Adler v. Newell

109 Cal. 42 (1895)

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Adler v. Newell

California Supreme Court
109 Cal. 42 (1895)

Facts

Mr. McBride borrowed money from Mr. Moseley in exchange for a promissory note. McBride granted Moseley a mortgage on some of McBride’s real property to secure the note. Separately, Moseley had substantial debts to the Bank of Lodi (bank) (defendant). As collateral for the debts, Moseley delivered the note to the bank along with a document purporting to assign the mortgage to the bank. Moseley never actually delivered the mortgage to the bank, nor did he ever record the assignment of the mortgage. Later, Moseley created a fake copy of the original promissory note, forging McBride’s signature. Moseley negotiated a transaction with Mr. Newell (defendant) in which Moseley delivered the (forged) note and the actual original mortgage to Newell along with an assignment of both instruments. In exchange, Newell paid Moseley the full balance due on the note. Newell had no knowledge that anybody other than Moseley had an interest in the note or the mortgage. After some time, Mr. Adler (plaintiff) came into possession of the real property. Adler wanted to clear the property of its mortgage lien but did not know whom to pay. Adler filed an action to determine the proper lienholder. The trial court held that, between the bank and Newell, Adler should pay the bank. Newell appealed.

Rule of Law

Issue

Holding and Reasoning (McFarland, J.)

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