Thompson v. State Bank of Lisbon

Nuessle, J- This is a statutory action to quiet title. The defend^ ant State Bank -of Lisbon answered. The other defendants defaulted. Tbe bank set up a certain mortgage covering the real property involved, and of which it was tbe assignee of record. Tbe facts, briefly stated, are as follows: Plaintiff bought a farm from one Carlson and gave Carlson a note for $3,975, as part of tbe purchase price, secured by a mortgage on the farm. Carlson owed tbe bank. He pledged Thompson’s note and mortgage as collateral to this indebtedness and gave an assignment of tbe mortgage to tbe bank. This assignment was pn't of record.' Thompson bad actual notice of this arrangement and made some payments on account of interest and principal to tbe bank. Thereafter tbe payments being somewhat in default tbe bank and Carlson agreed that tbe bank would surrender and release tbe note to Carlson with tbe understanding that be should sue Thompson and when be bad obtained judgment be should give tbe bank a lien on this judgment. In accordance with this arrangement tbe bank 'delivered tbe noto and mortgage to Carlson’s' attorney and suit was begun on tbe note. Tbe mortgage, however, was not satisfied nor was it reassigned. Thompson defended against tbe suit, setting up that tbe bank and not Carlson was the owner of the note and mortgage. Carlson moved to strike out this answer as sham and frivolous, and in support of bis motion filed tbe affidavit of Grover the cashier *238 of the bank, setting forth that it had surrendered and released the note to Carlson and taken other security. The court denied the motion to strike out the answer as sham and frivolous on the ground that a question of title could not be tried on affidavits. Thereafter, and at the next term of court, Thompson stipulated to withdraw his answer and permit judgment to be taken against him. This was doné, the judgment being for about $4,500. Some 30 days after this Thompson and Carlson entered into a compromise whereby Thompson paid Carlson $900 in settlement of the judgment and took a satisfaction thereof. Before doing this he examined the records in the offices of the clerk of court and register of deeds and found there was no assignment of the judgment, but he did not make any inquiry of the bank as to whether or not it had any interest in the mortgage or judgment. The mortgage remains unsatisfied and Thompson brought this action to quiet title. On this state of facts the district court found for the plaintiff and ordered judgment canceling the mortgage of record and quieting title in Thompson. The defendant bank then perfected the instant appeal. We are clear that on the record as made the judgment of the district court was right and'must be affirmed. Considerable was said in the briefs and on argument respecting the matter of estoppel. Defendant argues that under the circumstances no estoppel can be urged against it. It seems to us, however, that no attention need be paid to the question of estoppel.. It is undisputed that the bank returned Thompson’s note to Carlson under an agreement with Carlson that he would sue on it and give the bank a lien on the judgment obtained by him in place of the security of the note and mortgage. Consistent with this agreement Carlson brought suit and obtained the judgment. Thompson knew nothing of the agreément between Carlson and the bank that the bank should have a lien'on the judgment. He settled with Carlson. There was no reason why he should have goné to the bank to enquire whether or not the bank had any interest in the judgment. Carlson had the note and brought suit in his own name. To all intents and purposes the note was Carlson’s. So was the judgment. The note carried with it the mortgage, though no reassignment thereof was executed and'delivered. See Holvick v. Black, 57 N. D. 270, 221 N. W. 71; Brynjolfson v. Osthus, 12 N. D. 42, 96 N. W. 261; Emerson- *239 Brantingham Implement Co. v. Ainslie, 38 S. D. 473, 161 N. W. 1001; 41 C. J. 686. In fact tbe receipt given by Carlson’s attorney indicates that tbe mortgage and tbe assignment to tbe bank were delivered to bim for Carlson. When Thompson bad an opportunity to settle with Carlson there was no apparent reason why be should not make tbe settlement. When be paid and satisfied tbe judgment be paid tbe debt secured by tbe mortgage and thus discharged tbe mortgage. 41 O. J. 191. He examined tbe records to ascertain if there was any reason why be should not pay tbe judgment debt to Carlson, tbe judgment creditor. No reason appeared why be should not.' This was not done in a burry. Thirty days bad elapsed from the time tbe judgment was entered. Tbe bank was content to trust Carlson and took no steps to perfect and secure its lien on tbe judgment. Carlson did not keep faith, but that cannot affect Thompson, for tbe record indicates and tbe trial court so found, that Thompson acted in good faith in making settlement and adjustment of tbe judgment against bim. Tbe judgment of tbe district court is affirmed. Bueee, Cb. J., and Bukr, Burdzell, and Christianson, JJ., concur.