¶1John S. Hayes executed to William E. Reeves, guardian, a mortgage to secure the payment of three promissory notes evidencing the unpaid purchase-money of land sold to him by the guardian, and dated September 1st, 1873; afterwards Hayes sold the land to Len M. Copeland, who executed nine promissory notes for the purchase-money and also executed a mortgage; three of these notes were paid; prior to November 6th, 1874, one of them, number four in order of priority, wasassigned to the First National Bank of Newcastle; on the day named Hayes assigned to Reeves, guardian, the notes,in order of priority numbers six *522and eight, in exchange for the first notes executed by the former to the latter, and delivered, at the time, the mortgage executed by Copeland; on the 7th day of June, 1875, seven months after Reeves, guardian, had acquired the notes and mortgage by assignment, his assignor and original debtor, executed a release to Copeland which was placed on record; after the execution of this release and its entry of record, William Wilson lent to Copeland $2,000, and took as security a mortgage on the land bought of Reeves, guardian. The contest is as to who has the prior lien Wilson or Reeves and the Bank of Newcastle, the court below holding that Wilson’s lien was superior to that of the appellants.
¶2Prior to July, 1877, there was no law in force in the State authorizing assignments of mortgages to be recorded. This was the ruling in Hasselman v. McKernan, 50 Ind. 441, and while some of those who concur in this opinion regret that decision, we feel bound by it, for the reason that it has never been disapproved, but, on the contrary, has been repeatedly approved and followed. Coombs v. Carr, 55 Ind. 303; Dixon v. Hunter, 57 Ind. 278; Cain v. Hanna, 63 Ind. 408; Hosford v. Johnson, 74 Ind. 479. There is, therefore, an unruffled current of decisions upon this subject, but there is more, the Legislature accepted the court’s construction of the statute and passed an act providing for the recording of assignments, so that we have the concurrent action of two of the great departments of government. R. S. 1881, section 1093.
¶3It is perfectly well settled that notice is never imparted by the recording of an instrument which the law does not authorize. In Deming v. State, ex rel., 23 Ind. 416, it was held that a mortgage, not acknowledged according to law, could not be legally recorded, and that, although actually entered of record, it did not constitute notice, the court, by Frazer, J., saying: “ We suppose there can be no question, that the fact that the mortgage was actually recorded, without being acknowledged or approved, as the statute required to entitle *523it to be recorded, is not notice.” If it be true, as undeniably it is, that such a registration is not notice, much stronger the reason for holding the record not notice where there is no law authorizing the recording of the instrument. That is the case here, for there is not merely a defective execution of an instrument, but an absolute absence of authority for recording it. Caldwell v. Williams, 1 Ind. 405; Brown v. Budd, 2 Ind. 442; Taylor v. City of Ft. Wayne, 47 Ind. 274; Westerman v. Foster, 57 Ind. 408. Judge Story says, in speaking of the registry of instruments: "If they are not authorized or required to be registered, or the registry itself is not in compliance with the law, the act of registration is treated as a mere nullity.” 1 Story Eq., section 404.
¶4The appellants could not have done more than they did do. The recorder could not have recorded the assignment without a violation of his duty, and even if he had actually recorded it, his action would have been a mere nullity. There can be neither fault nor negligence where one does all the law permits him to do. Purdy v. Huntington, 42 N. Y. 334 (1 Am. R. 532). See opinion, Sutherland, J., 1 Am. R. 541. It was impossible for the appellants to have given notice, for there was no-way in which it could be done. They acquired rights in good faith, have been guilty of no fault, they are " equal in equity, and prior in point of time, and we know of no principle which will warrant the courts in depriving them of their rights.
¶5The contesting parties in this case are equal in equity, for both parted with value, and the appellants, as we have seen, were not, in anywise, in fault; therefore the maxim, " Where there are equal equities, the first in order of time shall prevail,” must be the governing rule. 1 Pom. Eq., section 413.
¶6The' authority of the mortgagee to release the mortgage terminated with the assignment. A recent writer thus states the rule: "After an assignment of the mortgage note the mortgagee can not discharge the mortgage if the note be ne- , gotiable and it be assigned to an innocent party, before due *524and for a good consideration, although the note be without any consideration; and satisfaction so entered will be vacated by a court of equity.” At another place this author says:, “ The notes in such a case become the evidence of the mortgagee’s authority to enter satisfaction of the lien.” 1 Jones Mort., section 814. In McCormick v. Digby, 8 Blackf. 99, it was held that the mortgagee had no authority to enter satisfaction after assignment, and this decision has received uniform approval from the text-writers. 4 Kent Com. 194; 1 Hilliard Mort. 230; 2 Washb. R. P. 129; Thomas Mort. 418; 1 Jones Mort., section 814.
¶7The release entered by the mortgagee after assignment of the notes was ineffective, and the only ground on which the assignees can be even plausibly said to have lost their rights is that of negligence. But it is legally impossible to conceive them guilty of negligence, for they had done nothing wrong, and had omitted nothing that they could do. If there had been a law authorizing the recording of assignments, then a very different question would face us.
¶8Promissory notes are articles of commerce, and pass from hand to hand by barter and sale. The transfer of a note carries the mortgage, for the former is the principal and the latter the incident. This is in accordance with the universal rule that the grant of the principal thing carries all the incidents. Matthews v. Wallwyn, 4 Vesey, 118; Jackson v. Blodget, 5 Cowen, 202; Green v. Hart, 1 Johns. 580; Johnson v. Hart, 3 Johns. Cas. 322. In Hubbard v. Harrison, 38 Ind. 323, it was said: “ The assignment of a mortgage, independent of the debt which it is given to secure, is an unmeaning ceremony.” It has always been the law of this State that the assignment of the note carries the mortgage. Blair v. Bass, 4 Blackf. 539. In Hough v. Osborne, 7 Ind. 140, the court said: “The only thing easily perceivable as to the transfer of the mortgage security without the notes, was its futility.” Garrett v. Puckett, 15 Ind. 485; Gower v. Howe, 20 Ind. 396.
¶9*525The assignment of a note negotiable by the law merchant carries the mortgage security, and in the hands of a bona fide holder the security is protected to the same extent as the note itself. Gabbert v. Schwartz, 69 Ind. 450; Bayless v. Glenn, 72 Ind. 5; Carpenter v. Longan, 16 Wall. 271; 1 Dan. Neg. Inst. 834; Clemens Corp., sec. 158.
¶10Promissory notes may be transferred by delivery. Hancock v. Ritchie, 11 Ind. 48; Speelman v. Culbertson, 15 Ind. 441; 1 Dan. Neg. Inst., section 729. So may a mortgage. 3 Pomeroy Eq. Jur., section 1210; 1 Jones Mort. 813. But. here there was a written assignment of the notes and a delivery of the mortgage. The appellants by the assignment to them of the notes acquired title, and' as they acquired the notes they also apquired the mortgage securing them. It would not have added to the strength of their title to have taken a written assignment of the mortgage, because, under the law as it stood at the time, no assignment could have been admitted to record. The fact that no written assignment was taken does not impair their rights or show them to be in fault, for the reason that had they taken one it would not have enabled them to give constructive notice by registry.
¶11Cases decided in States where the law provides for the registry of assignments can not be in point in a State where there is no law authorizing them to be recorded. This is the essential difference between many of the cases cited in argument and the one at bar. We must turn'to the common law for information, because, as there is no statute authorizing assignments to be recorded, we must look to the rights of the parties as they existed in the absence of such statutes. The case of James v. Morey, 2 Cowen, 246, was very ably argued, and the subject very carefully considered. Opinions were read by the Chief Justice and several other members of the court, and it was held that the assignee took absolute title as against subsequent mortgagees and bona fide purchasers, for the reason that there was no law authorizing the assignment of a mortgage to be recorded. Woodworth, J., in the course of *526his opinion, said : “ I have not met with any case that places the rights of the assignee on other or different ground, or that gives countenance to the suggestion, that the assignee must, at his peril, give notice to a subsequent assignee, or purchaser from the mortgagee. Such a doctrine is not only most unreasonable in itself, but would shake the foundation of security by mortgage assignment, hitherto deemed equal to that of the original mortgage, with the exceptions I have stated. It would, in fact, be no security, beyond the responsibility of the person making the assignment; for the assignee has no means of ascertaining how often, and to whom, the mortgagee may have subsequently assigned. Such notice is not necessary for the protection of a subsequent purchaser. The registry of the original mortgage is notice to him of its existence. If he will deal without asking for the mortgage or requiring it to be cancelled, he comes, without a semblance of equity, to demand that the prior bona fide assignee shall be postponed to his claim.” Again, the judge says: “ But is this pretended hardship anything more than every purchaser of land was liable to, since the existence of this government, until the last act requiring deeds to be recorded? Every grantpr had the power of conveying a second time,r,and no doubt the power was sometimes exercised by fraudulent .individuals. It was never seriously urged that the second purchaser had any remedy against the first purchaser, because his deed was not recorded or notice given.” Sutherland, J., said: “ If I have been successful in showing that the assignee is not bound to record the assignment, and that a voluntary registry would not be constructive notice to any person, then it necessarily follows, that whatever notice is required to be given must be actual and not constructive; for I know of no other act which can be supposed the assignee was bound to perform, from which notice could be inferred, except the act of registering. Now it is utterly impossible for the assignee of a mortgage to know with whom the mortgagee may subsequently deal in relation to the mortgaged *527premises.” Chief Justice Savage said: “I know of no law requiring the assignment of a mortgage to be recorded. If notice of the assignment is not given to the mortgagor, he is protected in any payments he may make to the mortgagee. And this is the extent of the risk run by the assignee, who neglects to give notice of the assignment.”
¶12A second mortgagee who finds on record a mortgage receives notice of its existence, and he must ascertain whether the release was executed by one having authority, for he is bound to know, as matter of law, that notes secured by mortgage are transferable as articles of commerce, and that, after transfer the mortgagee has no right to release the mortgage. He is bound, also, to know that he can obtain no notice from the record, because the law does not authorize the recording of assignments, and that he must, therefore, look elsewhere for information.
¶13Where notice can not be given by registry, then one who takes an interest in mortgaged property must ascertain that the person assuming to felease the mortgage is the holder of the notes -which it secures. It is unquestionably the law that where notice of title can not be given by record, the person seeking to secure rights must ascertain who is the owner of the mortgage, by tracing the notes to the hands of the assignees. It is said by Jones that “ Purchasers are bound to know that if the mortgagee has endorsed the notes before maturity to' a bona fide holder, the mortgagee has no longer authority to satisfy the mortgage; and therefore they are bound to ascertain whether the mortgagee still held the notes at the time.he discharged the mortgage.” 1 Jones Mort., section 814. In Wolcott v. Winchester, 15 Gray, 461, it was said : “As a purchaser, he must have known that the possession of the debt was essential to an effective mortgage, and that without it he could not maintain an action to foreclose the mortgage. The not finding it in the possession of the mortgagee, and not stipulating for any transfer of such debt, are circumstances that should estop him from setting up any title against *528a bona fide purchaser of the debt, who had possession of the bond and an assignment of the mortgage in due form to vest the legal estate in him as against the assignor, and only defective as to any others, in not being recorded.” The case of Kellogg v. Smith, 26 N. Y. 18, holds that the purchaser of a bond and mortgage, who fails to require the production of the bond, is chargeable with notice of defects in his assignor’s title. A much stronger case than those cited, or the one at bar, is that of Burhans v. Hutcheson, 25 Kan. 625, S. C. 37 Am. R. 274, where it was held that one who paid a commercial note secured by mortgage, without ascertaining that the note had not been transferred, did so at his peril, even though the statute authorized the recording of assignments ■of mortgages.
¶14It must be held that the purchaser of a note secured by mortgage, who can not give record notice of his rights, is entitled to protection as against subsequent encumbrances, or we must deny the negotiable value of such instruments. It is well said by Mr. Daniel, in maintaining the soundness of the rule we have stated, that “ The security of the mortgage may impart to the paper its marketable ■ value, as in the case of corporation coupon bonds, which rests mainly upon the basis of such security for their payment. And to sever the basis of credit from the obligation to pay would most frequently defeat the negotiation of these, or similar instruments, at anything like their par value.” Dan. Neg. Inst., sec. 834.
¶15It is impossible for one who acquired title to a mortgage by assignment prior to the act of 1877, to give notice of his title to all who might afterwards become interested'in- the mortgaged premises; all that he could do would be to take an assignment of the note and mortgage. On the other hand, it is both possible and practicable for one about to take a •second mortgage, to ascertain whether the original mortgagee had authority to execute a release. ■ No principle of law or ■equity will justify a holding that one who has omitted inquiry, where a duly recorded’ mortgage suggests inquiry and *529proclaims that action without inquiry is hazardous, shall be preferred to one who has acquired rights in good faith and has omitted nothing which the law permitted or required at his hands. Campbell v. Vedder, 3 Keyes (N. Y.) 174.
¶16The ease of Trustees, etc., v. Wheeler, 61 N. Y. 88, is not in point, because the person in whose favor the mortgage was released had acquired an interest in the land prior to the assignment of the non-negotiable bond secured by the mortgage. The case of Bank of the State v. Anderson, 14 Iowa, 544, is confessedly against the weight of authority, and is the decision of a divided court, followed in the subsequent case of McClure v. Burris, 16 Iowa, 591, with evident reluctance, and yielded to upon the ground of stare decisis. More than this, the recent case of Bowling v. Cook, 39 Iowa, 200, clearly shows that it is sustainable on the ground that the law authorized the recording of the assignment. In proof of this we quote the following: “The subsequent mortgagee would not be affected by an assignment of a prior mortgage unless charged with actual notice or the assignment has been duly recorded. Following this doctrine, we hold that if the party executing the second mortgage appear from the record to be the one to whom the first was executed and its assignment is not shown by the record, the equities of the second mortgage are superior to the first.” It is apparent, therefore, that the doctrine of the Iowa courts does not apply to a case where there is no law authorizing the recording of the assignment. Summers v. Kilgus, 14 Bush, 449, goes off on two points, one that the mortgage was executed to secure an antecedent debt, the other that the statute of Kentucky authorizes the recording of assignments of mortgages.
¶17Of the case of Fox v. Wray, 56 Ind. 423, it is only necessary to say that the point here in judgment was there neither discussed nor decided. Ayers v. Hays, 60 Ind. 452, does decide this question and against the views here declared, but it is evident that in that case the court proceeded on the *530theory .that assignments were entitled to record. We quote from the opinion the following: “ In the case at bar, there was nothing on record, when Hays and Butcher purchased the mortgaged property, indicating that Campbell had parted with the note in suit, or that it remained unpaid, or that Campbell was not fully authorized to enter satisfaction of the mortgage, or had made any mistake in such entry of satisfaction.” The whole force of the reasoning in that case is parried when it is considered that as there was no statute authorizing the recording of such instruments, the registry would have been an idle and unmeaning act. There are cases in our reports fully and directly sustaining the doctrine we now lay down. Directly in point is the case of Dixon v. Hunter, 57 Ind. 278, where the precise question was decided,, and was the one on which the. case turned. The language used in that case was very strong, the court saying that the proposition was too clear for argument. The third point decided in Lapping v. Duffy, 47 Ind. 51, is thus discussed: “It is also said,'that it was claimed by the incumbrances whose liens accrued after the entry of satisfaction of the mortgage was made by McClung, that they ought to be protected as purchasers for value, and without notice. We do not think so. According to the allegations of the complaint, McClung, at the time he entered satisfaction of the mortgage, .had no interest whatever in the debt, and made the entry without lawful right or authority. It is impossible that his act could, under these circumstances, be binding or obligatory on Lapping and Kerr, or could in any way affect their rights.” The case cited again came before this court, and although the former decision was expressly referred to, no question was made as to its soundness. The opinion delivered on the second appeal does, indeed, declare a principle which has an important bearing on the present case, for it declares that the recording of an instrument not required by law to be recorded is notnotice. Lapping v. Duffy, 65 Ind. 229. The case of Lapping v. Duffy, 47 Ind. 51, has been cited with approval in other cases than Dixon *531v. Hunter, supra,among them, Marshall v. Stewart, 65 Ind. 243, Teal v. Hinchman, 69 Ind. 379, Evansville, etc., Co. v. State, ex rel., 73 Ind. 219 (38 Am. R. 129), Hunt v. Elliott, 80 Ind. 245 (41 Am. R. 794); and Dixon v. Hunter, supra,is also cited in the first of these cases. On the other hand Ayers v. Hays, supra,does not, so far as we can ascertain, appear to have been even cited in any subsequent case. Burton v. Reagan, 75 Ind. 77, did not involve the question, for in that case the-answer averred that the appellants had notice of the rights of Hadley before the notes were assigned to them, and the question could not have possibly arisen. The case of Etzler v. Evans, 61 Ind. 56, is in harmony with Dixon v. Hunter, supra,rather than with Ayers v. Hays, supra.It was said in that case by Niblack, J., speaking for the court: “ Did the statement in writing, which the defendant John E. McClellan attached to the mortgage l’ecord, alleging that the consideration upon which the entry of satisfaction of the mortgage had been made had failed, operate- as constructive notice of the matters contained in such statement? We are of the opinion that it did not. It was not an instrument which the-law authorized to be recorded,”and “no one is bound to take-notice of the recoi’d of it.” It seems to us that if a statement attached to the entry of satisfaction, actually although not x'ightfully on the record itself, can not be regarded as impairing rights or putting persons in default, certainly no one can be in default for not recording what, in legal contemplation, it was utteidy impossible for him to record. We feel that it is our duty to follow Lapping v. Duffy, supra, and Dixon v. Hunter, supra,because they are in harmony with our own decisions, and because they are supported by sound principle.
¶18It will be observed that the case of Hasselman v. McKernan, supra,has never been questioned, and that there is an unbroken line succeeding it, while, as between Ayers v. Hays, supra,and Dixon v. Hunter, supra,there is irreconcilable conflict, and we must choose one or the other *532of them. There is no other alternative. If we overrule Hasselman v. McKernan, supra,we carry down many cases .and overturn the construction of a statute acted upon by the Legislature; while if we follow Lapping v. Duffy, supra, and Dixon v. Hunter, supra,and reject Ayers v. Hays, supra,we simply elect between two contradictory lines of decisions, and we think it far better to make choice of one of the two conflicting lines than to introduce more doubt and confusion by overruling Hasselman v. McKernan, supra.In the one case, we should unsettle what is harmoniously settled; in the other, we elect to follow one of two contradicting views, and disturb no settled and harmonious line of adjudications.
¶19The form which the case assumes in this court by the method of appeal, and by the character of the assignment of errors, precludes us from determining the equities of the appellants as between themselves, but the issues will have to be reopened and the entire proceedings changed and pleadings remodelled, for the error in adjudging Wilson’s lien to be the prior one pervades the entire cause.
¶20Judgment reversed, with instructions to proceed in accordance with this opinion.
¶21Dissenting Opinion.
¶22I feel constrained to dissent from the conclusion reached in this cause, as well as from some of the reasons upon which the opinion is made to rest. The deci•sion of the cause, as I construe the opinion, turns substantially upon the assumption that at the time Reeves purchased two of the Copeland notes, and received the mortgage securing them from Hayes, there was no law in force in this State authorizing the assignment of a mortgage to be recorded; that for that reason an assignment of the mortgage by Hayes to Reeves would have been unavailing as a means of affording notice to subsequent purchasers,- and that, in consequence, *533Reeves was not guilty of negligence in failing to obtain such an assignment from Hayes.
¶23In the first place, an assignment from Hayes to Reeves would have conferred upon the latter the legal as well as the equitable title to a proportionate interest in the mortgage,"and would, in some respects, at least, have very much strengthened his claim to a share in the benefits of the mortgage.
¶24In the next place, there was nothing decided in the case of Hasselman v. McKernan, 50 Ind. 541, which would have prevented Reeves from taking an assignment of an interest in the mortgage from Hayes, in a separate instrument in writing, executed with such formality as would have admitted it to record, and made the record of it constructive notice as much as the record of the mortgage itself. There has never been any rule of law, or anything in practice, that I am aware of, which has only permitted a mortgage to be assigned by endorsement, and it is only to assignments of mortgages made in that manner that the ease of Hasselman v. McKernanhas reference. The record of a mortgage might have been discharged, and the mortgage itself released by a separate instrument in writing. 2 R. S. 1876, p. 334, section 6. Then why might not a mortgage have been assigned in the same way ? I can not agree, therefore, that Reeves did all that he might reasonably have done to make his interest in the mortgage purchased from Hayes a matter of record.
¶25I am furthermore unable to resist the impression that the doctrine of the opinion antagonizes the spirit in which, as well as the purposes for which, our registration laws were enacted, and is, in fact, a departure from long recognized principles touching the subject of notice of secret equities in real estate.
¶26Let me illustrate: Suppose I have negotiated with C. for the purchase of a tract of land, but wish to feel assured that his title is good before accepting a conveyance; I go to the record affording information on that subject and there find that A. had purchased the land which C. is proposing to sell to me from the Government of the United States. Then *534turning to the record of deeds I further find that A. had conveyed the land to B., and that B. had conveyed it to C., in both cases by deeds regular upon their faces. Then suppose that, upon further examination, I find that no liens have been placed on record against the land, and hear of no secret ■outstanding equities in it adverse to C.’s title. . Under such ■circumstances I assume that no one will claim that I would not be safe in accepting a conveyance from C. without further inquiry. And yet if the doctrine of the opinion on the subject of secret equities be sound in principle, and hence, of general application, it would be my duty, in addition to what I may have done as above, to seek out both A. and B., and ascertain whether each had received all the purchase-money to which he was entitled, and whether one or the other or both might not have put some incumbrance on the land which the records of the county did not disclose. As a reason for thus extending and applying the doctrine of the opinion, it might be said that I must take notice of the fact that a vendor of real estate has, under ordinary circumstances, a vendor’s lien for unpaid purchase-money, and that the owner of land may, in many ways, put an incumbrance upon it without making the transaction a matter of record, and that, having notice that such a lien or incumbrance might have attached to or been put upon the land, I must, at my peril, ascertain whether the land is in fact free from all such liens or incumbrances.
¶27This may be regarded by those favoring the conclusion reached in the case as an extreme illustration of the extent to which the doctrine of the opinion might be carried. Concede this to be so, and still I am unable to see any difference in principle between the hypothetical case presented and the inferences we are justified in making from the arguments used in support of the opinion.
¶28If a subsequent purchaser may be put upon his inquiry as to what has become of the notes secured by a mortgage after the satisfaction of the mortgage has been entered in due *535form by the mortgagee simply^ because he is presumed to know that such notes were by law assignable, and may, in consequence, have been assigned to some stranger to the mortgage record, why may he not, for the same reason, be put upon his inquiry as to whether some previous owner may not hold a vendor’s lien, for unpaid purchase-money, or as to whether there may tnot be some outstanding but unrecorded mortgage, or other secret incumbrance upon the land? I confess my inability to answer this question. If we are to be put upon our inquiry in this way as to all kind of secret equities, what becomes of the supposed protecting value of our registry laws? 'Will not confidence in titles to real estate be greatly impaired by such a holding? The doctrine of caveat emptor has a very strong application to sheriff’s sales, and, in most respects, a purchaser of real estate at such a sale, simply takes the place of the execution defendant, and yet this court has decided that such a purchaser is protected against secret trusts of which he had no notice at the-time of his purchase. Milner v. Hyland, 77 Ind. 458.
¶29Section 5 of the act of May 4th, 1852, concerning mortgages, which was in force when the satisfaction of the mortgage in controversy in this case was entered, provided that every mortgagee of lands whose mortgage had been recorded, and who had received full payment of his mortgage, should, at the request of the mortgagor, enter satisfaction on the margin, or other proper place in the record of such mortgage, which should operate as a complete release and discharge thereof. 2 R. S. 1876, p. 334.
¶30It will be observed that this statute enjoined primarily, and in a literal sense exclusively, upon the mortgagee, the duty of entering satisfaction on the mortgage record where full payment was made, and it is only by a liberal construction of the statute that it can be held that any one else could take the place of the mortgagee in entering satisfaction of the mortgage. I submit, therefore, that when Wilson found, on examination, that Hayes had entered, satisfaction of the Copeland mortgage *536on the mortgage record, he had the right to assume, in the absence of actual notice to the contrary, that the entry of satisfaction had been entered in good faith, and by competent authority, and to act upon that assumption. It is only where the discharge upon the mortgage record has been entered by some person other than the mortgagee, that the subsequent purchaser is put upon his inquiry as to the authority of the person who entered the discharge. 2 Jones Mort., section 957.
¶31In the old case of McCormick v. Digby, cited in the opinion, this court said that “After a mortgagee has assigned the mortgage, he can not discharge any part of the premises from the mortgage,” and that case has been cited approvingly, and "followed, by Hilliard on Mortgages, and Washburn on Real Property, and perhaps other text-writers.
¶32Jones on Mortgages, at section 814, asserts a similar doctrine, but with more elaboration, adding that an entry of satisfaction by a mortgagee, after he has parted with his interest in the mortgage, will be vacated by a court of equity.
¶33As a general and as an abstract proposition, these authorities state the law correctly. A mortgagee, after he has assigned the mortgage, has neither the legal nor the moral right to discharge the mortgage, whether of record or otherwise. It is conceded that if he shall assume to discharge the mortgage after the assignment, his entry of satisfaction will be vacated, provided the rights of innocent third parties will not be thereby injuriously affected.
¶34I have no right to receive payment of a note executed to me after I have assigned it. Yet, if I receive the money due upon it from the maker before he has notice of the assignment, he will be protected. I have no right, either legal or moral, to make a fraudulent conveyance of my land to the injury of my creditors, but if I shall make such a conveyance, and the land shall come into the hands of an innocent purchaser, my creditors can not have the conveyance set aside. I am utterly without authority to make a second conveyance of land which I have once owned, yet if I shall make *537such a conveyance to an innocent purchaser, that is to say, to a purchaser without notice, either actual or constructive, of the fii’st conveyance, he will hold the land to the-exclusion of the first grantee.
¶35I am, therefore, not contending for the application of any new principle to this case. I am only insisting that principles, generally and thoroughly recognized as governing analogous cases, shall be applied to transactions concerning the discharge of mortgages, or' the release of mortgaged lands.
¶36Thomas on Mortgages, at page 142, states, in a nut-shell, the doctrine I am seeking to maintain, as follows: “ If a mortgage is discharged upon the record by a person who appears by the record to be the owner of it, even though it h.as actually been assigned, it will operate to cancel the mortgage as against subsequent purchasers and mortgagees in good faith and without notice, but as to all other persons, the validity of the mortgage will not be impaired.”
¶37Jones on Mortgages, at section 472, states the rule to be that “ The registration laws and the doctrines of priority by record generally extend to assignments of mortgages as well. The assignment is invalid against subsequent purchasers without notice unless it is recorded. Consequently if a mortgagee transfers the note secured by the mortgage, or makes a formal assignment of the mortgage which is not recorded, and afterwards enters a satisfaction of the mortgage upon the record, … the mortgage ceases to be a lien, as against one who purchases the property in good faith and without notice.” See, also, section 878. The same author, at section 791, says that “The assignee of a mortgage, as a practical matter, should always give notice of the assignment to the holder of the equity of redemption, so as to surely protect himself against payments which may be made in good faith to the assignor. The recording of the assignment is not of itself such notice of the assignment as will afford such protection.”
¶38At section 820 it is further said, that “An assignment by *538transfer of the debt only is effectual between the parties. The mortgage passes as an incident to the note. No assignment of the mortgage is necessary as between the parties, or as against the mortgagor or others having actual notice of the transfer of the notes. The mortgagor is bound to take notice of such an assignment upon the discharge of his debt, because proper diligence on his part demands that he should require the production of the notes before paying. But if the mortgagee, while the notes are in the hands of the assignee, cancels the mortgage on receiving payment from the mortgagor, who then makes conveyance or a new mortgage to another person, who acts in good faith and in ignorance of the fact that the original mortgage had not been paid to the proper party, such purchaser or subsequent mortgagee has the better title. Such subsequent purchaser or mortgagee is not bound to take notice of an assignment by transfer of the notes alone.”
¶39At section 967 it is still further asserted, that “ If the giving up of the mortgage notes, or a formal discharge of the mortgage, has been obtained by fraudulent means, this is no payment %nd discharge of the mortgage. In such case a subsequent mortgagee, whose rights existed at the time of such discharge, can not object to the prior mortgagee being restored to his rights. And so also the mortgage will be reinstated, not only as against the mortgagor, but against one who has purchased from him with notice of the mortgage, or without giving any new consideration, and in whose favor no new rights have intervened since the release. Of course the mortgage can not be restored as against one who has in good faith purchased the property after the cancellation, or has advanced money upon it upon the faith of a clear record title. The mortgage can not be restored when the rights of innocent third persons will be affected.”
¶40In the case of Bank of State v. Anderson, 14 Iowa, 544, commented on in the opinion, the facts were that Anderson mortgaged his real estate to one Mobley to secure certain negotiable notes. Before the notes became due Mobley sold *539and transferred them to the bank, but did not assign the mortgage. After this Anderson paid these notes to Mobley by conveying to him the mortgaged lands. Mobley thereupon, in his own name, by a proper writing upon the margin of the record, entered satisfaction of the mortgage.
¶41Afterwards Mobley borrowed money of the Artisan’s Bank of New York and secured its repayment by a mortgage on the same lands. Before taking this mortgage from Mobley the last named bank had the title examined by a competent attorney who reported that the lands had no incumbrance upon them. The Indiana Bank had no knowledge of the entry of satisfaction by Mobley and did not consent to it. The Artisan’s Bank acted in good faith and had no notice that the mortgage executed by Anderson had not been paid to the proper person.
¶42Upon these facts it was held that the second mortgage had priority. But the opinion says that this case is confessedly against the weight of authority. By whom is it so confessed ? Certainly not by the Supreme Court of Iowa, for as stated in the •opinion that court has followed that case in two later cases.
¶43In the recent case of Ogle v. Turpin, 102 Ill. 148, the court stated the law to be that where a mortgagee, after an assignment of his notes secured by his mortgage, acquires the equity of redemption, and enters a formal release of the mortgage upon the record, a party taking a mortgage from him on the same premises, without notice of the assignment of the notes, will acquire a lion superior to that of the holder of the assigned notes; also that as there is no presumption of law that the payee of. notes secured by mortgage has transferred the notes before purchasing the equity of redemption from the mortgagor, a person taking a mortgage from the payee will not be held chargeable with notice that the notes secured in the first mortgage have been assigned, but he may rely upon the record as showing title in his mortgagor.
¶44In the State of Kansas the registration laws, including a provision for discharging mortgages after they have been re*540corded, are very similar to ours. The Supreme Court of that State in the case of Lewis v. Kirk, 28 Kan. 497, also, very recently decided and involving the validity of the release of a mortgage by the mortgagee, after he had transferred the note by endorsement and the mortgage by delivery, reviewed some of its earlier decisions bearing on the same general subject in connection with the registration laws and other kindred statutes of the State. The concluding part of the opinion in that case is as follows:
¶45“Under these statutes we think it is perfectly safe for any person who has no notice of outstanding equities to purchase real estate which the records of the county apparently show is free and clear from all incumbrances. … If the-mortgage has been recorded and then has been regularly released on the margin of the record thereof by the mortgagee, then we think that any person, if he does it in good faith, may purchase the property in like manner freed from all liens and equities existing in favor of the holder of the mortgage; or in other words, and to state the proposition more succinctly, a purchaser in good faith of real estate may always rely upon the public records, subject only to the equities of persons in open, visible and exclusive possession of the property. A purchaser in good faith of real estate is never bound to take notice of secret equities, liens, interests, trusts or incumbrances, which can not be discovered from an inspection of the public records, or can not be ascertained by inquiries from the parties in possession. He may always rely upon the public records and such inquiries as they suggest, and such inquiries as are proper of the parties in possession; and if from all these the title appears to be clear, he will then obtain a good title, although there may be some outstanding-equity or lien in favor of some other person. … Where a real-estate mortgage is executed to secure the payment of a negotiable promissory note, such mortgage will so far partake of the negotiable character of the note that whenever' the note is transferred by endorsement before due so as to *541free it from-all equities existing in favor of the maker of the note, or prior endorsers, the mortgage will also be freed from such equities. But until the mortgage is recorded, such transfer will not prevent a third person, who has no notice of the mortgage or transfer, from purchasing the mortgaged property and thereby obtaining a full and absolute title to the property, free and clear from the mortgage lien. But when the mortgage is recorded, its negotiable character is then extended even to bona fide purchasers of the property, and it retains such character contemporaneously with the existence of the note to which it is an incident until the note is satisfied, or until the mortgage is released of record by the mortgagee, or his attorney, assignee, or personal representative; and that when the mortgage is so released it then loses its negotiable character to the extent that any third person who may then purchase the property in good faith will obtain the full, complete and absolute title thereto, freed from all equities, liens, interests, trusts or incumbrances existing in favor of any holder of the note and mortgage, whether the note is satisfied or not.” See, also, Burton v. Reagan, 75 Ind. 77. Other extracts of the same import might be given, and numerous other authorities holding substantially the same doctrine might be cited, but I deem it unnecessary to add anything further in that respect.
¶46I think most of the cases which seemingly hold a contrary doctrine will, upon a careful examination, be found to have reference only to the mutual relations existing between the parties to an assigned mortgage, and not to the rights of subsequent purchasers and subsequent mortgagees in good faith and without notice.
¶47Of this latter class are the cases of Carpenter v. Longan, 16 Wall. 271, and Gabbert v. Schwartz, 69 Ind. 450. Section 814 of Jones on Mortgages, supra, rests mainly, if not entirely, on that class of cases.
¶48I can not see that the cases of Wolcott v. Winchester, 15 *542Gray, 461, and Bayless v. Glenn, 72 Ind. 5, have any practical application to this case in any respect.
¶49One paragraph of the syllabus of the case of Trustees, etc., v. Wheeler, 61 N. Y. 88, to which reference is made in the opinion, is as follows: “ It seems that a release, executed by the mortgagee after assignment, to one acting in good faith and without notice of the assignment, is valid, and as effective to work such discharge as if executed by the assignee.”
¶50As to the case of Lapping v. Duffy, 47 Ind. 51, I need only say at the present hearing that it was made sufficiently distinguishable from a case like the one at bar by what was said in the case of Ayers v. Hays, supra, which this court now refuses to follow.
¶51The case of Dixon v. Hunter, referred to in the opinion, was not a parallel case with this in one essential respect, at least, and that is, in that case there was a formal assignment of the mortgage accompanying the transfer of the mortgage debt.
¶52Although the transfer of a debt secured by a mortgage carries the mortgage “security with it without an assignment of the mortgage, still, in such a ease, the legal title remains in the mortgagee, and it is only through a court of equity, or a court possessing equity jurisdiction, that the security afforded by the mortgage can be made fully available to theassignee of the debt.
¶53When a mortgagee transfers the mortgage debt, but fails to assign the mortgage, he becomes the trustee of the holder of the debt, and the value of the mortgage to the holder as a security must necessarily very much depend, as in cases of other trusteeships, upon the good faith as well as the business capacity of the mortgagee.
¶54When, therefore, any one purchases a debt secured by a mortgage, and fails to take with the transfer of the debt to him an assignment of the mortgage, he must be presumed to know that his interest in the mortgage, as a security, constitutes only a secret equity, which may be wholly lost or destroyed by the bad faith, mismanagement or mistake of the-*543mortgagee, and these contingencies ought to be taken into consideration by the purchaser in estimating the value of the mortgage debt.
¶55For the reasons given I can not escape the conclusion that Wilson is entitled to priority over the holders of the unpaid Copeland notes, and that, consequently, the judgment below ought to be affirmed.