The Polk County National Bank, a Corporation created and existing under the National Banking Laws of the United States, Appellant, v. James N. Darrah, Stella P. Darrah, William Van Fleet, F. M. Stansborough, The Knickerbocker Phosphate Company et al., Appellees, 52 Fla. 581

Hocker, J. (after stating the facts) : The first four assignments of error attack the decree because, first, it was rendered within three days from the filing of the master’s report; second, because the court did not require the master’s report to be filed as required by the rules of practice; third, because the complainant’s counsel was given no opportunity to except to the master’s report, and, fourth, because the court erred in rendering the final decree before the expiration of one month’s time during which the rules of practice require the master’s report to remain in the clerk’s office for exception.

We do not think the complainant can avail itself of these assignments of error inasmuch as the decree recites that complainant’s solicitor, Mr. T. L. Wilson, was present before the chancellor when the case came on for final hearing and the record does not show that he interposed any objection whatever to the hearing, or that he asked for the enforcement of the rules' with reference to the master’s report. The complainant therefore must be held to have waived the rules and to have consented to the hearing.

The remaining assignments question the corrctness of the final decree in giving priority of payment to the note for $490.66 held by Stella P. Darrah, and to the $8,000.00 note held by Stella P. Darrah and Addie M. Francis, over the two notes for $8,000.00 each, held by the Polk County National Bank. The facts in regard to the matters involved are as follows: In March, 1894, James N. Darrah agreed to purchase the lands described in the mortgage of The Polk County National Bank, and on the 12th of May, 1894, he made a cash payment and gave the four notes involved in this case for the deferred payments.

He also took a deed to the lands and executed a mortgage on them to the said bank to secure the payment of these notes, in the execution of which mortgage his wife Stella P. Darrah joined. The note for $490.66 was due four months after date and the other three notes were due respectively six, twelve and eighteen months after date. After the purchase of this property in March, Mr. Darrah organized The Knickerbocker Phosphate Company in New York, and after the 12th of May, 1894, transferred the land to that company, which it seems assumed his notes to the bank.

Very nearly all the stock of The Knickerbocker Phosphate Company was transferred by'James N. ■ Darrah to his wife, and $17,500.00 of its bonds, immediately after the organization of'the company. This was in accordance with the original design which Darrah had in buying this property. It clearly appears from the testimony that he was from the beginning of the enterprise acting for and in behalf of his wife as her agent and with her consent. Exhibits Nos. 11 and 12 to the testimony of James N. Darrah, a witness for Mrs. Darrah, show this. They are as follows: “Exhibit No. 11 to testimony of James N. Darrah.

In compliance with previous agreements and in pursuance of certain promises made to Stella P. Darrah, and' for the purpose of inducing the said Stella P. Darrah to furnish me with such sums of money as may be' required, I, James N. Darrah, do hereby promise and agree to use all money entrusted to me in behalf of and in the interest of Stella P.

Diarrah and that all negotiations and all contracts entered into by me shall be considered and regarded as being done for her and in her interest; and that in all respects I shall be her agent and act for her, and that whatever interests, rights, benefits, profits and all other advantages accruing and arising out of the contemplated phosphate deal at Bartow, Florida, shall belong to said Stella P. Darrah, to do with as she pleases.

And in consideration of such financial aid and assistance and in consideration of one dollar and other good and valuable considerations, the receipt whereof is hereby acknowledged, I do promise, agree and obligate myself to deliver and to make formal and valid transfer for and assignment of all right, title, interest, profits, etc., that may appear to belong to me wherever my name be used for the sake of convenience, to the said Stella P. Darrah upon demand. Dated New York, February 20, 1894. James N. Darrah.” “Exhibit No. 12 to testimony of James N. Darrah.

For value received I hereby sell, assign and transfer unto Stella P. IJarrah all my right, title and interest in and to the stock and bonds of The Knickerbocker Phosphate Company which were duly ordered to be issued to me by a resolution of the board of directors of said company, at a meeting held on April 30th, 1894, the right, title and interest in said bonds and stock which appear in my name is the amount so named in said resolution, excepting however, eighteen (18) bonds and seventy-five (75) shares of the stock of said company, which have been already sold and assigned to Wm. H.

Moore, and also five (5) shares of stock to each of the following named persons: J. Owen Moore, Byron G. Clark and Wm. F. Holwill. Dated New York May 1st, 1894. James N. Darrah.” It further appears that the only consideration Mrs. Darrah gave for the stock and bonds of The Knickerbocker Phosphate Company was money which she let her husband have to make the cash payment to the bank when the property was purchased. This testimony is in conflict with the allegations of the cross-bill of Mrs. Darrah, in which she states she had no interest in the mortgaged premises.

Just before the maturity of the note for $490.66, James N. Darrah wrote The Polk County National Bank that Mrs. Darrah was ready to take up the note and requested that the bank’s claim against this note be assigned to her. The president of the bank on September 10, 1894, by telegram authorized its correspondent in New York, The American Exchange National Bank, to comply with Mr. Darrah’s request, and on the 11th of September, 1894, the latter bank executed and delivered to Mrs. Darrah an assignment of the said note without recourse in consideration of the payment of $490.66. On November 5th, 1894, James N.

Darrah wrote to the cashier of The Polk County National Bank asking that the $8,000.00 note about to mature (Nov. 12th) be assigned to Mrs. Stella P. Darrah before maturity. He says, among other things, “If you will consent to this proposition Mrs. Darrah will pay the note in full} provided that The American Exchange National Bank, the present owners of the note, will assign their right, title and interest in the note to Mrs. Darrah, and provided also that the amount so paid will be endorsed upon the mortgage now held by your bank on the prop&rty purchased in my name.

On the 9th of November, 1894, Darrah sent a telegram to Warren Tyler, the cashier of The Polk County National Bank, asking that he wire The American Exchange National Bank to assign the note to Mrs. Darrah on payment. It appears from the testimony of E. W. Codington, the vice-president of the Polk County National Bank, that he answered the last mentioned telegram, and from the testimony of Mr. Tyler, the cashier, that he was absent from the bank at the time. Mr. Codington used Tyler’s name and sent the following telegram: “To American Exchange Nat. Bank, New York, N. Y.

Assign Darrah note eight thousand to party paying the same. Warren Tyler, Cashier.” On the 10th of November, 1894, the eight thousand dollar note due on the 12th was transferred by The American Exchange National Bank to Stella P. Darrah without recourse, on the payment by her of the amount of the note and interest. Mr. Codington says that when he sent the telegram to The American Exchange National Bank he had Mr. Darrah’s letter of the 5th of November before him and he sent the telegram Avith the distinct understanding in his mind that the payment would and must stand as a payment on the mortgage.

Under these circumstances we have to determine Avhether these notes are to be considered as paid so far as the mortgage is concerned, or whether by the transfer of them 'to Stella P. D'arrali she has the right to haA7e them considered as secured by the mortgage, and as entitled to priority of payment over the other two |8,000.00 notes held by The Polk County National Bank. In the case of Brown v.

Lapham, 3 Cush. (Mass.) 551, text 554, Chief Justice Shaw in the opinion says: “Whether a given transaction shall be held, in legal effect, to operate as a payment and discharge, which extinguishes the mortgage, or as an assignment, which preserves and keeps it on foot, does not so much depend upon the form of words used, as upon the relations subsisting -betweeu the parties advancing the money, and the party executing the transfer or release, and their relative duties. Gibson v Crehore, 3 Pick. 475.

If the money is advanced by one whose duty it is, by contract or otherwise, to pay and cancel the mortgage, and relieve the mortgaged premises of the lien, a duty in the proper performance of which others have an interest, it shall be held to be a release, and not an assignment, although in form it purports to be an assignment.” This doctrine is reaffirmed in Carlton v. Jackson, 121 Mass. 592, and is quoted and applied in Burnham v. Dorr, 72 Me. 198. In the case of Langdon & Scofield v.

Keith, 9 Vt. 299, it is held: “When all the notes secured by a mortgage are assigned the mortgage passes with them, but when a part only are assigned, whether the whole mortgage or a proportionate part or any interest therein is assigned depends on the real contract and actual agreement of the parties.” In Rolston v.

Brockway, 73 Wis. 407, it is held: “The holder of a mortgage may transfer by endorsement one of several promissory notes secured thereby, without passing any interest in the mortgage where that is the agreement between the parties;” and, “such an agreement may be evidenced by a memorandum upon the mortgage to the effect that the note negotiated has been ‘paid in full’ and proof that such memorandum was made by the mortgagee at tlie time of the transfer in presence of the endorsee and with his knowledge and assent.” It appears from the testimony of Mr.

Tyler, the cashier of The Polk County National Bank, that the payment of the $8,000.00 note was credited on the mortgage, but he does not recollect clearly at what time it was made. The general rule adopted by this court in regard to the priority of notes secured by the same mortgage is found in the case of Wilson v Hayward, 6 Fla. 171.

It is stated thus: “In case of a mortgage to secure notes payable at different periods the note which first falls due has the prior right to be satisfied out of the mortgaged property, unless there is some peculiar equity attached to the notes of subsequent date, and so as to the other notes.” Of course if such peculiar equities do exist, this rule does not apply. The appellees contend that the Polk County National Bank intended by the assignment of these notes to Stella P.

Darrah to give her the priority over the other two notes held by The Polk County National Bank, and they lay some stress on a letter written by cashier Tyler to W. R. Oglesby of New York. The letter is as follows: “Bartow, Fla., Dec. 21, 1894. Woodson R. Oglesby, No. 87 Nassau St, N. Y. City, N. Y. Dear Sir: Replying to yours of the 18th at hand I will state that the $8,00'0.00 note and interest $400.00 total $8,400.00 was paid in full on the 10th Nov. by Stella P.

Darrah, and the note and a proportionate part of the mortgage was assigned to her without recourse to us or The American Exchange National Bank, which then held the note. The exact nature of the assignment executed by the Am. Exch. Nat. Bank we do not know, but if necessary we can ascertain it. Trusting this information will he satisfactory, I remain, Yours very truly, Warren Tyler.” In explanation of this letter Mr. Tyler states that he was not in the bank when the telegrams were sent in regard to assigning the note to Mrs.

Darrah, and that when he returned to the bank the transaction was closed, and that his letter to Oglesby was based on information obtained from the teller, Mr. Huddleston, and upon the latter’s recollection of what occurred with Mr, Codington when the telegrams were sent; that he did not refer the matter to Mr. Codington as he was not in at the time, and that he never saw the telegrams until after this suit was brought. He further states that neither James N. Darrah or Stella P.

Darrah ever requested any other assignment of the note, or proportionate part of the mortgage than was contained in the letter of James N. Darrah, and in that letter Darrah requested that the amount paid be credited on the mortgage, and that this was done on receipt of information from New York that the amount had been paid. This letter of Tyler’s, written to Oglesby some time after the transaction was closed and without acquaintance with the real nature of the transaction, cannot, we think, be held to alter the nature of that transaction which was conducted and completed in liis absence by Mr. Codington.

It seems to us that in paying these two notes, Stella P. Darrah did nothing more than it was her duty to do. The' property was bought by her husband and agent for her benefit, and these notes represented part of the purchase money. In his letters and telegrams with reference to these notes Darrah speaks always of his wife’s purpose to pay them. It is true he wishes them assigned to her, but so far as The Polk County National B'ank is concerned, they are to be paid. It seems to us that what he must have had in mind was an assignment that would enable Stella P.

Darrah to hold the notes against The Knickerbocker Phosphate Compány, to which corporation the mortgaged real estate had been conveyed subject to the mortgage. To hold that the notes were not paid so far as The Polk County National Bank is concerned, but were simply assigned, if the mortgaged property should prove insufficient to pay all the notes would result in the injustice of causing the bank to lose a large part of the purchase money of the property and the turning it over to the purchaser without any equivalent. We do not think the evidence warrants so inequitable a construction of the Transaction.

Taking the whole case into consideration we are of the opinion that the decree is erroneous in holding 1hat the notes held by Mrs. Darrah were not paid as far as The Polk County National Bank is concerned, and in giving them priority over the notes held by the bank. This also applies to the interest of Addie M. Francis, as she purchased that interest in the $8,'000.00 note after its maturity and of course subject to equities.

The decree appealed from is reversed and the case is remanded with directions to the court below that a decree be entered in favor of The Polk County National Bank, according to the prayer of its bill. Taylor and Parkhill, JJ., concur; Shackleford, C. J., and Whitfield and Cockrell, JJ., concur in the opinion.