This section is from the book "The Law Of Real Property and Other Interests In Land", by Herbert Thorn Dike Tiffany. Also available from Amazon: A Treatise on the Modern Law of Real Property and Other Interests in Land .
It has occasionally been asserted that while, if a note or bond was given for the debt secured, the debt does not pass by an assignment in terms of the mortgage, it does pass in case there is no debt or bond,24 the theory obviously being that, if there is a note or bond, the failure to refer to it or to make a manual transfer thereof indicates an intention not to transfer the debt. But while the existence of the note or bond is a circumstance to be considered in construing the language used, and may serve to limit its scope, so as not to operate upon the debt, it should not, it is conceived, be conclusive in this regard. In spite of the frequent reference to a mortgage as securing a note or bond, the note or bond is merely evidence of, or additional security for, the debt,25 and it is perfectly possible for one to intend to transfer the debt without making in terms a transfer of the note or bond, or relinquishing possession thereof.26 The improbability that the mortgagee, desiring to transfer his beneficial interest'in the debt as well as the mortgage lien, will fail to make a specific transfer of the note or bond is not so great, it is conceived, as is the improbability of his attempting to do such an utterly futile thing as to transfer to another a lien securing a debt, while himself retaining the debt.27 It has occasionally been decided that the assignment in terms of the mortgage, though transferring the debt as well as the security, does not pass the legal title vested in the mortgagee.28 While a written assignment of a mortgage, so called, is nugatory if the name of the assignee does not appear,29 it has been decided that it is validated by the insertion of such name by one acting under authority
22. So in Foster v. Johnson, 39 Minn. 378, 40 N. W. 255, it is held that an averment that a mortgage was "assigned" is a sufficient averment of an assignment of the notes, since an assignment of the mortgage without the notes is nugatory. Hamilton v. Browning, 94 Ind. 242 is contra.
23. Buell v. Underwood, 65 Ala. 285; Seabury v. Hemley, 174 Ala. 116, 56 So. 530; Loveridge v. Shurtz, 111 Mich. 618, 70 N. W. 132 (semble); Campbell v. Birch, 60 N. Y. 214 (semble); Andrews v. Townshend, 56 N. Y. Super. Ct. 140, 1 N. Y. Supp. 421, 16 N. Y. St. Rep. 876; Williams v. Teachey, 85 N. C. 402. See Syracuse Sav. Bank v. Merrick, 96 N. Y. App. Div. 581,
89 N. Y. Supp. 238, rev'd, 182 N. Y. 387, 75 N. E. 232.
Occasionally it is said that an assignment in terms of the mortgage does not pass the debt unless an intention to that effect is shown (Fletcher v. Carpenter, 37 Mich. 412; Earll v. Stumpf, 56 Wis. 50), the objection to which is that it appears to impose upon the transferee in every case the burden of showing an intention to transfer the debt. Having regard to the ordinary use of the expression "assignment o' mortgage," the presumption should be the other way.
24. Carpenter v. O'Dougherty, 67 Barb. (N. Y.) 397; Earll v. Stumpf, 56 Wis. 50, 13 N. W. 701.
25. Ante, Sec. 607(c).
26. Campbell v. Birch, 60 N. Y. 214, per Andrews, J.
27. That a testamentary disposition of a "mortgage" includes the debt, see Johnson v. Goss, 128 Mass. 433; Klock v. Stevens, 20 N. Y. Misc. 383, 45 N. Y. Supp. 603.
28. Williams v. Teachey, 85 N. C. 402; Morton v. Blades Lumber
Co., 154 N. C. 336, 70 S. E. 623; McCook v. Kennedy, 146 Ga. 93, 90 S. E. 713. Compare H. Weil & Bros. v. Davis, 168 N. C. 298, 84 S. E. 395.
29. Curtis v. Cutler, 76 Fed. 16, 22 C. C. A. 16, 37 L. R. A. 737.
30. Phelps v. Sullivan, 146 .Mass. 36, 54 Am. Rep. 442, 2 N. E. 121; Casserly v. Morrow, 111
3 R. P.- 17 adopted as to the filling of blanks in other instruments of conveyance.31
-(d) Transfer of land or legal title thereto.
On the common-law theory of a mortgage, since the legal title is regarded as vested in the mortgagee, the only mode of transferring such title is by a formal conveyance similar to that required in the case of other transfers of estates in land, and, accordingly, such a conveyance is in some states necessary for the transfer of all the rights of the mortgagee.32 But, as we have seen,32a the fact that the legal title to the land is not transferred does not ordinarily affect the right of one to whom the debt secured by the mortgage is transferred, to assert in a court of equity his claim, against the mortgaged property for the purpose of security. It merely affects his standing in a court of law. Moreover, even though the legal title is transferred by the mortgagee to another, the transferee thereby acquires no beneficial interest, if the debt or obligation secured is not also transferred, but he holds the title merely in trust for the owner of the obligation, and can utilize it only for the benefit of the latter.33 And occasionally it has been decided that, even though one has the legal title as mortgagee, since he has this merely for the purpose of securing his debt, a transfer by him of such title without a transfer of the debt secured, is an absolute nullity.34
Minn. 654, 111 N. W. 655; Koch v. Hinkle, 35 Pa,. Super. Co. 421; Fidelity Insur. Co. v. Nelson, 30 Wash. 340, 70 Pac. 961; Friend v. Yahr, 126 Wis. 291, 1 L. R. A. (N. S.) 891, 110 Am. St. Rep. 924, 104 N. W. 997.
31. Ante, Sec. 434.
32. Sanders v. Cassady, 86 Ala. 246, 5 So. 503; Barrett v. Hinckley, 124 111. 32, 7 Am. St. Rep. 331, 14 N. E. 863; Douglass v. Durin, 51 Me. 121; Smith v. Kelley, 27 Me. 237, 46 Am. Dec. 595; Warden v. Adams, 15 Mass. 233; Adams v. Parker, 12 Gray (Mass.) 53; Williams v. Teachey, 85 N. C. 402; Torrey v. Deavitt, 53 Vt. 331. So in the case of an absolute conveyance given as security, the legal title vesting in the grantee. Henry v. McAllister, 93 Ga. 667, 20 S. E. 66. An instrument under seal, purporting to assign the debt and mortgage, has been regarded as transferring the mortgagee's full legal title, in spite of the omission of words of inheritance. Barnes v. Boardman, 149 Mass. 106, 3 L. R. A. 785, 21 N. E. 308.