McCaughrin & Co. v. Williams

The opinion of the court was delivered by

Fraser, A. A. J.

The case is so fully and clearly stated in the report of the referee, which was confirmed and made the judgment of the Circuit Court, that only so much will be stated here as is necessary to explain the judgment of this court. The *515finding of fact by the referee having been concurred in by the Circuit judge, and upon such testimony as has been introduced in this case, will not be overruled in this court.

On December 21st, 1874, J. Wash. Williams, one of the defendants, executed in the usual form a mortgage to J. W. Chandler and L. L. Young, of a tract of land. The mortgage recites that “whereas I, the said J. Wash. Williams,_ &e., in and by certain bond or obligation, bearing date December 8th, 1874, stand firmly held and bound unto L. L. Young and J. W. Chandler in the penal sum of $8000, as in and by the said bond and condition thereof, reference being thereunto had, will more fully appear.”

The condition is for the “ payment ” of the said debt or sum of money aforesaid, with interest.” The referee finds, as a fact, that no such bond as here described had been executed at or before the execution of the mortgage.

A bond was, however, executed December 21st, 1875, one year after the mortgage, by Williams to Young and Chandler, in the penal sum of $8000, conditioned to pay $8000. This bond is without a witness and has no time fixed for the payment.

On this bond is a written declaration of the same date as the bond signed by Williams that it was “ executed in the place of the bond mentioned in the mortgage, * * it being for the ■same amount and for the same purposes, and intended to occupy its place under the mortgage, not in payment thereof but in lieu thereof.” On the other side of the sheet is a further declaration, in writing, signed by Williams, without date, that this bond and mortgage were given by him “ to secure the payment and thereby to save harmless the said Young and Chandler as endorsers thereon of two notes for $1500 each,” &c., * * * and “ to •secure the payment of such renewals thereof as may be made,” &c., and “ to secure the payment of-to L. L. Young,” with interest, “ the amount of individual indebtedness ” to said Young. The notes bore date December 8th, 1874. The referee finds, as a fact, that the mortgage was intended, or, to use the words of the referee, “ given for the purpose of securing Young ■and Chandler as endorsers on the bank notes.” The referee finds *516that there was no proof that Williams intended to secure the individual note of $2000 to Young.

His conclusion, therefore, may be stated to be this: that the-mortgage was given at its execution to secure the endorsers on the bank notes, but the feature in the transaction, in reference to the individual note of Young, was an attempt to engraft it upon a mortgage with which it had no original connection.

The questions raised by the appeal in this case are—

1. Is a mortgage of land a valid security, which recites a bond to be secured by it, which bond in fact was not executed before-the mortgage or at the same time with it ?

2. Can such a mortgage be held a valid security for the contingent liability of the mortgagor to the mortgagees, arising from an endorsement by the mortgagees on promissory notes of the-. mortgagor ?

3. Can a mortgage, which is a valid security only for contingent liability, or for any other debt, be extended afterwards to-secure other debts not included in the original agreement between the parties, and after its execution and delivery ?

The first question has been decided by- the Circuit judge affirmatively, and, we hold, correctly. The case of Bramhall v. Flood, 41 Conn. 58, was a case in which the debt was described as a note for $1000. No such note had been given, but the, mortgagor was indebted to the mortgagee for $756 for goods sold, and there was an agreement to furnish the balance to the amount of $1000. The mortgage was held to be void. This is said in Jones on Mort., § 70, to be an extreme case and not to be relied on.”

In Jones on Mort., § 353, we find the doctrine laid down-in these words : “ A deed of trust or mortgage is valid without any note or bond, although it purports to secure a note or bond and substantially describes it. The mortgage debt exists independently of the note. The inquiry is : Does the debt exist t If it does, it is not essential that there should be any evidence of it beyond what is furnished by the recital of the deed. The-validity of a mortgage does not depend upon the description of' the debt contained in the deed, nor upon the form of the indebtedness, whether it be by note or bond or otherwise; it depends-*517rather upon the existence of the debt it is given to secure. Although there be no note or bond, and no time is specified for the' payment of the mortgaged debt, the mortgage, if given to secure the payment of the debt that actually exists, is valid, and may be ■enforced immediately.”

As soon as this mortgage was executed it enured to the benefit •of the bank to secure an existing debt, the notes endorsed by Young and Chandler. The renewals of the original notes do not affect the security. Jones on Mart., § 355. If the mortgage was valid to secure the debt which really existed, and that •debt was a note or notes payable in bank, it is not correct to say that this was a mortgage to secure a contingent liability. If the agreement between these parties had been that the mortgage should secure a note thereafter to be made and endorsed, or an account for goods thereafter to be contracted, it might very well be held that as no such debt existed at the time the mortgage was ■executed, no such future and uncertain liability could be secured by it; but such is not the case here. The mortgage describes an ■obligation absolute on the face of it, and parties are estopped from denying its existence. A deed, absolute on its face and reciting full consideration, can be shown by parol evidence to be ■only a mortgage, and there seems to be no good reason why a mortgage reciting a bond, which in reality has no more existence than the recited considerations of a deed, can be shown to be in ■reality security for the payment of a debt for which the mortgagor and mortgagees are liable at the time of its execution.

The only question which remains is as to the individual note to L. L. Young. The referee holds that it was no part of the original agreement that-this mortgage should secure this note. A mortgage given to secure a certain debt is valid for that purpose only.” Jones on Mort., § 357. The security remains good so long as the debt can be traced, but it cannot cover a new debt by any subsequent agreement of the parties.

It is, therefore, the judgment of this court that the mortgage ■of J. Wash. Williams is a valid security for the two notes in bank, endorsed by L. L. Young and J. W. Chandler, with their renewals and interest, but that it is not a security for the note of J. Wash. Williams to L. L. Young, individually, for $2000.

*518It is, therefore, ordered and adjudged that the judgment of the Circuit Court, as herein modified, be affirmed.

McIyer and McGowan, A. J.’s, Concurred.