Northern Counties Investment Trust v. Edgar

Sedgwick, J. This was an action to foreclose a mortgage upon real estate. There was a decree in the court below for defendants and plaintiff appeals. The defendants gave to the Globe Investment Company, a Massachusetts corporation, doing a-business at Boston, their promissory note, secured by this mortgage. The investment company immediately sold the note and mortgage to an English company, having its place of business at Manchester, England, and a few days later this company sold the note to the plaintiff, which is also an [302] English corporation. The note was negotiable in form, and was regularly indorsed and delivered to the plaintiff. There is no question that the plaintiff was a bona-fide purchaser of the note for full value in the regular course of business. The original payee of the note, upon selling the same, indorsed its guaranty of payment thereon, and the place of payment was by the terms of the note at the office of the payee in Boston. As the interest, coupons became due from time to time the plaintiff sent them for collection to the place of payment designated therein, and the guarantor, as above stated, paid the same, and then forwarded them to its western agent for collection, who obtained payment from the makers. When the principal note became due. there was an agreement made between the original payee and the maker, extending the time of payment for one year, but this was without the knowledge of the plaintiff herein. At the expiration of the time of the extension the maker of the note paid to the original payee the full amount of the principal and interest of the debt. The original payee was then insolvent, and the plaintiff never received the money, but the mortgagors were ignorant of these facts until afterwards. No assignment of the mortgage was put upon record, and the mortgagor acted in perfect good faith, without any notice that the original payee was not at all times the owner of the paper. On the other hand, tiie plaintiff also acted in good faith, kept the note in its own possession from the time of the purchase' of the same, forwarded the coupons and the principal note to the place of payment named therein, as above stated, for payment, and did not authorize the payee to act for it in any respect, or in any way countenance any pretensions of the payee that it owned the note or had any right to act for the plaintiff in connection therewith. The question is, which of the two innocent parties must suffer the loss caused by default of the original payee. The facts are substantially the same as in the case of Garnett v. Meyers, ante, page 280. The defendant having paid his money to one who did not and could not [303] produce the note, and having failed to show that the party to whom he paid it was the owner thereof, or was authorized by the owner to receive payment, and defendant not having been misled by any act of the plaintiff to suppose that such a payment was authorized, can not now defend against the true owner of the note, an innocent purchaser in the usual course of business. The decree of the district court is therefore reversed and the cause remanded, with direction to enter a decree of foreclosure as prayed in the petition. The following opinion was filed on rehearing October 7, 1903: Reversed and remanded.