76. 2 Ames, Cas. Bills & Notes. p. 812; Norton, Bills & Notes, (3rd Ed.) 216.

77. Tabor v. Foy. 56 Iowa 539, 9 N. W. 897 (forgery); Mersman v Werges, 1 McCrary, 528, 3 Fed. 378, 112 U. S. 139, 28 L. Ed. 641 (material alteration).

78. Norton. Bills & Notes (3rd Ed.) pp. 9, 105. 197.

79. Fenn v. Harrison, 3 Term. Rep. 757; Doll v. Hollenbeck, 19 Neb. 639, 28 N. W. 286; Franklin v Twogood, 18 Iowa, 515; Bouton v. Cameron, 205 111. 50, 68 N. E. 800.

80. Berry v. Berry, 57 Kan. 691, 57 Am. St. Rep. 351, 47 Pac. 837; First Nat. Bank v. Bryan. 62 Iowa, 42, 17 N. W. 165, both cussing the specific point, suggest at least a different view.81

The question of what constitutes a bona fide purchaser of a negotiable note is to he determined, it would seem, by the same rules when the note is secured by mortgage as when it is not so secured, and, at the present day the weight of authority is to the effect that in order to deprive the holder for value of such a note of the character of a bona fide holder, he must have had actual knowledge of the defect or equity, or must have had knowledge of such facts that his action in taking the note amounted to bad faith.82

-(b) In favor of others than debtor. The question whether the transferee of a debt secured by mortgage takes it, with the benefit of the mortgage security, free from equities in favor of persons other than the mortgage debtor, is determined by the general rule prevailing in that jurisdiction as to the rights of assignees of choses in action. The rule in this regard which has been adopted in the majority of the states is that the assignee of a chose in action takes it free from any latent equities in favor of third persons, for the being cases of the mortgage of a homestead by a wife acting under duress. Paulsen v. Koon, 85 Minn. 240, 88 N. W. 760.

81. O'Rourke v. Wahl, 48 C. C. A. 360, 109 Fed. 276; Jarvis Conk-lin Mort. Trust Co. v. Willhoit, 84 Fed 514; Beals v. Neddo, 1 Mc-Crary 206, 2 Fed. 41. See Hayden v. Snow, 9 Biss. 511, 14 Fed. 70.

82. Norton, Bills & Notes (3rd Ed.), 320; Negotiable Instruments Law, Sec. 95. This view is applied in connection with a mortgage note in Borgess Investment Co. v Vette, 142 Mo. 560, 64 Am. St. Rep. 567, 44 S. W. 754.

In Lockwood v. Noble, 113 Mich.

418, 71 N. W. 856, it was decided that the fact that the first of a series of notes secured by one mortgage was not paid at maturity put a purchaser of other notes on inquiry as to equities affecting the notes. The decision is in terms based on Abele v. McGui-gan, 78 Mich. 415, where it was decided that the fact that one of a series of notes was overdue put the purchaser of all of them on inquiry as to equities, a somewhat different case. The earlier decision is referred to with approval in Pertuit v. Damare, 50 La. Ann. 893, 24 So. 681.

Reason, it is usually said, that there is no definite person, or definite number of persons, of whom the assignee can inquire in order to discover such equities, and consequently, if one did not take tree from such equities, no assignment could ever be taken with safety.83 This rule has been quite frequently applied in favor of a purchaser of an obligation secured by mortgage.84 It has for instance been decided that the transferee of the mortgage debt takes free from latent equities in favor of third persons affecting the title of the mortgagor at the time of making the mortgage,85 as when the mortgagor had obtained the property by fraud.86 So the transferee may take free from the claim of a person entitled to share in the benefit of the mortgage obligation,87 or of a subsequent mortgagee in favor of whom the transferor of the prior mortgage had relinquished the rights of priority.88 And the equity of one to be subrogated to the benefit of the mortgage security does not affect a transferee of the mortgage obligation without notice thereof.89

83. The proper reason for the rule has been said to be that equity will not deprive a bona fide purchaser of a legal interest. Frof. J. B. Ames in 1 Harv. Law Rev. at p. 7, Lectures on Legal History, 259. See editorial notes, 12 Columbia Law Rev. at p. 152, 23 Harv. Law Rev. at p. 310.

84. Dulin v. Hunter, 98 Ala. 539, 13 So. 301; Silverman v. Bullock, 98 III. 11; Himrod v. Gilnian, 147 III. 293, 35 N. E. 373; First Nat. Bank v. Garlich, 137 La. 282, 68 So. 610; Economy Sav. Bank v. Gordon, 90 Md. 486, 48 L. R. A. 63, 45 Atl. 176 (semble); Losey v. Simpson, 11 N. J. Eq. 246; Vred-enburg v. Burnet, 31 N. J. Eq. 229; Mott v. Clark, 9 Pa St. 399, 49 Am. Dec. 566; Sweetzer v. Clark, 100 Pa. St. 18.

85. Mott v. Clark, 9 Pa. 399, 49 Am. Dec. 566.

86. Warren v. Hayes, 74 N. H. 355, 68 Atl. 193; Humble v. Curtis, 160 111. 193, 43 N. E. 749; Bloomer v. Henderson, 8 Mich. 3P5, 77 Am. Dec. 453; Robertson v. United States Live Stock Co., 164 Iowa, 230, 145 N. W. 535. In Burns v. Cooper, 72 C. C. A. 25, the fraud was apparent on an inspection of the records.

87. Tate v. Security Trust Co., 63 N. J. Eq. 559, 52 Atl. 313; Pryor v. Wood, 31 Pa. St. 142.

88. Vredenburg v. Burnet, 31 N. J. Eq. 229; Cook v. Stone, 63 Iowa, 352, 19 N. W. 280; Contra, Brewing Co. v. Iba, 155 N. Y. 224. 49 N. E. 677.

89. Tison v. Peoples Savings & Loan Ass'n, 57 Ala. 323. But aliter

This protection from equities in favor of persons other than the mortgage debtor applies only as against equities of which the transferee had no notice, either actual or constructive.90 And, accordingly he takes subject to equities the existence of which would appear upon an investigation of the mortgagor's title to the land,91 or with knowledge of which he is chargeable by reason of their appearance on the records.92 Moreover, no protection exists in favor of one who is not a purchaser for valued 93 It has, furthermore, been decided that the rule that the assignee takes free from such latent equities cannot operate to place him in a more favorable position than that which he occupies according to the records, its only application being to prevent him from being dislodged from the position which, according to the records, he apparently holds.94

In a few states the rule obtains that the purchaser of a non negotiable chose in action takes subject to all equities of whatsoever character existing in favor of third persons as well as of the obligor, and consequently the transferee of a debt secured by mortgage, and not represented by a negotiable note, stands in exactly the same position as regards such equities as did his transferor.95 when he is chargeable with notice of the equity. Albion State Bank v. Knickerbocker, 125 Mich. 311, 84 N. W. 311.

90. County Bank of San Luis Obispo v. Fox, 119 Cal. 61, 51 Pac 11; Sumner v. Waugh, 56 111. 531; Albion State Bank v. Knickerbocker, 125 Mich. 311, 84 N. W. 311; Vredenburgh v. Burnet, 31 N. J. Eq. 229; Goodell v. Munroe, 87 N. J. Eq. 328, 100 Atl. 238; Rayburn v. Davisson, 22 Ore. 242, 29 Pac. 738; Mott v. Clark, 9 Pa. 399, 44 Am. Dec. 566; Bigley v. Jones, 114 Pa. St. 510, 7 Atl. 54.

91. Patterson v. Booth, 103 Mo. 402, 15 S. W. 543; United States Mortgage Co. v. Gross, 93 111. 483; Bigley v. Jones, 114 Pa. St. 510, 7 Atl. 54.

92. See post, Sec. 631.

93. Vann v. Marbury, 100 Ala. 438, 23 L. R. A. 325, 46 Am. St Rep. 70, 14 So. 273; Tate v. Security Trust Co., 63 N. Y. Eq. 559, 52 Atl. 313; Hovey v. Hill, 3 Lans. (N. Y.) 167.

94. Davis v. Piggott, 57 N. J. Eq. 619, 42 Atl. 768.

95. Bush v. Lathrop, 22 N. Y. 535; Trustees of Union College cording law of the particular state, of the record of the assignment before the record of the prior mortgage.4 On the other hand, it may happen, under some recording laws, that, by reason of the record of the other mortgage before the assignment, Buch mortgage, even though not entitled to priority as against the assignor, is so entitled as against the assignee.5 But that the assignee has notice, otherwise than by record, of the prior mortgage, would not ordinarily postpone his mortgage if his assignor had no such notice,6 the rule being that a purchaser with notice from a purchaser without notice is in the same position as the latter.7

While, in the majority of states, as just stated, an assignee of a debt secured by mortgage, as of any other debt, takes it free from equities in favor of third persons, he has no superior right as against one having the legal title to the land. The one who has the legal title has the legal right, and he cannot be deprived thereof because another person undertakes to create a mortgage on the land, and the debt intended to be secured by the mortgage is assigned to another.96