Demuth v. Old Town Bank

Citations

• 85 Md. 315
• 37 A. 266
• 1897 Md. LEXIS 72

Syllabus

<p>Mortgages — Assignment of Promissory Note Secured by Mortgage— Rights of Endorsee Prior to Act of 1892, Chap. 392 — Release of Mortgage by Mortgagee When Note is Held by Another Party— Bona Fide Purchaser — Laches—Limitations.</p> <p>Where a note secured by mortgage was endorsed as collateral security prior to the Act of 1892, chap. 392, the endorsee was entitled to the full benefit of the lien of the mortgage itself without an assignment thereof or notice upon the records, and his rights could not be affected by a release of the mortgage executed by the mortgagee.</p> <p>P., the owner of certain land, executed a conveyance of the same to F. for a simulated consideration of $1,500, and at the same time F. executed a mortgage to P., the grantor, to secure the payment of $1,000 alleged to be part of the purchase money. The deed and mortgage were placed on record. The mortgage recited that it was given to secure the payment of a note of $1,000 and two notes of $30 each for interest. P. then borrowed from a bank a sum of money and assigned to it the mortgage note of $r,ooo as collateral security. P.’s object in the transaction was to borrow money on his property without himself executing a mortgage of the same. At the time the said deed and mortgage were executed, F. executed another deed reconveying the property to P., but this deed was not recorded. He also executed another promissory note bearing the same date payable to P. for $1,000 with interest, but this note did not show on its face that it was a mortgage note as did the note transferred to the bank. P.’s loan from the bank was renewed several times, and F. ’s mortgage note was repledged upon each renewal. Nearly three years after the original transaction, plaintiffs desired to purchase the property in question and opened negotiations with P., the mortgagee, who informed them that the mortgage had been paid and that he held a deed from F. conveying the property back to him. Plaintiffs agreed to purchase from