Klemmer v. Morse

By the Court. This is an action of contract in which the plaintiff seeks to recover money lent by him to the defendant. There was evidence tending to show that a junior mortgage with the note thereby secured had been transferred by the defendant to the plaintiff by assignment in writing unqualified in terms; that the note was payable to the defendant who indorsed it on the back under the [301] words “Without recourse to me”; and that simultaneously with the delivery of the mortgage, note and assignment to the plaintiff he had given money to the defendant. The plaintiff contended that the mortgage and note were transferred to him as collateral security for the payment of the loan; while the defendant contended that the money was paid as consideration for the purchase of the mortgage and note, and that the transfer was an absolute sale conclusive between the parties. It was agreed that the property described in the junior mortgage had been foreclosed under power of sale contained in a first mortgage and that there was no surplus to be applied in payment of the amount due on the junior mortgage. The single question is, whether parol evidence was admissible to show that the assignment of the junior mortgage absolute in form was given as collateral security in the absence of a written agreement showing that the transaction was in fact a loan. It is settled by Reeve v. Dennett, 137 Mass. 315, and Butman v. Howell, 144 Mass. 66, that such evidence is admissible in the circumstances here disclosed. Order dismissing report affirmed.