Court Opinion

ID: 8654079
Source: CourtListenerOpinion
Date Created: 2022-11-24 21:14:06.263209+00
Date Added: 2024-06-11T16:56:37.471832
License: Public Domain

ZaNe, C. J.,
after stating tbe facts, delivered the opinion of the court.
The plaintiff insists that the court erred in holding that the note sued on was not negotiable. The mortgage given to secure it contains covenants for the payment of taxes, assessments, and insurance, and against waste; and the maker stipulated in the note that, upon his failure to • “comply with any of the conditions or agreements contained in the mortgage, the principal sum, with the accrued interest, should, at the option of the holder, become due and payable, and should be collectible, without further notice.” The stipulation made a failure to pay taxes, assessments, or the premium for insurance on the property, or a failure to pay damages on account of waste, a violation of the provisions of the note. By this stipulation the maker of the note became bound to pay indefinite sums of money for taxes, assessments, insurance, and waste; and in case of a failure to do so the payee was given the right to declare the note payable, and to proceed to collect it without notice. The legal effect of this note did not simply bind the maker to pay a definite and certain sum of money, and, in case of failure and suit, the costs of collecting, including attorney’s fees. When the promise is to pay a certain sum of money, with an attorney’s fee in case of suit brought, the sum to be paid is definite while the note remained negotiable. If suit is brought afterwards, the maker is bound to pay the costs of the suit, including the *238attorney’s fee. This court held at the present term that a stipulation to pay 10 per cent, on the amount recovered, as attorney’s fees, in case of a suit upon it, included in the note, did not render the note non-negotiable. Salisbury v. Stewart, 15 Utah 308. But by the stipulation now under consideration the maker became bound to pay indefinite amounts for taxes, assessments, insurance, and waste,— unliquidated and unascertained damages. They do not relate to the cost of collecting the note. Though the maker may keep his promise to pay the sum named in the note as principal, and the interest, he is liable in addition to pay taxes, assessments, insurance premiums, and damages for waste. The note was not negotiable.
The note and mortgage sued on were executed to Bache on January 25, 1892, and recorded soon after, and they were assigned to the plaintiff, and transmitted to him at London, where they were received by him in March, 1892; but the assignment was not recorded until October 10, 1895. When Bache executed the trust deed to Miller to secure his note given to MacCord, and when it was recorded, and when the deed to Mulvey was made and recorded, the note and mortgage and the land appeared from the records to belong to Bache; and it does not appear that Miller, MacCord, or Mulvey had any notice that Bache was not the owner, and that he had not the right to satisfy the mortgage and to convey the property. The question is, were the trust deed and conveyance subject to plaintiff’s mortgage? Stating the question to be decided in more general terms, does the law require the assignee of a mortgage to have the assignment recorded, in order to give notice to subsequent grantees, mortgagees, and lienholders? The determination of the question depends upon the con*239struction of the following sections of the Compiled Laws of Utah of 1888:
“Sec. 2613. That every conveyance of real estate within this territory hereafter made, which shall not be recorded as provided in this act, shall be void as against any subsequent purchaser in good faith and for a valuable consideration, of the same real estate, or any portion thereof, where his own conveyance shall be first duly recorded.”
“Sec. 2645. The term ‘conveyance’ as used in this act shall be construed to embrace every instrument in writing by which any real estate, or interest in real estate, is created, aliened, or mortgaged, or assigned, except wills and leases for a term not exceeding one year.”
The first-mentioned section makes all conveyances of real estate not recorded void, as against subsequent purchasers in good faith for a valuable consideration, when the subsequent conveyance is first recorded. The last section declares that the term “conveyance,” as used in the act, shall be construed to embrace every instrument in writing by which any real estate, or interest in real estate, is assigned. While a mortgage under the statute of this state does not vest the title in the mortgagee, it does create a lien in favor of him, — an interest in the land to the extent of the debt secured. It vests an interest in the land according to the provisions of the mortgage. Thompson v. Cheesman, 15 Utah 43. The lien and interest created by the mortgage to Bache, he assigned to the plaintiff. As the assignment was not recorded, we are not called upon to determine whether it was sufficiently expressed and proven to entitle it to be recorded. If it was not, it should have been; and we have no doubt that the indorsement and delivery of the note to the plaintiff were equivalent to an assignment *240and delivery of tbe mortgage to bim also. In consequence of tbe failure of tbe plaintiff to record tbe assignment of bis note and mortgage, bis lien by virtue thereof became subject to tbe trust deed to Miller, and tbe conveyance to Mulvey vested tbe title in bim, discharged from tbe plaintiff’s mortgage. 1 Jones, Mort. §§ 472, 814; Bacon v. Van Schoonhoven, 87 N. Y. 446; Ladd v. Campbell, 56 Vt. 529; Insurance Co. v. Talbot, 3 Am. R. St. Rep. 655.
Tbe plaintiff having lost his' right to foreclose bis mortgage on tbe property by bis neglect to have its assignment to bim recorded, tbe further question arises, can be maintain bis action against Grant, tbe maker of tbe note, and the mortgage to secure it? After executing tbe note and tbe mortgage to secure it on tbe land, be conveyed to Bache for $4,200, and Bache deducted that amount from tbe purchase price. Tbe land was still subject to tbe mortgage, but Bache assigned tbe note and mortgage to tbe plaintiff, who failed to have tbe assignment recorded, and lost tbe lien of the mortgage on tbe land, and now insists upon enforcing tbe collection of tbe debt so secured against Grant. If be should be permitted to do so, Grant would lose tbe $2,000 through plaintiff’s negligence. Section 3460, Comp. Laws Utah 1888, declares that there can be but one action for tbe recovery of a debt or the enforcement of any right secured by mortgage upon real estate or personal property; that tbe court may direct a sale of tbe incumbered property, or so much as may be necessary, and apply tbe proceeds to tbe payment of costs and tbe amount due tbe plaintiff, and, if it appears from tbe return of tbe officer making tbe sale that tbe proceeds are insufficient, a judgment may be docketed for the balance against tbe defendant personally liable for the *241debt; and that it shall become a lien on the judgment debtor, as in other cases, and that an execution may-issue thereon. This section requires the property mortgaged to be subjected first to the payment of the debt, and the mortgagee or any assignee of the note cannot recover a personal judgment unless the proceeds of the sale of the property mortgaged prove to be insufficient. In that case a deficiency judgment may be entered as provided by the section. The supreme court of California have so held in construing a law of that state like ours. Bank v. Casaccia, 103 Cal. 641; Society v. Thornton, 42 Pac. 447; Hopkins v. Warner, 109 Cal. 133; Barbieri v. Ramelli, 84 Cal. 154. In Bank v. Casaccia, supra, the court said:
“The obvious purpose of the statute is to compel one who has taken a specific lien to secure his debt to exhaust his security before having recourse to the general assets of the debtor. When he has done this, or when, without his fault, the security has been lost, the policy of the law does not prohibit a personal action.” In Society v. Thornton, supra, the court said: “It may be that if the mortgagor’s title to the land has become extinguished subsequent to the making of the mortgage, by title paramount, or if the mortgaged property has been destroyed or ceased to exist, the mortgagee need not go through the idle form of bringing an action for foreclosure before he can have a judgment on the note. But, when the mortgagee by his own act or neglect deprives himself of the right to foreclose the mortgage, he at the same time deprives himself of the right to an action on the note. He is not permitted, without the consent of the mortgagor, to release the mortgage for the purpose of bringing an action upon the note. He is not authorized to waive the security and bring an action on the in*242debtedness, and whether he releases the security by some affirmative act or by his neglect is immaterial.”
In consequence of his failure to record the assignment of the mortgage to him, the plaintiff lost his right to obtain a judgment on the note against the defendant Grant. The judgment appealed from is affirmed.
BáRTCH and Mixer, JJ., concur.