Farr v. Doxtater — 29 N.Y. St. Rep. 531

Majority

p. 531

Archibald Farr, Pl’ff, v. Robert H. Doxtater el al., Def’ts.

(Supreme Court, Special Term, Oneida County,

Filed March 1, 1890.)

Headnote

Mortgage—Security for endorsements—When a continuing security.

Defendant gave plaintiff a mortgage expressed to be as “ security for the payment of any and all notes, checks and drafts endorsed by Farr for the benefit and accomodation of Doxtater, or of any firm in which Doxtater is interested or in any manner connected.” At the time of its execution there was but one such note outstanding which was made by the firm,but two notes were subsequently endorsed by plaintiff, which he was obliged to take up. Held, that the circumstances attending the execution of the mortgage, in connection with its terms, showed that it was not intended to be limited to past transactions; that it was a continuing security and covered the subsequent notes.

Action to foreclose a mortgage upon real property.

The defense is by a subsequent mortgagee, who seeks to show that nothing is owing the plaintiff upon Ms mortgage.

The plaintiff’s mortgage was given by Doxtater, bears date and was acknowledged June 18, 1888, but was not recorded until April 8, 1889. The consideration expressed in the mortgage was $15,000, and the mortgage was expressed to be, “ security for the payment of any and all notes, checks and drafts, endorsed by Farr, for the benefit or accommodation of Doxtater, or of any firm in which Doxtater is interested, or in any manner connected.”

Before the mortgage was given the plaintiff had been endorsing for the accommodation of Doxtater and his firm. And when the mortgage was given there was a note outstanding and unpaid, dated April 16, 1888, payable at three months, for $3,000, and interest, upon which he was endorser. This note was renewed at maturity, July 19, 1888, for two months, and the renewal note was paid at maturity, September 22, 1888.

October 22, 1888, plaintiff endorsed another note, dated that day, payable at ninety days, for $2,000. This note was renewed at maturity, January 23, 1889, for three months; and again renewed at the maturity of renewal note, April 26, 1889, for three months, and was, August 10,1889, paid and taken up by plaintiff, the amount being $2,005.01.

November 8, 1888, plaintiff endorsed another note, dated that day, payable at three months, for $3,000. This note was renewed at maturity, February 11, 1889, for two months; again renewed at maturity renewal note, April 15, 1889, for two months; again renewed at maturity renewal note, June 18, 1889, for two months, and was, August 30, 1889, paid and taken up by plaintiff, the amount being $3,005.91.

The plaintiff claims to foreclose his mortgage for the amount of the two notes paid and taken up by him, both of which are renewals of notes first given after the execution of the mortgage, but before it was recorded

p. 532

¡The defendant Nichols’ mortgage was executed and delivered, about August 9, 1888, to secure the endorsement of five promissory notes for Doxtater’s firm, amounting in the aggregate to-$25,000, and th@ mortgage was recorded July 24, 1889. November 4, 1889, Nichols was compelled to, and did, take up a portion of the notes that were unpaid, and paid thereon $14,115, no-part of which has been repaid to defendant

July 31, 1889, Doxtater’s firm made a general assignment for the benefit of creditors, as a firm and as individuals.

The assignee defends also in form, but gave no evidence to sustain his defense, and has submitted no brief or requests to find.

G. S. Flock, for pl’ff; Charles Lyons, Jr., and Merritt F. Sawyer, for def’t Nichols ; Matteson & Harvey, for def’t assignee.

It is claimed by the defendant Nichols that the mortgage of plaintiff secured only endorsements which had already been made, and did not secure endorsements to be thereafter made. There is no doubt but that the court may look into the circumstances, and may take paroi evidence for the purpose of determining what the intention of the parties was in making the mortgage. Agawam Bank v. Strever, 18 N. Y., 502 ; Merchants’ Nat. Bank of W. v. Hall, 83 id., 338; Simons v. First Nat. Bank of Un. Spr., 93 id., 269.

In 18 N. Y. the memorandum stated the note was left as collateral security for all liability incurred, and the proof showed there was at the time no liability, but liability was thereafter incurred. The court said that upon a strict grammatical construction the memorandum would be held to embrace only liability already incurred, but its meaning could hardly be regarded as so entirely clear and unequivocal as to exclude all aid from the circumstances surrounding the parties at the time of entering into the arrangement; that it was not usual to pay a very nice and critical regard to the grammatical rules in the use of language in the ordinary transactions of business; and no interpretation which depended upon a very rigid application of those rules could well be cdhsidered as so satisfactory as not to admit of modification by any species of extrinsic proof; and that the proof that there were no existing liabilities when the memorandum was delivered was of the highest importance, and left no doubt as to the true construction of the terms of the memorandum; that it referred to liability that should be thereafter incurred. Then as to whether the memorandum should be construed as covering a single liability, or as a continuing security, the court said there was no doubt but the words should be construed as creating a continuing security; that the words “ all liability ” were equivalent to “ any liability,” and were inconsistent with the idea of limiting the security to a single one. These considerations are quite pertinent to the language used in the plaintiff’s mortgage. The language used, strictly construed, would refer to past endorsements very likely; but when we consider that there was then but a single endorsement outstanding, and that upon the note of Doxtater’s firm, it is very evident, from the language used, the parties did not intend to limit.

p. 533

the security of the mortgage to that one endorsement The language is “ any and all notes, checks and drafts, endorsed for the benefit and accommodation of Doxtater, or any firm in which he is interested or any manner connected.’' And this language shows unmistakably that the intention was to secure not alone past but future endorsements, and that it was to be a continuing security.

In 93 N. Y., the language was “this grant is intended as collateral security for the payment of any indebtedness, etc., by note or otherwise.” The court said the language might refer as well to contemplated as to existing indebtedness, and the real intention of the parties might be and was shown aliunde, without infringing the rule which excluded paroi evidence to extend or change the meaning of written instruments. The court found the intention was solely to secure future indebtedness.

I must find the plaintiff’s mortgage covered and secured the two notes as alleged.

I do not deem it necessary to discuss any other questions raised in the case. My disposition of the requests on either side will indicate my conclusions as to any such questions.

Plaintiff’s attorney will prepare formal findings, and submit to attorneys for defendants for approval as to form and then to me. for signature.