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 acceptance of the promissory note of a debt or, for the amount of the debt, contemporaneously with the creation of the debt, as when a purchaser of goods gives, at the time of purchase, a note for the price, is not usually regarded as involving a discharge of the debt.95 And so, in the case of a mortgage, the fact that the debt secured is evidenced by a promissory note does not affect the existence of the debt itself, nor does it, in effect, make the mortgage operate as security for the note rather than for the debt as evidence of which the note was given.96 That this is so appears from the numerous decisions that a mortgage remains effective as a security although the note or notes do not remain the same.97
Brookings v. White, 49 Me 471, opinion of Davis, J.
94. See 10 Am. Law Rev. at p. 374.
94a. Ante, Sec. 552.
95. Byles, Bills (15th Ed.) ch. 23; 22 Am. & Eng. Encyclopedia Law, 558; 30 Cyclopedia, Law & Proc. 1199.
When a bond is given for the amount of the debt secured, as is the custom in some states, and was formerly the custom in England, the bond is, it seems, to be regarded, not as itself constituting the obligation secured by the mortgage, but rather as merely collateral security for the debt secured by the mortgage,98 and a note so given has also been referred to as merely collateral security for the debt.98a Were the mortgage regarded as securing the bond or note, rather than the debt, it would result that by naming an excessive sum in the bond or note, the mortgage could be made effective as security for a much greater sum than that actually due, and opportunity for oppression and extortion would thus be presented.
In the case of a note or bond thus accompanying the mortgage, and executed contemporaneously therewith, the two instruments are, it is said, to be construed together, as constituting parts of one transaction.99 In case of contradiction between the two, the note or bond, it has been held, will control, as being the principal thing.1
96. Simmons Hardware Co. v. Thomas, 147 Ind. 313, 46 N. E. 645; Clough v. Seay, 49 Iowa, 111; Buck v. Wood, 85 Me. 204, 27 Atl. 103; Bartlett v. Bartlett, 4 All. (Mass.) 440; Wilson v. Pickering, 28 Mont. 435, 72 Pac. 821; Hill v. Beebe, 13 N. Y. 556; Williams v. Stair, 5 Wis. 534; Each v. Cosby, 26 Gratt. (Va.) 112.
97. Post, Sec. 640(h).
98. Coote, Mortgages (8th Ed.) 82; 1 Powell, Mortgages, 61; Clarke v. Abingdon, 17 Ves. 106; Nichols v. Briggs, 18 S. C. 473.
98a. Campbell v. Beach, 60 N. Y. 218, per Andrews, J.
99. Phelps v. Mayers, 126 Cal. 549, 58 Pac. 1048; Taylor v. American Nat. Bank of Pensacola, Florida, 63 Fla. 631, Ann. Cas. 1914 A 309, 57 So. 678; Clark v. Paddock, 24 Idaho, 142, 46 L. R. A. (N. S.) 475, 132 Pac. 795; Boley v. Lake St. Elevated R. Co., 64 111. App. 305; Wilson v. Reed, 270 Mo. 400, 193 S. W. 819; Garnett v. Meyers, 65 Neb. 280, 91 N. W. 400, 94 N. W. 803; Collins Inv. Co. v. Sanner, 42 Okla. 634, 142 Pac. 318; Green v. Frick, 25 S. D. 342, 126 N. W. 579; Bell v. Engvolsen, 64 Wash. 33, 116 Pac. 456.
(d) Description in mortgage - Definiteness required. The degree of accuracy which is necessary in the mortgage instrument, with reference to the description of the debt secured, is a matter upon which the cases are in a state of very considerable confusion. Occasionally it has been asserted that a mortgage instrument is invalid if it fails to name a particular sum as being the amount of the debt secured, provided the amount can be regarded as ascertained at the time of execution.2 But more generally a statement of the amount of the debt is not required, it being sufficient if the debt is otherwise so described that persons interested are directed to the proper sources of information as to the amount.3 And in most if not all jurisdictions, a mortgage not naming any amount is valid if the indebtedness is not ascertained, or perhaps, capable of ready ascertainment, at the time of the execution of the mortgage. So a mortgage to secure future advances,4 or to indemnify a guarantor or surety,5 is valid, although the aggregate of the advances to be made or of the indemnity to be furnished is not stated, and a mortgage may be made to secure such sum as may be found due upon a settlement of accounts between certain persons.6
1. Indiana & I. Cent. Ry. Co. v. Sprague, 103 U. S. 756, 26 L. Ed. 554; Hutchinson v. Benedict, 49 Kan. 545; Tipton v. Ellsworth, 18 Idaho, 207, 109 Pac. 134.
2. Hart v. Chalker, 14 Conn. 77; Pearce v. Hall, 12 Bush (Ky.) 209; Bullock v. Battenhousen, 108 111. 28. Compare Gardner v. Cchn, 191 111. 553, 61 N. E. 492, where the mortgage was upheld, though it stated the sum secured only indirectly, by naming the rate of interest and amount of interest payments.
3. Fetes v. O'Laughlin, 62 Iowa, 532, 17 N. W. 764; Williams v.
Moniteau Nat. Bk., 72 Mo. 292; Boody v. Davis, 20 N. H. 140, 51 Am. Dec. 210; Somersworth Bank v. Roberts, 38 N. H. 22; Burnett v. Wright, 135 N. Y. 543, 32 N. E. 253; Seymour v. Darrow, 31 Vt. 122; Goff v. Price, 42 W. Va. 384, 26 S. E. 287.
4. Robinson v. Williams, 22 N. Y. 380; Anglo-Californian Bank v. Cerf, 147 Cal. 384, 81 Pac. 1077; McDaniel v. Colvin, 16 Vt. 300; Keyes v. Bump's Adm'r, 59 Vt. 391, 9 Atl. 598; Campbell v. Perth Amboy Shipbuilding & Engineering Co., 70 N. J. Eq. 40, 62 Atl. 319, 71 N. J. Eq. 302, 71 Atl. 1133.
In regard to this question of the necessity of stating the amount of the debt secured or at least its outside limit, it has been well said that "if the mortgage were to limit the amount of the security, as not exceeding two thousand dollars or two hundred thousand dollars in all, either of which sums might be adopted with equal propriety, when the sum really intended to be secured was less than fifty dollars, it is obvious that it could afford no security against possible fraud,"7 and that it will generally be found that the interest of a mortgagor to have the amount of the incumbrance stated, with a view to his future dealings, and the interest of the mortgagee to be able to make, when needed, a transfer of the claim and the security, will induce a reasonable certainty in the condition of mortgages.8