137 Mich. 158 | Mich. | 1904
Lead Opinion
This is a suit in chancery to set aside the transfer of two mortgages from complainant’s testator to the first-named defendant. There is also a claim, .which will be discussed at the conclusion of this opinion, that complainant, in her individual capacity, is entitled to an equitable lien on certain real estate. The original bill was filed by complainant, the widow of said Levi R. Peirson, deceased, in her individual capacity. It sought relief on the ground that the moneys invested in the mortgages belonged to her. Afterwards the will of said Levi R. Peirson, whereby he devised to complainant all his property and appointed her executrix, was admitted to probate. Thereupon her bill was amended, and a decree sought on the ground that these mortgages still belong to the testator’s estate. The trial court dismissed complainant’s bill. She appeals to this court, and asks a decree “so that these two mortgages should stand in the name of the estate; then, by operation of the will, they would, after the settlement of the estate, come to Mrs. Peirson.”
Complainant contends that she is entitled to this decree on one of two grounds: First, that the assignments were never delivered; second, that, if they were delivered, no consideration was paid for them, that they equitably belong to complainant, and that they should be decreed to belong to the estate in order that complainant’s equitable right to them may be enforced. We will discuss these claims separately.
First. Were the assignments ever delivered f One of these assignments was dated September 5, 1898, and the other December 14, 1898. Mr. Peirson died in a hospital
“The impression I got from what he said to me was that he had made these papers — these assignments — and fixed his property over with the intention of it taking effect at his death.”
Notwithstanding this statement, I think Mr. Peirson— who was a lawyer, and knew the meaning of the words he used — correctly stated the facts when he told the witness, as the witness testifies, “he had made a disposition of his property; that he had assigned the mortgages to Myrtie.” It is conclusively established that Mr. Peirson intended that after his death these mortgages should belong to Miss McNeal. He did not intend to transfer them by a will or any instrument to take effect after his death. He intended to transfer them directly to her by delivery. He was a lawyer, and presumably he knew that, to effect
I do not think that the charge should be made that the testimony of the mother and sister of Miss McNeal was introduced out of place. Of course, it was introduced, as it should have been, after complainant had closed her testimony in chief. I do not understand from the record that it was introduced after complainant had closed her rebutting testimony. The notion that it was so introduced I think results from the fact that complainant swore some witnesses, who testified to value, just before the testimony under consideration was introduced, and before defendants had rested. We are asked to discredit this testimony because the papers were not recorded until January 16th, because Mr. Peirson was in .control of the subject of the first assignment on the 12th of November, and because one witness — Mr. Ransom J. Eaton — testifies to two conversations with Miss McNeal in which she admitted to him that the mortgages were never delivered. The fact that these assignments, delivered just before and in anticipation of Mr. Peirson’s death, were not placed on record until after his death — an event which occurred in less than a month after the papers were delivered — is to my mind a circumstance of no particular significance. The fact that Mr. Peirson claimed to be in possession of one of these mortgages on the 12th of November is entirely consistent with the evidence that he parted with his interest in that mortgage by delivering, in December, an assignment' executed in September. Miss McNeal denies under oath that she made the admission to Mr. Eaton, and in this she is corroborated in part by the testimony of her
Second. Nor do I think that complainant can prevail on the ground that these mortgages are equitably hers. The only testimony in the case which justifies the conclusion that these mortgages equitably belong to complainant is her own testimony. In giving that testimony complainant testified to matters clearly within the knowledge ’ of her testator. On the theory that this property is equitably hers, complainant is seeking a decree, not for the benefit of the estate, but for her own benefit. She attacks the transaction between her testator anid Miss McNeal, not on the ground that the testator’s estate is damaged, but solely on the ground that her interest in the estate is damaged. It is clear, therefore, that if complainant can recover on the ground that she is the equitable owner of the property, and that her equities entitle the estate to recover what otherwise it could not recover, she is the real party in interest. See Bachelder v. Brown, 47 Mich. 366 (11 N. W. 200). Complainant is, in the language of the statute (section 10212, 3 Comp. Laws), “the opposite party” to Miss McNeal, who is (see Ripley v. Seligman, 88 Mich., at page 189 [50 N. W. 143]) an assignee of the deceased. Complainant’s testimony is therefore inadmissible under said section. See Bachelder v. Brown, supra.
I do not understand that complainant asks relief upon the ground that she has established her charge in the bill that these assignments were procured by undue influence. To avoid any misapprehension, we deem it proper to say that, in our judgment, that charge is not established.
We now come to the consideration of the claim referred to at the commencement of this opinion — that complain
We are not called upon to determine the propriety of the relations which existed between Mr. Peirson and Miss McNeal, for it is clear that the impropriety of those relations, if they were improper, would not, as a matter of law, defeat the latter’s title to the mortgages in question.
In my judgment, the decree of the circuit court should be affirmed, with costs.
Dissenting Opinion
(dissenting). Complainant and Mr. Peirson were married September 17, 1857. She was then a young widow, possessed of some means, and he was in the mercantile business in Hudson, Mich. He failed in 1859, studied law, and entered upon the practice of the profession at Hudson in 1862. He occupied rooms for his office in a building owned by his wife. His business was small, largely confined to office work. The only data of the extent of his business is found in his account books for "the years 1895, 1896, 1897, and 1898. In 1895 it amounted to $1,085.24, and decreased steadily until in- 1898 it
“All I know about it is that Myrtie brought in some papers, left them on the stand, and said they were valuable papers. She didn’t say what they were, or where she got them, or anything about them. She left them there until she retired that night, and took them upstairs and locked them up. That is all I know about it. I had one in my hands — the Duesler mortgage. I just took it up and looked at it, and just saw Julia Duesler’s name.”
Her sister testified that Miss McNeal brought some papers home a few days before she went to Columbus; said nothing as to what they were; that when she went to Columbus she gave witness the key, and told her to take care of them while she was gone; that there were two envelopes; that the writing on them said they were mortgages. Both witnesses identified the envelopes, and the witness Nellie testified that she “took the papers out to see what the envelopes contained,” but when she did this does not clearly appear. Opposed to this is the testimony of one Ransom J. Eaton, who was a personal and life-long friend of Mr. Peirson. Mr. Eaton was an undertaker, and Mr. Peirson had expressed to him a wish that when he died he should take charge of his funeral. After Miss McNeal had been in the hospital some days with Mr. Peirson at Columbus, she returned home to Hudson. Meanwhile Mr. Peirson became worse, and was evidently nearing the end of life. Mrs. Peirson received a telegram from Dr. S. P. Hartman, superintendent of the hospital, directed to Miss M. Peirson, saying: “ Your father growing weaker rapidly. Come to him at once. ” Mrs. Peir
4 4 There was money and valuable papers in the trunk, and that she was pretty busy just then, and that she wished I would make up my mind to go. She said she wished I would go. She said there was something like six hundred dollars and valuable papers. At that time she did not tell me whose they were. I said, 41 will see Mrs. Peirson, ■and, if she is willing I should go, I will see you again in this matter, and let you know.’ She said, ‘Yery good.’ At that time she didn’t make any claim that these valuable papers were hers.”
After this interview Mr. Eaton went to see Mrs. Peirson, who would not consent to his going, because it was unseemly to send an undertaker there before he was dead. Thursday morning following Mr. Eaton again saw Miss McNeal, and she said to him:
“ That there were $800 she had deposited with Dr. Hartman, and she said in the trunk there was a couple of mortgages that belonged to her that had never been delivered. She wished that I would go down there myself and see to it, and get those and give them to her. She said she felt that somebody ought to be there to look after them, and it was too bad to see Mr. Peirson die in that way, and it was too bad to see this money and papers going that way, and she wished I would go. I said, 4 Myrtie, can’t you go?’ She said, ‘No, I cannot.’ This was about nine o’clock.”
Miss McNeal admits having had conversations at these times with Mr. Eaton; denies the material facts testified to by him, but admits the immaterial. At 2:20 that afternoon Miss McNeal, accompanied by Seth McNeal, her ■cousin and attorney, left for Columbus. They arrived at the hospital during the night; but Mr. Peirson was unconscious, and so remained until his death, the next morning. On receiving a telegram of his death, Mr. Eaton left for
“ She said, ‘ That is all, except those two mortgages or bequests that I told you about in Hudson, which had not been delivered to me; but,’ she said, ‘those I cannot give you. They are mine.’”
Mr. Eaton is an entirely disinterested witness. There is no room to say that he is mistaken. Either Miss McNeal said what Mr. Eaton testified to, or else he is a perjurer. No mo'tive can be found for his committing the crime of perjury. It follows that, if his testimony is believed,, these mortgages and assignments were not delivered.
It is also a matter of some significance that the sister and mother were not called as witnesses until about the close of a long hearing, after the complainant had closed her testimony in chief, the defendants had closed their testimony in chief, and the complainant had closed her rebuttal. It could not well have escaped the attention of.’ Miss McNeal and her counsel that it was essential for her1 to prove actual delivery. The facts testified to by her mother and sister, and their importance, must have been known to her, if not to her counsel. It is, in my judgment, much more reasonable to say that the mother and sister were mistaken as to 'the time when they saw these papers in the possession of Myrtie than to say that Mr. Eaton was mistaken, or had testified falsely.
But there are other indicia of nondelivery. They were not recorded during Mr. Peirson’s lifetime, but were promptly recorded after his death, being put upon record the very day of the funeral, upon the return of Miss McNeal from Columbus. No reason is shown or suggested
On November 12 — more than two months after the date and acknowledgment of the assignment of the McCullen mortgage — Mr. Peirson wrote to Mr. McCullen, stating that there would be $141 interest due February 1, 1899, and offering to take $100 if he would pay the interest in full up to that date, and to make him and his wife a present of the $41, and that he would then have no more interest to pay until February 1, 1900. Nothing was said in the letter about having assigned the mortgage. Mr. McCullen afterwards called on Mr. Peirson, and in a conversation Mr. Peirson said that “ he intended to give her [Miss McNeal] that property, if nothing happened, when he died.” Mr. Duesler testified to a conversation with Mr. Peirson a few days — not over 10 — before Mr. Peirson went to Columbus. Mr. Duesler then paid Mr. Peirson the interest due on the mortgage. Mr. Duesler testified that Mr. Peirson said “he had transferred, or was going to transfer, the mortgage to her [Miss McNeal], and for us to deal with her as with him, after he was dead.” On cross-examination he testified:
“It is my best recollection that Mr. Peirson said we should deal with her after his death. It is my recollection those are the very words.”
Miss McNeal did not notify either of the mortgagors that she owned, or claimed to own, either mortgage, until after Mr. Peirson’s death. According to the testimony of one Albert Price, a witness for the defendants, Mr. Peirson, anticipating trouble after his death, called Mr. Price into his office December 16, 1898, to talk with him, and have him observe his mental condition. In this conversation Mr. Peirson told Mr. Price that he wanted to do something for Miss McNeal, and spoke about the mortgages he had assigned to her. Mr. Price testified:
“ He didn’t tell me that he had delivered any papers, or anything of the kind, but he was making calculations, in*172 case he should go away, or should die, to leave these papers in this shape. * * * My impression that I got from what he said to me was that he had made these assignments, and fixed his property over with the intention of taking effect at his death.”
He further testified that he inferred from the conversation that he had not passed any of the papers over to Miss McNeal. That he did not intend to deliver them at the time he signed and acknowledged them is apparent from the fact that he did not then deliver them, and that he retained them, under the testimony of her own witnesses, until just before he left his home for Columbus. It is, in my judgment, entirely consistent with the character and actions of Mr. Peirson, as delineated upon this record, to hold that he did not intend to part with these mortgages and the income therefrom so long as there was any possibility that he would live to control and use them. I think he took them with him to Columbus, intending to deliver them to Miss McNeal whenever he should think death was approaching. I prefer to 'believe the disinterested testimony of Mr. Eaton, sustained as it is by circumstances, rather than the interested testimony of Miss McNeal’s mother, sister, and cousin. I therefore conclude that these mortgages and assignments were never delivered. He left them undelivered in his trunk, and she took them without any authority or right. In doing so she obtained no title.
“ Where a negotiable note is found in circulation after it is due, it carries suspicion on the face of it. * * * Although it does not give the indorser notice of any specific matter of defense, such as set-off, payment, or fraudulent acquisition, yet it puts him on inquiry.”
“ It can also be shown against the indorsee of overdue paper that he claims title through a thief or finder, or from a bankrupt.” Tiedeman on Com. Pap. § 295.
It follows that defendants Barre and Cook obtained no title to this note and mortgage, and that the title thereto is in the estate. They are therefore payable to complain-; ant as executrix of her husband’s will.
In Strong v. Jackson, 123 Mass. 60 (25 Am. Rep. 19), a note and mortgage were assigned to one Jackson as collateral security for the note of one Kingsley to enable him to borrow money from Jackson. The note and mortgage and Kingsley’s note were delivered to Jackson. Jackson assigned the mortgage to one bank to secure a debt of his own. He subsequently transferred the note to which the mortgage was collateral to another bank as collateral security for a loan made by him at that bank. It was held that the taker of either the mortgage or the note took according to the true title of the one who transferred it, and that, therefore, the second bank took no title, and did not take the note in the ordinary course of business without notice.
In Canajoharie Nat. Bank v. Diefendorf, 123 N. Y. 191 (25 N. E. 402, 10 L. R. A. 676), the plaintiff bank took two notes of $1,000 each, made by a farmer living six miles from the bank, from a stranger, at a discount greater than the lawful interest. The bank made no inquiries, but H studiously refrained from acquiring any information as to the circumstances under which such an
In Smith v. Jansen, 12 Neb. 125 (10 N. W. 537, 41 Am. Rep. 761), plaintiff purchased notes aggregating $100 for $30. It was held that he was not a bona fide purchaser, and did not take the paper in the usual course of trade.
In Hall v. Wilson, 16 Barb. 548, an employé stole a promissory note, made by his employer, for $120, payable to U. or bearer, intending to subsequently deliver it upon obtaining the money. It was placed by the maker in his desk, whence it was stolen. The employe sold it to one Bigelow for $115. Before it became due, Bigelow transferred it to plaintiff. It was held that the plaintiff could not recover, the note never having had a legal inception for want of delivery, and not having been taken for a full and fair consideration and in the usual course of business.
Where a note and mortgage were given by a father for $3,000 to lawyers to defend his two sons charged witbmurder, and the lawyers transferred the note and mortgage to a third party, who brought suit, and the purchaser knew that the sons had been arrested on the charge of murder, that the attorneys had appeared at the preliminary hearing, that they were not indicted, and that the note was executed while they were in jail, it was held that the circumstances were sufficient to put the purchaser of the note and mortgage upon inquiry as to the consideration. Shirk v. Neible, 156 Ind. 66 (59 N. E. 281).
So, where a bank purchased the notes of farmers from a stranger at a large discount, it was held that the circumstances were sufficient to put the purchaser upon inquiry as to the validity of the notes. Auten v. Gruner, 90 Ill. 300; Eaton & Gilbert on Com. Pap. 370. See, also, Wisconsin Yearly Meeting of Freewill Baptists v. Babler, 115 Wis. 289 (91 N. W. 678).
“Bad faith is predicated upon a variety of circumstances; some of them slight in character, and others of more significance. * * * A perfectly upright, honest man might sell a bond which had been stolen, and the explanation might prevent even the taint of wrong on his part, while the explanation, although falling far short of proof of actual guilt, might leave upon the mind an apprehension that he either directly or impliedly connived at the wrong, or, at least, that he was willing to deal in securities and keep his eyes and ears closed so that he should not ascertain the real truth.” Dutchess County Mut. Ins. Co. v. Hachfield, 78 N. Y. 228.
Where a note is lost or stolen, or fraudulently put into circulation, plaintiff must show that he came lawfully and fairly by it. Vallett v. Parker, 6 Wend. 615.
It is often difficult to obtain positive evidence of bad faith. The bona fides of the transaction must be determined from the circumstances surrounding each particular case. Goodrich v. McDonald, 77 Mich. 486 (43 N. W. 1019). There is no uncertainty in the law. The difficulty lies, solely in applying the facts to the law. I am of opinion that Mr. Barre had sufficient knowledge of the transaction to place him beyond the pale of a bona fide holder of this note and mortgage, and is liable to the estate for the amount thereof.
“ A bona fide holder for value of negotiable paper is one who has acquired title in the usual course of business, for a valuable consideration, in good faith, from one capable of transferring it, or from one in possession of the paper with an apparent right to transfer it, and without notice or knowledge of defenses or circumstances which should put him on inquiry.” 7 Cyc. 924.
The above is a good general definition of the term “bona fide holder for value.” The authorities are there, well collated.
Decree should be reversed, and decree entered in this court for the complainant in accordance with this opinion, with costs of both courts.