Saleeby v. . Brown

Clarkson, J. From the entire record it is shown that the defendant, O. M. Brown and wife, Helen D. Brown, made and executed on or about 24 June, 1919, to secure a note of $12,500, a mortgage on certain business property to the Washington Building & Loan Association. This mortgage was not recorded until 27 January, 1921. That to satisfy the Building & Loan (a subsequent mortgage made by Brown and wife to Bragaw, trustee, having been recorded prior to the Building & Loan mortgage on the same property) Brown and wife were requested to give a first mortgage to secure the indebtedness on another piece of property. This was done and the $12,500 note and mortgage first made to the Building & Loan Association were turned over to C. M. Brown, who was vice-president of the Building & Loan Association, and on 22 December, 1921, John D. Webb, secretary of the Washington Building & Loan Association, wrote on the mortgage “paid and satisfied.” This mortgage was satisfied by a new mortgage on other property, his home, made by Brown and wife. The consideration or payment of the first note and mortgage being the property of Brown and wife. On the next day, 23 December, 1921, C. M. Brown wrote on the mortgage that had been turned over to him marked “paid and satisfied” by the Building & Loan secretary, the following: “Placed and transferred to N. E. Saleeby, as security for loan of $3,000 and $2-,000, for which he holds my note of this date.” It was in evidence that the $5,000 was loaned by plaintiff giving four checks totalling $5,000 to defendant Brown, on the Bank of Wash: ington, which were duly paid. These checks were given after the transfer by Brown to Saleeby of the mortgage which had been marked “paid and satisfied,” the first check of $1,000, being dated 24 December, 1921. It was in evidence that in June and July, 1922, two notes were given Saleeby by Brown totalling $5,000. It appears in evidence that on 1 August, 1922, O. M. Brown signed the statement set out in facts *145 of this case, which closes as follows: “The Washington Building & Loan Association has been duly satisfied as to this mortgage, and the note executed to them in connection with same has been canceled and destroyed.” On this admitted evidence, we think the charge of the court below correct. Brown paid the mortgage with his own property. The mortgage was by the Building & Loan Association secretary marked “paid and satisfied,” and Brown himself signed the paper-writing in which he says that the Building & Loan Association has been satisfied as to the mortgage and the note “has been canceled and destroyed.” Walker v. Mebane, 90 N. C., 259; Smith v. Bynum, 92 N. C., 108; Blake v. Broughton, 107 N. C., 220; Hussey v. Hill, 120 N. C., 312. It was said in Stevens v. Turlington, 186 N. C., p. 194: “And, finally, when the debt is paid, the title of the mortgagee is thereby extinguished, and all his interests in the land revert immediately to the mortgagor by operation of law. Porter v. Miller, 9 Mass., 101.” To discharge the debt and mortgage to secure same, there is a vast difference as to who furnishes the money or property. If it is the mortgagor and the note and mortgage is surrendered and the mortgage marked “paid and satisfied” as in the present case the. debt is paid and the lien extinguished. If a third person advances the money or property, a different principle applies. The authorities, if carefully analyzed, will bear out this distinction. In Bank v. Bank, 158 N. C., p. 244, it is said: “The authorities are entirely agreed, though, that where a person advances money to pay off a mortgage debt under an agreement with the owner of the equity of redemption or his representative that he shall hold the mortgage as security for his advance, but the mortgage, instead of being assigned to him, is discharged in whole or in part, he is yet entitled as against subsequent parties in interest to be subrogated to the rights ' of the mortgagee and to enforce the mortgage.” Davidson v. Gregory, 132 N. C., 389; Grantham v. Nunn, 187 N. C., 394. In 19 R. C. L., part see. 229 (p. 445), the following is laid down: “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 resusitate 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. It is possible that the circumstances of the reissue may be such as to furnish ground for a court of equity to intervene and compel the execution of a new mortgage, to accomplish the real purpose of the parties, and notice of such circumstances to the *146 subsequent grantee or mortgagee might, perhaps, under special conditions, subject his right to the prior equity. But 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.” Bogert v. Striker et al., 42 N. E. Rep. (N. Y.), 582; Flye v. Berry, 63 N. E. Rep. (Mass.), 1071; Hibernia Nat. Bank v. Succession of Gragard, 33 So. Rep. (La.), 728; Porler v. Title Guaranty, etc. Co., 17 Idaho, 364. It is said in Wilkes v. Miller, 156 N. C., p. 431: “The substitution of one note and mortgage for another will not discharge the lien of the original note and mortgage unless the latter is surrendered to the mortgagor, or canceled of record. It is only a renewal or acknowledgment of the same debt. Collins v. Davis, 132 N. C., 106; Hyman v. Devereux, 63 N. C., 626.” In the present case, the mortgage was not canceled of record, but it was surrendered to the mortgagor and marked “paid and satisfied.” and the note also surrendered to mortgagor and “canceled and destroyed.” In Collins v. Davis, supra, cited by the plaintiff, Justice H. G. Connor, writing the opinion in that case, carefully says: “We have not overlooked the case of Smith v. Bynum, 92 N. C., 108. There, the note and mortgage were surrendered to the mortgagor." (Italics ours.) It is well-settled doctrine that neither in law nor equity can a note and mortgage paid by the mortgagor and the mortgage marked “paid and satisfied” and both note and mortgage delivered to the mortgagor, be resusitated and revivified. To protect plaintiff, a new note or notes secured by mortgage should have been made. The note turned over to the mortgagor and the mortgage marked “paid and satisfied” and surrendered to the mortgagor, so far as law and equity are concerned, were as dead as an Egyptian mummy. The case of Furniture Co. v. Potter, 188 N. C., 145 has no application. That case discusses the doctrine of merger. From a careful reading of the record and briefs and hearing the argument of counsel, we think that the court below made no error. The exceptions and assignments of error by the plaintiff cannot be sustained. It was in the discretion of the court below to grant or refuse an amendment to the complaint. From the facts and circumstances, we do not think the principle of estoppel applies as to the Bank of Washington. Upon the entire record, we can find No error.