Gadsden v. Latey

Irvine, C. Gadsden brought this action in the district court of Douglas county to foreclose a mortgage executed by the defendants Latey and Benson to one Alfred Stedman to secure a note for $5,000. The mortgage covered a large amount of property situated in the counties of Douglas, Dodge, Colfax, and Stanton; but the petition described only property in Douglas and Stanton counties. Stedman and Gadsden were partners as bankers when the note and mortgage were executed. Soon after their execution the note was transferred to the .partnership and thereafter to a banking corporation, which succeeded the partnership. On the day of the, maturity of the note it was again transferred to Gadsden. On the 10th of April, 1888, Latey and Benson Conveyed a portion of the mortgaged property to Alvin Saunders. Saunders answered setting up several defenses, to only one of which attention need be directed. He pleaded that the note had been paid and the mortgage satisfied, and, further, that the mortgagee had executed and delivered a release thereof. There was a general finding for Saunders and a decree canceling the mortgage on- the [130] land conveyed to him. From this decree Gadsden appeals. The release referred to was as follows: . “Know all men by these presents, that whereas William Latey and wife and William V. Benson and wife on the 23d day of September, 1887, by a certain indenture of mortgage did convey to me certain premises, to-wit, the east half northwest quarter and the west half northeast quarter section five (5), township seventeen (17) north, of range six (6) east of the 6th P. M., in the county of Dodge and state of Nebraska, which said mortgage was filed for record in the office of the county clerk of Dodge county in the state of Nebraska, on the 28th day of September, 1887, at -- of said day, and duly recorded in Book ‘W’.of Real Estate Mortgages, on page 521, and which said mortgage was executed and given to secure the payment of a certain sum of money therein mentioned: “Now, therefore, for and in consideration of the sum of one dollar, to me in hand paid by William Latey and William V. Benson aforesaid, the receipt whereof is hereby confessed and acknowledged,.! do hereby acknowledge that the said mortgage and the note accompanying the same is redeemed, paid, and satisfied, and I do hereby release all my claim to the premises covered by said mortgage, and do release and quitclaim unto the said William Latey and William V. Benson, their heirs and assigns forever, • the premises covered by said mortgage, and do release all obligations due me by virtue of said note and mortgage. “In witness whereof, I have hereunto set my hand and seal this 5th day of January, 1888. “Alfred Stedman. [seal.] “In presence of “T. B. CxtEWITT.” This release was acknowledged and. recorded in Dodge county but not in Douglas. The reply admits that the Dodge county land was released, but pleads that it was intended to, and did, release only that land and not the [131] Douglas county land. The evidence shows that when Saunders purchased he had no notice of the mortgage except such as the law imports from its record in Douglas county, and that he did not at that time know of the release. There is some evidence tending to create an estoppel in pais from other facts; but as it is not shown that Saunders relied upon or even knew of the release, no-equitable estoppel can be claimed by reason thereof, and the question presented is whether or not, in the absence of facts constituting an equitable estoppel, the document referred to operated to discharge the mortgage on the Douglas county land and estop the plaintiff from asserting its invalidity for that purpose. The first question presented is as to the proper construction of the language of this instrument. The only premises expressly described are lands in Dodge county and this description is in a recital which identifies the mortgage by parties, date, and place of record. In the operative part of the instrument is the following language: “I do hereby release all my claim to the premises covered by said mortgage and do release and quitclaim unto [the mortgagors] the premises covered by said mortgage.” A distinct reference to the mortgage thus incorporates the mortgage in the release (2 Devlin, Deeds, sec. 1020, and cases cited); and the language, extending generally to the land covered by the mortgage referred to, must be taken" to refer to all such land, and not only to the particular tract described in the recital. On this question Miller v. Hicken, 92 Cal., 229, is- directly in point, although there the particular description was contained in the releasing clause instead of a recital. But if there were doubt as to the construction; it would be set at rest by the following language: “Ido hereby acknowledge that the said mortgage and the note accompanying the same is redeemed, paid, and satisfied, and do release all obligations due me by virtue of said note and mortgage.” No language could be selected more [132] clearly expressing an intention to acknowledge satisfaction of the whole mortgage deed and to discharge the whole lien of the mortgage. What, then, is the legal effect of the instrument so construed? Clearly the delivery of this instrument operated; in the absence of fraud or mistake, to divest the lien of the mortgage, and must be held effective for that purpose until rescinded or reformed for such fraud or mistake. Neither fraud nor mistake is in this case pleaded, nor is any reformation asked. The reply in effect admits the instrument and puts in question merely its legal effect and construction. If reformation were sought, then the question would arise as to Saunders’ notice and his bona jides; but as the case was presented we do not think that these questions are material. If A be the owner of land and convey to B, the deed not being recorded, and B thereafter convey to C, C takes title, although he did not investigate and did not know in fact of the conveyance from A to B. In such case A could not be heard to set up title against C on the ground that C took without notice of the fact making his title good. So here a formal deed of release was made, including even words sufficient to operate as a conveyance of the property, and, upon most familiar principles, the grantors are bound by the instrument and estopped not only by its operative part, but even by its recitals, in so far as they are particular and pertinent to the subject-matter of the instrument. (7 Am. & Eng. Ency. of Law, 7, and cases cited.) This estoppel operated in favor of the grantees in the release, and of Saunders, their privy in estate. Without regard to the other defenses and the questions arising therefrom, the foregoing considerations ■demanded the decree which was rendered. Judgment affirmed.