Babcock v. Bridge

By the Court, T. R. Strong, J. In the view I take of this case, it is not important to determine whether the note, for the collection of which the mortgage in question is sought to be enforced, is embraced within the general words of the condition of the mortgage. It is clear that it is not of the description of notes the defendant had agreed to sign as surety or indorse for Peets to a limited amount, according to the recital in the condition; as the latter were to be payable at the Rochester City Bank, or some of the other banks in the city of Rochester, and this note is payable at large. If it comes within the condition, it is because of the general language ex [434] pressing that the mortgage is an indemnity against the note particularly described, which had been executed, “ and again&t all other notes which the said Alexander may sign as surety or indorse with or for the said Hiram Peets,” &c. Assuming then, that the condition embraces this note, the mortgage was security to the plaintiff in respect to two classes of notes which he might thus sign or indorse; one class comprehending the note already executed, which was payable at the Rochester City Bank, and other notes payable at one of the aforesaid banks, not in the whole to exceed a specified sum; the other class, including notes payable elsewhere, or mentioning no place of payment, to an indefinite amount. There is no evidence of an understanding between the plaintiff and Peets, when the note in question was signed by the plaintiff, in regard to its qoming under the agreement, and forming part of the amount to which the plaintiff was to sign or indorse for Peets, if such evidence would have been admissible; and in the absence of evidence on that subject, this note must be deemed additional to the. notes the plaintiff had agreed to sign or indorse; leaving the plaintiff bound to sign or in-, dorse note's payable at the banks named, to the amount agreed upon, irrespective of the note in suit. If the plaintiff had signed or indorsed notes for Peets, of the description and to the amount specified in the agreement as recited,, in addition to the present note, it cannot be doubted that the mortgage would have been available to him as security for his liability on all. It follows, therefore, that this note belongs to the second class of notes provided for by the mortgage; and that the mortgage in reference to this note must be regarded and treated precisely as if the' plaintiff was indemnified only as to the second class of notes, by the mortgage. Looking at the case in this aspect, the question arises, whether the mortgage, as to the note in suit, is entitled to priority under the recording acts, as against the defendant Bridges, a junior mortgagee in good faith. I think, under the decisions, it is not. The defect in the mortgage as con [435] structive notice, under those acts, is that no limit is fixed to the extent of liability in regard to the second class of notes ; that it may be increased indefinitely ; and that it affords a dangerous facility for a fraudulent substitution of notes ; in short, that to allow such a mortgage to be valid, would effectually defeat the policy of the recording laws. In Pettibone v. Griswold, (4 Conn. 158,) a mortgage with a condition to secure a note particularly described, and “ all other notes the said grantee might indorse for, or give for, said Griswold, at the bank or elsewhere, and all the receipts said Pettibone, deceased, might hold against said Griswold,” was as to the (! other notes,” &c., void as against a junior incumbrancer, for substantially the reasons above stated. This doctrine is approved in numerous cases, and supported by the most convincing reasoning, which it is unnecessary here to repeat. (Truscott v. King, 2 Seld. 147, 161, 166, and cases therein cited. Also Youngs v. Wilson. 24 Barb. 510, and cases there cited.) [Cayuga General Term, June 6, 1859. T. R. Strong, Smith and Johnson, Justices.] My conclusion is, that the judgment should be reversed, and a new trial granted, with costs to abide the event.