The facts of this case are fully set out in our opinion filed herein on June 4th, 1938.
Portions of the decree appealed from were set out in that opinion, among which was a finding of fact, as follows: *Page 870
"(3) That Francis M. Dolan as Trustee holds title to six (6) promissory notes described in the plaintiff's Bill of Review, three (3) of which are in the amount of Two Thousand Three Hundred Fifty and No/100 Dollars each, and three (3) of which are in the amount of Five Hundred Fifty and No/100 ($500) Dollars each, said notes being executed by Walter J. Dolan Properties, Inc., a corporation, unto O.L. Dayton as Trustee, and that the said Francis M. Dolan holds the legal title to said promissory notes as Trustee for the maker of said notes, to-wit: Walter J. Dolan Properties, Inc., and the Court further finds that the lien of said mortgage notes has become merged with the legal title of said real estate."
This finding of fact, except as to the fact that the lien of the mortgage notes had become merged with the legal title is amply supported by the record and, therefore, should not be set aside or overruled by the appellate court.
Upon this and other findings of fact, the Chancellor decreed:
"That the said lien of the said six promissory notes so held by Francis M. Dolan as Trustee has become merged with the legal title of said real estate, and the said Francis M. Dolan as such Trustee is hereby directed to enter a satisfaction of said notes of record within (5) days of the entry of this decree, and upon his default or failure to so do this decree shall operate as a satisfaction of the lien of said notes so held by the said Francis M. Dolan as Trustee."
In this connection we said:
"Under the circumstances set forth above, when the maker of notes has transferred the mortgaged property to another corporation for valuable consideration, and the notes are thereafter purchased by one who is alleged to be a trustee for the maker of the notes, with money alleged to *Page 871 have been obtained from a third corporation, and there is lack of proof showing the identity in fact of the grantor and grantee corporations, or of the grantor and the third corporations, there is an insufficient showing of facts under the rules laid down by this court for the occurrence of a merger. Therefore, we think the Chancellor below erred in holding that a merger occurred as to said six notes, under the allegations and proofs here produced," * * *
While our holding in that regard was correct, we failed to duly consider and state what the adjudication should have been on the finding of fact hereinabove quoted in the event merger did not occur.
On consideration of the cause pursuant to rehearing granted, we find and hold that the only material error disclosed by the record is the adjudication that merger occurred.
It conclusively appears, however, that appellee was entitled to the relief prayed whether the merger existed or not because the duty rested on Walter J. Dolan Properties, Inc., to pay off and discharge the said notes and when Francis M. Dolan acquired the legal title to the notes in trust for the use and benefit of the maker of the notes, to-wit: Walter J. Dolan Properties, Inc., that transaction constituted a payment and discharge of the notes so acquired and left the mortgage standing securing the remaining outstanding notes.
So the decree was erroneous in so far as it adjudicated a merger but was without error in adjudging that the notes in the hands of Francis M. Dolan as trustee were paid off and discharged by operation of law on the acts of the parties.
So the decree stands reversed as herein indicated and the cause is remanded with directions that the Chancellor enter *Page 872 decree in favor of the complainant in the court below, appellee here, not inconsistent with the views herein expressed.
The costs of this appeal shall be taxed one-half against the appellant and one-half against the appellee.
So ordered.
WHITFIELD, TERRELL, BROWN and CHAPMAN, J.J., concur.
