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 .
The right of the transferee of land to question the validity of an asserted mortgage thereon has been the subject of a number of decisions, and is a matter of considerable difficulty. It is ordinarily stated, either expressly or by implication, that if the transfer of land is subject to a mortgage, the transferee cannot question the validity of the mortgage.91 And it is also stated that a transferee who assumes the mortgage is incapacitated in this regard.92 Since one who assumes a mortgage necessarily takes subject thereto, the latter statement is in effect included in the first. The one or the other of these statements has been made in connection with various asserted defenses against the enforcement of a mortgage, among them being violation of the federal land laws,93 coverture,94 lack of corporate capacity,95 insufficiency of execution,96 extinguishment
90. Ladue v. Detroit & M. R. Co., 13 Mich. 380, 87 Am. Dec. 759; Spader v. Lawler, 17 Ohio, 371, 49 Am. Dec. 461; Parker v. Jacohy, 3 Grant (Pa.) 300; Ter Hoven v. Kerns, 2 Pa. 96; Bank of Montgomery County's Appeal, 36 Pa. St. 170.
91. See cases cited 3 Pomeroy, Eq. Jur., Sec. 1205, 2 Jones, Mortgages, Sec. 735; Moore v. Boise Land & Orchard Co., 31 Idaho, 390, 173 Pac. 117; Ostran v. Bond, - Okla. -, 172 Pac. 447.
92. 3 Pomeroy, Eq. Jur., Sec. 1206; 2 Jones, Mortgages, Sec. 744.
93. Forgy v. Merryman, 14 Neb. 513, 16 N. W. 836; Green v. Houston, 22 Kan. 35; Skinner v. Reynick, 10 Neb. 323, 35 Am. Rep 479, 6 N. W. 369. So where the land was part of an Indian allotment. Jones v. Perkins, 43 Okla 734, 144 Pac. 183; United States Bond & Mortgage Co. v. Keahey, - Okla. -, L. R. A. 1917C, 829, 155 Pac. 557.
94. Riley v. Rice, 40 Ohio St. 441; Hadley v. Clark, 8 Idaho, 497, 69 Pac. 319; Kennery v. Brown, 61 Ala. 296.
95. Alvord v. Spring Valley Gold Co., 106 Cal. 547, 40 Pac. 27; American Water Works Co. v. Farmers' Loan & T'rust Co., 73 Fed. 956, 20 C. C. A. 133; Camden Safe Deposit & Trust Co. v. Citizens' Ice & Cold Storage Co., 71 N. J. Eq. 221, 65 Atl. 980; Moore v. Boise Land & Orchard Co., 31 Idaho, 390, 173 Pac. 117.
96. Pidgeon v. Trustees of by lapse of time or otherwise.97
In the majority of cases any attack which the transferee may seek to make upon the validity of the mortgage involves merely the assertion of a right to have the mortgage set aside, and this right may not be available to the transferee, either because it is in its nature personal to the mortgagor, the party to the original transaction, or because it was evidently not intended to pass by the conveyance of the land. In asserting, however, that the transferee cannot question the validity of the mortgage, the courts evidently do not into and to restrict the statement to the case of a voidable, as distinguished from a void mortgage, and we will accordingly assume, for the purpose of discussion, that it means that, although an attempt to create a mortgage was utterly ineffectual, or a mortgage legally created has been extinguished, a transferee of the land who, mistakenly assuming that a mortgage was created, or that a mortgage created has never been extinguished, takes in terms subject to such supposed mortgage, cannot thereafter assert, as against one seeking to enforce such supposed mortgage, that it has no legal existence. Such a view finds its most effective support, it is conceived, in the theory of an equitable lien or charge.
If a transfer of land is in terms subject to a charge in favor of a third person, for an ascertained amount, the transferee will, in the view of a court of equity, hold the land so subject.98 And so, it is conceived, if a transfer of land is in terms subject to a mortgage to A, and there has never been an attempt to create such a mortgage, or there has been an attempt, but it was nugatory, or such a mortgage has been created but subsequently extinguished, the language of the transfer might usually be construed as indicating an intention to create a charge in favor of the nominal mortgagor, equivalent to the supposed mortgage. If there is no language in the instrument itself sufficient to create a charge in favor of the nominal mortgagee or other third person, the question of its existence would depend upon whether there are any circumstances in the case upon which a court of equity will lay hold to support such a charge. If one purchases land, and pays a reduced price therefor by reason of the fact that a debt, for which the transferor is personally liable, is supposed to be secured by a mortgage on the land, thus making the transfer subject to the mortgage, though it is not so expressed in terms,99 the propriety of denying to the transferee the right to question .the existence of the supposed mortgage, and so to throw the burden of the debt on the transferor personally, is sufficiently evident.1 In such a case equity may well regard the land as charged, in the hands of the transferee, and persons claiming under him, with the payment of the debt, irrespective of the validity of the mortgage securing the debt.
Schools, 44 111. 501; John v. Thompson, 129 Mass. 398; Alt v. Banholzer, 36 Minn. 57, 29 N. W. 674; Christian v. John, 111 Tenn. 92, 76 S. W. 906; Brown v. Blwell, 17 Wash. 442, 49 Pac. 1068; Scheiter v. Hooker, 94 Wash. 642, 162 Pac. 981. Contra, Goodman v. Randall, 44 Conn. 321; Thompson v. Morgan, 6 Minn. 292. See editorial notes, 4 Columbia Law Rer. 222, 17 Harv. Law Rev. 497.
97. See Bennett v. Bates, 97 N. Y. 354; Tuite v. Stevens, 98 Mass. 305; Foster v. Wightman, 123 Mass. 100, West v. Miller, 125 Ind. 70, 25 N. E. 143.
98. Post, Sec. 660.
It may happen that the transferee who has taken the property "subject to" the mortgage, or has assumed payment of the mortgage debt, undertakes to assert, as against the mortgage creditor seeking to foreclose, not that the mortgage is invalid for the pur99. Ante, Sec. 622, note 19.
1. Sherman v. Goodwin, 11 Ariz. 141, 89 Pac. 517; Fuller v. Hunt, 48 Iowa, 163; Selby v. San-ford, 7 Kan. App. 781, 54 Pac. 17; Green v. Houston, 22 Kan. 35;