69 Ind. App. 208 | Ind. Ct. App. | 1918
Appellee brought this action, which is a companion case to McKay v. Corwine (1918), post 238, 118 N. E. 978, against appellant and others .to recover on certain promissory notes executed by appellant and Horace McKay, her husband, and to foreclose a mortgage on lot No. 208 in Cross’ Trustees Clifford Avenue Addition to Indianapolis, executed to secure the payment of the.notes. The lot at the time of the execution of the mortgage was held by appellant and her husband as tenants by the entire-ties. The husband died before tfie bringing of the suit.' A trial resulted in a finding and judgment against appellant for $746.30, the amount due on the notes, and in a decree foreclosing the mortgage as against all the defendants.
The substance of the pleadings in so far as necessary to a consideration of the questions presented is as follows: The complaint contains the usual averments, and, in addition, that by reason of default in the payment of one of the notes all were due by virtue of a provision of the mortgage to that effect, a copy of which is exhibited with the complaint. Hunt and Hunt, alleged to be subsequent purchasers of the real
Appellant answered in four paragraphs: The first a general denial; the second and third,, facts to the effect that appellant executed the notes and mortgage as surety for her husband; the fourth paragraph is an amplification of the second and third. Appellant filed also a cross-complaint against appellees repeating the averments of the fourth paragraph of answer, and praying the cancellation of the notes and mortgage, and all other proper relief. Appellee’s demurrer to th.e cross-complaint was sustained.
Appellee filed a reply in four paragraphs, the third being addressed to the second, third and fourth, paragraphs of answer. Appellant’s demurrer was sustained to the first and second paragraphs of reply, and also to the third as addressed to the third and fourth paragraphs of answer, and overruled as addressed to the second paragraph of answer. The fourth paragraph .of reply was a general denial. The substance of the third paragraph of reply was to the effect that Horace McKay died May 9, 1914, leaving no separate estate, real or personal; that he and appellant, his wife, owned real estate as tenants by the entireties of the value of $75,000, of which $10,000 in value was purchased after July 29,1909; that Horace purchased all of said real estate-with his own means, and caused it to be conveyed to himself and wife as tenants by the entireties for vthe purpose of defrauding his creditors, including appellee; that he did not retain any property wherewith appellee’s claim might have been paid at maturity; that appellant knew all
It will be observed that the issues submitted for trial were suretyship, formed by the special answer and the general denial replied thereto, and estoppel, if the third paragraph of reply filed to the second paragraph of answer was sufficient to present such issue, a question not necessary to be determined, as-hereinafter appears.
Under some circumstances such, an error is held not to be harmless. Ross v. Banta (1895), 140 Ind. 120, 34 N. E. 865, 39 N. E. 732; Davis v. Brown (1903), 159 Ind. 644, 65 N. E. 908.
We proceed to a consideration of the sufficiency of the evidence. This question involves the single inquiry whether in the transaction under investigation the court was justified in determining that appellant was a principal rather than surety. There was evidence to the following effect: Appellee resided in New York; for more than twenty-five years prior to August 24, 1909, Horace^ McKay, who resided in Indianapolis, was her agent. As such he loaned money for her on real estate security, made collections when due, reloaned the money, sent money to appellee, and received other money from her. In some manner not explained the agency resulted in her acquiring real estate in Indianapolis, it not appearing whether the legal title stood in her name or in Horace’s name. In 1909, apparently by reason of failing health, Horace decided to surrender the agency. There had been no full settlement between the parties for a number of years. In the latter part of July, 1909, in response to a letter written the appellee by appellant at Horace’s request, she went to Indianapolis with a Mr. Paul, a lawyer, for the purpose of making a settlement. Thomas D. Stevenson, a lawyer, represented Horace. The two lawyers proceeded to audit Horace’s accounts pertaining to the agency, and after several weeks’ work arrived at an agreement that in addition to four parcels of real estate, the title to which either stood in appellee’s name, or that should be conveyed to her, and the value of which does not appear, Horace should account to her for $26,000.85, charging Horace with a Thomas-note hereinafter mentioned. The parties thereupon,, after negotiations, caused to be prepared, and on August 25, 1909, executed an
The principal note first above mentioned, with certain unpaid semiannual interest notes and the mortgage securing them are involved in this action. These notes executed under the agreement bear the signatures of Horace McKay and Martha N. McKay, there being nothing on the face of the notes to indicate that they signed otherwise than as joint makers. The real estate mortgaged to secure these notes, as we have said, was held by Horace and appellant as tenants by the entireties. The settlement agreement specified that appellee should assign the Thomas note and mortgage to Horace McKay. She assigned these instruments, however, to Horace McKay and Martha N. McKay as husband and wife, on the same day that the settlement agreement was executed. It does not appear why, or at whose solicitation appellant was included as an assignee. Appellant testified that she first learned after her husband’s death that she was so included. After Horace’s death she collected $80 on the Thomas note, and later surrendered it and the mortgage, then amounting to about $400, as a gift to Amanda C. Thomas, assigning as a reason that the latter' was not financially able to pay the note. The release by which she surrendered the mortgage was executed by her both as an individual and as sole heir of Horace McKay.
At the time of the decease of Horace in 1914 he and appellant as tenants by the entireties owned real estate in Indianapolis valued for taxation purposes at $80,530, about $9,000 of which was conveyed to them after the execution of the notes in suit. Six thousand dollars of the $9,000 in value was conveyed
Horace, as agent, loaned money for other persons living in the East, besides appellee, and through such agency became indebted to such other persons also. All his indebtedness other than that owing appellee was paid in his lifetime, with funds derived from the sale of real estate held by entireties.
Appellant’s relation to the transaction involved here was disclosed principally by her own testimony. She testified in general terms that all the real estate which she and her husband owned at his decease was purchased with her money, inherited from her mother’s estate. She did not state definitely the amount of such inheritance, but that she had heard that it was between $70,000 and $75,000; that at her request her husband invested her money in real estate which increased in value; that from time to time tracts were sold and other tracts bought; that for many years prior to 1909 they held all their real estate by entireties; that as tracts were bought from time to time title was taken or soon conveyed to them by entireties; that they so held their real estate to simplify matters in case of the death of either of them, and not for the purpose of defrauding creditors ; that her husband was engaged in the real estate business for forty years, and that in such business he handled exclusively the money of his patrons and none of his own; that the real estate held by them in August, 1909, and prior thereto, was purchased with money that came largely from her husband’s business and from the sale of their joint real estate; that throughout their married life she and her husband
Mr. Stevenson, who with Mr. Paul audited Horace’s accounts as above stated, testified that such audit disclosed a balance due appellee of something like $25,000, but that he and Mr. Paul were unable to determine whether such balance was represented by cash, mortgages, real estate, or what it was, and that they simply reduced the balance to a cash basis, and the agreement of settlement was executed accordingly after negotiations, and that property and cash were taken by appellee to the amount of the balance, as indicated by the agreement.
If she contracts for the purpose and upon the consideration that in her judgment she will be benefited either in her person or property, and thus becomes principal in fact as well as in form, she will not be permitted to say as against the contract that she has' been disappointed in the result, and that she is therefore surety. Vogel v. Leichner, supra.
Applying these principles to the facts here, it appears that in the settlement the Thomas note and mortgage were assigned to Horace McKay and Martha N. McKay, husband and wife. Thereby her interest therein became coequal with that of her husband. Collyer v. Cook (1901), 28 Ind. App. 272, 62 N. E. 655; Abshire v. State (1876), 53 Ind. 64.
Appellant, after the decease of her husband, collected $80 on this note, and subsequently surrendered it as a gift to the maker, and by releasing the mortgage, not only as heir of her husband, but also as an individual, she recognized the interest which she ac
Judgment affirmed.