132 P. 958 | Or. | 1913
Lead Opinion
Opinion
The substance of the complaint herein is that the defendant Spencer accused the plaintiff’s husband, the other defendant, of the crime of embezzlement, and caused his arrest without a warrant on that charge; that while under compulsion of arrest the husband agreed with Spencer to give the latter a note for $1,700 and secure the same by the signature of the plaintiff and their mortgage upon their homestead all upon the illegal agreement of Spencer not to prosecute the husband for the alleged crime; that the charge and the corrupt agreement were concealed from the plaintiff by Spencer and the husband, the latter of whom, with Spencer’s knowledge and contrivance, fraudulently represented to her that the note and mortgage were being executed for a present loan of money which the husband was obtaining from'Spencer for the purpose of engaging in business on his own account; and that in that manner only was her signature obtained. Subsequent discovery by the plaintiff of the alleged fraud is alleged, and the plaintiff prays for cancellation of the note and mortgage. Issues were formed, and the Circuit Court heard the cause, entering a decree dismissing the suit, from which the plaintiff appealed.
Meanwhile Spencer instituted suit to foreclose the mortgage, and now the plaintiff in this suit to cancel that indenture moves this court to enjoin the prosecu
It is therefore denied. Motion Denied.
Opinion on the Merits
Argued September 3, decided September 16, rebearing denied October 14, 1913.
On the Merits.
(135 Pac. 1180.)
Department 2. . Statement by Mr. Justice Eakin.
The plaintiff brings this suit to cancel a mortgage signed by her on the ground that her signature to it was procured by fraud. Plaintiff and defendant Spencer S. Hunt are husband and wife. The husband was employed as a salesman by defendant F. W. Spencer, a hardware merchant in Salem, from November 1, 1910, until November 14,1911, during which time Hunt was systematically embezzling money and taking goods from defendant Spencer. On November 14, 1911, he
For appellant there was a brief over the names of Mr. Myron E. Pogue and Mr. Woodson T. Slater, with an oral argument by Mr. Slater.
For respondents there was a brief over the name of Carson & Brown, with oral arguments by Mr. John A. Carson and Mr. Thomas Brown.
delivered the opinion of the court.
It is not denied that the execution of the mortgage by the plaintiff was procured through fraudulent representations of her husband; and, the property mortgaged being their homestead, the mortgage was void except as against a purchaser in good faith, for a valuable consideration, and without notice of the fraud. It is not claimed that Spencer actually knew of the fraudulent representations of Hunt to plaintiff, but she contends that as the mortgage recites that “for and in consideration of the sum'of $1,700, to them in hand paid, the receipt whereof is hereby acknowledged,” and that Spencer was a party to that recital, or caused it to be made, she was justified in considering the mortgage as given for a loan of money. That is the usual form given in mortgages; also it is the form of the ordinary printed blank mortgage and might well be considered as referring to Spencer’s money which Hunt had received. She contends, however, that it was drawn by Carson, Mr. Spencer’s attorney, and that therefore Spencer was charged with knowledge of the recital: but it appears that Hunt proceeded to have the mortgage drawn, and, failing
“Where a conveyance is made or a security taken, the consideration of which is an antecedent debt, the grantee or person taking the security is not regarded as a purchaser for a valuable consideration. He has not parted with anything of value. ’ ’
The same is held in People’s Sav. Bank v. Bates, 120 U. S. 556 (30 L. Ed. 754, 7 Sup. Ct. Rep. 679) ; 3 Story, Eq. Juris. 364, 389. Those cases, however, were decided on the theory that the mortgagee did not change his condition; he did not part with anything of value. But the rule seems to be otherwise where the purchaser or encumbrancer canceled or surrendered the debt on the ground that he is placed in a worse position thereby.
Pomeroy’s Equity Jurisprudence, section 749, says:
“Whether the complete satisfaction or discharge or the definite forbearance of an antecedent debt, without the surrender or cancellation of any written security by the creditor, will be a valuable consideration is a question to which the courts of different states have*186 given conflicting answers; but tbe affirmative seems to be supported by the numerical weight of authority.”
In a note to Western Grocer Co. v. Alleman (81 Kan. 543 (106 Pac. 460, 135 Am. St. Rep. 398), in 27 L. R. A. (N. S.) 620, after citing many authorities to the rule as stated, the writer says:
“The reason for this holding is said to be that the purchaser by his purchase is placed in no worse condition than he was in before, as he has parted with nothing of value. But, even in jurisdictions adhering to this doctrine, it is also held that, if for any reason the purchaser is placed in a worse condition than he was in before, he is entitled to the protection of the recording acts. Thus * * if he has extended the time of payment of the indebtedness” — citing cases to that effect from Alabama, Indiana, Iowa, Mississippi, New York and Ohio.
Jones, Mortgages, section 461, in considering the effect of registration acts, says: “The giving of further time for the payment of an existing debt, by a valid agreement, for any period however short, though it be for a day only, is a valuable consideration. ’ ’
In O’Brien v. Fleckenstein, 180 N. Y. 350 (73 N. E. 30, 105 Am. St. Rep. 768), the opinion says: “It is safe enough to say that the general trend of the cases and the consensus of opinion supports the rule or principle above stated.”
Although the cases are not in harmony upon this question, especially the earlier cases, we are convinced that a pre-existing debt is sufficient to constitute a mortgagee a purchaser for a valuable consideration in such a case as this, if it has a new element of consideration imported into the transaction.
In this case the time of payment of the debt was extended for six years and was sufficient with the other circumstances of the case to give defendant Spencer
Affirmed.