$206. Part Payment.

Where a purchaser has in good faith paid part of the consideration before receiving notice of a prior right, he will, as a rule, be protected to the extent of the payment actually made.1 Courts of equity, it has been said, may afford this protection in several ways; as by permitting the plaintiff to enforce his claim to the whole land only upon condition of his doing equity by refunding to the defendant the amount already paid before receiving the notice; or even, when the plaintiff has been guilty of laches, or thé defendant has made valuable improvements, by decreeing that the land itself should remain free from any claim on the plaintiff's part, and that his remedy should be confined to a recovery of the portion of the purchase money which was unpaid at the time the notice was received. Where the purchaser, after knowledge of an outstanding prior equity such as a vendor's lien, then pays any remaining part of the consideration without seeing to its application to the extinguishment of the lien, this has been held an act which the law regards as mala fides, and he forfeits the protection of a court of equity as to the part paid before notice was received.3

1 Huyler v. Dahoney, 48 Tex. 239; Wormley v. Wormley, 8 Wheat. 421; Fletcher v. Ellison, 1 Tex. Un. Cas. 672; Dresser v. Mo. Ry. Co., 93 U. S. 92; Kitteridge v. Chapman, 36 Iowa, 348; Youst v. Martin, 3 Serg. & R. 423; Curts v. Cissna, 7 Biss. 260; Fowler v. Merrill, 11 How. (52 U.S.), 375; Duphney v. Frenage, 5 Stew. & Port. 215; 1 Story Eq. Jur., §64; 2 Lead. Eq. Cas. 79; Kohl v. Lynn, 34 Mich. 360.

2 Marchbanks v. Banks, 44 Ark. 48; 2 Pom. Eq. Jur., $750, citing Baldwin v. Sager, 70 Ill. 503; Haughwout v. Murphy, 21 N. J. Eq. 118; Frost v. Beekman, 1 Johns. Ch. 288; Farmer's Loan Co. v. Maltby, 8 Paige, 361; Paul v. Fulton, 25 Mo. 156; Union, etc., Co. v. Young, 1 Whart. 410, 431; Everts v. Agnes, 4 Wis. 343, and other cases.

Fraim v. Frederick, 32 Tex. 294, 308. This accords with the English rule which goes even to the extent of recognizing notice as sufficient in all cases, if given before the entire consideration is paid. Story v. Lord Windsor, 2 Atk. 630; Tourville v. Naish, 3 P. Wms. 307; Tildesly v. Lodge, 3 Smale & G. 543; Wigg v. Wigg, 1 Atk. 382.

332

$207. Antecedent Debt as Valuable Consideration. Where property is taken in satisfaction of a pre-existing debt, or as security therefor, although this is a sufficient consideration as between the parties, the weight of authority is that it will not, of itself alone, constitute a valuable consideration under the recording acts sufficient to shut out the claim of prior equities.1 As, against such equities, a party to be entitled to protection must have acquired rights of which he would otherwise be deprived.2 When a transaction of this kind is set aside for failure of consideration the debt still exists, and the purchaser is ordinarily in no worse condition than before. In a number

of states, however, the rule does not obtain, and the discharge of a pre-existing debt is held a valuable consideration.4

1 McKamey v. Thorpe, 61 Tex. 653; Jewett v. Tucker, 139 Mass. 566; Steffian v. Bank, 69 Tex. 513; s. c. 6 S. W. Repr. 823; Overstreet v. Manning, 67 Tex. 657; Bybee v. Hawkett, 12 Fed. Repr. 649; Coddington v. Bay, 20 Johns. 639; s. c. 11 Am. Dec. 342; Story's Eq. Jur., §1503; Willard's Eq. Jur. 256; Spurlock v. Sullivan, 36 Tex. 511; Union, etc., Inst. v. Duryea, 67 N. Y. 84; Dickerson v. Tillinghast, 4 Paige, 215; s. c. 25 Am. Dec. 528; Banks v. Long, 79 Ala. 319; Pancoast v. Duvall, 26 N. J. Eq. 445; Morse v. Godfrey, 3 Story, 364; Zorn v. Ry. Co., 5 S. Car. 90; Metropolitan Bk. v. Godfrey, 23 Ill. 579; Clark v. Flint, 22 Pick. 243; McAdow v. Black, 6 Mont. 601; s. c. 13 Pac. Repr. 357; Webster v. Van Steenburg, 46 Barb. 211; Funk v. Paul, 64 Wis. 35; s. c. 54 Am. Rep. 576; 24 N. W. Repr. 419; Buffington v. Garrish, 15 Mass. 156; Johnson v. Graves, 27 Ark. 557; Ashton's Appeal, 73 Pa. St. 153, 162; Halstead v. Bk. of Kentucky, 4 J. J. Marsh. 554; Harris v. Horner, 1 Dev. & B. 445; s. c. 30 Am. Dec. 182; Chance v. McWhorter, 26 Ga. 315; Repp.v. Repp, 12 Gill & J. 341; Sweeney v. Bixler, 69 Ala 539; VanHenzen v. Radcliff, 17 N. Y. 580; s. c. 72 Am. Dec. 480; People's Sav. Bk. v. Bates, 120 U. S. 556; s. c. 7 Sup. Ct. Repr. 679; Withers v. Little, 56 Cal. 370; Padgett v. Lawrence, 10 Paige, 170; s. c. 40 Am. Dec. 272; Clarke v. Barnes, 72 Iowa, 563; 34 N. W. Repr. 419; Tiffany v. Warren, 37 Barb. 571.

2 Overstreet v. Manning, 67 Tex. 657; s. c. 4 S. W. Repr. 248.

3 McKamey v. Thorpe, 61 Tex. 648, 653; Wright v. Douglass, 10 Barb. 107; Dickerson v. Tillinghast, supra.

4 Hunter v. Watson, 12 Cal. 373; s. c. 73 Am. Dec. 543; Cammack v. Soran, 30 Gratt. 292, 295; Exchange Bk. v. Knox, 19 Gratt. 739; Evans v. Greenhow, 15 Gratt. 153; Fry v. Clifford, 44 Cal. 335; Partridge v. Smith, 2 Biss. 183, 187; Bayley v. Greenleaf, 7 Wheat. 46; Metford v. Metford, 9 Ves. 100; Babcock v. Jordan, 24 Ind. 14; Gassen v. Hendrick, 74 Cal. 444; S. C. 16 Pac. Repr. 242; Work v. Brayton, 5 Ind. 333

$208. Extension of Time-Surrender of Security, and the Like.

While the satisfaction or security of a pre-existing debt is not alone, under the general rule, a valuable consideration within the meaning of the recording acts, yet if the creditor, in connection therewith, has been induced by the transaction to change his position for the worse, the rule is different, and the claim of valuable consideration may be sustained.1 Thus, the surrender or cancellation of a security held by the creditor will be sufficient. So, the giving of an extension of time, however short, upon the debt, is a valuable consideration for a mortgage taken as security.3 By 396; 2 Story's Eq. Jur. 657; Soule v. Shotwell, 52 Miss. 236; Ruth v. Ford, 9 Kan. 17; City Bank v. Goodrich, 3 Colo. 139; Wert v. Naylor, 93 Ind. 431. The later Indiana cases qualify the earlier to the extent of requiring an extension of time or surrender of some security. Gilchrist v. Gough, 63 Ind. 576; s. c. 30 Am. Rep. 250.

Where a second mortgage of chattels is for a pre-existing debt, but the mortgagee enters into possession and assumes control of the business connected therewith, the responsibility thus assumed becomes a valuable present consideration. Clark v. Barnes, 72 Iowa 563; s. c.

34 N. W. Repr. 419, citing Trustees v. Hill, 12 Iowa, 462; Ryan v. Chew, 13 Id. 589.

In a few states a distinction is made between cases where the second conveyance is taken as security for an antecedent debt, and cases where it is taken in absolute discharge of the debt; and in the latter, though not in the former instance, it is held to constitute valuable consideration. Compare with cases cited in the preceding notes to this section, Saffold v. Wade, 51 Ala. 214; Ohio Co. v. Ledyard, 8 Ala. 866; Mobile Co. v. Randall, 71 Ala. 220; Boon v. Barnes, 23 Miss. 136; Love v. Taylor, 26 Miss. 567; Upshaw v. Hargrove, 6 Sm. & Mar. 286, 292; Donaldson v. Bank, 1 Dev. Eq. 103.

The rule requiring the actual payment of the consideration does not apply to any but the original purchaser from the person from whom both parties claim; the subsequent purchaser being protected by virtue of his immediate grantor's title. Webster v. VanSteenburg, 46 Barb. 211; ante, $155.

1 Steffian v. Bank, 69 Tex. 517; s. c. 6 S. W. Repr. 823; Dickerson v. Tillinghast, 1 Paige, 214; s. c. 25 Am. Dec. 528; Van Heusen v. Radcliff, 17 N. Y. 580; s. c. 72 Am. Dec. 480; Roxborough v. Messick, 6 O. St. 548; s. c. 67 Am. Dec. 346; McLeod v. First National Bk. 42 Miss. 99; Munn v. McDonald, 10 Watts, 270; Farmers' Bank v. Wallace, 45 O. St. 153; s. c. 12 N. E. Repr. 439.

2 Padgett v. Lawrence, 10 Paige, 170; s. c. 40 Am. Dec. 272; Goodman v. Simonds, 20 How. (U. S.), 343, 371; Youngs v. Lee, 12 N. Y. 551; Spurlock v. Sullivan, 36 Tex. 511.

8 Gilchrist v. Gough, 63 Ind. 576; s. c. 30 Am. Rep. 250; 19 Alb. Law Jour. 276; Busenborke v. Ramey, 53 Ind. 499; Thames v. Rembert,

extending the time of payment the creditor yields up for a season his right of action, which is a privilege deemed of value in law, and sufficient to support the claim of an innocent purchaser.1

$209. Mortgagee a Purchaser.

It is settled by statute in some states, and by judicial decision in most others, that a mortgagee is a purchaser within the meaning of the recording acts.2 The proposition. is subject to the qualification that where the mortgage is to secure a pre-existing debt, and such debt is not, of itself alone, recognized as a valuable consideration, then the mortgagee must have given an extension of time, or surrendered some security, or otherwise brought himself within the definition of a purchaser for value under the recording acts. As to an assignee of a mortgage, the rule is not quite so well settled. In a considerable number of

63 Ala. 561; Griswold v. Davis, 31 Vt. 390; Hale v. Omaha Bank, 33 N. Y. Sup. Ct. 40; Bay v. Coddington, 20 Johns. 637; s. c. 11 Am. Dec. 342; Port v. Embree, 54 Iowa, 14; Ingram v. Morgan, 4 Humph. 66; Schumpert v. Dillard, 55 Miss. 348; Sargent v. Sturm, 22 Cal. 359; Farmers' Bk. v. Wallace, supra; Downing v. Blair, 75 Ala. 216.

1 Steffian v. Bank, 69 Tex. 513, 517; Cook v. Parham, 63 Ala. 456; Whitfield v. Riddle, 78 Ala. 99; but see Penner v. George, 31 Ala. 190. 2 Steflian v. Bank, 69 Tex. 513, 515; Huffman v. Blum, 64 Tex. 334; Fargason v. Edrington, 49 Ark. 207, 214; s. c. 4 S. W. Repr. 763; Seevers v. Delashmut, 11 Iowa, 174; s. c. 77 Am. Dec. 179; Welton v. Tizzard, 15 Iowa, 495; Cook v. Parham, 63 Ala. 456; Halbert v. McCulloch, 3 Met. 456; Dickerson v. Tillinghast, 1 Paige, 214; s. c. 25 Am. Dec. 528; Moore v. Walker, 3 Lea, 656; Chapman v. Miller, 130 Mass. 289; Haynsworth v. Bischoff, 6 S. Car. 159; Weinberg v. Rempe, 15 W. Va. S29; Brophy v. Brophy, 15 Nev. 101; Pierce v. Faunce, 47 Me. 507; Stockton v. Craddick, 4 La. Ann. 282; Martin v. Jackson, 27 Pa. St. 504; Salter v. Baker, 54 Cal. 140; Jordan v. MeNeill, 25 Kan. 459; Singer v. Chalmers, 2 Utah, 512; Willoughby v. Willoughby, 1 T. R. 763; Bailey v. Crim, 9 Biss. 95; Keith v. Bingham (Mo.), 10 S. W. Repr. 32.

3 Gilchrist v. Gough, 63 Ind. 576; s. c. 30 Am. Rep. 250; Busenborke v. Ramey, 53 Ind. 499; Carey v. White, 52 N. Y. 138; Ashton's Appeal, 73 Pa. St. 153. And for instances in which a mortgagee will not be considered a purchaser, see further, James v. Morey, 2 Cow. 246; s. c. 14 Am. Dec. 475; Berry v. Mut. Ins. Co., 2 Johns. Ch. 612; Searing v. Brinkerhoff, 5 Id. 331; Van Rensaeller v. Sheriff, 1 Cow. 801; Bybee v. Hawkett, 12 Fed. Repr. 649.

the states assignments of mortgages are expressly placed within the recording acts; but where this has not been done, it is held in many cases that such an assignee is not a purchaser within the meaning of the registry laws; while in others it is held by judicial interpretation that such an assignment is a conveyance within the meaning of the registry law. In Alabama it has been held that a mortgagee whose mortgage is tainted with usury is not a bona fide purchaser; and in Georgia, that the record of an absolute deed which fails, under the statute, to pass the legal title on account of usury, is not notice of the instrument as an equitable mortgage such as to postpone a junior judgment lien.*

$210. Trustee a Purchaser.

A deed of trust is technically a deed,5 and is now generally considered in legal effect as a mortgage with power of sale. The trustee, unless he be a trustee for the benefit of creditors generally, is regarded as a purchaser for value,

1 See ante, §33, and authorities there cited; also, §§174, 203.

2 The Conn. Co. v. Talbot, 113 Ind. 373; s. c. 3 Am. St. Rep. 655; 14 N. E. Repr. 586; Dixon v. Hunter, 57 Ind. 278; Watson v. Dundee, 12 Or. 474; s. c. 8 Pac. Repr. 548; Oregon Trust Co. v. Shaw, 5 Sawy. 336; Gordon v. Rixley, 76 Va. 694, 701.

3 Pepper's Appeal, 77 Pa. St. 373; Purdy v. Huntington, 46 Barb. 389; s. c. 1 Am. St. Rep. 532; Neider v. Pennypacker, 9 Phila. 86; Westbrook v. Gleason, 79 N. Y. 23; Phillips v. Bank, 18 Pa. St. 394, 401; St. John v. Spalding, 1 Thomp. & C. (N. Y.), 483; Smith v. Knickerbocker, 84 N. Y. 589; Stein v. Sullivan, 31 N. J. Eq. 409; McCormick v. Bauer, 122 Ill. 573; s. c. 13 N. E. Repr. 852; Bowling v. Cook, 39 Iowa, 200; Smith v. Keohane, 6 Bradw. (Ill.), 585; and other cases cited in 1 Jones on Mort., §§472-478.

In New York powers of attorney to assign a mortgage, and to collect and discharge it, have been held to be not within the recording acts. Williams v. Birbeck, Hoffm. 359; Jackson v. Richards, 6 Cow. 617.

MoCall v. Rogers, 77 Ala, 349; Johnson v. Wheelock, 63 Ga. 623; Code Ga., §2024. Such a deed will not be regarded as an equitable mortgage. Broach v. Smith, 75 Ga. 159; ¡overruling Bullard v. Long, 68 Ga. 821, and Sugart v. Mays, 54 Ga. 554.

Branch v. Atlantic, etc., Ry. Co., 3 Woods, 481, ante, §35.

Jackson v. Harby, 65 Tex. 710; McLane v. Paschal, 47 Tex. 365; Baldwin v. Peet, 22 Tex. 718; Flint v. Auditor Gen. 41 Mich. 635; Sargent v. Howe, 21 Ill. 148; Turner v. Watkins, 31 Ark. 429; Webb v. Hoselton, 4 Neb. 308; Woodruff v. Robb, 19 Ohio, 212; Bennett v.