#### COMMERCIAL AND FARMERS BANK v. SCOTLAND NECK BANK and F. P. SHIELDS.

(Filed 20 December, 1911.)

1. Notes — Security—Subrogation—Agreement—Debtor and Creditor —Notice—Equity.

One advancing money to a debtor under an agreement tbat tbe latter is to take up a note of bis secured creditor and bold tbe security as collateral to tbe note given for tbe money thus advanced is entitled to be subrogated to tbe first creditor’s rights in tbe security upon tbe discharge of bis note by payment, in tbe absence of intervening equities, whether or not tbe bolder of tbe first note bad notice of tbe agreement.

*2392. Same.

A debtor who bas entered into an agreement to take up a note with security in the hands of his creditor with money advanced for the purpose, and have the securities assigned as collateral to a note given for the money thus advanced, does not defeat the right of the one advancing the money to be subrogated to the rights of the holder of the first note in the securities, by having them assigned to himself, contrary to the agreement, and in the absence of intervening equities, especially, as in this case, when the debtor at once placed the securities in the hands of the creditor advancing the money for the purposes agreed upon.

3. Same — Trusts and Trustees.

Equity will not allow a debtor, who has had money advanced to him with which to take up his note secured by a mortgage under an agreement that the security will be held as collateral to his note given for the money advanced, to avail himself of a breach of trust in taking an assignment of the note and mortgage to himself and thereby defeat the right created by his agreement, upon the faith of which the money was advanced, but will regard the assignment of the security, if made to the debtor, as being for the benefit of him to whom it justly belongs.

4. Same — Assignment for Creditors.

An assignee, in a conveyance for the benefit of creditors, takes subject to prior equities by which his assignor is bound.

5. Same — Registration—Notice.

A debtor secured a note by mortgage and subsequently made a deed of assignment for the benefit of his creditors, while the mortgage was outstanding and uncanceled of record. The land embraced in the mortgage was included in the deed of assignment : Held, the uncanceled mortgage was notice to the assignee of the rights of one who had advanced the money to the debtor to pay off the mortgage note and who had an equity to be sub-rogated to the rights of the holder thereof in the mortgaged premises.

Appeal from Ferguson, J., at August Term, 1911, of Halifax.

This case was beard below upon facts agreed, as follows:

1. Both plaintiff and defendant Scotland Neck Bank are, and were at tbe time of tbe acts hereinafter set out, corporations of tbis State, doing a general business.

2. On 1 November, 1904, S. W. Morrisett and J. G. Morri-sett, partners as Moriisett Bros., gave tbeir note to defendant *240Scotland Neck Bank for $1,500, for borrowed money, and to secure tbe same, S. ~W. Morrisett. and wife executed to tbe said Scotland Neck Bank a mortgage on real estáte in tbe town of Scotland Neck, N. C., wbicb was duly recorded.

3. Some time after tbe maturity of tbe note and demand for payment, Morrisett Bros., through B. W. Morrisett, requested the' plaintiff bank to take up said note and mortgage and carry tbe same for them, wbicb plaintiff agreed to do, upon tbe distinct understanding and agreement between it and Morrisett Bros, that they should have tbe Scotland Neck Bank transfer and assign to plaintiff tbe note and mortgage as security for tbe amount so furnished by it.

4. In pursuance of said agreement, tbe plaintiff, on 2 October, 1905, furnished Morrisett Bros, with an amount of money sufficient to take up said note and mortgage (for wbicb funds Morrisett Bros, executed to it their note), and Morrisett Bros., acting by and through said S. W. Morrisett, on 4 October, 1905, with tbe funds so furnished by plaintiff, under tbe understanding and agreement aforesaid, paid tbe Scotland Neck Bank tbe amount of tbe note and mortgage, and, at tbe time of payment tbe Scotland Neck Bank, at tbe request of S. W. Morrisett, transferred directly to S. W. Morrisett tbe note and mortgage, indorsing on each tbe following:

Transferred to S. "W". Morrisett without recourse.

Scotland Neck Bank,

4 October, 1905-, W. R. Bond, Alssí. Gashier.

5. At tbe time of tbe payment for and transfer of tbe note and mortgage aforesaid, tbe Scotland Neck Bank bad no notice of tbe understanding* and agreement between plaintiff and Mor-risett Bros, or S. W. Morrisett, and did not know from whom or bow Morrisett Bros, obtained tbe funds with wbicb tbe payment was made.

6. In making tbe payment and having tbe note and mortgage transferred to S. "W. Morrisett, as aforesaid, it was tbe purpose and intention of Morrisett Bros, and S. ~W. Morrisett that plaintiff was to be tbe bolder and owner of said note and mortgage, but, not desiring tbe Scotland Neck Bank to know from whom *241they obtained tbe money or of tbeir dealings with tbe plaintiff bank, and being ignorant of any legal effect snob transfer might bare, bad tbe transfer made directly to S. ~W. Morrisett, as aforesaid.

I. In furtherance of said intention and purpose, and in order to comply with tbe understanding between Morrisett Bros, and plaintiff, S. "W. Morrisett, on tbe following day, 5 October, 1905, transferred and delivered to tbe plaintiff tbe note and mortgage as collateral security for tbe note of Morrisett Bros., wbicb they executed for tbe funds furnished by plaintiff, said note being given on that date for $2,500 ($1,500 of wbicb was for tbe money furnished by plaintiff to take up tbe note and mortgage held by tbe Scotland Neck Bank), tbe note since then having been renewed from time to time, tbe last renewal being dated 1 May, 1908.

8. There is now due on tbe $2,500 note tbe sum of $1,500 and interest, $1,000 having been paid on same; and said note, as well as tbe note and mortgage purchased from tbe Scotland Neck Bank, is long past due.

9. Some time after tbe execution of said notes and tbe payment and transfer of tbe note and mortgage, as hereinbefore set out, to wit, on 19 December, 1908, Morrisett Bros, duly executed to defendant F. P. Shields a deed of assignment for tbe benefit of creditors (without preference), wbicb was duly recorded, and in wbicb was conveyed, with other property, tbe real estate in Scotland Neck, N. O., wbicb was conveyed in tbe mortgage by S. W. Morrisett to tbe Scotland Neck Bank.

10. That prior to tbe date of tbe deed of assignment, as well as afterwards, plaintiff has demanded of Morrisett Bros, payment of tbeir note, wbicb has been refused.

II. Plaintiff has demanded of tbe Scotland Neck Bank that it foreclose tbe mortgage executed to it by S. ~W. Morrisett and wife, by selling tbe real estate therein conveyed, under tbe terms and provisions of tbe same, to satisfy tbe note of Morrisett Bros, secured by it, but said bank has refused and still refuses to do so. Tbe said mortgage has not been canceled on tbe record.

*24212. Defendants contend tbat tbe transaction in regard to tbe note and mortgage, and tbe transfer of tbe same to. S. W. Mor-risett by Scotland Neck Bank, as set forth in tbe foregoing statement of facts, was in law a payment of tbe note and a cancellation of tbe mortgage as to E. P. Shields, assignee under said deed of assignment, and as to him and tbe creditors of Morrisett Bros, tbe mortgage is not in force, while plaintiff contends tbat such payment and transfer of tbe note and mortgage did not have tbat effect and tbat tbe mortgage is still in force as against Shields, assignee, and all others, at least in equity, and is a subsisting security for tbe debt of Morrisett Bros, to it.

13. It is agreed tbat if tbe court shall be of tbe opinion tbat tbe payment of tbe said note and mortgage and transfer of tbe same by tbe Scotland Neck Bank to said S. W. Morrisett, as set out in tbe foregoing statement of facts, was not, as to defendants, E. P. Shields, assignee or grantee under tbe deed of assignment, a payment of tbe note and cancellation of this mortgage, and tbat said mortgage is in force as against Shields, as assignee, judgment shall be entered requiring tbe defendant Scotland Neck Bank to foreclose tbe mortgage according to tbe provisions and 'terms thereof, for tbe benefit of tbe plaintiff bank.

14. It is further agreed tbat tbe costs of tbe action be divided equally between plaintiff and defendant F. P. Shields, assignee.

Tbe note for $2,500 given by Morrisett Bros, to tbe plaintiff refers to tbe other note and mortgage for $1,500, purchased from tbe Scotland Neck Bank as collateral security for its payment, and it is described therein as having been indorsed by S. W. Morrisett to tbe plaintiff for tbat purpose, and tbe note for $1,500 to tbe Scotland Neck Bank, secured by tbe mortgage, is indorsed as follows:

Transferred to Commercial and Farmers Bank (tbe plaintiff) as collateral. (Signed) S. W. MoRRisett.

Tbe court rendered tbe following judgment:

This cause coming on to be beard, and being beard and fully considered upon the facts agreed, tbe court is of tbe opinion *243that S. W. Morrisett, at tbe time be paid tbe money to tbe Scotland Neck Bank and took tbe assignment of said note and mortgage, was not tbe bolder of tbe same in bis own right or in tbe right of Morrisett Bros., but in tbe right of tbe Commercial and Farmers Bank, as trastee for said bank, and therefore it is ordered and adjudged that said note and mortgage was not discharged, but is in full force and effect; and it is thereupon ordered and adjudged that tbe Scotland Neck Bank foreclose said mortgage according to tbe provisions and terms thereof. It is further ordered that tbe plaintiff and tbe defendant F. P. Shields, assignee, each pay one-half of tbe cost.

G. S. FergusoN, Judge.

Defendant F. P. Shields, assignee, excepted and appealed.

B. G. Dunn and Murray Allen for plaintiff.

Kitchin & Smith for defendant.

Walker, J.,

after stating tbe case: Tbe plaintiff’s claim appeals very strongly to tbe conscience of tbe Court, and we think it is sustained by well-settled principles. Tbe doctrine of subrogation rests upon principles of natural justice and equity, and there are numerous authorities which support tbe rule that one who, at the request of another, advances money to pay off a security or encumbrance, in which tbe latter is interested or to tbe discharge of which be is bound, under tbe agreement that be shall have tbe benefit of tbe creditor’s security, is entitled to be subrogated to tbe rights of tbe creditor in tbe security, and some cases bold that, in tbe absence of an express agreement, one will be implied that tbe security shall’ subsist for tbe use and benefit of tbe lender of tbe money, and it will be so enforced. Gans v. Thieme, 93 N. Y., 225; Levy v. Martin, 48 Wis., 198; Wilkins v. Gibson, 113 Ga., 31. One who pays a debt at tbe instance of tbe debtor, under such circumstances that it appears to have been contemplated by tbe parties that be should become entitled to tbe benefit of-the security for tbe debt held by tbe creditor from tbe debtor, may, as against tbe debtor and tbe debtor’s estate, be subrogated to tbe benefit of such security and of'the debt which be has discharged. And a party who has paid a debt at tbe request of tbe debtor, under *244circumstances wbicb would operate a fraud upon Mm if tbe debtor were afterwards allowed to insist that the security for the debt was discharged by this payment, may also be subro-gated to the security, as against the debtor. But this subrogation will not be allowed against one interested in the property held as security, who was a stranger to the transaction by which the payment was made and who was under no obligation for the payment of the debt, unless it appears that the payment was made, not as an extinguishment of the debt, but in reliance upon and as a purchase of the security. This is a species of conventional subrogation, being a subrogation by an implied convention or agreement. Accordingly, it will not be allowed if it appears not to have been intended by the parties, though this intention, if not expressed, may (ordinarily be determined from the circumstances attending the transaction. Sheldon on Subrogation, sec. 274.

The authorities are entirely agreed, though, that where a person advances money to pay off a mortgage debt under an agreement with the owner of the equity of redemption or his representative that he shall hold the mortgage as security for Ms advance, but the mortgage, instead of being assigned to him, is discharged in whole or in part, he is yet entitled as against subsequent parties in interest to be subrogated to the rights of the mortgagee and to enforce the mortgage. Sheldon on Subrogation, sec. 19; 37 Cyc., 467, 471; Crippen v. Chappel, 35 Kansas, 495; Fivel v. Zuber, 67 Texas, 275. In the case last mentioned it is said that no different rule has been found except in LoMsiana, where the law of the subject is governed by statute.

Numerous authorities are cited in support of the rule, and the following passage from Domat, in which the principle is clearly and strongly stated, is quoted with approval: “One may acquire the privilege of a creditor without substitution in the same manner as a mortgagee, by agreement with the debtor that he who shall pay for him shall have the privilege; and it makes no difference whether the payment be made to the creditor by him who lends the money or by the debtor with whom the money has been intrusted.” (2 Strahan’s Domat’s Oivil Law, Cushing’s Ed., p. 698, sec. 1783.)

*245Tbe subject is fully discussed iu 1 Jones on Mortgages (6 Ed.), see. 874 et seq., and all tbe authorities collected. It is there said that tbe principle is well settled that when tbe money is advanced, at tbe request of tbe debtor or creditor, with tbe agreement that an assignment should be made or that subrogation should take place, or, what is tbe same thing in law, that tbe lender should have tbe benefit of tbe security, in either of tbe cases it will be kept on foot for tbe repayment of tbe amount advanced by tbe lender; and there seems to be no ruling to tbe contrary.

Downer v. Miller, 15 Wis., 612, seems to be exactly like this case in all respects. It decides every point raised in favor of tbe plaintiff, viz., that there clearly exists tbe right of conventional subrogation, that tbe express assent of tbe creditor, who received tbe money from tbe party claiming tbe right, is not necessary, and that tbe assignee takes subject to plaintiff’s equity. Lyness was tbe creditor, Steever tbe debtor, and Miller tbe one who advanced tbe money and claimed tbe right of sub-rogation. Tbe Court said: “Miller’s rights, therefore, must depend entirely on tbe effect of tbe agreement between him and Steever, and that we deem sufficient to justify tbe judgment of tbe Circuit Court. That agreement was that Miller was to indorse for Steever so as to enable tbe latter to raise the money at tbe bank, but that tbe money was to be used, not to pay and extinguish tbe Lyness judgment, but. to procure an assignment of it to Miller, to indemnify him as tbe indorser. To use tbe money thus obtained to pay tbe judgment and have it discharged would operate as a fraud upon Miller, and it is upon this ground that be was entitled to tbe relief given by tbe court below. It may be conceded that such relief could not have been given against any party who, relying upon tbe discharge of tbe Lyness judgment, has acquired an interest in tbe property for a valuable consideration, without notice of Miller’s equitable rights. But tbe appellant here does not stand in such a position. His rights were subsequent and subject, to tbe Lyness mortgage. . . . Nor is tbe fact that Lyness-was not party to tbe agreement that bis decree should be assigned, for Miller’s security, any reason why that agreement should not be enforced. It was *246a matter of indifference to bim whether the decree was assigned or discharged, and where justice between others requires it to be assigned, he should not be allowed to prevent it upon the supposed technical right to control his own decree. The enforcement of this agreement .between Miller and Steever without reference to the question whether Lyness assented to it is entirely analogous to the principle of subrogation, where the assent or agreement of the creditor who gets the money is not essential to the right. If a surety pays a debt, he has a right to be subrogated to the securities of the creditor, and the latter would not be allowed to object, for it is a matter of indifference to him. It is equally true here, though Miller’s right is not (strictly) that of subrogation) but grows out of the agreement between him and Steever. That agreement is one which should have been enforced even though Lyness had adhered to his refusal to assign the decree. But here he voluntarily consented in the end to make the assignment.” Shreve v. Hankinson, 34 N. J. Eq., 76; 1 Pingrey on Mortgages, sec. 1175. “Where the amount due on mortgages is paid by. a third person at the request of the mortgagor, and there is no understanding that they shall be considered satisfied, a court of equity will, for purposes of justice, keep the mortgages alive, and much more so if the party takes an assignment of the mortgages.” Tolamn v. Smith, 85 Cal., 280; Gans v. Thieme, 93 N. Y., 232; Yabie v. Stephens, 36 Kan., 680; Bacon v. Goodnow, 59 N. H., 415.

The case of Gans v. Thieme is a very strong authority for the position that, under the facts of this case, the plaintiff, who, at the request of the Morrisett Bros., advanced the money to pay the debt owing to the defendant bank, is entitled to be sub-rogated to the rights of the latter in the debt and mortgage, as will appear from the following extract: “It is no doubt true, however, as the learned counsel for the respondents argues, that a volunteer cannot acquire either an equitable lien or the right to subrogation (Sandford v. McLean, 3 Paige, 122; Wilkes v. Harper, 1 N. Y., 586; 2 Barb. Ch., 338); but one who, at the request of another, advances his money to redeem or even pay off a security in which that other has an interest, or to the discharge of which he' is bound, is not of that character, and in *247the absence of an express agreement one would be implied, if necessary, that it shall subsist for his use, and it will be so enforced. But ’ the doctrine of substitution may be applied although there is no contract, express or implied. It is said to rest 'on the basis of mere equity and benevolence’ (Cheeseborough v. Millard, 1 Jons. Ch., 409; 1 Story’s Equity Jurisprudence, sec. 943), and is resorted to for the purpose of doing justice between the parties.”

'Why should this not be the true doctrine, when the money is paid at the request of the debtor, with the agreement that the security should continue for the benefit of him who advanced the money? The creditor is not prejudiced in any way or to any extent. The debtor has made the promise and has derived a clear benefit by the payment to his creditor, and in a court of equity he will not be heard to say that the arrangement has failed by reason of the fact that he violated his instructions or agreement, if he did, and took an assignment to himself instead of the plaintiff. The mortgage has not been canceled, and even if it had been, a court of equity would not regard the cancellation as in the way of enforcing the undoubted right of the plaintiff to relief, provided there has intervened no new right acquired for value and without notice, which wd.ll be prejudiced if the lien is enforced. The law will not allow the debtor to avail himself of the breach of trust and thereby defeat the right created by his agreement, upon the faith of which the money was advanced, but will regard the assignment as made for the benefit of him to whom it justly belonged, as we have already shown. Dudley v. Bergen, 23 N. J. Eq., 397; Russell v. Mixer, 42 Cal., 475; Cobb v. Dyer, 69 Me., 494; Seiberling v. Tipton, 113 Mo., 373; Bruce v. Bonney, 78 Mass., 12 Gray, 107. In Russell v. Mixer, supra, it is said: “The only question presented is, whether or not, upon the facts stated in the amended complaint, the plaintiff is entitled to the relief he obtained. We think that there can be no doubt that he is. The agreement between Miller and himself was for an assignment and transfer of' the mortgage; the mistake occurred wholly in the' selection of the means by which this agreement was to' be effectuated. There is no appreciable distinction between this *248case and that where a scrivener, through ignorance or inattention, fails to select or prepare such an instrument as effectuates the previous agreement of parties, and relief is always decreed in that case. (1 Story Eq. Jur., sec. 115.) Had the recorder here, upon being informed by the parties that the agreement between them was that the mortgage in question should be more effectually transferred to Russell, prepared a release, instead of an assignment, whether he did so through mere inattention to what he was doing, or through a misapprehension of its legal effect in the premises, there would be no doubt that equity would relieve against the mistake. The rule must be the same in a case where the parties have made the mistake for themselves, and without the aid of either scrivener or recorder.”

But in Moring v. Privott, 146 N. C., 558, we find an authority which clearly sustains the plaintiff’s right of subrogation. It is there said that subrogation is of equitable origin, not dependent upon contract, and is always invoked to prevent injustice. It is defined to be the substitution of another person in the place of a creditor, so that the person in whose favor it is exercised succeeds to the rights of the creditor in relation to the debt, . . -. or that change by which another person is put into the place of a creditor, so that the rights and securities of the creditor pass to the person who, by being subrogated to him, enters into his right. It is a legal fiction, by force of which an obligation extinguished by a payment by a third person is treated as still subsisting for the benefit of this third person, who is thus substituted to the rights, remedies, and securities of another. The party who is subrogated is regarded as entitled to the same rights, and, indeed, as constituting one and the same person with the creditor whom he succeeds. Sheldon Sub., 2; 27 Am. and Eng. Enc., 206; Davidson v. Gregory, 132 N. C., 389; Carter v. Jones, 40 N. C., 196; Springs v. Harven, 56 N. C., 96.

But the Court, quoting from and approving Robinson v. Leavitt, 7 N. H., 99, further said: “There are cases in which a party who has paid money due upon a mortgage is entitled, for the purpose of effecting the substantial justice of the case, to be substituted in the place of the encumbrancer and treated *249as assignee of the mortgage, and is enabled to bold the land as assignee, notwithstanding the mortgage itself has been canceled and the debt discharged. The true principle is that when money due upon a mortgage is paid it shall operate as a discharge of the mortgage or in the nature of an assignment -of it, as may best serve the purpose of - justice and the just intent of the parties. Many cases state the rule in equity to be that the encumbrance shall be kept on foot or considered extinguished or merged, according to the intent or interest of the party paying the money. . . . And it makes no difference whether the party, on payment of the money, took an assignment of the mortgage or a release, or whether a discharge was made and the evidence of the debt canceled. The debt itself may still be held to subsist in him who paid the money, as assignee, so far as it ought to subsist, in the nature of a lien upon the land, and the mortgage be considered in force for his benefit, so far as he ought in justice to hold the land under it, as if it had been actually assigned to him.” There are numerous authorities of like tenor.

Our recent decision in Tripp v. Harris is directly in point. We there held that where the note secured by a mortgage is paid by a surety thereon, the note is satisfied, but an implied promise of the principal to reimburse the surety at once arises, and that he is subrogated to the rights of the creditor in all securities held by him, and he may, with or without any formal assignment, avail himself thereof for the purpose of indemnifying himself, and if the security be a mortgage, he may foreclose the same for his own benefit as a creditor of the principal.

Our ease presents a much stronger equity in favor of the plaintiff, as there the mortgage was not canceled on the record or otherwise; there was an express agreement for subrogation; Morrisett received the note as agent for the plaintiff and had HP authority in law or in fact to take an assignment to himself, and the next day he actually delivered note and mortgage, which he had received from the creditor, in execution of the agreement, to the plaintiff. The conduct of Morrisett shows conclusively that he did not take the assignment to himself for his own benefit and with the purpose of satisfying the debt and can*250celing tbe note, but for tbe use and benefit of tbe plaintiff bank, in accordance with tbe agreement between them, because be almost immediately transferred and delivered tbe note and mortgage to it. In tbe case of Liles v. Rogers, 113 N. C., 197, tbis Court, recognized tbe doctrine of conventional subrogation, and it is there said that where the money is paid to tbe creditor by another, at 'the request of tbe debtor, to discharge bis obligation, tbe person who advanced tbe money is, in equity, subrogated to tbe rights of tbe creditor in tbe securities held by him.

We do not understand that tbe Morrisetts or tbe defendant bank are contesting tbe right of tbe plaintiff, tbe appeal having been taken by tbe assignee of tbe Morrisetts, and be stands in no better position than bis assignors would have held if tbe general assignment bad not been made by them. “It may be said generally that an assignee succeeds only to tbe lights of bis assignor and is affected by all equities against him, and takes tbe property subject to all such equities.” 'Justice Shepherd thus states tbe rule in Wallace v. Cohen, 111 N. C., 104: “It is true, as laid down in Southerland v. Fremont, 107 N. C., 565, that such a trustee or mortgagee is a purchaser for value within tbe Statutes of 13 and 27 Elizabeth, but it is, in that case, conclusively determined, after some confusion in our decisions, that such a purchaser takes tbe property subject to any equity or other right that attached to tbe same in tbe bands of tbe debtor. Tbis view is abundantly sustained, not only by our own previous decisions, but by tbe great weight of judicial authority. Bassett v. Norsworthy, White & Tudor’s L. C. Eq., and notes. As applicable to tbe present case, tbe doctrine has been recognized and applied in a large number of decisions. 'In order to entitle one to protection as a bona fide purchaser in such a case, be must have advanced some new consideration, or incurred some new liability, on tbe faith of tbe fraudulent vendee’s apparent ownership.’ Johnson v. Peck, 1 Woodb. & M., 334; McLeod v. Bank, 42 Miss., 99; Hyde v. Ellery, 18 Md., 496; Sargent v. Sturm, 23 Cal., 359; Ratcliffe v. Sangston, 18 Md., 383; Pope v. Pope, 40 Miss., 516. Hence, .'an assignee of tbe fraudulent vendee for tbe benefit of creditors, incurring no new liability on tbe faith of bis title, is not protected.’ Farley v. Lincoln, *251 51 N. H., 577; Harris v. Horner, 30 Am. Dec., 182; Stevens v. Brennan, 79 N. Y., 254; Montgomery v. Bucyrus, 92 U. S., 257; Donaldson v. Farmer, 93 U. S., 361. These authorities, with very many others we could cite, are directly in point, and sustain the right of the plaintiffs to recover without fixing the assignee with notice.” This has always been the settled law in this State, and certainly since Potts v. Blackwell, 56 N. C., 449, was decided. This doctrine is so well established that it requires no further discussion. Besides, the record of an uncanceled mortgage upon real estate charges subsequent purchasers with notice of the encumbrance. Smith v. Stark, 3 Col., 453.

The court was right, in giving judgment for the plaintiff, upon the ease agreed.

No error.