Durfee v. McClurg

6 Mich. 223 | Mich. | 1859

Lead Opinion

Manning J.:

On the 14th November, 1855, and previous thereto, Benjamin C. Durfee, complainant’s husband, and one Moore, were partners in trade under the name of Moore & Durfee, and the firm was indebted to defendant in the sum of fifteen hundred dollars, for which amount he held the notes of the firm. He also held three other promissory notes of the firm, given on that day, for six hundred dollars each, payable in six, nine, and twelve months, with interest at ten per cent. On the same day, two mortgages were assigned to defendant, both given by one Berry — one to complainant for eighteen hundred dollars, and assigned by her and her husband to defendant; and the other to her husband for nineteen hundred dollars and odd, and assigned by him to defendant. The mortgages bore even date, and one or more payments had been made on each. Both assignments were absolute on their face. The mortgages and assignments were delivered to defendant by complainant’s husband, and defendant at the same time gave to him a receipt describing the mortgages, and stating defendant had received them of Benjamin C. Durfee, as collateral security for the payment of the aforesaid notes of Moore & Durfee, and of an individual debt Durfee was owing defendant. By a subsequent agreement, made in May or June, 1856, between Moore, Durfee, and defendant, the latter purchased Durfee’s interest in the co-partnership; and in the settlement then made between the three, the notes of the firm and the individual debt of Durfee were paid, and the mortgages were transferred to defendant.

Complainant files her bill for a re-assignment to her of the eighteen hundred dollar mortgage, and for all payments made on it to defendant, stating in her bill that the mortgage was assigned by her to defendant as collateral security for the payment of the aforesaid notes of Moore & Durfee, and the individual debt of her husband, and that the notes and debt had been paid.

There is nothing on the face of the mortgage, assignment, or receipt, nor is there any parol testimony, showing complainant was a party or actor in any of the transactions between defendant, and Moore, and her husband, Benjamin C. Durfee, unless the assignment of the mortgage by her and her husband to defendant is to be regarded in that light. The assignment, it is to be observed, is absolute on its face; and the receipt given by defendant is to her husband, and not to her, and does not mention her name, except in describing the mortgage and assignment in the body of it. If the receipt had been made to her, or to her and her husband, the case would be altogether different. It would show she was a party to the delivery of the mortgage and assignment to defendant, and that she had not parted with her interest in the mortgage to her husband, and at his request assigned it to defendant.

If she did not intend he should have the absolute disposal of the mortgage, she should have made the assignment conditional, or had the receipt taken in her own name. From the facts before us, we can not say the assignment was intended by her as security only, and that there was no intention to part with her interest in the mortgage, to her husband, unless it be a legal inference to be drawn from the circumstance of the mortgage having belonged to her before the assignment. The law draws no such inference.

She was not present when the mortgage and assignment were delivered, nor does it appear there was any negotiation between her and defendant as to the mortgage or its assignment, or that her husband was acting in her behalf, or as her attorney, or not solely for himself. As her agent, the assignment would be equivalent to a power of attorney authorizing him to sell the mortgage to defendant; and any instructions given him to the contrary, unless brought home to the knowledge of defendant, would not affect him. The great difficulty is, there is no evidence the assignment was intended by the wife to be conditional.

Real and personal property belonging to a married woman may be “ contracted, sold, transferred, mortgaged, conveyed, devised, or bequeathed by her, in the same manner and with the like effect as if she were unmarried.” —Comp. L. p. 966, §3292.

The reason why complainant’s husband joined in the assignment, probably, was that the statute (Comp. L. p. 965, §3289), before it was amended, in February, 1855, required the husband to give his consent to all transfers made by the wife of her individual property, and the parties, most likely, were not aware, at the time, of the alteration in the law. Since the amendment, we think, we should treat all contracts of sale by married women as we would were they made by a feme sole. If complainant had been unmarried, there would be nothing in the case showing she did not intend, by assigning the mortgage, and delivering it and the assignment to Durfee, to give him the absolute control and disposition of it, and we see no reason why her rights should be placed on any different footing on account of her coverture.

We should not, without some evidence at least, presume her husband has deceived her; and even if he has (we suppose the case, for there is no charge of the kind), inasmuch as she has, by her' own act, enabled him, not only to deceive her but defendant, she, instead of defendant, should be the sufferer.

It was said on the argument, the answer admits the assigment was made by complainant as security.

The bill waived an answer on oath, and a replication was filed. When no replication is filed, the answer is received as true, and is evidence. When a replication is filed, it is not evidence, but complainant may use it as an admission by defendant of a fact necessary to establish his case. He can not, however, use a part of the answer, and exclude other parts relating to the same subject that would b,e responsive to the bill had the answer been under oath.

In the answer, defendant admits “complainant, jointly with her husband, did make, execute, and deliver to him an assignment of the mortgage as “ collateral security.” Here is an ■admission that the assignment was delivered to defendant, by complainant and her husband, as security. Defendant means nothing of the kind, as is evident from other parts of his answer. A few lines lower down, after describing the mortgage, and debts to be secured by it, the answer says: “ But whether said assignment was made by complainant at the request of said Benjamin C. Durfee, or not, the defendant has no knowledge, and can not state. But he avers he never saw said complainant, or ever transacted any business with her.” A little lower down still, the answer says: “ That he had no privity of contract, of any kind, with complainant, and knew not then, and knows not now, what were her rights or interests in said mortgage, or what induced her to join her husband (the said Benjamin) in assigning the same to him.”

The decree of the court below must be affirmed, with Costs.

Martin Ch. J. concurred.

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Dissenting Opinion

'Christianoy J.:

I am unable to agree in the opinion of my brethren in 'this case. I do not, however, propose to discuss the case at large, but to state the points on which I differ, and briefly to indicate the .grounds of that difference.

I agree with my brethren in holding that, under the statute of 1855 {Comp. L. §§3292 to 3296), we are to treat the transactions disclosed by the case, and the rights' of complainant growing out of them, as if she were a feme sole; with this qualification, that I am not prepared to admit the competency of the wife to contract directly with her husband, or to sell her mortgage to him. — See Graham v. Van Wyck, 14 Barb. 531. I agree with them, also, in supposing that the reason why the husband joined in the assignment of the wife’s mortgage, was either that the parties were not aware of the recent alteration of the law, which rendered it unne-. cessary, or that they were doubtful of the effect of the alteration. In either case, however, I think the fact of his having joined in the assignment, wholly immaterial, neither adding to, nor detracting from, the effect of the assignment;-, and that the rights of the parties stand exactly upon the same footing as if the assignment had been executed by her alone.

But, though the assignment was absolute on its face, yet the bill, answer, and proof all show it to have been made only as security for the payment of certain notes of Durfee, and Moore & Durfee; and there is not a pretence or suggestion on the part of the defendant that the assignment was made- or delivered to him for any other purpose. The answer not only clearly and distinctly admits this, but shows that it was in pursuance of a previously proposed arrangement between defendant and Durfee, and that the latter “offered to procure the assignment for his (defendant’s) security.” The answer and the proof clearly showing that this assignment was so made and delivered, as and for the security of the notes mentioned, I am at a loss to perceive how, in a court of equity, as between complainant and defendant (assignor and assignee), it can be supposed to give to the latter any greater rights in or over the mortgage, than if it had distinctly declared, upon its face, that it was given as such security only. The effect between them, as to all beneficial or substantial interest in the mortgage, is, I think, precisely the same as if so expressed.

The defendant had full notice by the mortgage itself, as well as by the assignment, that the mortgage was the property of complainant, and not of her husband. There was nothing on the face of the papers, or in the nature of the transaction, to warrant any inference on his part that she had sold the mortgage to her husband (if it were compe* tent for her to do so), or given him power to sell it. It was not assigned to the husband, nor was the title in anyway vested in him. The assignment was directly to the defendant himself. Had it been assigned to her husband, so as to vest him with the title, or had it been a certificate of stock, or negotiable paper, endorsed in blank, the possession of the husband would have been prima facie evidence of ownership, and the defendant would have been justified in dealing With him as the owner. It was claimed, on the argument, that the case might be placed upon this ground, as the mortgage discloses the fact that it was given to secure a note. But the answer to this suggestion is, that it does not appear whether the note was negotiable; and the answer of defendant sets up no such claim, but claims the mortgage under the assignment only, and the subsequent arrangement with the husband. My brethren seem to me to view this case as if complainant had vested her husband with the indicia of OAvnership, so as to authorize the defendant to deal Avith him as the owner. If I could so understand the fact, I should agree in their conclusions. But the mere placing the mortgage in the hands of the husband, with an assignment of it to the defendant, and for the purpose of delivery to the defendant, Avas not, it seems to me, vesting her husband with any indicia of OAvnership, especially when it Avas distinctly understood, by defendant, that he was receiving it only as security — a purpose entirely consistent with her continued general ownership. The ■ indicia of OAvnership Avere given to the defendant, not to the husband, as security only, and not as a sale. It is fair to presume, and the defendant had a right to infer, that complainant had been informed of the proposed arrangement between himself and the husband, by Avhieh the husband undertook to procure the assignment as security; and had that arrangement or understanding been for the sale of the mortgage, doubtless the production, and delivery by the husband to him, of the assignment in this absolute form, Avould have given him the right to infer' that she had been informed that the purpose of the assignment was a sale. But when the proposed arrangement between him and the husband was for a transfer only to secure the payment of certain notes, and he received it only as such security, he had no right to infer, and no court, I think, can infer, that she had assented to an absolute sale, as she could not have ‘been informed that such was its purpose, unless the information was false. She assented to the arrangement actually proposed, and not to one which was not proposed, and had not been thought of. This assignment created, of itself, a privity of contract between complainant and defendant, as much, as if she had been present and transacted the business in person. The denial of such privity of contract in the answer, is merely a denial of the legal effect, or of an inference of law.

The legal effect of the transaction by which this mortgage was assigned and delivered to the defendant, and received by him, is, I think, in a court of equity, a contract between him and complainant, that he might hold the mortgage as a security for the notes (which it was assigned to secure); that if those notes were not paid by the parties liable on them, as they became due, he might collect and apply the mortgage money for that jrarjDose, so far as it would extend, and so far as necessary; but if the notes should be paid, or extinguished, by the parties liable on them, the mortgage should revert to her; that he, in that event, .would re-assign it to her; and that after payment, and until such re-assignment, he would hold it as a mere naked trustee for her, and that if he had, in the mean time, received any payments upon it, he should account to her for the amount.

But it seems to be supposed that the receipt given by defendant for the mortgage and assignment, being given to complainant’s husband and not to herself, alters the effect of the transaction, and prevents its enuring to her benefit. I think it entirely immaterial to whom the receipt was given, or whether any receipt had been given; and if given to any other person, it could not have the effect to prejudice complainant’s rights as between her and defendant. — Vartie v. Underwood, 18 Barb. 561. The mortgage was hers; She assigned it to defendant as security; he knew and acknowledged the fact; he can not claim it as a sale. Subject only to his right or special property in it, as a security, the general property and beneficial interest in it, in equity, still belonged to her. — Henry v. Davis, 7 Johns. Ch. 40 ; Slee v. Manhattan Co. 1 Paige, 48; Hoyt v. Martense, 16 N. Y. 231; Norton v. Warner, 3 Edw. 106. He was not the general owner, and could not transfer to another person, having notice, any greater right than he possessed.— Sweet v. Van Wyck, 3 Barb. Ch. 647; nor, as between himself and her, could he make any transfer of it to the prejudice of her rights, or which should prevent her from obtaining the-full benefit of the mortgage when his debt should be paid; nor could he, by this receipt, or any other arrangement with the husband, transfer to the husband her right. When the mortgage and assignment were delivered to, and accepted by, defendant as security, the transaction, so far as complainant was concerned, was complete, and the respective rights of the parties became fixed. There was nothing left to be done by the husband, except to see to the payment of his and Moore & Durfee’s notes, and nothing from which to infer any authority in the husband, at some future period, to make a new and entirely different arrangement, or to alter the effect of that already made, so as to prejudice her interests; — in short, to make an absolute sale of the mortgage which she had only consented to transfer as a security. The same unequivocal evidence of her assent was necessary to give validity to the new arrangement, as was required to perfect the first. She stood, in fact, so far as this mortgage was concerned, in the relation of a surety for the notes of her husband and of those of Moore & Durfee.— VanHorne v. Everson, 13 Barb. 526; Vartie v. Underwood, 18 Barb. 561.

By the sale to defendant of Durfee’s interest in the firm of Moore & Durfee, in May, 1856, the notes of Durfee and Moore & Durfee, secured by the assignment, were, as between complainant and defendant, paid or extinguished, and every purpose of the assignment had been fulfilled. From that moment ah interest of defendant in the mortgage ceased, and it belonged, in equity, to complainant as fully and completely as if the assignment had never been executed.

The assignment was not a power of attorney to the husband, but, so far as it was in the nature of a power, it was a special power given to the defendant, to secure the payment of the notes in question; and when these notes were paid, that power was extinguished by the extinguishment of the debt secured by it.

I can see no evidence in- this case to warrant the inference of complainant’s assent to the'new arrangement, by which defendant claims to own the mortgage, unless, to every disposition a husband may choose to make of his wife’s property, her assent is to be inferred from the marital relation alone. But this, so far from treating the wife as a feme sole in respect to • her separate property, according to the plain intent of the statute, would practically nullify the statute, and place the property of the Avife under the unrestrained control of the husband.

It is unnecessary to discuss the question, Avhat Avould have been the effect, if the answer, as respects the chattel mortgage, had been fully supported by the proof, so as to, show it to have been given for the specific purpose of securing the Avife for having assigned her mortgage as security; since the evidence does not support the answer in this respect. .The answer alleges it to have been a mortgage of Moore & Durfee, of the same date and for the same amount of the mortgage assigned. The evidence, so far as it shows any thing ixpon .the point, would make it a mortgage of Durfee alone, and does not show either its date or amount, or the purpose for which it Avas executed,, or, if'intended to show either, it leaves it to the loosest possible inference; and even this inference, so far at least as to the purposes of its execution, is entirely destroyed by the statement of the witness, ■on his cross-examination, that he “knew nothing about the chattel mortgage, except from seeing it on the files and from "hearsay. This evidence is entirely too vague and uncertain to affect the rights of the complainant, or to furnish any safe ground of decision. Neither the mortgage itself nor its con* tents are proved. Better evidence must have been in the defendant’s power. Why was not Moore called as a witness, Who must have known by whom and for what purpose it was executed, if the facts were such as stated in the answer.

The answer alleges the agreement of the defendant, on the purchase of the stock, to have been to pay to the complainant the amount of this chattel mortgage ; the proof is that he was to pay to Durfee the amount of the mortgage he had pro* cured his wife to assign. If the chattel mortgage is properly in evidence at all, there is nothing in the evidence from which we can safely infer it was given to secure her for the assign* 'ment of her mortgage. We may as well infer that it was given for some other debt.

There is not a word of testimony to show that complainant ever received or assented to the assignment, from the defendant to her, of the mortgage from Berry to her husband.

I think the decree of the court below should be reversed, &nd a decree entered in favor of complainant according to the prayer of the bill.

Campbell J. did not sit in this case.

Decree affirmed.