Marshall v. Billingsly

7 Ind. 250 | Ind. | 1855

Gookins, J.

Bill in chancery by Billingsly, as the assignee of Major, against W. T. Marshall, the mortgagor, and Heathy Marshall, his grantee of the mortgaged premises, for foreclosure. The mortgage was given to secure the following notes, dated August 7,1849, one for 200 dollars, due one year after date, one for 235 dollars and 32 cents, and another for 258 dollars and 72 cents, both due three years after date, and all drawing interest from date. The mortgage was of a half-section of land. The bill is in the usual form. Certain junior incumbrancers were made parties; but as no questions in reference to them are made in this Court, they need not be further noticed.

*251W. T. Marshall answered, admitting the execution of the notes and mortgage to Major, but saying they were obtained from him by fraud, and setting up incapacity from drunkenness, as a defence. His original answer and amendment, which are made a cross-bill against Billingsly and Major, make the following case: That being embarrassed with debts, he applied to Major for his services in negotiating a loan, who endeavored to procure it, but without success; that Major then proposed to sell him two notes he held against Hume and Logan, dated in August, 1839, each for 159 dollars, besides interest, and, on condition that he would buy said notes, proposed to lend him a small sum; that he accepted the offer, and took an assignment of the notes of Hume and Logan, without recourse, which, with a small sum of money and a note of Major's for a small amount, constituted the only consideration of the notes mentioned in the mortgage; that Major represented Hume and Logan to be solvent, knowing they were worthless; that he knew, also, that the defendant Marshall was embarrassed with debts, and that he was not in a situation to buy notes, but that he would not have lent him any money except on the condition of his buying said notes; that he took advantage of his embarrassments, and of his incapacity from habitual drunkenness to transact business safely, to sell him said worthless notes, and to obtain an unlawful and usurious consideration for the use of money, and an unconscionable advantage of him. He admits his sale of the mortgaged premises to his mother, Heathy Marshall. He brings into Court the notes of Hume and Logan, and offers to return them to Major.

The answer and cross-bill of Heathy Marshall make substantially the same case.

In answer to the cross-bills, Billingsly says he knows nothing of the original transaction, and says the notes were assigned to him upon a valuable consideration, which is not impeached. Under our statute, however, the notes and mortgage are open to the same defence as if they had not been assigned.

*252Major, in his answer to the cross-bills, admits that Marshall applied to him to borrow money. The amount sought was 1,500 dollars. He says he informed Marshall that he had no money to lend; that he endeavored, without success, to procure a loan for him. He denies any particular knowledge of the nature and extent of Marshall’s embarrassments; says he spoke of some small debts, but the particular use he wished to make of the money was to enable him to get out stone and timber, of which he had an abundance on his farm, which lay upon the canal, to carry to market. He states the consideration of the notes mentioned in the mortgage to be 200 dollars, a part of which he paid at the time, and for the residue he gave his note, which he paid to Marshall’s assignee soon after; and the two notes he held against Hume and Logan. He admits that Maoshall had not, as he presumed, money with which to buy notes, and that he would not have loaned him the 200 dollars, except upon condition that he would purchase the notes of Hume and Logan, but denies that he first proposed to sell him said notes. He says that in conversation Marshall had informed him that he was acquainted with Hume, from whom he had learned of his indebtedness to Major; that he stated that Hume was good, and had property, and that said debt could be collected. He states that he told Marshall that he had supposed Hume to be insolvent, and that Logan had gone to Arkansas; that he had heard that he was supposed to be solvent, but that he did not know where he was; that he further stated to Marshall that he had once commenced suit against Hume, but having heard that he intended to rely upon the defence of infancy at the time of giving the note, he withdrew the suit; that Marshall, in answer to this, assured him that he was well acquainted with Home; that he had a house and lot in Cincinnati, worth some 3,000 dollars, and that the money could be made out of him in a short time; whereupon he proposed to sell him the notes at the amount then due upon them, payable three years after date with interest, and to assign them without recourse, and to loan him *253200 dollars, and take a mortgage for the whole, which was done; that at the close of the transaction, Marshall boasted that he would collect the notes from Hume within three months, tie denies having taken any more than lawful interest, and denies that Marshall was incapable from drunkenness to transact business, but says he was fully competent. The answers are put in under oath, as required by the bill.

All the answers, on both sides, were put in issue by replications.

. The following facts we conceive to be established by the proofs.

In the summer of 1849, W. T. Marshall applied to the defendant Major, residing at Lawrenceburgh, to negotiate a loan for him of about 1,500 dollars, for the ostensible purpose of carrying on the business of getting out timber and stone upon his farm lying on the canal, to be sent to market. Major endeavored to procure the loan, without success. Ma/rshall visited Lawrenceburgh three times on this business. On his first visit he was accompanied by one Hume. On being inquired of by Major who this person was, Marshall informed him that it was Hume, who did not wish to be recognized by Major, fearing the latter might sue him upon some notes he held against him. This incident seems to have led to a negotiation between Major and Marshall, which resulted in the loan by the former to the latter of 200 dollars, and the purchase by Marshall from Major of two notes he held against said Hume and one Logan, dated in August, 1839, one of which, with interest, then amounted to 235 dollars and 32 cents, and the other to 258 dollars and 72 cents, for which several amounts W. T. Marshall executed to Major the mortgage sought to be foreclosed, dated August 7,1849; payable in one and three years from date, with interest from date; and Major assigned to Mai'shall the notes of Hume and Logan, without recourse. Major, at the time of the transaction, told Mai'shall that he had supposed that Hume was not good, and that Logan had left the country some years before and gone to Arkansas; that he had heard a *254report that Logan was good, but did not know where he was. Marshall expressed the opinion that the money could be made off of Hume, who, he said, had a house and lot in Cincinnati worth 3,000 dollars. Major was aware that Ma/rshall had not money with which to buy notes; and he would not have loaned the 200 dollars to Marshall, except upon condition that he would buy the notes of Hume and Logan. Marshall got 80 dollars, at the time saying he wanted a little money to pay off a judgment and some other small debts. For the residue, Major gave his due-bill, which he afterwards paid to Marshall’s assignee. During the negotiation, Major informed Marshall that he had once brought suit against Hume on the notes; that Hume set up the defence of infancy; and that fearing he would prove it, and for the purpose of maldng inquiries, he dismissed the suit. It also appeared in evidence that Hume was a minor when the notes were given, and that they were not given for necessaries.

For ten or fifteen years before the giving of the mortgage, W. T. Marshall had been a habitual drunkard. There was a preponderance of evidence that about the time of this transaction, he was capable of transacting business when not intoxicated. During his visits to Lawrenceburgh to procure money, he lodged with one Hornberger, an inn-keeper, and paid his tavern bills by orders drawn on Major, who paid them out of the 200 dollars loaned. Marshall, during these visits, was always drinking, and carried his bottle to bed with him, or had a glass of liquor set at his bedside. In the opinion of Hornberger, and of Kmikle, his bar-keeper, he was not, during any of said visits, capable of transacting business. Armstrong, another witness, stated that in his opinion Ma/rshall had been incapable of transacting business for six or seven years.

It was proved that Hume was a drunken printer residing in Cincinnati; that he died in October, 1849, utterly worthless; that he died of a disease of the lungs, brought on, probably, by his irregular habits; that for two years before his death, he had not been able to earn a living, and not *255more than that for the two years preceding. He lived in a house situated upon a lot in Cincinnati, which he purchased for 400 dollars about 1840, and on which he paid a little over 100 dollars. The house was a framed building, and was erected by Hume, at a cost of about 250 dollars. He soon after sold the property to his father-in-law, Dowd, who, during his life, and his widow after his death, permitted Hume to occupy the house until the death of the latter, free of rent. There were circumstances tending slightly to show that the property was covered for the use of Hume; but there was no proof that such was the fact. The testimony, so far as it goes, raises a stronger presumption that he lived there as an object of charity, than that the property was fraudulently covered. It further appeared that in the latter part of Hume’s life, he and Marshall were intimate, and habitual drinkers together.

Tibbs, Cloud and Murdoch, witnesses for the plaintiff, testified that Marshall, in their opinion, was capable, when sober, of transacting business. They discovered nothing like insanity about him, and give a few instances of contracts made by him.

Major was examined as a witness, at the instance of Billing sly. He detailed the transaction which led to the taldng of the mortgage, substantially as stated in his answer.

In reviewing this case, we have arrived at the conclusion that the mortgage, to the extent of the two notes of Hume and Logan, purchased by W. T. Marshall from Major, can not be sustained in a Court of equity. It is evident that those notes had no appreciable value, and that they were regarded as worthless, or nearly so, by the holder, at the time he sold them to Marshall and indorsed them without recourse. Logon was gone to parts unknown. The short distance and facilities for intercourse between Lawrenceburgh and Cincinnati, connected with the fact that he had held the notes for ten years, and had once brought suit against Hume upon them, raise a very strong presumption that Major was aware of Hume’s utter worthlessness. Indeed, Major does not state in his an*256swer, that he believed Hume had any property. He prudently states, that from what Marshall told him, he believed that Marshall believed he could collect the notes from Hume. K Marshall did so believe, with the knowledge his intimacy with Hume must have given him of his circumstances, and with the information that he was relying upon the defence of infancy, which Major communicated to him, it goes further to establish the imbecility of Marshall, than any other proof in the record.

We do not think Marshall’s incapacity from drunkenness alone sufficient to avoid his contract; but when a transaction is characterized by weakness of mind, pecuniary embarrassment, inadequacy of price, an enterprising and sagacious adversary, and an unconscientious advantage, a Court of equity will set the transaction aside. McCormick v. Malin, 5 Blackf. 509. We think all these elements combine in the transaction presented by this record. Major well knew that Marshall had not money to buy notes with, even had they been good. He came to borrow money. He wants 1,500 dollars to enable him to get out stone and timber to send to market. His demand is finally reduced to 200 dollars, to meet some immediate pressure, of which he gets in hand only 80 dollars; he pays his tavern bills by orders on Major, and yet Major admits that he refused to loan even that sum, except upon condition that he would purchase the notes. If a man, with his eyes open, choose to buy property, he may give what price he pleases, and will apply to a Court of equity for relief in vain; but this was not a sale of property. It was money Marshall wanted, and the purchase was yielded to by him as the only means of obtaining a loan. The case of Collett v. Preston, 15 Eng. Law and Eq. R. 101, in which relief was granted, was in many of its features like the present. The most essential difference between the two, is, that in that case the borrower, without any degree of imbecility or incapacity shown, was forced by his necessities to purchase property at ten times its value, as the only condition on which he could obtain a loan; while in this case we find the borrower, with greatly weakened powers of mind, *257under the pressure of pecuniary embarrassments, and probably the resistless demands of a depraved appetite, yielding to the purchase of property of no appreciable value, as the only condition of obtaining a loan in no respect adequate to the use to which it was ostensibly to be applied. In these respects the claim for relief is stronger than in that above quoted. Lawley v. Hooper, 3 Atk. 278, is a very similar ease, in which, although Ld. Ch. Hardwicke said he would, if necessary, have found the transaction usurious, yet he did not deem it necessary to put the case on that ground, for, independent of it, it was an unconscientious bargain, which he would not allow to stand.

P. L. Spooner, for the appellants. JD. S. Major, for the appellees. Per Cwriam.

The judgment is reversed with costs. Cause remanded, with instructions to the Circuit Court, to enter a judgment for the plaintiff below for the amount of the 200 dollar note and interest, and a foreclosure of the mortgage for that amount, with leave to the defendant Major to withdraw the notes of Hume and Logan, which were brought into Court with the answer of W. T. Marshall.