75 Neb. 358 | Neb. | 1905
On the 3d day of-December,- 1892, George F. Orchard and Sarah M. Orchard made and delivered to William Preston three promissory notes, one for the sum of $5,000, payable three years after date; one for the sum of $5,000, payable four years after date, and one for the sum of $6,000, payable five years after date, each to draw interest at the rate of 7 per cent, per annum, payable semiannually. For the purpose of securing the payments, the makers of said notes, on the 20th day of December, 1892, executed and delivered to the payee, William Preston, a mortgage on certain real estate in Douglas county Nebraska. The mortgage recited the execution and delivery of the notes, giving the dates of payment of both principal and interest, and contained this provision: “But if said sums of money, or any part thereof, or any interest thereon, is not paid when the same is due, then in that case the whole of said sum and interest shall, and by this indenture does, immediately become due and payable.” Afterwards William Preston borrowed of the Blackstone National Bank of Boston, Massachusetts, $5,000, and assigned to this bank as collateral security the note secured by said mortgage which matured three years after date. He also borrowed of the First National Bank of Mauch Chunk, Pennsylvania, the sum of
To the petition William Preston filed a separate answer, admitting the execution and delivery of the Orchard note, but denied that the note Avas sold to the plaintiff by absolute sale; alleged that the note and mortgage Avere assigned to the plaintiff as collateral to secure the payment of his OAvn $5,000 note1, payable to the plaintiff, and asked that the court so find, and find that the legal title to the note Avas in him, but consented that the mortgage might be foreclosed in that action, and prayed that his rights in the premises might be protected, and that he should have every relief that justice and equity might require. William Preston also answered the cross-petition of the Blackstone National Bank, in which he denied that Alfred Preston and Walter G. Preston were partners in the firm of William Preston & Company, and alleged that he, William Preston, was the only person interested in the business of William Preston & Company, and alleged that the note of
Upon a trial to the court on the 27th day of December, 1896, the court entered a decree, finding that the Orchard note held by the plaintiff Avas assigned to that bank by the defendant, William Preston, as collateral security for the promissory note of said Preston, and determining the amount due the plaintiff on the'Orchard note. The court also found that the Orchard note held by the defendant, the Blackstone National Bank, Avas held- as collateral, and determined the amount due on that note. The court entered a decree of foreclosure, and directed the mortgaged premises to be sold, and that, out of the proceeds of the sale, there should first be paid the costs, second, the sum found due the plaintiff, the First National Bank of Mauch Chunk, and the sum found due the defendant, the Blackstone National Bank, pro rata, and any sum remaining after the satisfaction of the sums due the plaintiff and the Blackstone National Bank he held to abide the further order and decree of the court. The court also found
Under this decree the mortgaged premises Avere offered for sale and bid in by Edgar M. Morsman, Jr., as trustee for the plaintiff and the defendant, the Blackstone National Bank. At the sale the sheriff was put into the possession of and read this notice: “In the District Court of the State of Nebraska, Avitkin and for the County of Douglas. The First National Bank of Mauch Chunk, Plaintiff, y. George F. Orchard et al., Defendants. Notice. To the purchaser or purchasers at sheriff’s sale of the property in controversy in this action: You and each of you are hereby notified that Earnest Griffith claims a first lien for six thousand dollars ($6,000) upon the property in controversy in this action (describing it); that he claims said lien by reason of the fact that he is the holder of a note for six thousand dollars ($6,000) executed by George F. Orchard and Sarah M. Orchard, and secured by the mortgage upon said above described property Avhich is sought to be foreclosed in this action. Lysle I. Abbott, Atty. for Earnest Griffith.” This notice Avas returned by the sheriff Avith his report of the sale and filed by the clerk of the court on December 3, 1897. On December 4, 1897, the plaintiff and the defendant, the Blackstone National Bank, joined in a motion for an order confirming the sale, and for the execution and' delivery of a deed. On January 6, 1898, the court ordered a confirmation of the sale and execution of a deed. The deed was duly executed and delivered to the purchaser, and was filed and recorded on January 18, 1898. Morsman, as trustee, entered into the possession of the premises, and has expended a considerable sum of money in the payment of taxes in order to preserve the property for the benefit of his clients. The Blackstone National Bank has subsequently sold its in
William Preston is the father of Alfred Prestop and Walter G. Preston. Emilie Y. Preston, the plaintiff in this action, is the wife of William Preston, and is the mother of Alfred Preston and Walter G. Preston.
On the 18th day of October, 1901, Emilie Y. Preston filed a petition in the district court for Douglas county, setting out the execution and delivery of the $6,000 note secured by the mortgage foreclosed' in the former action, claiming to be the owner of the same; that she was the owner at the time of the commencement of the former action, and at all times since has been such owner and in possession thereof; that the Blackstone National Bank, the First National Bank of Mauch Chunk, and Edgar M. Morsman, Jr., trustee, had actual notice and full knowledge of the fact of such ownership. She made Edgar M. Morsman, Jr., as trustee, the First National Bank of Mauch Chunk, George F. Orchard, Sarah M. Orchard, William Preston, the Blackstone National Bank, Frederick Brommer, Fred Armbrust and Fred Krug Brewing Company, defendants. She prayed a foreclosure of the mortgage; that the mortgaged premises be sold, and that, out of the proceeds of such sale, she be paid the amount of the note. It was alleged in the petition that no part of the note had been paid, except interest instalments on June 8 and December 3, 1893, and June 3 and December 3, 1894.
Edgar M. Morsman, Jr., trustee, and the First National Bank of Mauch Chunk answered, and, among other defenses, pleaded the foreclosure proceedings hereinbefore related; the title acquired by Morsman, Jr., trustee, thereunder; that no assignment of the mortgage had ever been made by William Preston and entered of record in the
At the trial of the latter case there was offered and introduced in evidence a power of attorney from the plaintiff, Emilie Y. Preston, to her son Walter Gf. Preston, authorizing Walter G. Preston, as such attorney in fact, to execute, convey, acknowledge and deliver by deed of trust, mortgage, bill of sale, or any other conveyance, any real estate or personal property that she then owned or might thereafter own, wherever the same was situated; to sign notes, checks, drafts or any other documents in her name, and to secure payment of the same by deed, mortgage, deed of trust, or any other conveyance upon any property, real or personal, granting full power to transact any and all business. This power of attorney was executed on the 23d day of July, 1895; was properly acknowledged and was recorded in the office of the register of deeds of Douglas county on the 11th day of January, 1896. The deposition of the plaintiff was taken and read in evidence, from which it appeared that, since the giving of the power of attorney, she had entrusted all of her business affairs to her son, Walter G. Preston, as such attorney. Walter G. Preston was called as a witness on behalf of the plaintiff, and testified that his mother had been incompetent to handle her own business by reason of nervous prostration; that it was necessary for some one to handle her business, and that she gave him a power of attorney; that he had attended to her business since 1891; that prior to the transaction with reference to the $6,000 note he had no recollection of transacting any business for his mother other than the payment of taxes on some property in Iowa; that on the 10th
On the part of the defendants, the record of the foreclosure proceedings was put in evidence, together with the sheriff’s deed and the record of the same. It was also shown that the Blackstone National Bank had conveyed its interest in the property to Morsman, Jr., trustee for the Mauch Chunk Bank; that the Blackstone National Bank had gone into voluntary liquidation and had ceased to exist; that a portion of the premises involved had been convoyed to the Fred Krug Brewing Company; that no assignment of the mortgage securing the $6,000 note had ever been filed in the office of the register of deeds. Payment of the taxes on the property was also shown, together with services performed in reference to the assessed valuation and the defense of condemnation proceedings. There was evidence that the Mauch Chunk and Blackstone National banks, and Mr. Morsman, Jr., as trustee, had never had any knowledge of any claim to the $6,000 note on the part of Emilie Y. Preston.
It is contended by plaintiff in this court that the decree in the foreclosure proceedings instituted by the Mauch Chunk Bank, in so far as it fixes a personal liability upon William Preston on account of his indorsement of the two
We think, however, that under the facts in this case, no protest for the nonpayment of the notes was necessary. These notes were payable directly to Preston; he pledged them to the bank as collateral security for his own debt; there were no indorsers to be charged; Preston suffered no loss by reason of the failure to protest the notes.
Mr. Story, in his work on Promissory Notes (7th ed.), sec. 284, declares the rule to be “a relaxation of the strict rule as to the necessity of a due presentment of a note by the holder to the maker for payment at its maturity, where the note has been received as collateral security for another debt due to the holder. * * • * In order therefore, to entitle the debtor, as owner of the collateral security, to resist the payment of the debt, he must establish that he has sustained damages by reason of the want of due diligence and due presentment on the part of the creditor, and to the extent of such damages he may recover compensation or indemnity, or recoup the amount in any suit for the debt.”
Another writer on the same subject declares that “the creditor who has effects of the principal in his hands, or under his control for the security of the debt is a trustee for all parties concerned, and if such effects are lost through the negligence or want of ordinary diligence of the creditor, the surety is discharged to the extent that he is injured, the same as if the effects had been lost by the positive act of the creditor. In such case he is bound to
The rule announced by these authors is supported by sound reasoning, and, applied to the facts in this case, leaves nothing in the contention of the plaintiff as to the failure to protest the notes involved in the original foreclosure. In that case the answers of Preston to the petition and cross-petition were evidently prepared with this rule in view. He asserted therein his title to the notes and insisted upon a decrees in conformity with his demand. It was right and proper that he should do so, and the trial court in that case rightfully found that these notes were held as collateral only, and, in so far as the rights of William Preston are concerned, he was absolutely bound thereby, and, whether liable as an indorser on these notes or not, he Avas still held under his contract of indebtedness to the holders of the notes; and, in our opinion, the court upon the issues there presented, properly found that the Mauch Chunk Bank and the Blackstone National Bank were first entitled to he paid out of the proceeds of the sale of the mortgaged property. ,
A mortgagee may, by agreement, fix the rights of the holders by assignment of the notes secured by the mortgage to the mortgage security, and such an agreement may he implied from the circumstances of the transfer. Noyes v. White, 9 Kan. 640; Grattan v. Wiggins, 23 Cal. 16. From the assignment of the notes to the banks by Preston as
Mrs. Preston claims to have acquired the $6,000 note in January, 1896. At that time, by reason of the failure of the maker to pay the interest which'had matured thereon in June and December, 1895, the note, according to the express stipulation of the mortgage, was past due for the purpose of the foreclosure which the plaintiff now invokes, and for that purpose was dishonored. She took, therefore, by the delivery of the note,' a chose in action. She acquired the rights of William Preston, and no more.
Furthermore, the good faith of the transaction may well be questioned. We are far from convinced that the name of the Avife is not being used for the purpose of enabling Preston to evade his obligations. Walter G. Pres
The judgment of the district court -was right, and we recommend that it be affirmed.
By the Court: For the reasons stated in the foregoing opinion, the judgment of the district court is
Affirmed.