Farr v. Nichols — 44 N.Y. St. Rep. 555

Majority

p. 555

Archibald Farr, Resp’t, v. John P. Nichols, Impl’d, App’lt.^[1]

(Court of Appeals, Second Division,

Filed April 19, 1892.)

Headnote

1. Mortgage—To secure endorsements—Continuing security.

In June, 1888, defendant D. gave a mortgage to plaintiff for $15,000, to secure him for the “ payment of any and all notes, checks and drafts endorsed” by him for the benefit or accommodation of said D. and his firm. Before the mortgage was given plaintiff had been endorsing for D. and his firm, and a $3,000 note endorsed by plaintiff was then outstanding. This was renewed in July and paid by D. in September. In August, 1888, D. gave defendant Nichols a mortgage upon the same premises for accommodation endorsements. Nichols had no notice of plaintiff’s mortgage and recorded his in July. In October and November plaintiff again endorsed notes for D. with no notice of the Nichols mortgage, which notes he was compelled to pay. Held, that plaintiff’s mortgage covered his payments on the two notes last mentioned and was not limited to past endorsements.

•■2. Same—Evidence—“ Endorsed."

As between the plaintiff and the mortgagor it was proper to show the amount of the plaintiff’s endorsements then existing, in order to aid in ascertaining whether they used the word “endorsed” in the mortgage solely with reference to such existing endorsements or with reference to existing and future endorsements.

Appeal by the defendant Nichols from a judgment of the •general term, fourth department, affirming a judgment entered upon the decision of the trial judge at special term.

The action was to foreclose a mortgage given by the defendant Doxstater to the plaintiff upon three parcels of land, June 18, 1888, and recorded April 8, 1889. The expressed consideration was $15,000, and it was given as security to the plaintiff for the •payment of any and all notes, checks and drafts endorsed by the .said Archibald Farr for the benefit or accommodation of said Robert H. Doxstater or of any firm in which, said Robert H. Doxstater is interested or in any manner connected.”

Before the mortgage was given the plaintiff had been endorsing

p. 556

for the accommodation of Doxstater and his firm. When the mortgage was given there was outstanding and unpaid one note at three months for $3,000, dated April 16, 1888, made by Doxstater and endorsed by plaintiff. This note was renewed at. maturity, and the renewal note paid by Doxstater September 22, 1888. Meantime and on August 9, 1888, Doxstater executed and delivered to the defendant Nichols a mortgage upon the same premises to secure the accommodation endorsement by Nichols of five promissory notes of the same date made by Doxstater’s firm and endorsed by Nichols amounting in the aggregate to $25,000. Nichols then had no notice of the mortgage to plaintiff. Nichols-recorded his mortgage July 24, 1889. Nichols subsequently was-compelled to pay upon these notes $14,115, no part of which has been repaid him.

October 22, 1888, the plaintiff endorsed another note for Doxstater’s accommodation for $2,000 at ninety days, which being renewed plaintiff paid in full August 10, 1889.

November 8, 1888, the plaintiff endorsed another note for Doxstater's accommodation for $3,000 at three months, which being renewed plaintiff paid in full August 30, 1889.

When plaintiff endorsed the two notes last mentioned he had no notice of the existence of the mortgage to Nichols.

The trial court held that plaintiff’s mortgage was a valid and' prior lien for the amount of plaintiff’s payments upon the two-notes last mentioned. The court refused to hold that the mortgage to plaintiff was not a continuing security, and refused to-hold that it only extended to the notes already endorsed by plaintiff at the date of its execution, and also refused to hold that it was invalid as against the mortgage given to Nichols.

Ojiarles Lyons and Merritt M Sawyer, for app’lt; Q. S. Kbclc, for resp’t.

The appellant claims that the plaintiff’s mortgage, by its terms, covered past endorsements only, and did not cover those for which recovery was had. This contention is based upon the terms of the mortgage, which declare it to be given as security for the payment of “ any and all notes, checks and drafts endorsed ”, by the plaintiff.

At the time plaintiff made his endorsements upon the last two-notes of the mortgagor he had no notice, actual or constructive, of the existence of the mortgage to the appellant. He, therefore,, had the same right to make endorsements upon the faith of his mortgage security as if the appellant’s mortgage had not been, made. Ackerman v. Hunsicker, 85 N. Y., 43 .

Evidence was received to the effect that when the plaintiff's-mortgage was given, the plaintiff was endorser for the mortgagor-upon only one note. That was for only $3,000, and as the consideration expressed in the mortgage was $15,000, and the mortgage was given to secure payment of “ any and all notes, checks., and drafts endorsed” by the plaintiff, the inference was justifiable: that a series of endorsements to the amount of $15,000; or nearly,, was within the contemplation of the parties.

p. 557

As between the plaintiff and the mortgagor, it was proper to-show the amount of the plaintiff’s endorsements then existing, in. order to aid in ascertaining whether they used the word “ endorsed ” in the mortgage solely with reference to such existing, endorsements, or with reference to existing and future endorsements. Agawam Bank v Strever, 18 N Y , 502 , Simons v. First National Bank, 93 id., 269. Merchants’ Nat’l Bank v. Hall, 83 id., 338.

Since the plaintiff was not affected by the appellant’s mortgage, it follows that the appellant was in no position to resist the application- of this rule of evidence.

The evidence showing the existence of the note when the mortgage was given, in connection with the evidence touching the two-subsequent notes, was necessary to enable the court clearly to understand the subject matter in controversy.

When the facts were understood the terms of the mortgage were also understood; they were not altered or varied. The-mortgage was for the protection of the plaintiff. The words “any and all notes, checks and drafts. endorsed ” are comprehensive words; there are no words restricting the meaning of the word “endorsed” such as, now, heretofore, already, or which have been. The plaintiff may construe the promise as beneficially to» himself as its terms will fairly admit.

We think the judgment should be affirmed.

Judgment affirmed, with costs.

All concur.