Boyd v. Parker

Bartol, O. J., delivered tbe opinion of tbe Court. The questions presented by this appeal, are 1st. Whether tbe promissory notes held by the appellees, and.exhibited with the bill of complaint are the same notes as are mentioned in Kilgore’s mortgage of May 31st, 1869? 2nd. Whether the mortgage according to its true construction and effect, was a mere indemnity to Mrs. Warner to secure her against loss, by reason of her endorsement, or was a security for the payment of the notes themselves to the holders thereof? 3rd.

Whether if the latter be its true construction, the appellant is entitled, as a bona fide purchaser without notice; or on any other equitable ground, to be protected against its enforcement ? 4th. If it be held that the mortgage can be enforced against the' property, is the appellant entitled to have abated therefrom, the amounts paid by him in satisfaction of the prior liens which rested upon the property, when the mortgage was executed ? 1st. We have no doubt of the identity of the notes described in the mortgage, with those held by the appellees and exhibited with the bill of complaint. The only vai’iance between them, pointed out by the appellant’s counsel consists in their not being stamped, while the notes mentioned in the mortgage are described as, "being duly stamped.” In all other respects, they correspond ; being all drawn by Kilgore, and endorsed by Margaret Warner.

The date, amounts, and times when they are payable respectively are the same as described in the mortgage. In addition to this, the testimony in the cause, showing the circumstances attending the execution and delivery of the notes, and mortgage, ¡Move conclusively that they are the same notes now held and claimed by the appellees. 2nd. After the most careful examination of the terms of the mortgage, we can give no other construction to it than ¹⁹⁹ that it is a security for the payment of the notes, as well as an indemnity to Mrs. Warner the endorser. It is not to be distinguished from the mortgage which was before this Court in Kunkel vs. Fitzhugh, 22 Md., 567 .

Eor though the instruments are not in the same words, they are substantially the same, and so far as this question is concerned must be construed as having' the same operation and effect. The mortgage being held by Mrs Warner, not only for her own indemnity, but as a security for the payment of the notes, inures to the benefit of any one into whose hands the notes may be, provided he is a bona fide holder of them ; and as a consequence, it was not in the power of Mrs. Warner to release the same, so as to deprive the appellees, by whom the notes were held, of the benefit of their security under the mortgage. This conclusion rests upon well settled principles which have often been recognized in this State. We may refer to the decisions of the late Chancellor in Clark vs. Levering, 1 Md. Ch.

Dec., 178; Ohio L. Ins. and T. Co. vs. Winn & Ross, 2 Md. Ch. Dec., 26; to Owens vs. Miller & Mayhew, 29 Md., 145 , and Kunkel vs. Fitzhugh, before cited. The counsel for the appellant has contended that a surety who has taken a mortgage for his own indemnity, may assign or release the same, while solvent, and thus defeat or prevent the creditor from claiming under it by subrogation as a security for his debt; and therefore that the release executed by Mrs. Warner, the mortgagee, is valid, and operated to defeat the claim now set up by the apjjellees, and for this they have cited Woodville vs. Reed, 26 Md., 181 . If the general proposition were conceded ; the consequence above stated would not follow ; because the mortgage in this case is not merely one of indemnity to the endorser, but is by its terms a security for the payment of the notes.

We do not understand however, the case of Woodville vs. Reed, as having decided the general ²⁰⁰ proposition for which it has been ciied. The particular mortgage which had there been assigned to J. D. Roman, (viz: that of May 18, 1856,) was not a mortgage of indemnity at all, but an absolute mortgage to H. Easton, to secure the payment of a debt of $15,000 due him from the mortgagor. The question as to the effect of an assignment by a surety of a mortgage of indemnity did not arise in the case, and was not decided • "What was said by the Court on that subject, (page 191) was stated as the result of decisions in other States, which had been cited at the bar, and has been erroneously copied by the Reporter in his. head note, as part of the Court’s decision. There is nothing in the case of Woodville vs. Reed, in conflict with the decision in Kunkel vs. Fitzhugh, which is conclusive of the second question. 3rd.

The mortgage having been duly recorded, was notice to the appellant of the existence of the promissory notes which it was intended to secure, as well as of its legal import and effect. It appears that he was either mistaken as to the construction and effect of the paper, or was misled by the statements of Kilgore, upon whose representations he relied. It is impossible for him to claim equitable relief- and protection on either ground. The appellees had no agency in misleading him; they are not responsible for the misrepresentations of Kilgore, and had no knowledge of the purchase by appellant, till after it had been completed.

It is no