Pelton v. Knapp

21 Wis. 63 | Wis. | 1866

Lead Opinion

Dixon, C. J.

The plaintiff testifies that an arrangement was made at the time he made the first payment, that the mortgage was to be transferred to him, and he was to hold it until he was paid. If such arrangement had been perfected with the mortgagees, or with Randall Whiting, who was one of them, little or no difficulty would have been presented by the case. The plaintiff would then have come in purely in the character of assignee, and, as such, his rights would have been paramount to those of the defendant Daniel B. Knapp under the lien of the judgment in Ms favor. But the inference from the plaintiff’s testimony is, that the arrangement was made with Farmin, the mortgagor, and not with the mortgagees or with Randall Whiting, though he says that Randall Whiting “ understood the arrangement I had with Farmin." If there were any cor*69roborating evidence upon this point, and it bad appeared tbat Whiting assented to the arrangement, the assignment migh still be upheld as against the Knapp judgment. But there i no such evidence, and no proof that the mortgagees ever gav their assent until the assignment was in fact made, in May, .1854. On the contrary, Whiting testifies that he has no knowledge or recollection of the arrangement; and Eisk denies that any was ever made. Farmin is not interrogated, and does not speak directly to the point; but I conclude, from what he does say, that the arrangement was not made until he went to Oshkosh to make the last payment to Webster. Under these circumstances, I think the fact must be found against the plaintiff ; and then the question arises, whether it was competent for the parties at that time, by the form of an assignment, to revive the mortgage as to the payments previously made, so as; to take precedence of the lien of the Knapp judgment? In other words, the question is, whether as to those payments the-mortgage had not been extinguished. I think it had and if so, it was clearly not in the power of the parties, mortgagor and mortgagees, to revive it so as to to dispossess or postpone the lien of the judgment which had already attached. As between the immediate parties, it might, perhaps, have been thus revived, but not so, as to, defeat the intervening interest of a third person. See Patterson v. Pope, 5 Dana, 241.

The conclusion that the mortgage was extinguished as to all the sums paid except the last, seems to me very plain. Those sums were received by the mortgagees, or- by Webster -for them, either as payments, or as so much money to be applied on an agreement to. assign the- mortgage when the whole should be paid. There was. no such agreement on the part of the mortgagees to assign, and consequently the money must have-been received in. payment. It was so regarded by the mortgagees; and being so regarded by them, the sums received, con*70stituted in law valid and effectual payments. The case in this respect differs materially from that of Downer v. Miller, 15 Wis., 612. There the lender constituted the borrower his agent to receive the money, and with it to procure an assignment of the judgment to the lender. Instead of fulfilling the duties of his agency, the borrower was guilty of gross fraud in procuring the judgment to be satisfied. The greatest injustice would have ensued if we had passed by the intention of the lender, and had been governed by that of the creditor receiving the money, to whom it was a matter of utter indifference whether the money was paid in satisfaction or in consideration of a transfer of the judgment. No reason was perceived why the fraud should be more successfully perpetrated by the borrower in his capacity of agent, than if the money had been entrusted to a stranger to the judgment, and he had been guilty of a like fraud. If an agent, entrusted with funds to buy land for and in the name of his principal, should violate his trust by buying and taking title in his own name, no one would doubt that a court of equity would relieve the principal even as against a creditor of the agent claiming a lien by judgment, and notwithstanding the vendor, at the time of the sale, had no intention of selling or conveying to the principal. The same rule was applied in that case. It turned upon the question of fraud. Here, however, there was no agency on the part of the borrower, and no fraud as to the application of the two first payments. The plaintiff, the lender, undertook the management of the affair himself. He made those payments; and if the business was so conducted that he cannot now succeed to all of the rights of the mortgagees in the first instance, it is his own fault. If he wished to preserve the lien of the mortgage, or to assume the character of a purchaser according to his arrangement with Farmin, he should have apprised the mortgagees, and have obtained their assent at the times of payment for otherwise the transactions were fixed as payments by *71the money being received and applied as snob, and could not afterwards be changed to suit his convenience, or so as to give him preference over another creditor of the mortgagor, whose lien, though subordinate to that of the mortgage, is prior in date to the assignment.

I am aware that some general expressions are to be found in the books, to the effect that where money is paid by one not a party to the instrument or liable upon it, but by some third person, the debt will be extinguished or not according to the intention of the party paying. But such expressions are not to be separated from the facts of the cases in which they occur. They are to be taken in connection with those facts, and not as independent propositions of law. It will appear from examination, that the intention of the party paying was invariably communicated to the creditor at or before, the time of payment, and that the creditor consented to receive the money not in payment but in consideration of a transfer of the debt or demand. Such was the case of Harbeck v. Vanderbilt, 20 N. Y., 395, where the note was delivered to the plaintiffs in the judgment, and the judgment was at the same time assigned as an indemnity for the endorser of the note. The same is likewise true of Champney v. Coope, 32 N. Y., 543, in which the assignment was upheld only as to those sums which were paid after the mortgagee had agreed to assign the bond and mortgage. As to the $1200 paid before the mortgagee’s agreement, it was held that the mortgage was extinguished, and could not be.enforced by the assignee. I do not think any case can be found where the mere intention of the person paying, not communicated to the creditor at or before the time of payment, has been held to change the nature of the transaction.

.The foregoing observations are applicable only to the two first payments. As to the last, it appears that the plaintiff furnished the money with which Farmin was to go to Oshkosh and complete the payment of the Webster debt, and take an *72assignment of the mortgage to the plaintiff for bis security. Farmin did so, and so far I think the transaction valid, and the lien of the mortgage not extinguished. In this respect it is like the case of Downer v. Miller, except that there was no vio - lation of duty on the part of the agent. It was the same as if the plaintiff himself had procured an assignment of the mortgage in consideration of paying the balance of the debt.

Eor these reasons I am of opinion that the judgment as it now stands should be reversed, and tbe cause remanded with instructions to enter judgment for tbe plaintiff for $188 and interest from tbe 12th day of May, 1854, being tbe amount of the last payment with interest from its date.

Cole, J., concurred in tbe above opinion.





Concurrence Opinion

Downer, J.

I concur in the opinion of the chief justice as to the two first payments made on the note to Webster signed by the mortgagees. But I disagree with the majority of the court as to the last payment, bolding that the mortgage ought not to be enforced even for that amount, and that the lien thereof is entirely extinguished. Farmin testifies as to the time of making the assignment: “It was after the Webster debt had been paid in full. I think it was three or four days after Webster’s debt bad been paid. It [the assignment] was delivered to me personally.” If the mortgagees had themselves paid the last installment to Webster, they would then have had a right to enforce the mortgage to the amount of such payment; but they never paid any part of the debt, %o indemnify them against which the mortgage was given, and consequently never had any right to foreclose the mortgage, nor any interest which they could transfer to Pelton, certainly ’none after the debt to Webster was paid by Farmin, their principal, or by Pelton at his request. If Pelton desired to keep alive and avail himself of the mortgage as a security to reimburse hiipself for the money advanced, he should have first *73arranged with the mortgagees that they, or be for them, should pay the money to Webster, and that, in consideration of such payment for them, they would assign him the mortgage. But without any agreement or understanding with the mortgagees, the debt to Webster was paid by Farmin, as he says, with Felton's money. Such payment instantly extinguished, the debt and the mortgage lien. The subsequent assignment by the mortgagees, or any agreement they could make, could not revive the lien as against a prior judgment creditor of Farmin, There is no pretense for saying that Farmin acted fraudulently, or with any intention to injure Pelton. The most that the. evidence tends to prove is, that Farmin made a mistake, not of fact but of law. And the plaintiff is entitled to no relief on that account I am of opinion therefore that the judgment should be reversed, and the complaint dismissed.

By the Court. — Judgment reversed, and cause remanded with instructions that judgment be entered in favor of the plaintiff for $138, and interest from May 12th, 1854.

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