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 .
Iowa, 36. And see Chaffe v. Wilson, 59 Miss. 42. The head note to Ritter v. Phillips, 53 N. Y. 586, is contra, but is not supported by the opinion.
6. Welbon v. Webster, 89 Minn. 177, 94 N. W. 550; Bennett v. Keehn, 57 Wis. 582, 15 N. W. 776. It has been so decided with reference to the defense of usury. Lillenthal v. Champion, 58 Ga. 158; Maher v. Lanfrom, 86 III. 513; Van Winkle v. Earl, 26 N. J. Eq. 242; Camden Fire Ins. Co. v. Reed, - (N. J. Ch.) -, 38 Atl.
667; Chamberlain v. Dempsey, 9 Bosw. (N. Y.) 212, S6 N. Y. 144 (But see Berdan v. Sedgwick, 40 Barb. (N. Y.) 359, 44 N. Y. 626); Union Bank v. Bell, 14 Ohio St. 200; Lewis v. Farmers' Loan & Building Ass'n, 183 Mo. 351, 81 S. W. 887.
7. Magie v. Reynolds, 51 N. J. Eq. 113, 26 All. 150; Crawford v. Nimmons, 180 111. 143, 54 N. E. 209 (usury); Brunswick Realty Co. v. University Investment Co., 43 Utah, 75, 134 Pac. 608.
If there are covenants of title sufficient to render the transferor liable in damages by reason of the mortgage, with no language excepting the mortgage from the operation thereof, it would seem to be not only the right of the transferee to assert any invalidity in the mortgage, but also his duty to do so in behalf of the transferor. It is perhaps for this reason that occasionally decisions adverse to the transferee's right to question the mortgagor emphasize the fact that the transfer was by quit claim deed.8
That the mortgage is expressly excepted from the covenants for title has been regarded as not involving such an assertion of the existence of the mortgage as to preclude the transferee from questioning its validity.9
A statement in an instrument of transfer that it is subject to all liens, or to all incumbrances, without specifying any particular lien or incumbrance, has been regarded as referring only to valid liens and incumbrances, and as consequently not precluding the transferee
8. Forgy v. Merrman, 14 Neb. 513, 16 N. W. 836; Fairfield v. McArthur, 15 Gray (Mass.) 526; Fuller v. Hunt, 48 Iowa, 163.
9. Calkins v. Copley, 29 Minn. 471, 13 N. W. 904; Stough v. Badger Lumber Co., 70 Kan. 713, 79 Pac. 737; Boyer v. Price, 45 Wash. 667, 88 Pac. 1106. In Weed Sewing Machine Co. v. Emerson,
115 Mass. 554, it was held that the description of the premises as subject to the mortgage, taken in connection with the exception of the mortgage from the covenants, was merely to protect the transferee from liability on the covenants, and did not preclude the latter from asserting the invalid ity of the mortgage.
3 R. P.-20 from questioning the validity of any particular lien or incumbrance.10
The general rule, as stated, that a transferee subject to a mortgage cannot question its validity, has been asserted as against a purchaser at execution sale, it being held that if the sale is expressly subject to the mortgage, or the price is adjusted with reference to the existence thereof, such purchaser cannot question its validity,11 and the same rule has been asserted as against one purchasing at such sale the equity of redemption eo nomine.12 A considerable proportion of these cases involved merely the right of the purchaser at execution sale to have the mortgage set aside as in fraud of creditors, but the language of the decisions is sufficiently broad to cover an attack upon the mortgage as wholly or in part non existent. The considerations which bear upon this point would appear to be as follows: In case the execution debtor is the mortgagor, or is otherwise personally liable for the mortgage debt, the purchaser at the execution sale, taking expressly subject to the mortgage or obtaining a reduction in price by reason of the mortgage, may well be precluded from questioning the validity of the mortgage for the purpose of throwing the burden of the obligation upon the execution debtor. Likewise if the execution debtor acquired the land by a transfer subject to the mortgage, the purchaser at the execution sale must also take it so subject, and he is to the same extent precluded from questioning the mortgage, for the purpose of throwing the burden of the obligation on another, the original mortgagor, for instance. But the case is different if the execution debtor acquired the land after the making of the mortgage but not subject thereto, the primary liability for the debt still remaining upon the mortgagor personally. In such caste the execution debtor had a right to question the mortgage,13-14 and one claiming under him, whether as a purchaser at execution sale or otherwise, should have a like right, even though the levy or sale is in terms subject to the mortgage, and the purchaser pays a reduced price by reason of the mortgage. The intention is ordinarily to sell whatever interest the execution debtor may have in the property, and an essential part of such interest is the right to show that an asserted incumbrance thereon is not a valid incumbrance. There is no equity in favor of the mortgagor, which should forbid the purchaser from attacking the mortgage, since the mortgagor's primary liability as between him and the land is already established, and there is no equity in favor of the execution debtor, since he is, ex hypothesi, not subject to any liability. And there is no equity in the nominal mortgagee, which entitles him to assert a non existent mortgage against the land, even though the land was sold and purchased under the mistaken supposition that the mortgage did exist. A transferee who has assumed a debt which purports to be secured by a mortgage can obviously not assert, in defense to an action to enforce his personal liability, that the mortgage itself is invalid. The invalidity of the mortgage has no bearing on his personal liability under his contract. Whether he can assert that the debt is in whole or in part non existent appears properly to depend on whether he assumed the payment of a particular sum, the nominal amount of the debt, or whether he assumed the payment of such sum as his transferor might owe.15
10. Purdy v. Coar, 109 N. Y. 448, 4 Am. St. Rep. 491, 17 N. E. 352; Murray v. Jones. 50 Ga. 109; Robinson Bank v. Miller, 153 111. 244, 27 L. R. A. 449, 46 Am. St. Rep. 883, 38 N. E. 1078.
11. Yaeger & Bethel Hardware Co. v. Pritz, 69 Fla. 8, 67 So. 231; Willis v. Terry, 15 Ky. L. Rep. 753, 24 S. W. 621; Messmore v. Huggard, 46 Mich. 558, 9 N. W. 853; Knoop v. Kelsey, 102 Mo. 291, 22 Am. St. Rep. 777, 14 S.
W. 110; Koch v. Losch, 31 Neb. 625, 48 N. W. 471; Flanders v. Jones, 30 N. H. 154; Brinsmade v Hurst, 3 Duer (N. Y.) 206; Steele v. Walters, 204 Pa. St. 257, 53 Atl. 1097. Contra, Osborne v. Rice, 107 Ga. 281, 33 S. E. 54.
12. Lord v. Sill, 23 Conn. 319; Brown v. Snell, 46 Me. 490; Russell v. Dudley, 3 Mete. (Mass.) 147; Freeland v. Freeland, 102 Mass. 475. See Stebbins v. Miller, 94 Mass. 591.
13-14. Ante, this section, note 6.
In the ordinary case a junior mortgagee is entitled to contest the validity of a prior mortgage, or to question the amount of the debt secured thereby.16 His lien is subject to the prior lien only in so far as the prior lien is a valid lien. It may occur, however, that the subsequent mortgage is in terms "subject" to the prior mortgage, and it has been decided in several cases that such a clause precludes the second mortgagee from questioning the prior mortgage.17 These cases merely apply, without discussion, the rule ordinarily asserted with reference to an absolute transfer subject to a mortgage. But there is, it would seem, a considerable difference between an absolute transfer and a mortgage so subject. A mortgage in terms subject to a supposed prior mortgage cannot be regarded as creating an equitable lien or charge equivalent to the supposed mortgage, nor can it operate to throw the primary liability for the debt upon the land in exoneration of the mortgagor.18 Nor does it indicate, as ordinarily an absolute transfer so subject does indicate, that the mortgagee (the transferee) has reduced his payment by the nominal amount of the mortgage. Such a clause in a mortgage, it is submitted, constitutes merely a recognition of the prior mortgage in so far as it may constitute a valid and existing lien and no further, and does not operate to give to the beneficiary of the supposed mortgage the right to enforce it to its nominal amount, without reference to its validity or the existence of the indebtedness which it purports to secure.
15. See Wald's Pollock on Contracts (Williston's Ed.) p. 275.
16. Carpentier v. Brenham, 40 Cal. 221; Alley v. Bay, 9 Iowa, 509; Nicholson v. Aney, 127 Iowa, 278, 103 N. W. 201; Howell v. McCrie, 36 Kan. 636, 59 Am. Rep. 584, 14 Pac. 257; Livingstone v. Murphy, 187 Mass. 315, 105 Am. St. Rep. 400, 72 N. E. 1012; Dye v. Mann, 10 Mich. 291; Gadsden v. Thrush, 56 Neb. 565, 45 L. R. A 654, 76 N. W. 1060; Prouty v. Price, 50 Barb. (N. Y.) 344.
17. Pratt v. Nixon, 91 Ala. 192, 8 So. 751; Gow v. Collin & Parker
Lumber Co., 109 Mich. 45, 66 N. W. 676; Hardin v. Hyde. 40 Barb. (N. Y.) 435; Mississippi Valley Trust Co. v. Washington Northern R. Co., 212 Fed. 776; Central Trust Co. v. Columbus, etc., R. Co., 87 Fed. 815; Bronson v. La Crosse & M. R. Co., 2 Wall. (U. S.) 283, 17 L. Ed. 725. But see Nicholson v. Aney, 127 Iowa, 278, 103 N. W. 201; Atchison Sav. Bank v. Wyman, 65 Kan. 314, 69 Ault v. Blackman, 3 Wash. 624, 36 Pac. 694. 18. Ante, Sec. 622, note 48.