Town of Woodbury v. Bruce

The opinion of the court was delivered by Royce, Ch. J. While A. W. Nelson was trustee of the U. S. surplus revenue money for the town of Woodbury, he procured a mortgage, executed by George H. Wells, of the land described in the bill, securing a note which said Wells had given, payable .to the trustee of said revenue money, or his successor in office, of said town of Woodbury, and two other notes that said Nelson then held against said Wells. The land described in the mortgage was subsequently conveyed to Nelson, and on the day of its' conveyance to him he made the following endorsement on the mortgage: “Having received the contents of the notes specified in this mortgage according to the tenor and effect of the same, I hereby discharge this mortgage in full,” signed, A. W. Nelson. The endorsement was not recorded ; and it is found that the note given to the town of Woodbury had not then, and has not since been paid. That note and the mortgage remained in Nelson’s possession until March, 1877, when he handed the note to his successor in office and retained the mortgage. On the 10th of March, 1877, he sold the land described in the mortgage to the defendant, and before he executed the deed he informed the defendant how he considered the Wells moidgage to be discharged, and what he had done to discharge it and to clear the title'; so that the defendant purchased the property with full knowledge that Nelson, while acting as trustee of the town of Woodbury, attempted to discharge the mortgage with [627] out the note secured by it having been paid, and that it had not then been paid. The attempt of Nelson to deprive the town of the security it held for the payment of the note, and which he had obtained while acting as trustee, was, as between himself and the town, a gross breach of trust. The question presented is : Will the endorsement so made upon the mortgage bind the town, so that the deed from Nelson to the defendant will be operative to defeat the right of the town to the security given by the mortgage ? It was an attempt to discharge the mortgage without payment of the note secured by it, and the statement that he had received payment of the note was false in fact, and must have boon known by the defendant to be false at the time he purchased the property. The right of the town to the security given by the mortgage was not prejudiced by the attempted discharge. The information given to the defendant when he purchased the property was, in our judgment, amply sufficient to put him upon inquiry. Blaisdell v. Stevens, 16 Vt. 179; Lovejoy v. Raymond, 58 Vt. 509. And if he, with such knowledge, purchased and paid for the property without making provision for the payment of the note, he did so at his peril; and as between him and the town, the town has the superior equity. Neither do we find any fact that in law estops the town. The town did not- participate in. the purchase of the property by Nelson, nor in its sale to the defendant, and had no knowledge of the endorsement made upon the mortgage ; and there is no act or conduct of the town shown that influenced the defendant in making the purchase. He purchased the property equitably charged with the payment of the note, and has in no way been released from that obligation. The decree is affirmed and cause remanded.