Towner v. McClelland

Citations

• 110 Ill. 542

Syllabus

<p>1. Assignment—assignee of negotiable paper before and after maturity—sale by agent without authority—whether assignee protected—and of defences in equity. Where the holder and owner of two notes indorsed in blank, the one over-due and the other not, placed them in the hands of an agent to receive payment of them only, and the latter sold and delivered them to an innocent purchaser having no notice, in fact, of the agent’s want of authority to negotiate the same, it was held, that the purchaser, as to the note past due, was put on inquiry to ascertain whether the agent had authority to negotiate the same, and took no title as to such note, but as to the note not due the purchaser acquired the legal title.</p> <p>2. While a purchaser in good faith of a note before its maturity, which is indorsed in blank, acquires the legal title, and may enforce his rights in a court of law, yet if the note is secured by mortgage on real estate, and he resorts to a court of equity to foreclose the mortgage, that court will let in any defence which would have been good against the mortgage in the hands of the mortgagee.</p> <p>3. A mortgage, not being assignable at law, the assignee takes it subject to equities between the parties; and the fact that he takes the note secured by the mortgage by assignment before maturity, free from all defences at law, does not protect the mortgage against equitable defences.</p> <p>4. The equitable assignee of a mortgage, to protect his rights against a payment by the mortgagor to the mortgagee, must give the former notice, actual or constructive, of its assignment. He may place the assignment on record, or give notice to the mortgagor, and thus protect his equitable rights. If he does neither, a payment of the debt to the mortgagee,—and there are no circumstances to put the mortgagor on inquiry as to the fact of the assignment,—will satisfy the mortgage and defeat a foreclosure. But such payment to the mortgagee after the legal transfer of the not