Liberty Manufacturing Co. v. Malloy

Barnhill, J. There was no present consideration for the execution of the chattel mortgage and note secured thereby. It was executed and delivered as additional security to the notes secured by the trust deed as is indicated upon its face. Witness for plaintiff so testified: “When he gave the chattel mortgage he owed the money. He already had the consideration for the chattel mortgage. We asked for additional security on what he already had. He gave the additional security because we asked for it. There was no additional consideration. We did not give him anything additional for it. When Mr. Malloy executed the chattel mortgage referred to there was no additional credit given him.” When an instrument creating a lien upon real or personal property is recorded as required by law it is for the purpose, in part at least, of giving notice of the lien to all persons who may thereafter acquire an interest in the property thus conveyed. It is equally true that when such instrument thus recorded is duly canceled of record it gives notice that the lien thereby created no longer exists. All persons are charged with notice of the lien created by the registered instrument. They may rely with equal security upon the cancellation. The debt secured is the life of the mortgage and gives it vigor and efficacy. The essential effect and consequence of the discharge of the mortgage debt is the discharge of the mortgage itself. The mortgage was incident to the debt, rested upon it, and when the purpose for which it was created was accomplished, it ceased to have effect. Walker v. Mebane, 90 N. C., 259; Elliott v. Wyatt, 74 N. C., 55. While the *669 chattel mortgage is not canceled of record the debt secured by the deed of trust and for which the chattel mortgage was given as additional security has been paid and the trust deed has been duly canceled. When the principal debt is discharged the security is discharged. Cancellation of the trust deed was notice to the public that the lien created by the chattel mortgage no longer existed for the reason that the debt for which it was given as security had been fully discharged. But the plaintiff contends and offered evidence tending to show that at the time the chattel mortgage was executed it was understood and agreed that it should also be held as additional security for the crop lien, which, incidentally, has been duly marked paid and canceled of record. As to this, what has been said is apropos, even if it be conceded that the verbal agreement had any legal effect. But the plaintiff contends further that at the time the real estate notes were satisfied by the conveyance of the land described in the trust deed, at the request of Malloy, plaintiff agreed to release two mules which were included in the deed of trust upon condition that Malloy would permit plaintiff to retain the chattel mortgage. The purpose for which the chattel mortgage was to be retained is not clear. The land debt was paid by the conveyance of the land and if the chattel mortgage was to be retained as security for the value of the two mules released, the amount to be so secured does not appear. Even so, this is not material. “There is no principle which permits a mortgagor who has paid his mortgage and taken a satisfaction, there being at the time no equitable reason for keeping it afoot, subsequently to resuscitate and reissue it as security for a new loan or transaction, especially where the rights of third parties are in question, and it would make no difference whether the reissue of the mortgage was before or after the new rights and interests had intervened . . . the contention that a person having at the time notice that a mortgage had been paid by the mortgagor in usual course, can, by a verbal arrangement between himself and the mortgagor, give the extinct mortgage vitality again as security for a new loan, so as to give it priority over a subsequent conveyance or mortgage is not justified by the authorities.” Saleeby v. Brown, 190 N. C., 138, 129 S. E., 424; Bogert v. Striker, 42 N. E. (N. Y.), 528; Flye v. Berry, 63 N. E. (Mass.), 1071; Hibernia Nat'n. Bank v. Succession of Gragard, 30 So. (La.), 728; 19 R. C. L., 445, sec. 229. In Blake v. Broughton, 107 N. C., 220, there was evidence that the mortgagor, after the execution of the mortgage and notes secured thereby, procured the assignment of the notes to a third party to secure money then advanced. There was likewise evidence that the original debt, evidenced by the notes and mortgage, had been satisfied. The Court held that if the mortgage debt had been discharged the mortgage was no *670 longer operative, although the notes were not marked satisfied. It was there said: “After their (notes) satisfaction, though not so marked on the record, they certainly could not be held as a security for money loaned or advanced to the prejudice of a purchaser for value from the mortgagor or his assigns. Having been paid off and discharged, the want of cancellation could not have the effect to revive them and give them new life and vitality to defeat such a purchaser.” Walker v. Mebane, supra; Ballard v. Williams, 95 N. C., 126. It follows that on this record the corporate defendant acquired a good title to the personal property purchased from Malloy and that the charge of the court was erroneous. As there was no motion for judgment as of nonsuit the only course left for us to pursue is to direct a new trial. The defendant Malloy gave notice of appeal and joined in the settlement of the case on appeal. However, as he filed no brief, his appeal is deemed to be abandoned. New trial.