12 N.D. 1 | N.D. | 1902
Lead Opinion
This action is brought to foreclose a mortgage upon real estate, which mortgage was executed by the defendant, John E. Cooley, and delivered by him to the Security Trust Company ; and, upon its face, the mortgage purports to secure a promissory note for $500, dated December 20', 1893, which note was executed by said Cooley, and was by him delivered at the date of its -execution to the Security Trust Company. After a trial without a jury, the district court entered a money judgment against defendant Cooley
In this court the controlling question presented for determination is whether the mortgage is a valid security, and, as such, available to the plaintiff for purposes of foreclosure. The contention of the-defendant Cooley is fully set out in his answer' to the complaint as-follows:
“(2) Further answering, this defendant alleges that the said mortgage was given to the said Security Trust Company by'this defendant without any consideration whatever therefor, but simply as an accommodation to the said Security Trust Company, to enable it to sell, assign, transfer, negotiate, and hypothecate the note evidencing the indebtedness described in said mortgage to some person, or persons to this defendant unknown, and to enable the said trust company to make a true statement to such purchaser, transferee, or pledgee that the said note was secured by mortgage on real estate,, and to enable the said trust company to realize on said note by negotiating or hypothecating the same.
“(3) That at the time of the making and delivery of the said mortgage, it was understood and agreed by and between the said Security Trust Company and this defendant that the said mortgage should be, and was, given for the sole purpose as set forth in paragraph 2 of this third defense, and that the same should be, and was, accepted by the said trust company for the same purpose, and no other; that it was further stipulated and agreed by and between the said trust company and this defendant that the said mortgage was not given or received as security to the said trust company, but that the same was given and received, and was by the said parties understood and intended to be, as security only to the transferee or the pledgee of the said note; and it was further agreed that the-said
“(4) That the said mortgage has wholly fulfilled the purpose for which the same was made and accepted, that the said note evidencing the indebtedness purporting to be secured by said mortgage has been returned to the said trust company, and that the defendant, under the terms of the said agreement, is now entitled to have the same delivered up to him and canceled. Wherefore this defendant asks that the plaintiff’s cause of action be dismissed, and that he, the said defendant, do have judgment against the said plaintiff for his costs and disbursements herein.”
Upon the issues as specified in the statement of the case, the first -question of fact presented is whether defendant John E. Cooley executed the mortgage, and delivered the same to the Security Trust Company. As to this question of mere fact there is, and can be, no contention. It is conceded that subsequent to the delivery of the $500 note described in the mortgage, and on February 19, 1894, the defendant Cooley did execute and deliver the mortgage to the Security Trust Company and further, that after said company became insolvent, and-on July 27, 1897, said mortgage was recorded in the office of the register of deeds of Grand Forks county.
The second question of fact is whether the mortgage was given to secure a part of the debt evidenced by the note sued on. We are quite clear that an affirmative answer must also be given to this - question. It appears by the answer, as well as by the testimony, that in so far as the mortgage was intended to operate as security for the performance of any act whatever, it was given, and intended to be given to secure the $500 note described in the mortgage, which note, it appears, has never been paid; and the same has been merged in, and forms a part of, the note sued on in this action. Nor is such merger controverted in this courh If we understand the position taken by appellant’s counsel in this court, it is not that the mortgage was not, in any event, intended to be given as a security for the payment of . the $500 note described in the mortgage. On the contrary, the contention of counsel corresponds to the averments in the answer of the defendant Cooley in this respect, and both are to the effect that the mortgage was given, and intended to be given, to secure the debt evidenced by the note described in the mortgage; but it is
The third question presented is whether the mortgage has in any manner “been released, discharged, or otherwise rendered of no effect.” This, obviously, is the crucial question in the case. The mortgage was given voluntarily, and there is no claim that it was obtained either by mistake or fraud, and there can be no doubt that the note which it purports to secure is a substantial consideration for its execution. True, the mortgage was given two months after the execution of the note, but it is well settled that the same consideration which supports a principal debt will likewise support any collateral undertaking given to secure the payment of the principal debt. Nor is it at all necessary that the collateral undertaking should be given at the inception of the principal debt. See Red River Valley National Bank v. Barnes, 8 N. D. 432, 438, 439, 79 N. W. 880. The mortgage therefore rests upon a valuable consideration, and, unless the agreement pleaded in the answer can be upheld, the mortgage is and at all times has been a valid security in favor of the mortgagee for the debt which it purports to secure.
At the trial, evidence was received, against objection, which was offered by the defense in support of the collateral agreements alleged in the answer to the complaint. The evidence was offered for the purpose of defeating and setting aside a written instrument which is plain and unambiguous in its terms. The mortgáge, by its terms, purports to be a security in favor of the mortgagee named therein, and the evidence is offered to defeat the mortgage as security in the
The agreements set out as a defense in the answer of John E. Cooley are squarely repugnant to the terms of the mortgage, and are of such a character as not only to vary and contradict its terms, but they go much further, and embody a contract wholly different from that stated in the written instrument. It is alleged that this contract was entered into at the time the mortgage was executed, and that the same was the inducement for its execution. If this extraneous agreement is valid and binding in the law, it will follow that the writing itself must give way to such agreement. But the rule is that contemporaneous agreements and negotiations are conclusively presumed to be merged in the writing. , Proof is allowed of such agreements in cases where fraud, mistake, or failure of consideration is alleged as a -ground of defense. But in the case at bar there is an attempt not only to defeat the mortgage for want of consideration, but to create a new and wholly different contract by an alleged agreement not embraced in the instrument. The recent case of First
Under the rule of law established by the adjudications and recognized by the provisions of the Code which we have cited, it follows that Ihe delivery of the mortgage in question was absolute, and when delivered the sáme took effect according to its terms, wholly discharged from tlie several conditions and agreements set out as a defense thereto in the answer to the complaint. The judgment of the trial court will therefore be reversed in so far as it adjudges that the mortgage herein is null and void, and in so far as it directs that the same be discharged of record and surrendered to the defendant Cooley; ¿nd the trial court will be further directed to ’
Rehearing
on rehearing.
(April 28, 1903.)
A petition for rehearing was granted in this: case, and the same was fully argued at the first session of the March term. Counsel for defendant, in his petition for rehearing, in refering to the admissibility of parol evidence offered at the trial to defeat the mortgage, very properly concedes that “there is no question', about the effect of the provisions of our Code (section 3517, Rev. Codes 1.899), if it is to be held that the mortgage was delivered to-the Security Trust Company for its use with any -conditions attached.” His contention is that the mortgage “was not delivered to the Security Trust Company to be used by them either absolutely or conditionally.” Again he says: “We have contended all along, and what we contend now is, that this mortgage never was delivered to the Security Trust Company, in the ordinary meaning of the term ‘delivered.! ” Further, that “in this case there was no mortgage that was effective between the mortgagor and the mortgagee. The verbal agreement was simply as to the disposition to be made by the-Security Trust Company of an instrument left in its hands, and in. which it had no interest. There was no attempt to make an instrument which would be operative between the parties.” The petition, presents for determination the question whether the mortgage was. delivered — a question which was not seriously considered in the original opinion, it being taken as a conceded fact that there was a delivery. As already stated, counsel for defendant concedes that if there was a delivery of the mortgage, within the meaning of section 3517, Rev. Codes 1899, it took effect freed from any oral conditions: upon which the delivery was made, and that in that event the parolevidence offered to establish such conditions was inadmissible. His contention is that the mortgage was not delivered, and that the oral' evidence objected to was admissible to establish the fact of nondelivery. That parol evidence is admissible to show that a written instrument was never delivered, and therefore never became effective, cannot be doubted; and such evidence is not open to the objection that it contradicts or varies the terms of the written instrument, for it does nothing of the kind, but merely goes to one element of the contract
The case shows a delivery of the mortgage, accompanied by oral* conditions; and, both under the common law and under our statute-(section 3517), such oral conditions were extinguished by the delivery, and the delivery became absolute. Section 3517, Rev. Codes-. 1899, provides that “a grant cannot be delivered to the grantee conditionally. Delivery to him or his agent as such is necessarily absolute ; and the instrument takes effect thereupon discharged of any?
In Braman v. Bingham the question involved the effect of the delivery of a deed to the grantee. Upon the question of the admissibil
The cases just referred to have been followed in New York, and represent the settled rule in that state. In Lawton v. Sager, 11 Barb. 349, the court, in considering the question as to whether a deed was delivered absolutely or conditionally, said: “A deed can only be delivered as an escrow to a third person. If it be intended that it shall not take effect until some subsequent condition shall be performed, or some subsequent event shall happen, such condition must be inserted in the deed itself, or else it must not be delivered to . the igrantee. Whether a deed has been delivered or not is a question of fact, upon which, from the very nature of the case, parol evidence is admissible. But whether a deed, when delivered, shall take effect absolutely, or only upon the performance of some condition not expressed therein, cannot be determined by parol evidence. To allow a deed absolute upon its face to be avoided by such evidence would be a dangerous violation of a cardinal rule of evidence. Gilbert v. The North American Fire Insurance Company, 23 Wend. 43, (35 Am. Dec. 543) ; Ward v. Lewis, 4 Pick. 518; 4 Kent’s Com. 454; Jackson v. Catlin, 2 Johns. 248, (3 Am. Dec. 415), per Platt, arguendo. The deed in this case, being absolute upon its face, and having been delivered to the grantee himself, took effect at once. It could not have been delivered to take effect upon the happening of a future
Counsel for defendant, in support of his contention that evidence of the conditions attending the delivery of the mortgage was admissible, relies upon the case of Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816, 38 L. Ed. 698, which lays down the rule that “the effect of the delivery and the extent of thje operation of an instrument such as a promissory note may be limited as between the original parties thereto by the conditions on which delivery is made.” This case does not sustain counsel’s contention. In the first place, the decision is not based upon a statutory provision like ours, but rests entirely upon the common law; and, in the second place, the instrument in question in that case did not relate to real estate. It was a promissory note. And the decision does not purport to announce $ rule as to the effect of the delivery of instruments relating to real estate, but does relate wholly to the rule which obtains in reference
Counsel for defendant also contends that the conditions attending-the delivery of the mortgage, and upon which he relies to defeat its-enforcement, do not rest in parol, but that they were in writing. There is testimony to the effect that George B. Clifford, the western-manager of the Security Trust Company, wrote a letter from Nashua, N. H., addressed to the Security Trust Company, or J. E. Clifford, assistant treasurer, at Grand Forks, requesting the latter to-procure the mortgage in question. The letter in question was not produced, and secondary evidence as to its contents was received,, over plaintiff’s objection. The testimony shows that the letter was-one of instruction to the Security Trust Company’s officers at Grand Forks to procure the execution and delivery of the mortgage substantially upon the conditions pleaded by the defendant in his answer. The contention “that the written instrument consisted o£
The conclusions in the original opinion will be adhered to.