, I know of no difference between one secured by mortgage and one not so secured. Its transfer or payment is a mere question of fact and intention as if no mortgage existed, and the rules of law and evidence and the power of the parties the same. Its existence might assist in explaining and ascertaining their intention as evidenced by particular acts, but cannot vary or control their power or mode of dealing with or settling the debt. A formal release of this mortgage should be under seal, but such a release would not discharge the debt. On the contrary a verbal or written discharge of the debt by its payment in money, property or other securities, would discharge the mortgage, and without a release or satisfaction entered upon the mortgage itself or the margin of the record, as provided by Rev. Stat. p. 110, Sec. 37. The provision is made for the protection of mortgagees and others, by the recording and preservation of evidence of satisfaction of it, on the same public record; and not as prescribing a rule of evidence. What then may be alleged and sustained as payment ? . It is not a technical term importing the delivery of money. It may be made in property or other securities. It is a question of fact, of the meaning and intention of the parties. The proofs here leave no question of the intention. It was Stickney, not Gatewood, who owed and was bound to the bank for this debt. Gatewood, it is true, had purchased subject to the bank lien, but he owed the bank nothing on it; he was bound to Stickney, not the bank. Stickney desired to be released by payment of his debt to the bank. The bank proposed to release Stickney if Gatewood would give his note for the debt and interest due from Stickney, with a mortgage on the same and other property. This was agreed to and done, and Stickney’s notes and mortgage receipted and delivered up to him, and satisfaction entered on the margin of its record in the recorder’s office by the cashier of the bank. The entries in the books of the bank and two of its directors prove the intention to comport with these acts, as a total discharge of Stickney’s debt without any reservation of the mortgage security to meet Gatewood’s new liability secured by his mortgage of the same and other property. It would require an express agreement to rebut such clear proof of payment. The doctrine of the mere renewal of mortgage notes by the mortgagor or others, continuing under the mortgage security, is no answer to such facts as these. /, I need not review the various cases of payment by giving higher or other securities by the debtor, or the bills or notes of third persons. A satisfactory summary will be found in 2 Greenleaf Ev., Secs. 516 to 528, and well sustained by the references; 7 Mass. R. 286; 2 Metcalf R. 168; Allard v. Lane; 18 Maine R. 9; 21 Pick. R. 230; 6 Cow. R. 301; Hadlock v. Bullfinch et. al., 31 Maine R. 246; 5 Wend. R. 85; Hilliard on Mortg. 306, 307 and notes, p. 310 paragh. 12; 12 Johnson R. 409; Barnes v. Carmack et. al., 1 Barb. S. C. R. 392. There is no proof of bad faith or false representations. If there was any mistake in canceling a prior and taking a junior lien to other incumbrancers, it was the fault and carelessness of the bank in not examining the records and title. They shall not be heard to allege this to the prejudice of Stickney and Gate-wood. The remaining question is as to the powers of the bank or agents and officers of the bank to make this agreement and cancellation of one debt and mortgage and take another in payment. It is needless to discuss the general doctrine which confines corporations síSsróly within the delegated powers, and to the objects and means wiihin the charter. The general powers of the bank for further transactions of general banking were suspended by the Act of 25th Feb., 1843, which declared that the bank should go into liquidation within thirty days from that date. Act 1843, p. 32, Sec. 6. The 7th Section declares that the bank should not exercise the usual banking powers, but should “ confine all its operations to winding up its affairs, collecting and securing its debts, paying the debts of the bank, selling its real and personal estate, issuing the certificates for balances, provided for in the sixth Section of this Act, and to renewing the notes of its debtors from time to time, upon the payment of one-fifth part each time, and to suing and being sued, in relation to all its dealings,” for which purpose alone its powers and charter were continued for a limited time. There were other specific directions and details for the same object. This Act seems to be now construed as converting the directors and officers of the bank into trustees of creditors and stockholders. I do not so regard it. They were no more of that character after this Act, in the exercise of the powers limited by it, than before, in the full exercise of their charter powers. They were still in the management of their own affairs for the purposes of settling their business. What they had power left to do was done in the same character, though for a single object, as the like acts before the restriction. The character of those who managed the settlement of the affairs of the bank was changed fully by the Act of 1845, when assignees were appointed in the nature of receivers of the effects of the bank. It is true, it appears by the evidence, that a loan of money was a part of this particular transaction for change of debtors and securities, and which they had no power to make. But they had power to make the arrangement to secure the debt by taking the note and mortgage of one for the debt, note and mortgage of another. And in doing so, to exercise their own best judgment of their interest. Circumstances and facts, known and apparent to them, dictated the policy and prudence of this arrangement. They acted very negligently in not examining the title,.it is true; but there is no proof of fraud, design or overreaching in any one concerned, nor of any bad faith in Dunlap, who, though president, was not personally concerned as such, or present, or knowing of this transaction when made. The principles and doctrines contended for would render banking and other corporate acts of like general business transactions, wholly impracticable. Nor do we recognise the current of authorities at this day as sanctioning the ancient strictness which required corporations to act in most important transactions by seal and in writing. In the varied and multiplied transactions of banking, manufacturing, railroad, municipal, and other corporations, it will be found impossible to provide their agents with written or even express verbal powers and instructions for all their acts on behalf of their principals, or for those dealing with them, to wait to inspect such evidences of authority. To a very great extent, like individuals who act through agents and servants, these corporations are held to presumed or implied agencies, authority and instruction, to those who are held out or permitted to act for them in their usual course of dealing within their charter powers, when not controlled specially by its provisions, the by-laws, or the nature and character of the contract or the subject matter of it. Angelí and Ames on Corp., 268 to 304; Paley on Agency, pp. 310 to 312, Sec. 2; Story on Agency, Secs. 52 to 56, and notes. Although the English rule has not been relaxed to the same degree, in this respect, as the American, yet the courts have conformed to the wants and necessities of daily business transactions in a very great degree. Beverley v. The Lincoln Gas Light and Coke Co., 6 Adol. and Ellis, R. 829; Church v. Imperial Gas Light and Coke Co., id. 846; Mayor of Ludlow v. Charlton, 6 Mees. and Welsh. R. 815. The cashier is necessarily the general agent of the bank in dealings with customers in money, notes and bills,—the receipt, deposit, transfer and payments of them. It is indispensable to the interests of the corporation, and necessary to the protection and security of customers that he should exercise these powers, and that his acts should bind his employees. Angell and Ames on Corp., 293, (2) to 297; Story on Agency, Secs. 92 to 97, 114, 115. The cashier acted in this instance within the general scope of his authority in endorsing receipts for payment upon the note, mortgage and record, as evidence of the agreement and discharge between the dirdctors and Stickney, and in delivering them up as paid. Proof is made that he had been in the habit of entering satisfaction of mortgages in the mortgage record for four years previous. The power of attorney to Caldwell to do the same is no revocation of this authority in the cashier. We do not think the objection sustainable, that the transaction is not proven by minutes of the proceedings of the board. The agreement may be shown by parol when no minute was made or kept,—and that although no formal meeting of the directory was had for the purpose. The transaction was known to them—they acquiesced in and acted upon it. We are of opinion the mortgage and notes of Stickney to the bank were paid and discharged; and the assignee is not entitled to revive the mortgage as a prior lien. Decree is affirmed. Decree affirmed.