Strong v. Jackson. tion and relation of the parties, their means of knowledge, the circumstances which should lead to inquiry, together show such a state of facts that it would be inequitable for subsequently acquired rights to supplant rights previously acquired? In this view, a fact, which, under some circumstances and some situations and relations of the parties, would be insignificant, in other relations of the parties and under other circumstances would be decisive; and thus many apparently conflicting decisions will be found to be harmonious. The question is, not does any one fact, but does the whole case, disclose such a state of circumstances as that it is inequitable for a person having subsequent rights to enforce such rights against an elder title defective only by reason of some legal rule. If it does, the elder title should prevail. It is quite clear that a note payable five years after date, with a memorandum upon it that it is secured by mortgage upon real estate, is not what by men of business is usually denominated commercial or business paper; and we think there is a material distinction between securities of this kind and strictly mercantile paper; and that such paper as this may be subject to equities, when strictly mercantile paper would not be ; not that the rule of law is different, but what would attract no attention in relation to purely business paper should attract the attention in paper of this description. According to the practice which originally prevailed in relation to mortgages of real estate in this Commonwealth, the assignee of a mortgage debt would always take subject to all equities; because the evidence of the mortgage debt was then a bond. In Crane v. March, 4 Pick. 131, PARKER, C. J., says: "In the form usually practiced in regard to mortgages, until lately, these difficulties could not occur, for the collateral personal security was a bond, which not being assignable at law, the action upon it would be always in the name of the obligee, and the assignee in equity could avail himself of no means of enforcing payment from which the obligee would be restricted." The Chief Justice proceeds to add advice, which, it is to be regretted, has not been followed by conveyancers: Mortgagors may protect themselves from having their time of redemption reduced, by giving bonds, or notes not negotiable." It had been decided in Atkins v. Sawyer, 1 Pick. 351, that the mortgagee could not sell on execution the equity of redemption upon a judgment recovered upon the mortgage note, for the reason that the equity of redemption would thereby be Strong v. Jackson. reduced from three years to one. But in Crane v. March, it was held that the assignee of one of several mortgage notes might seize and sell the equity of redemption upon execution, although the effect of such seizure and sale would be to reduce the time of redemption. In that case, and the cases which have since arisen, the difficulties have been caused by the fact that, as in this case, the note and the mortgage have been in different hands and under various circumstances; and there was nothing in the several cases to show that the holder of the note necessarily had knowledge of the mortgage, and, as is said in Crane v. March, the record "would inform him only that a note of like tenor and date was so secured." As between the original parties, the note and mortgage are but one transaction, and but one security. When, however, as in this case, the note purports upon its face to be a mortgage note, we think note and mortgage are to be construed together in determining the rights of the holder of the note. The reference upon the note to the mortgage, under the circumstances, is of much significance; the mortgage describes the note; the note refers to the mortgage; and, in the condition of things at the time the First National Bank took the security, we think that the taker of either must take according to the true title of him who transfers it, as such title is apparent upon proper examination of it. It is to be observed, as a fact of considerable importance, that Jackson was not and did not claim to be the original mortgagee, but claimed to hold the note and mortgage by assignment. His title was on record. If the First National Bank had examined the record to see if Jackson had a title, or if it had called upon him to exhibit his title, it would have been apparent at once that he was committing a fraud. The assignment to him would have shown that he held the note for a purpose inconsistent with his proposed sale or transfer of it; while the record would have developed not only that fact, but the further fact that he had already disposed of the title which he originally acquired. Under this state of facts, we cannot hold that the First National Bank took the note in the ordinary course of business without notice. That bank not only took the note having then more than four years to run before maturity, but took also an assignment of the mortgage; and now, in its answer, claims a title to the said mortgage, and prays for a decree that the Tremont National Bank shall hold the same in trust for it. These facts alone are quite cuggest Welch v. Good win. ive that the First National Bank did not take the note as mercantile paper in the ordinary course of business, but took or attempted to take note and mortgage as the evidence of the same debt with substantial reliance upon the mortgaged land. But it is impossible for this bank to trace its title, either as it actually exists, or as it appears of record, without the fraud of Jackson being manifest. Suppose it should come into court to enforce its right under the mortgage; its own case must show that the title which Jackson had was conveyed to it in fraud of the rights of the plaintiff, while the record would show that it was thus conveyed not only in fraud of the rights of the plaintiff, but also in fraud of the rights of the Tremont Bank to whom Jackson had already conveyed his true title. The question whether the transaction with the First National Bank was void upon the ground that it was an attempt to evade the law of the United States, which does not allow a loan to be made by a bank upon mortgage of real estate, is a question not free from embarrassment and difficulty, and one which, in the view we have taken of the case, need not be now decided. The result of our conclusion is that the First National Bank shall deliver the McQuaid note to the Tremont National Bank, and that the plaintiff be allowed to redeem from the Tremont National Bank the McQuaid note and mortgage, upon payment to the Tremont Bank of the Kingsley note. Decrce accordingly. WELCH V. GOODWIN. (123 Mass. 71.) Recovery of money paid on forged note. One who acts as agent of an undisclosed principal may be treated as principal by the party with whom he deals. If one pays a forged note, supposing the signature to be his own, he may maintain an action to recover the money so paid, provided he proceeds promptly on discovering the forgery, although the defendant at the time of such payment had surrendered to him a mortgage which he in good faith had received as collateral security for the note, but which had been executed as security for another note, of which the forged note was a copy. A Welch v. Good win. CTION for money had and received. In March, 1873, the plaintiff borrowed of Abraham Jackson $2,000, and gave him his note therefor, payable in three years, with a real mortgage as collateral security, duly recorded. Jackson turned out a forged copy of this note, and the mortgage, to the Eliot National Bank, of which defendant was president, as security for a precedent debt, about February, 1875, the mortgage being assigned by a separate paper, and to the defendant "as trustee," and duly recorded. On the 18th March, 1873, Jackson assigned the plaintiff's mortgage to the Franklin Insurance Company, by a separate instrument, which was recorded April 23, 1875, and also the genuine note in question. On July 8, 1875, the plaintiff, supposing the note which defendant held to be his genuine note, paid defendant the amount of his mortgage note, and the forged note was surrendered to him, and the defendant thereupon released to him the mortgage. The plaintiff, on July 26, 1875, discovered that the Franklin Insurance Company held his genuine note, and two days after demanded repayment from the defendant. There was evidence on the question whether the plaintiff knew that the transfer by Jackson to the defendant was for the bank; that the transaction on the part of the bank and defendant was in good faith, and that the note so paid to defendant was forged. The defendant contended that the action should be against the bank, if any could be maintained; that the defendant was not liable in any event; and that the bank was damaged by the release of the mortgage. The question of forgery, and when the plaintiff discovered the forgery, and whether the plaintiff knew that the transaction was for the bank, were submitted to the jury, and the plaintiff had a verdict. The trial judge reported the case to this court. R. R. Bishop & F. Goodwin, for defendant. R. M. Morse, Jr. & C. P. Greenough, for plaintiff. LORD, J. This case differs from that of Carpenter v. Northborough National Bank, 123 Mass. 66, in two particulars only. The payment was received by the defendant in this case as the agent of another party. The instructions of the presiding judge on that subject were correct. One who acts as the agent of an undisclosed principal may be treated as principal by the party with whom he deals. The other particular in which the case differs from that of Car VOL. XXV.— 4 penter v. Northborough National Bank, is that the forgery, by means of which Jackson accomplished the fraud, was that of the name of the plaintiff himself; and the only question is, whether that fact of itself is an absolute bar to the right of the plaintiff to recover. We do not understand that any other question than this was presented to the mind of the judge who presided at the trial. If any other questions were presented, it is to be presumed that proper instructions were given in reference thereto, and that the jury were required to make the proper distinction and discrimination between the payment upon a note, the forged signature to which was that of the payer, and not that of another party to the contract. It may well be held that a banking corporation, which issues notes as currency, upon such plates and with such securities as it deems sufficient, may be, from reasons of public policy, estopped to deny the genuineness of notes which it has redeemed as its own, while such considerations would have no bearing upon the question whether an individual should be permitted to show that a signature which he had treated as his own was, in fact, a forgery. Nor is it necessary in this case to go so far as to say, as was held by a majority of the court in National Bank of North America v. Bangs, 106 Mass. 441; s. c., 8 Am. Rep. 349, that a bank may recover money paid upon the forged check of one of its depositors. In both those classes of cases, entirely different considerations may properly enter. The question which we are called upon to decide is, whether, under any circumstances, a party may recover back money paid upon a security bearing a forged signature of himself, supposing it, at the time of payment, to be his own genuine signature. We can have no doubt that he may. This is entirely clear in case he was induced to make the payment by fraud or misrepresentation. Nor is it necessary that fraud or misrepresentation should exist. An innocent mistake, whether arising from natural or temporary infirmity or otherwise, made without fault upon his part, entitles him to the same relief. How far this right would be affected by neglect upon his part to give prompt notice of the mistake, or by any change affecting the situation or rights of the person to whom the payment is made, we are not called upon to consider. Here notice was given immediately upon discovering the forgery. Whatever securities were given up by the defendant, in consideration of |