Meyer v. Weber

California Supreme Court Aug 13, 1901 No. Sac. No. 872.Published

Before: Van Dyke

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Holding. A promissory note secured by a mortgage must be construed together with that mortgage as a single transaction, rendering the note non-negotiable because it is subject to the conditions and contingencies contained in the mortgage. Consequently, the note is subject to all defenses, including failure of consideration, that the makers could have asserted against the original payee.

Issues

Whether a promissory note secured by a mortgage is a negotiable instrument under the Civil Code.
Whether a note and its securing mortgage must be construed together as a single transaction.
Whether the assignment of a non-negotiable note and mortgage is subject to existing defenses between the original parties.

Disposition. affirmed

Quotations verified verbatim against the opinion

“But the mortgage was delivered at the same time as the note, relates to the same subject-matter, and they form, substantially, one transaction. They must therefore be taken and considered together.”

“Being inseparably connected with the mortgage, and affected by the conditions contained therein, the note is not negotiable, within the law merchant or Civil Code.”

“The assignment and transfer of the note and mortgage in question, therefore, was without prejudice to any set-off or other defense existing in favor of the defendants Weber”

Synopsis

The facts are stated in the opinion of the court.

[682]

VAN DYKE, J.

The Woodbridge Canal and Irrigation Company, a corporation, being indebted to the plaintiff in the sum of $3,280, on July 28, 1894, executed to the plaintiff its promissory note for that amount, and, to secure the same, at the same time executed its mortgage upon a tract of land in San Joaquin County, and also, at the same time, as further security, indorsed and assigned to the plaintiff the note and mortgage in suit. The note reads as follows: —

“$1,963.66. Woodbridge, Cal., May 28, 1894.

“Ten years after date, we promise to pay to the Woodbridge Canal and Irrigation Company, or order, the sum of nineteen hundred sixty-three 66-100 dollars, payable only in gold coin of the government of the United States, for value received, with interest thereon, in like gold coin, at the rate of six per cent per annum from date until paid. Interest payable annually, on the first day of September of each year, and in default of payment at said times, the same to be then added to the principal and form a part thereof, bearing interest at the same rate.

“This note is secured by mortgage of even date herewith.

“Helen Weber.

“C. M. Weber.

“Julia H. Weber.”

Although the note is dated May 28th, it was not delivered until June 15th, at which time the mortgage to secure the same, and referred to in the note, was executed and delivered to the said corporation, the Woodbridge Canal and Irrigation Company. The plaintiff subsequently brought an action to foreclose the mortgage executed to her by the Woodbridge Canal and Irrigation Company, and such proceedings were therein had that a decree of foreclosure and sale was rendered, and thereupon the property mortgaged sold and applied on the judgment, leaving a deficiency of $2,639.49. Thereupon plaintiff brought the present action to foreclose the mortgage assigned to her.

The defense is, that the consideration for the note and mortgage was an agreement in writing entered into between the makers and the payee, the Woodbridge Canal and Irrigation Company, that said company should construct a ditch from the main canal, or branch thereof, to the line of the land of the Webers, being the same described in the mortgage, of sufii

Meyer v. Weber

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Synopsis

VAN DYKE, J.

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