138 Wis. 82 | Wis. | 1909
The findings establish that on September 21, 1898, Everett H. Jones executed his promissory note for $2,000 payable two years after date to the order of Henry Herman and bearing interest, and at the same time and as security for the payment of the note executed a mortgage to Henry Herman in due form upon lots 11, 12, 13, 14, 15, 16, 17, 18, and 19 in block No. 1, Lindsay’s subdivision in the Seventeenth ward of the city of Milwaukee, which mortgage was recorded on September 22, 1898, in the proper office. Jones executed and delivered this note and mortgage
In addition to these findings of fact tbe undisputed evidence showed that tbe lots in question were, at tbe instance- and request of Herman, conveyed by tbe National Eealty Company to Jones immediately prior to tbe execution of tbe note and mortgage in question by Jones and for tbe purpose-of having Jones execute tbe mortgage tbereon as an accommodation to Herman.'
As conclusions of law from tbe foregoing facts tbe court below found that tbe note and mortgage executed by tbe defendant Jones are void for want of consideration, but that tbe defendant Lindsay is estopped to set up this invalidity because Lmdsay purchased tbe mortgaged premises subject to tbe mortgage; that tbe plaintiff’s assignor and tbe defendant Lindsay were negligent in their dealings with Henry Herman in tbe matters herein involved — plaintiff’s assignor-in not recording bis assignment after tbe same was delivered to him, and Lmdsay in not demanding tbe note and mortgage in question at tbe time the release of the mortgage and warranty deed to tbe lots were delivered to bim; that tbe plaintiff' cannot come into equity asking relief because bis negligence-
The reasons given in the foregoing conclusions of law do not meet the approval of this court, but we review results, not reasons assigned.
Was the action properly dismissed as to Jones ? No consideration moving to the accommodation maker is necessary to uphold an accommodation note. The very name of the paper suggests this. The consideration in such case which supports the promise of the accommodation maker is that parted with by the person taking the accommodation note and received by the person accommodated. Nor is it any defense by the maker of an accommodation note that the taker other than the person accommodated, whether indorsee or transferee for value, knew before and when he took the note th'at the accommodation -maker received no consideration. This would be merely showing that such taker, indorsee, or transferee knew that it was an accommodation note. If this were sufficient to defeat the note there could be no such thing as accommodation paper, except in cases of ignorance of this fact on the part of the taker, indorsee, or transferee, and this would be contrary to common experience, and avoid many of the daily transactions'in banking and other branches of business. Sec. 1675 — 55, Stats. (Supp. 1906). But the accommodation note in question was transferred by the party accommodated, namely, the payee therein, after it became due. Does this circumstance permit the accommodation maker to avoid the note on the ground that he received no consideration ? If the effect of a transfer after due is merely to leave the transferee subject to notice or knowledge of the time circumstances attending the execution of the note in question, and for this reason subject him to defenses, then, as actual knowledge that the note was accommodation paper would be no defense by the accommodation maker as against the trans
Tbe uniform Negotiable Instrument Law (secs. 1675 to 1684—7, Stats.: Supp. 1906) enacted by tbe legislature of this state, and in like manner adopted by thirty-four states of tbe Union and by Congress for tbe District of Columbia in tbe effort to bring about more uniformity of decision regarding these instruments of commerce, appears to distinguish between a bolder for value and a bolder in due course. Brannan, Neg. Inst. Law (1908); Bunker, Neg. Inst. Law
In the hands of a holder otherwise than in due course such note is subject to the same defenses as if the notes were not negotiable. Sec. 1676—28, Stats. (Supp. 1906). A negotiable instrument is discharged by the payment in due course by the party accommodated. It is not discharged by payment by a party secondarily liable thereon, but remits such party to his rights against him primarily liable (sec. 1679—2, Stats.: Supp. 1906) except where it is made for accommodation and paid by the party accommodated (Id.) On the other hand there are the cases of Chester v. Dorr, 41 N. Y. 279; Peale v. Addicks, 174 Pa. St. 543, 34 Atl. 203; Bacon v. Harris, 15 R. I. 599, 10 Atl. 647; Battle v. Weems, 44 Ala. 105; and Simons v. Morris, 53 Mich. 155, 18 N. W. 625. See, however, in Alabama the later case of Connerly v. Planters’ & M. Ins. Co. 66 Ala. 432; in Michigan the later case of Warder, B. & G. Co. v. Gibbs, 92 Mich. 29, 52 N. W. 73.
The courts of this state are not yet committed upon the question presented, and it seems more in harmony with the uniform negotiable Instrument Law and with the weight of judicial authority to hold, as we do, that the mere fact that the accommodation note was transferred by the party accommodated after due to a holder for value does not permit the accommodation maker to defeat recovery at the suit of the holder for value merely upon the ground that the note was an accommodation note and without consideration moving to- the accommodation maker. This necessitates a modification of
Upon the question of the right of the appellant to foreclose-the mortgage against the mortgaged premises different questions arise. The findings of the court below, based on sufficient evidence, establish that the transaction between Lindsay raid Herman which resulted in Lrndsay receiving from Bay-mond, at Herman’s request, a warranty deed of the mortgaged' premises, with covenant against incumbrances except the mortgage in question, and in receiving from Herman a satisfaction-of the mortgage in question, was a single transaction — at one and the same time a purchase of the lots by Herman from Lindsay, and a payment of the mortgage of $2,000 thereon in> consideration of $2,475 of pre-existing debt then and there- and by that transaction paid and discharged. Griswold v. Nichols, 117 Wis. 267, 94 N. W. 33.
Within the rule of Marling v. Nommensen, 127 Wis. 363, 106 N. W. 844; Friend v. Yahr, 126 Wis. 291, 104 N. W. 997, and other cases, Lindsay was a purchaser of the real property. The fact that the deed delivered to him simultaneously with the satisfaction of mortgage and as part of the-transaction excepted this mortgage from the covenant against' incumbrances was not sufficient to put Lindsay in the position of a debtor paying a mortgage debt. It, with the abstract, merely charged him with notice of the existence of the-mortgage and the name o-f the mortgagee from whom he procured the satisfaction piece. His rights must be determined by the rule of the cases last cited rather than by the rule off Bartel v. Brown, 104 Wis. 493, 80 N. W. 801. He is entitled to the protection which the statute gives to purchasers-without notice, because it is found that he purchased in good faith for a valuable consideration without knowledge of the-outstanding assignment of the mortgage to plaintiff’s assignor, and first placed his deed and satisfaction of mortgage-
By the Court. — The judgment of the circuit court is ordered modified so as to provide for judgment in favor of the plaintiff and against the defendant Jones for the amount found due the plaintiff, but not exceeding the amount due from Jones upon the note executed by him to Herman, costs in the discretion of the court below; and the judgment is in other respects affirmed; costs of this court in favor of appellant against both respondents.