First National Bank v. Merrill

HENSHAW, J.

This action was brought by plaintiff as mortgagee to have a deed absolute in form declared to be a mortgage, and to have the mortgage foreclosed against the land of Charles H. Merrill and Mary B. Merrill, defendants and appellants. The facts, over which there is no controversy, are in their chronological order the following: In March, 1909, Charles H. Merrill borrowed five thousand dollars from plaintiff bank to pay for the real estate here the subject of foreclosure. In April of the same year Merrill and his wife executed their deed of grant of this land to the bank. It was, however, thoroughly understood and agreed that the deed was but a mortgage given as security for the five thousand dollars already advanced and for such future advances as the bank might make. Contemporaneously a letter, in effect a defeasance, was given by the bank to the Merrills declaring the deed to be a mortgage upon the conditions above noted. This letter was signed by the bank, through Moulton, its president, but was not signed by either Merrill or his wife, nor was it acknowledged by any of the parties named. The acknowledgment to the deed executed by Merrill and wife to the bank

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was taken before a notary public, who, at the time, was the assistant cashier of plaintiff bank and a stockholder of the corporation. The bank loaned the Merrills the additional sum of two thousand dollars, so that secured by this mortgage there was due the bank the sum of seven thousand dollars. Admittedly no part of this sum has been paid. The mortgage deed to the bank remained in its possession unrecorded. On the twenty-third day of February, 1911, the Merrills filed a claim of homestead covering the property. Two days afterward Charles H. Merrill was adjudicated a bankrupt, and two days after that, on February 27, the bank recorded its mortgage deed.

The Merrills are here engaged in an effort to defeat the payment of this admittedly just debt by virtue of the provisions of the homestead and recordation acts. In this effort they place great reliance upon the case of the

Merced Bank

v.

Rosenthal,

99 Cal. 39, [31 Pac. 849, 33 Pac. 732], declaring it to be “absolutely on all fours” with the case at bar, and insisting that its declarations of the law compel a reversal of the judgment given by the trial court in favor of plaintiff. In fact, however, from a legal standpoint, there is not only no identity, but no similarity between the Merced Bank case and the one before .us. In the Merced ease Rosenthal and wife had executed a mortgage in the form of a deed of grant, which mortgage was upon their