Owen v. Evans — 47 N.Y. St. Rep. 661

Majority

p. 661

James P. Owen, App’lt, v. Thomas C. Evans, Resp’t.^[1]

(Court of Appeals, Second Division,

Filed October 1, 1892.)

Headnote

Mortgage—Ownership—When a question for jury.

Sarah A. Evans, in 1871, in Kansas, gave defendant her promissory note for $750. and also a mortgage upon 160 acres of land in that state-In 1872 defendant assigned the note and mortgage to John Owen, and. guaranteed the payment. In 1889, John Owen purported to assign the-mortgage to plaintiff, “ together with the bond accompanying said mortgage, and therein referred to, and all sums of money due and to grow due; thereon.” This action was commenced in 1889 upon defendant’s guaranty, and defendant answered that in 1878 John Owen had assigned the; note and mortgage to Geo. H. Evans, the husband of the maker, and alleged that he is “still the owner and holder ” thereof. The evidence upon the trial consisted mainly of letters written by John Owen in New York to George H. Evans in Kansas, relative to the desire of the latter to buy the mortgage which the former threatened to foreclose unless paid,and also letters acknowledging payments on account. Cashier’s checks were also' put in evidence, the last one endorsed “being in full for amount due on S. A. Evans’ mortgage;” but this was returned as being too small. The court directed a verdict for plaintiff. Held, error; that the question of ownership should have been submitted to the jury.

Appeal from an order of the general term of the supreme; court in the fourth judicial department, reversing a judgment, entered on a verdict rendered for the plaintiff under the direction of the trial court.

This action was commenced May 20,1889, upon a written instrument dated November 25,1872, whereby the defendant guaranteed the payment of a note and mortgage on that day assigned by him to one John Owen, the assignor of the plaintiff. '

On the 20th of December, 1871, at Independence, Kansas, one Sarah A. Evans executed and delivered to the defendant her promissory note, dated at the time and place aforesaid, whereby she promised to pay to his order the sum of $750, as follows: $200' each year commencing March" 1,1878, until the entire amount was. paid, with annual interest at the rate of ten per cent “ payable-at the house of - George H. Evans, Cherry -township, Montgomery county, Kan.” At the same time she executed and delivered to. the defendant a mortgage upon 160 acres of land in said county and state as collateral security to said note. November 29, 1872,. the defendant, by an instrument under seal, assigned said note and-mortgage to one John Owen and guaranteed the payment thereof with interest at the rate mentioned. April 12, 1889, John Owen purported to assign the mortgage to the plaintiff, “ together with the bond accompanying said mortgage and therein referred to, and all sums of money due and to grow due thereon.” The answer put at issue the alleged transfer to the plaintiff and set forth among other defenses, that in 1878 John Owen for a valuable-, consideration assigned the note and mortgage to one George H.. Evans, the husband of the maker, and that he “ still is the owner and holder ” thereof.

Thomas S. Jones, for app’lt; M. H. Powers, for resp’t.

—At the close of the evidence the defendant asked leave “to go to the jury upon the question of whether or not there was a sale of the mortgage and note by John Owen to George H. Evans,” as well as “upon all the questions of fact in the case,” but the learned trial judge denied the application, and directed a verdict in favor of the plaintiff for the sum of $1,276.23, the entire amount claimed. The general term reversed the judgment entered on the verdict upon the ground that the question of ownership of the cause of action should have been submitted to the jury. The evidence addressed to that issue consisted mainly of letters written by John Owen, residing in Jefferson county, New York, to George H. Evans, residing in Montgomery county, Kansas, the answers of Mr. Evans, with a single exception, not having been produced. The following extracts embrace the material parts of the correspondence so far as it was read in evidence: ■“ July 29, (1877). I received a letter from Thomas, saying that you wanted to buy the mortgage of mine; „ to talk business, you can háve it for $1,000, that is throwing off $150. * * * Now, I would as leave take $1,000 as to come out there, for it would cost me a good deal to come out there; but if you do not see fit to buy the mortgage, I shall be out there this fall and shall be prepared to do something in regard to the mortgage on the property when I see the land.” “ September 3, (1877.) I received your letter, and in reply to it I would say that I would take for 'the mortgage $900, if you want it, if not, I will be out there soon.” ■“ November 29, 1877. I received your letter speaking of my brother wanting to come out there. * * * Now I want to know whether you want to pay me $900, or have me send my brother out there, for I am going to straighten it up some way soon." “January 27, 1878. I have concluded to take you to your offer-of $850, one hundred cash, $750 March next. I bad rather do that than to come out there, for I am all alone here this winter. I spoke to my brother of coming, but he is sick and cannot come at present” “February 17, 1878. I will let you have the mortgage if you pay me for it, as soon as you agree5 to pay me, for $850. I always do as I agree. All well.” “ June 9, 1878. I would like the balance of the money as soon as I can get it. Received of George Evans four hundred and twenty-five dollars to apply on mortgage, May 10, 1878.” (Signed) “John Owen. I received the draft about that time, I think.”

The following cashier’s checks drawn on a bank in Independence, Kansas, were produced by the defendant and read in evidence : 1. Api’il 20, 1878, for $425, payable to the order of G. H. Evans and endorsed by him as follows: “ Pay John Owen or order, being for one-half of amount due him oh S. A. Evans mortgage.” It was also endorsed by John Owen. 2. July 22, 1882, for $400, payable to the order of John Owen and endorsed by him. 3. October 28, 1882, for $154.50,' payable to the order of George H. Evans and by him endorsed over to John Owen, ■“ being in full for amount due him on the S.

p. 663

lor, under the date of November 15, 1882, in which he said “ Yours of a recent date with draft on New York for $154.50' enclosed is at hand, which contains an endorsement that it is a? balance due on a mortgage, which is not according to our understanding and therefore I return it I gave you a proposition in-1878 that if you would pay $850 down, I would give you-.the-mortgage, and you did not do it. I have given you the credit, for the amount paid them in 1882. Received another payment- and gave you the proper credit And now ask me to accept this-draft as a balance would be contrary to my precedent. There is,; now due on the mortgage about $900, and I will accept, if ptiidi before the 1st day of January, 1883, $500 in full, and you may let me know at once, as I have a chance to change it, and wish1, to do it at once.” A letter from Mr. Evans to John Owen, dated! October 7, 1877, was read in evidence by the plaintiff as follows : “Now, John, I will give you $100 cash down and the other $750 between now and March.” The two sums of $425 and $400' were not endorsed on the mortgage by John Owen until the; third cheek was returned, when, after taking counsel, he directed! the endorsements to be made as payments on the mortgage. The-amount of the three checks was equal to the price agreed upon.by John Owen and George H. Evans for the mortgage with interest.

In April, 1889, John Owen assigned the mortgage to the plaintiff, his brother, who commenced this action about one month-thereafter. This evidence, if it had been submitted to the jury,, would have authorized them to find that on the 27th of January,. 1878, John Owen agreed to sell the note and mortgage in question to George H. Evans for $850, payable $100 down and the' balance in the month of March following; that on the 20th of April, 1878, Mr. Evans paid Mr. Owen on said contract the sum of $425; that Mr. Owen by accepting said sum and requesting^ payment of the balance as soon as he “ could get it,” waived strict, performance of the contract as to time; that July 27, 1882, a further payment of $400 was made and accepted on the contract and an indefinite waiver of performance as to the remainder thereby entered into; that thereupon the circumstances required notice from Owen to Evans to pay the balance within a reasonable-time, before he could refuse to accept further performance on the part of Evans, or decline to perform on his own part; that no1 notice was given, and on October 28, 1882, the amount unpaid on; the contract, with interest, was tendered by means of a cashier’s check, which was refused on grounds other than because it was not a legal tender. These facts, if found by the jury, would have required the conclusion of law that Mr. Evans had fully performed his agreement and was entitled to the note and mortgage. After performance by Evans of the contract to-purchase, Owen had no personal interest in the note or mortgage, but by operation of law held simply the naked title as trustee for Evans, with no power to enforce the securities, or to do anything with them except to transfer them pursuant to his agreement. Evans was the equitable owner thereof when Owen, who had no?

p. 664

beneficial interest left therein, assumed to assign them to the plaintiff, who is not- “ the real party in interest ” within the meaning of § 449 of the Code of Civil Procedure, because he had no personal interest, nor is he “ a trustee of an express trust ” under that section. He was not shown to be, and he does not claim to be, a hona fide purchaser. The assignment to the plaintiff simply recites “ á good and valuable consideration,” and he testified that he paid “a certain lot of stuff ” for the note and mortgage; “in all $428, part of it in money and part of it in property.” He did not state how much of the sum named was paid’ in money, nor what the property was worth. He bought the securities, nearly twenty years old, payable in Kansas, and there executed ■ by parties who had, since the delivery thereof, continuously resided in that state, where the statute of limitations was shown to be “five years * * ° * upon any agreement, contract, or promise in writing, whether sealed or unsealed.” Ho payment had been made upon either the note or mortgage for seventeen years when the plaintiff bought thfem from his brother and, although he lived in the same village as the defendant, it did not appear that he made any inquiry of him with reference to the matter.

According to the rule, well settled in this state, however it may' be elsewhere, the plaintiff, as assignee of the note and mortgage when both were past due, took those securities subject to all the equities which third persons could enforce against his assignor. Our courts recognize no distinction between equities existing in favor of the mortgagor and those existing in favor of a third person, but hold that, in the absence of an estoppel, an assignee of a mortgage takes only the interest of his assignor and subject to any latent equity in favor of any person. Bush v. Lathrop, 22 N. Y., 535 ; Schafer v. Reilly, 50 id., 61; Trustees Union College v. Wheeler, 61 id., 88; Greene v. Warnick, 64 id., 220. The recording act of this state has no application because the mortgage did not coverany land situated therein and it does not appear what protection, if any, is provided by statute in the state of Kansas for the benefit of an assignee of a mortgage. It does not even appear that any of the assignments of the mortgage in question was ever recorded.

It is our duty to assume that the jury would have found the facts in accordance with the defendant’s theory, if the question of ownership had been submitted to them. Stone v. Flower, 47 N. Y., 566 ; Baylies on New Trials and Appeals, 186.

Upon that assumption we think that the plaintiff had no interest in the note or mortgage that he could have enforced against the mortgagor and hence that he had no cause of action against the defendant upon his guaranty of performance by the mortgagor.

The order appealed from should, therefore, be affirmed and judgment absolute rendered against the appellant, with costs.

All concur.