
    Paintsville National Bank v. Robinson. Paintsville Bank & Trust Company v. Robinson, et al.
    (Decided June 7, 1927.)
    Appeals from Johnson Circuit Court.
    1. Limitation of Actions. — Purchaser of a note complete and regular on its face, negotiated to her on the day it became due, taking it in good faith and for value, held a “holder in due course,” under Negotiable Instruments Act (Ky. Stats., section 3720b-52), thereby placing note on the footing of a hill of exchange, within Ky. Stats., section 2515, precluding suit thereon more than five years after cause of action accrued.
    2. Limitation of Actions. — A mortgage is merely incident to the debt it is given to secure, and no relief can he granted under the mortgage after the obligation to which it is incident is barred by limitation.
    FRED HOWES for appellants.
    KIRK, KIRK & WELLS and WHEELER & WHEELER for appellee.
   Opinion of the Court rt

Commissioner Sandidge — •

Reversing.

The two above-styled appeals grow out of the^ same cause of action and will be considered and determined in one opinion. Appellee, Sallie G-ambill Robinson, instituted the action to enforce a mortgage lien on a certain town lot in Paintsville', Ky., securing a note for $500, dated May '20 Í917. When the action was instituted appellant, Paintsville National Bank, owned the lot covered by the mortgage lien sought to be foreclosed by appellee. In view of the conclusions reached by the court, there would seem to be no necessity to- state the various facts pleaded by the various parties; it being sufficient to say that by its answer, counterclaim, and cross-petition, the appellant, Paintsville National Bank, which will be hereinafter referred to as the bank, after denying that the lot then owned by it was liable to be subjected to the payment of appellee’s debt, further pleaded that, in the event the court should conclude otherwise, it should recover the amount it would thus have to pay to save its lot from appellant Paintsville Bank & Trust Company, which will hereinafter be referred to as the trust company. Both the bank and the trust company interposed a plea of limitation under section 2515, .Kentucky Statutesi, in bar of appellee’s right to recover. Upon the trial below the chancellor adjudged that appellee had a mortgage lien upon the lot owned by the bank and was entitled to subject it to the payment of her $500.00 note with interest and cost. It further adjudged that the bank was entitled to recover from the trust company the amount it was so compelled to pay appellee to save the lot owned by it from sale to enforce her mortgage lien. Both the bank and trust company have appealed.

The plea of limitation interposed by both the bank and trust company to appellee’s right to recover seems to this court to be conclusive, and, consequently, it alone will be considered. These facts appear: On May 20, 1917, Mrs. T. J. Moore and T. J. Moore executed and delivered to Paintsville Bank & Trust Company a promissory note negotiable in form for $500. By its terms it was made payable “four months after date.” To secure its payment, Mrs. Moore, who then owned the lot now owned by the bank, executed and delivered to the trust company a mortgage. The note, being dated May 20th, and being payable four months after date, was due and payable September 20th. On the latter date, appellee, who was the mother of Mrs. T. J. Moore, appeared at the banking house of the trust company during banking hours and paid the note. The trust company, by indorsement assigned the note to her without recourse. More than seven year's, elapsed after appellee so acquired the note and after it became due before she instituted this action#to enforce its collection by foreclosing’ the mortgage lien.

Section 2515, Kentucky Statutes, provides that an action upon a promissory note placed upon the footing of a bill of exchange shall be commenced within five years next after the cause of action accrued. It is insisted for the bank and the trust company that, as the note, the -basis of appellee’s right to enforce the mortgage lien, was assigned and delivered to her before the close of the day on which it was due, it was thereby placed upon the footing of a bill of exchange. Consequently, they insist, more than five years having elapsed after her cause of action on it accrued before she .sued, her cause of action was barred by the provisions of the statute, supra.

In Southern National Bank v. Schimpeler et al., 160 Ky. 813, 170 S. W. 178, and Reidlin Co. v. Haake, 218 Ky. 47, 290 S. W. 1050, it was held that our Negotiable Instruments Act did not repeal .section 2515, Kentucky Statutes, and that the period of limitation therein provided within which an action on a negotiable promissory note, placed upon the footing of a bill of exchange, must be brought, is still in force. 'Consequently, if the negotiable promissory note, the basis of appellee’s cause of action, was placed upon the footing' of a bill of exchange when negotiated to her, the five year statute of limitation applies, and her cause of action is barred. We have presented, then, the narrow question whether a promissory note, negotiable in form, which is negotiated on, but be- ■ fore the close of the day it is due, thereby is placed upon the footing of a bill of exchange. The statute, as will be observed, does not define how a negotiable promissory : note many be placed upon the footing of a bill of exchange, but merely prescribes the time within which an action must be brought upon that character of note when placed upon that footing. Our Negotiable Instruments Act furnishes perhaps the best test for determining when .by negotiation a promissory note negotiable in form is placed upon the footing of a bill of exchange. That .necessarily occurs when the purchaser by his purchase and its assignment to Mm becomes a “bolder in dne course.” Section 3720b-52, Kentucky Statutes, provides:

“A bolder in due course is a bolder who has taken tbe instrument under tbe following conditions :
“ (1) That the instrument is complete and regular upon its face.
“ (2) That be became tbe bolder of it before it was overdue, and without notice that it bad been previously dishonored, if such was tbe fact.
“ (3) That be took it in good faith and for value.
‘ ‘ (4) That at tbe time it was negotiated to him be bad no notice of any infirmity in tbe instrument or defect in tbe .title of tbe person negotiating it.”

Measured by the conditions under wMcb one is defined by that statute to be a “bolder in due course,” it is unquestionably true that, by purchasing tbe $500 note and taking it under tbe written indorsement assigning it to her, appellee became a “bolder in due course.” The instrument was complete and regular upon its face. She became its bolder before it was overdue and it bad not previously been dishonored. She took it in good faith and for value. At the time it was negotiated to her she bad no notice of any infirmity in the instrument or defect in tbe title of tbe person negotiating it. In facfi there was no infirmity in tbe instrument and no defect in tbe title of tbe person negotiating it. She became its holder before it was overdue, because the maker of the note had the entire day on which it was negotiated to her in which to pay it before it could be said to be overdue. The note having been negotiated at a time when by its negotiation appellee became a “bolder in due course.” it unquestionably follows that it was thereby placed upon the footing of a bill of exchange. That being true, it also necessarily follows that under tbe provisions of section 2515 of our Statutes, it was incumbent upon appellee to institute her action for relief under it witMn five years after it was due. This she failed to do.

Tbe fact that the note was secured by a mortgage on real estate does not alter tbe case. This court has uniformly written that a mortgage is merely incident •to tbe debt or obligation it is given to secure, and that no relief can be granted under the mortgage after tbe debt or obligation to which it- is incident is barred by limitation. See Vandiver v. Hodge, 4 Bush, 538; Yeates v. Weeden, 6 Bush, 438; Prewitt v. Wortham, 79 Ky. 287; First National Bank v. Thomas, 3 S. W. 12, 8 Ky. Law Rep. 690; Worsham v. Lancaster, 47 S. W. 448, 20 Ky. Law Rep. 701; McCormick v. Perry, 93 S. W. 607, 29 Ky. Law Rep. 420; Russell v. Centers, 153 Ky. 469, 155 S. W. 1149; and Allen v. Shepherd, 162 Ky. 756, 173 S.W. 135.

Under the facts appearing, and for the reasons' indicated, the chancellor erred in failing to sustain the-plea of limitation interposed by both the bank and trust company.

Therefore the judgment appealed from in both' appeals is reversed, and the cause is remanded, with direction that a judgment be entered in conformity herewith.

Reversed and remanded.  