Court Opinion

ID: 5585545
Source: CourtListenerOpinion
Date Created: 2022-01-11 01:52:24.327275+00
Date Added: 2024-06-11T08:36:13.847769
License: Public Domain

Atkinson, J.
A decision was rendered by this Court on June *65119, 1925, reversing the judgment of the trial court. On motion for rehearing the former opinion of the court is withdrawn, and the opinion now delivered is substituted. The notes do not require elaboration further than is here stated. The reasoning of the Supreme Court of Massachusetts in Murphy v. Barnard, cited in syllabus 6, subdivision (c), follows: “The report shows that Miss Barnard bought in good faith and without actual notice. But her purchase was not the purchase of negotiable paper simpliciter. While the title of one who buys ordinary commercial paper in good faith and before its maturity is not vitiated by the fact that there were suspicious circumstances which might have put him upon inquiry (Smith v. Livingston, 111 Mass. 342, and Freeman’s Nat. Bank v. Savery, 127 Mass. 75, 34 Am. Rep. 345), there is a distinction between the purchase of such paper and that of notes known to be secured by mortgage of real estate, although bought as negotiable paper. Strong v. Jackson, 123 Mass. 60, 25 Am. Rep. 19. The effect of the distinction is that subsequently acquired rights in mortgage notes will not be allowed to supplant rights previously acquired, if all the facts taken together, and including the means of knowledge and any circumstances which should lead to inquiry, show that such a result would be inequitable. If Miss Barnard’s rights as against Mrs. Patch were to be settled on this basis, the fact that Miss Barnard saw the insurance policy on which the assignment to Mrs. Patch was indorsed would be of some importance. But her title is not to be so settled. She did not buy a mortgage note only, but the mortgage also. And when the transaction is in terms the purchase of a mortgage, as both a debt and a conditional estate in land, the distinction becomes decisive, because of the doctrine that the purchaser of a mortgage is charged by statute with constructive notice of the state of the record title, when, as in the present case, the record discloses not only a want of title in his vendor, but the fact that the title to the mortgage was in the person who now claims adversely to the purchaser. One who purchases under such circumstances is not a purchaser without notice, but with constructive notice of the want of title of his vendor. In the present case Miss Barnard knew that in buying the note she was buying a mortgage, and in determining her rights as against those of the real owner of both note and mortgage she is to be charged with knowledge of the *652facts of which as purchaser of the mortgage she had constructive notice, namely, that the note and mortgage had been sold by her vendor to Mrs. Patch on January 14, 1888, and that Mrs. Patch continued to be the record owner of the mortgage. Miss Barnard therefore was not a purchaser without notice, but with a constructive notice of an infirmity in the title of her vendor; aud as he had in fact no title, she took none as against the owner.” The pertinent statement in Packwood v. Gridley, 39 Ill. 388, follows: “The sale of the notes and the deed of the land to him were all Dne transaction, and he must be held to notice in regard to the notes of Whatever the records brought to his knowledge in regard to the title of the land.”

Judgment reversed.

All the Justices concur.