November 5, 1923. The opinion of the Court was delivered by Action for foreclosure of a mortgage given by the defendant, Martha Brabham, to the defendant, People's Bank, to secure the payment of a bond for $150.00, dated January 12, 1918, due October 15, 1918, recorded on the day of its execution, and assigned by the People's Bank on October 13, 1918, to the plaintiff, George W. Wilson. *Page 282
The facts are sufficiently stated in the Master's report.
The authorities are in hopeless conflict upon the question whether or not a subsequent mortgagee can rely upon a satisfaction by the mortgagee of a prior mortgage, duly entered on the record, after having assigned such prior mortgage to an innocent purchaser.
The cases maintaining the affirmative of this question are based upon the ground that a subsequent mortgagee, who has acquired an interest in the property, without notice of the rights of a holder of the outstanding prior mortgage, while the record shows a regular discharge of the mortgage by the prior mortgagee, should be protected, rather than such equitable assignee of the mortgage, who could have prevented the loss to the second mortgagee by giving notice to the mortgagor of the assignment and recording it.
On the other hand, it is maintained that the mortgagee who has assigned the mortgage had no power to mark it satisfied; that such satisfaction is simply a fraud, and that the bona fide assignee, being a stranger to such fraudulent transaction, should not suffer by it; that the law does not require him to extend any notice of his assignment or to have it recorded; and that he cannot be charged with negligence in failing to do what the law does not require. See 1 Jones, Mortgages, § 956a, where the conflicting authorities are cited.
Without undertaking to decide the question as if presented upon a plain case of a subsequent mortgagee relying upon the record of a satisfaction by the prior mortgagee, the facts of this particular case justify the conclusions of the Master, confirmed by the Circuit Judge. When the agent for Mrs. Barr examined the record, he found an open mortgage in favor of the People's Bank; inquiring of the mortgagor, he was told that the mortgage had been paid; she was requested to produce it, made a search for it, could not find it, and so reported to the agent; her husband transacted business for her, and she *Page 283 thought he had paid it; the agent then prepared a satisfaction piece which the mortgagor presented to the bank, and it was executed; it was then recorded, and the mortgages in question were executed. It thus appears that the loss to Mrs. Barr has occurred mainly by the confidence which her agent reposed in the statements of the mortgagor and of the bank, without requiring a production of the alleged satisfied mortgage, or satisfying himself that the mortgage had not been assigned.
Assuming, without deciding that Wilson, the assignee, was negligent in not having his assignment recorded, the conduct of the agent of Mrs. Barr certainly contributed to the result.
It may not be amiss to quote the language of 1 Jones, Mortgages, § 956 (6th Ed.):
"There can be no question that utility and convenience demand that the registry laws should cover assignments of mortgages as well as other conveyances. But the protection secured by registration is wholly the creation of Statute, and if the Statute does not require an assignee to record his assignment, he is not guilty of negligence on failing to do so."
In reference to the exceptions of the Bank, the Court is satisfied with the conclusions of the Master.
Let the Master's report and the Circuit Decree be reported.
In addition to the authorities cited by the Master, seeSingleton v. Singleton, 60 S.C. 216, on page 235;38 S.E., 462. Bank v. Lynch (S.C.), 117 S.E., 715.
The judgment of this Court is that the judgment of the Circuit Court be affirmed.