Phelan v. Olney
Before: Terry
Synopsis
A mortgage being merely the incident to the note secured by it, it follows that where two notes are secured by a single mortgage, the endorsement and delivery of one of the notes carries with it a pro rata portion of the security.
A purchaser of the second note, taking therewith an assignment of the mortgage, takes with notice of the equity of the holder of the first note, as he was informed of its existence by the mortgage itself.
When the holder of the second note, and assignee of the mortgage entered a discharge of the mortgage and took a new security, the discharge was valid, as to him, and divested his lien under the mortgage, though void as to the holder of the first note.
Mr. Justice Terry delivered the opinion of the Court. Mr. Chief Justice Murray concurred.
[483]In Ord v. McKee, and Bennett v. Taylor, decided Oct. Term, 1855, we held that a mortgage is the incident of a debt, and that the endorsement of a promissory note secured by mortgage, carried with it the security without a formal assignment of the mortgage.
The endorsement and delivery by Jewett to Brigham of one of the notes secured by Gluey’s mortgage, carried with it a pro rata portion of the security. Keyes v. Wood, 21 Vt., 339; 9 Cowen, 751, and 17 Sergt. & Rawle, 404.
Roberts, the purchaser of the second note, and the assignee of the mortgage took with notice of the plaintiff’s equity; as he was informed by the deed itself that it was given as security for two notes of equal amount, neither of which was due.
The holders of the notes stood in the same relation to the mortgaged premises, until Roberts entered a discharge of the mortgage, and accepted a different security. This discharge, though void as to the plaintiff, was valid as to Roberts, and divested any lien which he had by virtue of said mortgage.
Judgment affirmed with costs.
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