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Geo. M. McDonald & Co. v. Johns

Washington Supreme Court
114 P. 175 (1911)


Facts

George R. Johns was indebted to Geo. M. McDonald & Company for $2,210. Johns had executed three promissory notes in favor of McDonald. Johns was also indebted to Bechtol. Johns signed mortgages on a certain property in favor of both McDonald and Bechtol. As it related to McDonald, the mortgage was for the preexisting debt; McDonald did not pay any new consideration for the mortgage. Bechtol’s mortgage was signed and delivered prior to McDonald’s, but McDonald’s mortgage was recorded first. McDonald had no notice of Bechtol’s mortgage. McDonald claimed that it was a bona fide purchaser for value and that its mortgage thus took priority over Bechtol’s. The trial court held that McDonald was not a bona fide purchaser for value, because McDonald did not pay valid consideration for the mortgage. McDonald appealed.

Rule of Law

Issue

Holding and Reasoning (Dunbar, C.J.)

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