Court Opinion

ID: 6235436
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:31:26.595963+00
Date Added: 2024-06-11T08:58:02.176848
License: Public Domain

Chief Justice Agnew
delivered the opinion of the court, January 22d 1877.
It must be conceded that the mortgages in these cases, while remaining in the hands of Leslie, the mortgagor, were not available to any one else. Even the bonds accompanying were not voluntary until delivery. A voluntary bond is protected by the seal as evidence of consideration after delivery, as regards the obligor. These cases are peculiar and depend on their own circumstances. The intent of the mortgagor, who had entire control over the instruments, was to raise money upon them. Smith, the nominal mortgagee, was but an instrument in his hands to effectuate his purpose. He could not have used the mortgages without Leslie’s consent, for Leslie retained their possession for his own lawful end. But when Leslie negotiated them, using the signature of the nominal mortgagee, he then parted with them, making them binding-on himself, and on all others possessed of no inconsistent rights attaching to the mortgaged premises. Johnson having purchased afterwards, was, therefore, bound by the mortgages, unless he had no notice of them, actual or constructive. It is obvious that it is the recorded mortgage, not the assignment, which concerns him as a purchaser, and of which he should have notice. The encumbrance, not the ownership of it, was important. If he knew, or ought to have known of it, he did not stand as a bond, fide purchaser, protected against a secret encumbrance upon the land he was bargaining for. The mortgages were clearly constructive notice, being duly recorded, and lying directly in the line of his search. He was bound to inquire into their existence as valid encumbrances; and. inquiry would have traced them to the possession of McCurdy as a bond fide holder by the negotiation of Leslie himself. It is said inquiry would have led to no result, for Leslie deceived him when he purchased by withholding the information. But that is nothing-; the law imposed the duty of a search on the purchaser, which would have led to a knowledge of the mortgages. These Leslie could neither produce nor explain away, for they were in the hands of McCurdy.
It is argued that the mortgages, when recorded, were not binding on Leslie and were therefore void. The conclusion is not logical. *286They were not binding, it is true, until he negotiated them. They were not absolutely void, for if so Leslie could infuse no life into them by negotiation. They were inchoate, but not void, until he negotiated and delivered them. Tlie purpose of recording was to enable him to negotiate, by anticipating other liens. How far such a negotiation as took place here would be good by relation, against an intervening encumbrancer or purchaser, is not a question now, for they were actually negotiated long before Johnson bought. No one has been injured, for, like a judgment to secure future advances, the recording was notice, and the actual advance was precedent. Unless we hold that a mortgage for the purpose of negotiation is absolutely void, because no immediate consideration passed, we must sustain these. True, the consideration was not complete, and Leslie could have defended against one who obtained surreptitious possession, without delivery; yet his act became complete when he himself negotiated and delivered them, and there is no intervening bon& fide encumbrancer or purchaser to complain. It is not necessary, therefore, to invoke the doctrine of equitable estoppel.
Judgment affirmed in each case.