
    AMASA T. C. DODGE vs. THE FREEDMAN’S SAVINGS AND TRUST COMPANY, JOHN S. JONES, JOHN E. KENDALL, JACOB LADOW, AND ORVILLE D. VAUGHAN.
    In Equity. —
    No. 4011.
    I. The assigneo of two several promissory notes is entitled to the benefit of a deed of trust executed to seeure their payment.
    II. The maker of said notes, being unable to. pay them, made an arrangement with a bank to carry them for six months and hold them as collateral for the payment of a new note which he, the maker, on his part gave the bank for the amount of the money advanced. The trustee who held the notes for collection indorsed them to the bank under this arrangement, and received the sum due thereon : Held, that this was not a payment and extinguishment of the notes so as to relieve the deed of trust, and that it made no difference whether the bank took these notes only as collateral, for they would have a right to enforce the trust if the new note was not paid.
    STATEMENT OE THE CASE.
    The complainant seeks by his bill to obtain a release of a certain deed of trust upon lot 5, in square 763, in the city of Washington. The cause was heard in the court below upon the pleadings and proof, and the following facts appear:
    In September, 1870, one Charles H. Holden, being the owner of the property in controversy and also other lots, made two promissory notes, bearing date September 23,1870, each for the sum of $1,892.50, payable, with interest at SJ per cent., to the order of J. S. Ladow & Co., one in six and the other in twelve months from date. To secure the payment of these notes Holden executed and delivered a deed, whereby he conveyed the property in question, with other property, to the defendant Jones, in trust, with the usual powers to sell in case of default. Between September 4, 1871, and April 1,1872, Holden paid on these notes about $2,200, and such payments were indorsed upon them by Ladow & Co. The notes were afterward sent to the defendant Jones by the holders, Ladow &.Co., with orders to collect them, and he was pressing Holden for payment. Holden, being unable to pay the notes, made an arrangement with the Freedman’s Savings and Trust Company, by which that company agreed to take the notes from Ladow & Co. and carry them for Holden for six months, and Holden, on his part, agreed to pay the trust company interest at the rate of 10 per cent, on the amount advanced by it. Holden then advised Jones, the holder of the notes, that he had made the arrangement before described, and requested him to take the securities and deliver them to the bank, and receive his money for them. On the 25th day of October, 1872, Jones went to the bank with the notes and the deed of trust by which they were secured, and delivered them to the actuary of the trust company, who thereupon paid him the sum of $2,205, that being the amount of principal and interest due on the notes at that date. To complete the transaction according to the agreement, Holden, about a week afterward, went to the bank and gave his note for the sum of 82,205.50, payable in six months, with interest at 10 per cent. It is admitted by complainant that these notes were to be held by the bank as collateral to secure the payment of Holden’s note, which he gave the bank to carry the notes secured by their trust-deeds.
    After all these transactions, and on the 9th day of September, 1873, the complainant purchased from one Frank Bell the lot which he now seeks to have discharged from the trust. And he asserts that an abstract of the record of the conveyances and incumbrances of the property, showing that it was free from incumbrances, was delivered to him at the time of said purchase.
    The complainant asserts in his bill, and produces testimony tending to show, that, at the time, Holden offered as a security for the payment of these notes a house and lot on the corner of A and Second streets, now owned by defendant Kendall, and which at that time was not completed. Ladow objected to the security in consequence of the house not being completed, and Holden finally agreed to include lot 5, in square 763, (now owned by the complainant,) with the understanding and agreement that, when the house was completed and a partial payment made, a portion of the property should be released. This payment was made, but members of the firm of Ladow & Co. swear that they never directed Jones to release the trust-deed on said lot. It seems from the evidence that Jones, the trustee, had informed Holden and Dodge that he had released it; and Jones swears that he has no recollection of executing any such release, and does not believe he ever has. He also states that, after having his attention called to the matter, he requested his attorney to examine the records and ascertain if, there was any such release; and he found that, instead of his having released said lot 5, it Was a release on other property, under another deed of trust, that he had released.
    Upon this presentation of the case, the justice holding the special term held that the transactions with the Freedman’s Savings and Trust Company were equivalent to a payment and extinguishment of the notes, and passed a decree declaring that they had been “fully paid,” and directing the trustee, the defendant Jones, to execute and deliver to the complainant, “within twenty days,” a deed of release discharging his property from the incumbrance, and also directing that, in the event of the failure of the trustee so to' do, the decree should “ operate as a final release of the said property.”
    The cause is now- heard on an appeal from this decree.
    J. Daniels for complainant:
    The defendant Jones was the trustee, Ladow & Co., the owners of the notes, sent them to him for collection, not for sale or transfer. He could not transfer the notes as trustee; that was no part of his trust. He could receive the money for the notes and give them up; and this he did, and delivered them to the actuary of the bank, who was then acting as the agent of Holden; and the money paid was Holden’s money, and when it was paid the notes were his; and the money paid was money belonging to Ladow & Co. in the hands of their trustee. This was, then, a final payment of these notes by Holden with his own money, borrowed from the bank on his own note. And now the question is, can he, by agreeing with the bank that these notes, so paid as aforesaid, shall be held as collateral security to his own note, and thereby revive the notes as against the prop•erty given as security for their payment. We emphatically answer, “No; be cannot.” The power of the trustee ceased the moment he received the money on these notes, and it cannot be renewed by Holden as against Dodge or any other purchasers subsequent to the trust.
    
      Enoch Totten for defendants:
    The general principles upon which this case depends are simple and plain. If a judgment or other debt or incumbrance be paid, not by one who is a party thereto, but by a. third person, the debt will be extinguished or not according to the intention of the parties, and a transfer or assignment thereof, whether valid or void, affords, under all circumstances, unequivocal evidence of an intention not to extinguish Harbuck vs. Vanderbilt, 20 N. Y., 397; Mead vs. York, 6 N. Y., 449.
    If this money had been paid directly to Holden, the debtor, under an agreement that the note and deed of trust should be assigned to the bank for its security, (even though the holder of the mortgage had no knowledge of the agreement,) and instead of procuring such assignment he had paid over the money and obtained a release in fraud of the rights cf the bank, this court would have been bound to annul the release and enforce the trust against all persons having notice of the rights of the bank. Downer vs. Miller, 15 Wis., 612; Freedman’s Savings and Trust Company vs. Dodge, MS.
    If the assignment had been made by Ladow & Co. for the benefit of the bank, but without its knowledge, the trust would have been valid and the trust company could have enforced it. An assignment made or trust created for the bene fit of one, without his knowledge, can be enforced by the beneficiary. Atkin vs. Barwick, 1 Strange, 165; Cumberland vs. Codrington, 3 Johns. Ch., 261; Berly vs. Taylor, 5 Hill, 576; Downer vs. Miller, 15 Wis., 611.
    In the present case, the complainant has no equities as against the trust company.- The deed of trust was duly recorded, and the assignment to the bank was made nearly a year before the complainant bought the property. If the per son from whom he purchased imp osed upon him by using a false or fraudulent abstract of title, he should seek his remedy at law against his vendor for the fraud.
   Mr. Justice Humphreys

delivered the opinion of the court

The brief record we have in this case discloses that, in 1870, Charles H. Holden had and possessed certain lots of ground in Washington City; that, in September, 1870, said Holden made and executed two notes amounting to $3,500, ta secure the payment of which he executed a deed of trust upon said lots of ground.

It appears after that that Frank Bell bought the property, and said Bell, on the 9th of September, 1873, conveyed the same to Dodge, the complainant.

Complainant alleges that Bell represented he had a good title, and that he never discovered, till October, 1872, that the Freedman’s Trust Company held a deed of trust upon said property. Said notes were payable to Ladow & Co., transferred by them to the Freedman’s Trust Company, which carried the security of the mortgage.

Complainant alleges that Ladow & Co. directed a release to-be made of lot 5, in square 763, and that Jones, trustee, told complainant he had released it.

The bill seeks to have lot 5 released.

Every material allegation in the bill is denied by all defendants, but especially is it not set up that the Freedman’s. Company participated in anything except the lending its money upon the faith of the deeds.

It is pretended by the bill that the bank took the deeds as collateral only; but this .would make no difference, for all deeds of trust are mere collaterals. The bank has a right to the collaterals. Even if the bank had put the collateral into the hands of Holden for collection, it would not have lost its lien. See Clark vs. Islin, 21 Wall., 369.

We can see no ground for taking from the bank the security for the payment of the moneys loaned on the faith of the lots. There is nothing to show that it has relinquished its hold, and whatever may have been the conduct of other parties, that cannot affect its rights.

The deeds were regularly executed and recorded, and constitute a lien till the debt is satisfied.

Decree reversed.

Mr. Justice Wylie dissenting.  