First National Bank of Hailey v. Glenn

77 P. 623 | Idaho | 1904

AILSHIE, J. —

The First National Bank of . Hailey commenced this action on the twenty-fourth day of July, 1895, for the foreclosure of a real estate mortgage excuted by Oliver S. Glenn and Emma Glenn, his wife, and G. P. Glenn and Jennie Glenn, husband and wife. The mortgage was executed on the twenty-seventh day of July, 1887, to secure the payment of three promissory notes aggregating the sum of $8,733, and bearing interest from August 1, 1888, at the rate of one and one-half per cent per month in favor of H. E. Miller. Miller sold and transferred the notes and mortgage to appellant, prior to the commencement of this action. At the time of the execution of the notes and mortgage, G. P. Glenn and wife were residing upon that portion of the land upon which the foreclosure was sought in this action, and the same was at that time the community property of the husband and wife. In 1889, G. P. Glenn died intestate, leaving his widow, Jennie, and six children surviving him. Payments had been made on the mortgage indebtedness from time to time, and after the death of G. P. Glenn, the mortgagee Miller, duly and regularly presented his claim for the amount due in principal, interest and taxes to the administrator of the estate, and the same was thereupon allowed by the administrator and also by the probate court of Elmore county. After the allowance of the claim the administrator paid something over $2,000 thereon. Under the statute as it existed at the time of the execution of this mortgage it was lawful to charge and collect interest at the rate of one and one-half per cent per month. It was also the law at that time that all mortgages were taxable; and under section 1425 of the Revised Stat-u.tes then in force it was provided that: “Every contract by which á debtor agrees to pay any tax or assessment on money loaned, or any mortgage, deed of trust, or other lien, shall as to such tax or assessment, be null and void.” By the terms of the notes and mortgage given in this case the debtors contracted to pay the highest legal rate of interest permissible under the laws of the then territory; and, in addition thereto, it was provided .that the debtors should-pay all taxes that might be assessed against the mortgaged property and also all taxes that might be assessed against the mortgage itself,, or the debt secured thereby. Personal service was .made upon all. the defendants, and also upon the guardian for the six minor .children of the deceased, G. P. Glenn. The action’ was dismissed as to Oliver S. Glenn and Emma Glenn, owing to their having no interest in the land, and the default of Jennie Glenn was duly and regularly entered. The minors, however, all appeared through their guardian and answered, and contested the action at every step of the proceedings and are the respondents in this action. The answer denies the execution of the mortgage by the defendant Jennie Glenn. It also alleges that she never acknowledged that instrument in any manner or form. It also sets up the defense of usury and charges that the contract was a usurious contract. It w.as further alleged as a separate defense that the claim had been presented to the administrator of the estate of G. P. Glenn, deceased, and that part payments had been made thereon, and 'that the mortgagee was thereby barred from maintaining his action upon the contract and to foreclose the mortgage.

The case was tried before the judge of the fourth judicial district sitting in ¡Elmore county; but before it was finally submitted upon that trial, the judge, Justice Stockslager, now of this court, who heard the testimony, was succeeded by Judge Perky, and the case was therefore retried and judgment was entered November 14, 1902. Soon thereafter one of the plaintiff’s attorneys died and the case had slow progress in getting into this court. The trial judge found that the mortgage was never executed by the defendant Jennie Glenn, and that the execution thereof was never acknowledged by Jennie Glenn. He also found that the contract was usurious and that the principal of the loan had been fully paid and judgment was thereupon entered dismissing the action and for costs against the plaintiff. Since the court found that the mortgage- was never executed nor acknowledged by the defendant, Jennie Glenn, we will consider both of these questions together. The mortgage which was introduced in evidence appeared to have been executed in due form and by all the parties, except by the defendant Jennie Glenn. Her name was affixed to the mortgage'as follows:

her

* J ennie X Glenn,” but this signature by mark was not witnessed

mark

by any person writing his name as a witness thereto. Her acknowledgment, however, as shown by the certificate of the notary who took the same, seems to have been duly and regularly made and taken. At the trial she appeared and testified as a witness on behalf of the minor children who were defending, and testified that she never signed her name to the mortgage and that she never made her mark, and that she never saw the mortgage. She also denied acknowledging the same, but did admit that the notary came to see her about the- matter, and claims that she did not understand anything about it. It should be observed that she is an Indian woman, and while she speaks the English language fairly well and appears to understand it reasonably well, as disclosed by her answers given on the witness-stand, still, like most of her people, she did not fully grasp all that was said to her, and especially business methods and ordinary legal proceedings. Other witnesses who were about the house at the time the notary came to take this acknowledgment, testify to his being there and having the mortgage with him, and going over and sitting down by the table or desk where she was seated and explaining to her the contents and nature of the mortgage, and that she replied in substance that whatever her husband would-do she would do, saying: “But Gus Glenn, he good man, and what Gus say and do I say and do all right.” The defendants at the trial called the notary' who took the acknowledgment and examined him with a view to contradicting his certificate and showing that no real acknowledgment had ever been taken from this woman. The plaintiffs objected to the notary testifying to any fact that would in any manner tend to impeach his certificate, but the court overruled the objection and permitted the testimony. We think the objection by the plaintiff was well taken. No notary should be allowed to come into court upon the foreclosure of a mortgage and give testimony impeaching his certificate to the mortgage which is being foreclosed. In the first place, the certificate is made at the time of the acknowledgment and is the solemn declaration of the officer in his official capacity, under his hand and seal, as to the truth and accuracy of the statements it contains, and it is much more likely to be true and correct than the memory of the person in years afterward. This case is a practical illustration of the danger of allowing an official to come in and contradict his own certificate at a period in this ease of more than fourteen years after it was made. After persons have relied upon the faith and correctness of his official statement and invested their money and rights have grown up thereunder, the person who acted as such official and made such certificate should not be heard in a court of justice disputing its correctness. (Shapleigh v. Hull, 21 Colo. 419, 41 Pac. 1108; Northwestern etc. Bank v. Rauch, 5 Idaho, 752, 51 Pac. 764; Hockman v. McGlanahm, 87 Va. 39, 12 S. E. 230; Hawkins v. Forsyth, 11 Leigh, 301; Central Bank of Frederick v. Copeland, 18 Md. 305, 81 Am. Dec. 597; Johnson v. Wallace, 53 Miss. 331, 24 Am. Rep. 699.) In this case, however, the evidence of the notary was as much in support of the certificate as in contradiction thereof. He testified to explaining to the witness the contents of the instrument and its purpose and effect, and that, while she did not appear to understand it very well, she told him it was all right with her if it was with her husband, and that whatever he did or said was all right with hsr. He also testifies that after going over the matter, making as full explanation as he could, and conversing with her about it, he considered she had made a sufficient acknowledgment of the execution of the instrument and that she was satisfied therewith, and that he felt justified in attaching the certificate of acknowledgment thereto. We think his conclusion was correct, and that he was justified in so certifying. (Banning v. Banning, 80 Cal. 273, 13 Am. St. Rep. 156, 22 Pac. 210; De Arnaz v. Escandon, 59 Cal. 489.) The record here shows that the wife reposed perfect confidence in her husband and was entirely satisfied with whatever he said and did in business matters. , We think an acknowledgment to this effect is a compliance with the statute. (Northwestern etc. Bank v. Rauch, supra; Gray v. Law, 6 Idaho, 559, 96 Am. St. Rep. 280, 57 Pac. 435.) More especially should this be true where, as in this ease, it is admitted that the husband and the family of which he was the head received the full consideration for which the mortgage was executed, and there is no pretense or contention that any fraud or deception was practiced upon either the wife or husband. It further appears in this case that the money for which this mortgage was executed was received and used by Glenn and his wife in redeeming this identical tract of land from a sheriff’s sale on foreclosure of a previous mortgage, and that the time for redemption was fust about expiring. The money, therefore, sought to be recovered in this action is, practically speaking, the purchase price for the tract of land. This brings us to the question of the signature to the mortgage by the defendant Jennie Glenn.

Section 16 of the Eevised Statutes which is devoted to definitions of various words and phrases used in the statutes defines a signature as follows: “Signature or subscription includes mark, when the person cannot write, his name being written near it, and witnessed by a person who writes his own name as a witness.” It is argued by respondent that under this statute Jennie Glenn’s “signature” does not appear to the mortgage, since it is shown on its face to have been made by mark and there is no witness thereto. We think this contention would be correct if the signature were found in this condition-to an unacknowledged'instrument, or one that is not required by law to be acknowledged. But by the provisions of section 2921, Ee-vised Statutes, it is provided that the community property occupied as a residence cannot be encumbered “unless both husband and wife join in the execution of the instrument by which it is so ... . encumbered, and it be acknowledged by the wife, as provided in chapter 3 of this title.” Section 2960 as found in chapter 3 referred to in section 2921, supra, provides the form of acknowledgment to be made by a married woman to an instrument affecting title to real property in which she has any interest. An examination of the acknowledgment will disclose that an officer is required to certify that “the person whose name is subscribed to the within instrument, described as a married woman,” personally appeared before him and that, “upon examination without the hearing of her husband, I made her acquainted with the contents of the.instrument; and thereupon she acknowledged to me that she executed the same and that she does not wish to retract such execution.” It is clear that an officer would not be justified in taking and certifying an acknowledgment of any person to an instrument whose name is not affixed to the'instrument and does not appear thereon; and it is equally clear that in order to make a good acknowledgment the person executing the instrument must adopt the name appearing thereon and the execution thereof as his or her own. The officer taking the acknowledgment is not required to see the person sign the instrument, nor is he required to witness the instrument; but he is required to ascertain whether or not the party acknowledges the instrument as his or her obligation or contract and as having been executed by him or her. All these things appear from the certificate in this case to have been done regularly. The name of Jennie Glenn appeared subscribed to the instrument; whether by her, her husband, or some other person, she approved of it, adopted it and acknowledged it as her own. (See Bartlett v. Drake, 100 Mass. 174, 97 Am. Dec. 92, 1 Am. Rep. 101; Clough, v. Clough, 73 Me. 487, 40 Am. Rep. 386; Harris v. Harris, 59 Cal. 620; Kerr v. Russell, 69 Ill. 666, 18 Am. Rep. 634.) To “execute” an instrument, it is true, includes signing it; but the admission by a party whose name is appended to an instrument that he executed it is as binding upon the party contracting as if the person to whom the admission is made had seen Mm affix his name thereto. Such admission becomes legal evidence of the fact. We therefore conclude that the notary’s certificate, that the party whose name is affixed acknowledged the execution of the instrument, is as good a witness to the signature by mark as if he had written his name at the foot of the document “as a witness to her signature by mark.” In a case like this where there is no charge of deception or fraud, and where it is not denied that the contracting parties received and enjoyed all the fruits of their contract and the full consideration therefor, it would be an injustice to allow a recovery to be defeated in a court of equity by reason of such a slight deviation from the forms usually recognized and followed.

We next come to appellant’s contention that the court erred In finding that the contract was usurious. This finding was predicated upon the clause found in the mortgage providing that the debtors should pay taxes on the mortgage and the debt secured thereby. The defendants maintained that, since the mortgage was drawn for the highest legal rate of interest permissible, a stipulation for the payment of taxes on the mortgage in •any sum whatever had the legal effect of raising the rate above that allowed by law, and therefore brought the contract within the provisions of section 1266, Bevised Statutes, and made it usurious. In support of this proposition respondent has cited Mortimer v. Prichard, 1 Bail. Eq. (S. C.) 505, and Meem v. Dulaney, 88 Va. 674, 14 S. E. 363. In Mortimer v. Prichard, the South Carolina court held that where a contract provided for the highest rate of interest and also provided for the debtor paying the state and city taxes, upon its face it would appear usurious, but that where, as in that case, it appeared that the parties acted in good faith and had taken the advice of counsel as to the legality of such a contract, there was no corrupt intent, and the court held the contract legal. In Meem v. Dulaney, the Virginia court of appeals held a contract very similar to the one at bar usurious.

In Banks v. McClelland, 24 Md. 62, 87 Am. Dec. 594, the supreme court of Maryland in the syllabus to that case say: “An agreement by the mortgagor to pay the taxes on the mortgage debt is not usurious,” and the question of usury in such a ease is there held to depend upon the particular circumstances of the case. We find that in none of the cases cited by respondent on this question has there been a statute similar to ours declaring such stipulations void.

Since section 1425, as it stood when this contract was entered into, provided that every contract whereby the debtor agreed to pay the taxes on the money loaned or the mortgage was null and void, the stipulation, therefore, found in this mortgage was never such as could be enforced. If “null and void,” it could never have had any life or vitality in it. If void from the beginning, it is difficult to see how it ever obtained the energy or ability to taint an otherwise legal contract with usury. This statute carried within itself its own penalty for its violation,, namely, that the contract should “be null and void.” To allow a stipulation which the statute says should be void from the beginning, to have the effect of corrupting the whole contract in; which it is found and subject it to the penalties for usury, would! be attaching a double penalty to a statute which carries its own. penalty with it. It is also worthy of observation that the usury-statute of this state does not declare the usurious contract void, but rather imposes a penalty upon both the debtor and creditor-If the contract under consideration were usurious, it would have been the duty of the trial court, not only to declare the penalty against the lender, but also the borrower; and we are not prepared to say that the borrower by inserting a stipulation in his mortgage which the statute says is void, thereby subjects himself to the penalty of a usury statute. On the other hand, the mortgagee in this case testifies that he never knew such a stipulation was in the mortgage until long after its execution, and that he never at any time collected such a tax from the mortgagors, nor did he ever charge them therewith.

In Re Press Fuller, 1 Saw. 243, Fed. Cas. No. 5148, a judgment had been entered by confession and provided for a greater rate of interest than allowed by law. It was contended that, this made the judgment usurious and subjected it to the penalties of the usury statute.' Judge Deady disposes of the usury phase of the question as follows: “There can be no doubt but this provision shows that it was intended that this judgment .should draw more than the legal rate of interest. But I do not think a judgment or decree can become usurious by any such means. The code provides the rate of interest a judgment shall bear, and the parties cannot change it by stipulations or terms inserted therein. Such stipulations are simply void — as, for instance, that the interest accruing on a judgment shall be paid annually, and, if not, shall bear interest as principal.”

We now come to the last contention made by appellant in this case. It is embodied in the following conclusion of law made by the trial court: “Plaintiff’s predecessor, having presented his claim against the estate of G. P. Glenn, dé-ceased, and having received payment thereon, cannot now maintain this action.”- Respondent claims that this conclusion •of law is justified by section 5470, Revised Statutes of 1887. The provisions of that section are as follows: “No holder of .any claim against an estate shall maintain any action thereon unless the claim is first presented to the executor or administrator, except in the following case: An action may be brought •by any holder of a mortgage or lien to enforce the same against -the property of the estate subject thereto, where all recourse .-against any other property of the estate is expressly waived in “the complaint.” Respondent argues that if the plaintiff could mot, in the first instance, maintain his action to foreclose his mortgage without expressly waiving “all recourse against any •other property of the estate,” then he cannot be allowed to present his claim against the estate, and, after obtaining all he •can from the estate, be permitted to foreclose Ms mortgage, and then waive recourse against any other property of the estate. We have been cited to no authority sustaining this construction ■of the foregoing statute, and we have been unable to find any "to that effect. In California they seem to have changed their statute on this subject from time to time, but at no time do they appear to have had a statute in the exact language •of our provision.’ Still the courts of that state have frequently considered the right of a mortgagee to foreclose both with and without having presented his claim to the administrator and have inferentially touched upon this question in the following cases: Fallon v. Butler, 21 Cal. 24, 81 Am. Dec. 140; Willis v. Farley, 24 Cal. 500; Moran v. Gardemeyer, 82 Cal. 36, 23 Pac. 6; McGahey v. Forrest, 109 Cal. 63, 41 Pac. 817; Hibernia Savings etc. Assn. v. Thornton, 109 Cal. 427, 50 Am. St. Rep. 52, 42 Pac. 447; Bull v. Coe, 77 Cal. 50, 11 Am. St. Rep. 235, 18 Pac. 808. We do not understand the statute to be a bar to the foreclosure of a mortgage simply because the mortgagee presented his claim in due form to the administrator, but when he seeks to maintain his action to foreclose the mortgage, then under the terms of the statute he must waive all Teeourse against other property. It appears to be conceded by -the argument of respondent, and at any rate exists- as a fact, that section 5470 does not in express terms forbid the mortgagee foreclosing the mortgage where he has previously presented his claim to the administrator. . If .that section means what respondents contend it does, it is only by implication and not by express terms. We cannot, however, by mere implication give to a statute like this a meaning or interpretation which; will preclude or tend to preclude the creditor pursuing his; remedy in a court of equity for the foreclosure of his mortgage. (Idaho Const., art. 5, sec. 20; Fallon v. Butler, supra; Pechand v. Rinquet, 21 Cal. 76; Willis v. Farley, supra; Corbett v. Rice, 2 Nev. 331; Verdier v. Bigne, 16 Or. 208, 19 Pac. 64.)

The respondent makes the point that the plaintiff after hav-. ing received a large sum of money from the estate on the allowance of his claim gains an advantage if he can afterward be. allowed to foreclose his mortgage. ■ This is a matter with which, the administrator and probate judge have ample authority to deal. If the estate is solvent over and above the family allowances, and such homestead as may be set off by the probate judge, in that case it can make no difference to the estate or any creditor thereof for the reason .that the claim should be fully paid, and there would be no occasion for a foreclosure. If, on the other hand, the estate is insolvent, the administrator should not pay and the probate court should not allow paid any secured claim except as the money therefor is made out of the encumbered property. The order of payments and preferences to be made out of an estate is directed by sections 5606 and 5607, Eevised Statutes. Provision is also made for the sale of the encumbered property by the probate court where the mortgagee or lienholder has presented his claim under sections 5536 and 5537, Bevised Statutes. Under these statutory provisions governing the administration of the estates of deceased persons, a mortgagee can acquire no advantage or preference by being allowed to present his claim and thereafter foreclose his mortgage. Of course he cannot foreclose his mortgage after haring presented his claim, if the encumbered property is sold by order of the probate court and the proceeds-thereof are applied to the payment of the mortgage debt. In such a ease he would have exhausted his security and could not-pursue it any further.

We therefore conclude that the plaintiff was entitled to a: decree foreclosing its mortgage, and the judgment of the lower court will be reversed. The cause is remanded with directions to’ the trial court to compute the amount due to the plaintiff on its mortgage, and to make findings of fact and conclusions of law in accordance with the facts proven upon the former trial and in harmony with the legal conclusions herein announced, and to enter judgment and decree in accordance therewith. Costs awarded to appellant.

Sullivan, C. J., concurs. Stoekslager, J., having heard the ease at the first trial, took no part in the foregoing decision.

Case Details

Case Name: First National Bank of Hailey v. Glenn

Court Name: Idaho Supreme Court

Date Published: Jun 22, 1904

Citation: 77 P. 623

Court Abbreviation: Idaho