Foster v. Beals — 21 N.Y. 247

Majority

p. 268

Foster v. Beals.

Headnote

Receipt.—Constructive Notice.

A receipt, signed by a mortgagee, is not, per se, sufficient evidence that the money was paid at the time it bears date, as against a bond fide as-. signee of the mortgage.

The non-production of a mortgage, at the time a payment is made on account, for which a plausible excuse is given, is not sufficient to afiect the mortgagor with notice of a prior assignment; even though the mortgagee be insolvent.

Appeal from the general term of the Supreme Court, in the seventh district, where judgment upon the report of a referee had been affirmed.

This was an equitable action to stay the foreclosure of a mortgage by advertisement, and to compel the holder to discharge the same, on receipt of an amount tendered by the plaintiff.

th® 23d May 1851, the plaintiff executed the mortgage in question to one Boyce, conditioned for the payment of $2983, with interest, on or before the 1st April 1854. On the 4th June 1851, Boyce assigned the mortgage to the defendant Beals. On the 6th June 1851, the plaintiff, in good faith and without notice of the assignment, paid to Boyce’s agent the sum of $850,.on account of the mortgage-debt. The securities were not produced, though the plaintiff inquired for them; but it was suggested, they must be at the county clerk’s office for the purpose of being recorded. On the 30th June 1851, the plaintiff made a-further payment, under similar circumstances. The referee allowed both these payments; and also another payment of $234, the only evidence in reference to which was a receipt in the handwriting of Boyce, dated the 31st May 1851; there was no proof of the time of its execution, other than the date. The de

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fendant excepted. The question was, whether these facts were sufficient to affect the defendant with constructive notice of the assignment of the mortgage, and to put him on inquiry. *The referee decided that they were insufficient for that purpose; and judgment having been entered on his report, and affirmed at general term, the defendant took this appeal;

Smith & Lapham, for the appellant.

Ghesebro, for the respondent.

After stating the facts, and coming to the same conclusion as the referee on the question of bona fides, and holding that the facts were insufficient to put the plaintiff upon inquiry, proceeded:—

We think, however, the referee erred in admitting the receipt of Boyce of May 31st, 1851, as evidence of the payment to him, on that day, of the sum of $234, on the bond and mortgage. A written receipt for money is but the admission of the party giving it, and is always capable of explanation; it is the'declaration of the party, attested by his signature. It has no greater significance from the circumstance that it is reduced to writing and-signed by him; if made by paroi, it would be of equal value. It has been supposed, since the decision of Paige v. Cagwin ( 7 Hill 361 ), in the court of errors, that the rule was settled in this state, that the declarations or admissions of the assignor of a chose in action could not be given in evidence against an assignee for value. This case was reviewed by Parker, J., in Smith v. Webb ( 1 Barb. 230 ), where he says, it was held in that case, that the declarations of a prior holder of a note, transferred after maturity, or of a vendor of a chattel, are not admissible in evidence against a subsequent purchaser, who acquired title for a valuable consideration; and that such declarations are only admissible, when made by a party

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reall>T *n illierest, or by one through *whom the plaintiff claimed by representation. The rule is only applicable, where there is an identity of interest between the assignor and assignee. This identity of interest is said in Fitch v. Chapman ( 10 Conn. 8 ), to exist “ when the nominal party was suing in fact for the benefit of a ■ third person.”

This court, in Booth v. Swezey ( 8 N. Y. 276 ), approves of thti cases of Paige v. Cagwin and Smith v. Webb. In that case, it was held, that in an action, brought by the assignee of a mortgage to foreclose the same, the declarations of the mortgagee, -made by him prior to the assignment, were inadmissible to impeach the mortgage, and to show that it was given upon a usurious consideration. It is true, that Judge Morse, in his opinion, says, that a receipt given by the mortgagee stands upon a different footing, as an act of the parties. The ground of the distinction is not perceived; the making of a usurious agreement which, if proved, would invalidate the whole mortgage, is as much the act of the parties, as the payment of a part of the moneys secured thereby, and the giving of an acknowledgment by the party receiving it, that it had been paid. Suppose, in Booth v. Swezey, the mortgagor had offered the written history of the inception of the mortgage, signed .by the mortgagee, and which would have shown its usurious character, would the offer have been in any the less objectionable form ? We do not see that it would, and the same reasons which would require its exclusion in one form, are equally applicable to its exclusion in the other.

The great objection to this class of testimony is, that it seeks to establish by hearsay or'secondaiy evidence, what can be shown by better and more satisfactory proof. The case of Jermain v. Denniston, in 6 N. Y. 276 , is relied upon as holding a contrary doctrine. That case was decided the year before Booth v. Swezey, and some of the judges who sat in that case, and who concurred in the decision of

Dissent

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it, took part in the decision of the former case. In Jermain v. Denniston, it was said, that admitting the doctrine of Paige v. Cagwin to the fullest extent, it ¿ould not apply, when the previous holder of a note, while he owned it, put into the hands of the maker, in the usual course of business, "“"written evidence of its payment and t * J discharge. That is not the present ease, and does not therefore control it.

The judgment in this cause must be reversed, and a new trial ordered, with costs to abide the event of the action.

(Dissenting.)—The payment made before the assignment, was primé facie proved by the receipt of the mortgagee. ;(1.) The holder of the-receipt is entitled to the benefit of the presumption usually allowed in respect to written instruments, that it was given at the time it bears date. (2.) That fact being presumed, the receipt ought not to fall within the rule that, the mere declaration of a former holder of a chose in action is not admissible in evidence, in a controversy between the debtor and an assignee. A receipt in full has a legal operation (at least prima fade) as a discharge of the debt; and a receipt of a partial payment should operate as a partial discharge. Such an instrument presumptively shows an actual transaction, in which both the parties wore actors, and it stands on higher ground than a mere declaration, which may be made to any one, when the party in whose favor it is made is not even present. It is scarcely expedient to extend the rule which excludes declarations of that nature. It seems to me a rule of great convenience, that written acknowledgements of this kind, given by a creditor to his debtor, shonld be taken as true, in the debtor’s favor, until they are disproved or some suspicion is thrown upon them.^[1] The doctrine, if not fully sustained,-is certainly very strongly countenanced in some

1 See Barclay v. Morrison, 16 S. & R. 129.

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of the adjudged cases in this state. (See Sherman v. Crosby, 11 Johns. 70 ; Rawson v. Adams, 17 Johns. 130 ; Booth v. Swezey, 8 N. Y. 276 ; Jermain v. Denniston, 6 Id. 276 .)

I think, the referee was also right in allowing the two payments made to the mortgagee after the assignment. In order to perfect an assignment of a chose in action, and protect the assignee against future payments to the ass^nor’ no^ce should *be given to the debtor. If the assignee neglects to give such notice himself, he must, in order to avoid the effect of a payment to the assignor, show that the debtor, before^ making it, in some other Avay acquired a knowledge of the fact. (Reed v. Marble, 10 Paige 413 ; 1 R. S. 763, § 41; Adams’ Equity, 53-54.) Notice may be inferred, of course, from the circumstances attending the transaction; but the true question is always one of good faith.

The referee, in this case, has found that the payments Avere made without notice of the assignment and in good faith. The particular facts stated in the finding certainly do not overthrOAV that conclusion; in other Avords, those facts do not compel us, as a legal inference, to impute notice and bad faith. It is true, the securities Avere not present, when the payments Avere made, nor was the supposed creditor personally there. The payments AA-ere made to an agent; the plaintiff inquired of him for the papers; they Avere searched for and not found; the plaintiff suggested that they might by. at the clerk’s office for record, and the agent stated that such was probably the fact. The fact suggested AAras by no means improbable, as to the mortgage at least, because it had been only recently given, and might Avell be at the clerk’s office for record. It is difficult to believe that these payments Avere made in bad faith, and Ave certainly cannot say so, in opposition to the conclusion of fact found at the trial.

The case of Brown v. Blydenburgh ( 7 N. Y. 141 ) is cited for the appellant, but the circumstances of that case

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distinguish it from the present. The conveyance there was made to the creditor, in full satisfaction of the mortgage-debt, and, of course, .the securities ought to have been delivered up at the same time. The transaction was with the mortgagee personally, and no inquiry was made of him for the securities, nor did he make any representation or suggestion intended or calculated to mislead. Such being the facts, this court affirmed the decision of the-court below, where the question had been determined against the mortgagor; the question was one of fact, as. it is in the present case. The decision is clearly not an authority requiring us to hold, as matter of “"law, that the plaintiff was chargeable with notice when he made the payments in question. The judgment should, be affirmed.

Denio and Bacon, JJ., also dissented.

Judgment reversed, and new trial awarded.

Cases cited

Smith v. Webb 1 Barb. 230 N.Y. Sup. Ct. 1847-10-25 p. 269
Booth v. Swezey 8 N. Y. 276 N.Y. p. 270, p. 272
Sherman v. Crosby 11 Johns. 70 N.Y. Sup. Ct. p. 272
Rawson v. Adams 17 Johns. 130 N.Y. Sup. Ct. p. 272