Sheldon v. Pruessner

The opinion of the court was delivered by

HobtoN, 0. J.:

In the answer of Joseph L. Sheldon to the petition of Simon Pruessner upon the note and mortgage executed by Sheldon and his wife to Henry S. Pruessner, on June 6, 1888, for $1,700, with interest, it was denied, among other things, that Simon Pruessner was the holder or owner of the note and mortgage, and it was also denied that he had any interest therein, the allegation being that the alleged transfer to him was colorable only, and without consideration. It appears from the evidence of Henry S. Pruessner that his indebtedness to his father before the transfer of the note and mortgage was $450. If he had given the note secured by the mortgage to his father, or if he had sold the note in good faith to his father for $450 only, or for any other sum, Simon Pruessner might be entitled, as the holder and owner thereof, to recover the amount with interest, and also to have a foreclosure of the mortgage. If it were not for the general finding of the trial court in favor of Simon Pruessner, there would would be no trouble whatever in this case. Simon Pruessner, the father, lives in Missouri. Henry S. Pruessner, the son, lives in Shawnee county, in this state. Henry testified, among other things, as follows:

“ In order to get rid of paying taxes on the nóte and interest I owed, I sold the note to my father. In fact, I have not got anything of the money. Therefore I sold to father, being I owed a part to him, and in case I want any more I will get it of him, because I am a poor man, and I cannot afford to pay taxes on an amount I have not got, and pay interest on the same amount at the same time.

“Ques. How did you sell it (the note) to him (your father)? Ans. I wrote him.

“Q. What did you write him? A. A letter. .

“Q. What were the contents of the letter? A. It was being I owed him some money.

“Q. For what? A. I borrowed it.

“Q. When? A. Just before I made that transfer.

“Q. How much did you borrow? A. $450.

“Q. $450? A. Yes, sir.

“Q. How was that $450 given to you? A. By note.

“Q. What was the date of the nóte? A. I could not say.

“Q. Was the note ever paid? A. No, sir.

“Q,. What cash did you ever get from your father? A. That much cash.

“Q. When? A. I could not state the exact time.

“Q. How did you get it ? Did he pay you cash in hand ? A. He sent a part, and paid a part in cash; sent by money order and registered letter.

“ Q,. Can you locate the year in which the $450 was paid ? A. No, sir.

“Q,. Was it 1890? A. No, sir.

“Q,. Was it 1888? A. It was before we had any transaction— before I disposed of the property.

“Q,. That would make it before 1888 ? A. Yes, sir.

“Q,. Before Sheldon bought? A. Yes, sir.

“Q. What about the balance of this mortgage? How much do you claim the Sheldons are owing you? A. $1,700.

“Q. What was to become of the balance of the $1,700, when collected, after the paying of the $450? A. Father holds it.

“Q. For you? A. Yes, sir.”

The note and mortgage were not transferred at the time that any of the money was borrowed. No demand was made upon Henry for security by his father, or for any transfer of the note or mortgage. They bear the blank indorsement of Henry, but it does not appear that they were delivered personally to Simon Pruessner, or that he employed the attorney to commence this action. It does appear that one of his brothers supports him; that Henry employed the attorney, and that the note and mortgage have been either in his possession or the possession of the attorney all the time. Henry was present at the trial, and seems to have been very much interested. Simon Pruessner was not present at the trial, neither was his deposition read. Construing all of the evidence as favorably as possible for Simon Pruessner, it appears that the note was merely transferred by Henry to evade the payment of taxes justly due in this state, and thereby to defraud the revenues of the state. His claim, that he wanted to secure $450 of borrowed money due his father, seems rather a mere incident of the transfer — the excuse, but not the controlling motive. The uncontradicted evidence is, that the transfer of the note and mortgage were made “to get rid of paying taxes.”

1- tractfiiot enforced. We could fairly sustain the general finding of the trial court upon the Pruessner mortgage if Henry had not testified that the transfer was made “to get rid of paying taxes,” and because “he was a poor man and could not afford to pay taxes.” This evidence does not seem to us to have been fully considered by the trial court. Perhaps it was not considered because the illegality of the transfer was not specially pleaded in either of the answers, but this was not necessary. The courts, in the due administration of justice, will not enforce a contract in violation of law, or per- # * A, mit a plaintiff to recover upon a transaction against public policy, even if the invalidity of the contract or transaction be not specially pleaded. (Oscanyan v. ArmsCo,, 103 U. S. 261, and cases cited.) Henry had no hesitation in stating the illegal purpose for which he, in part, transferred the note and mortgage, and cannot complain if this court gives it full effect. Notes and mortgages are subject to taxation in^this state. (Gen. Stat. of 1889, ¶¶6846, 6847, 6849; Life Association v. Hill, 51 Kas. 636. Cooley, in his work on Taxation, says:

“ There is not only a necessity for taxation, but it is eminently just and equitable that it should be as near equal as possible. Hence it is the policy of the law to require all property, except such as is specially exempted, to bear its proportion of the public burdens.”

“He who saves a sum of money by evading the payment of a tax does exactly the same injury to society as he who steals so much from the treasury, and is therefore guilty of as great immorality, or as great an act of dishonesty.” (1 Shars. Bl. Comm., p. 58, note; Railroad Co. v. Morris, 7 Kas. 210.)

Whatever tends to interfere with the beneficial operation of the statute is unlawful, as against the policy of the law. Whatever tends to obstruct duty by defeating the letter or spirit of the law is also unlawful, and the courts will not enforce any agreement or contract for the benefit of one through whose direction or assistance the law is violated, or public policy contravened. The law attempts to close the doors to temptations by refusing such parties recognition in the courts. (37 Cent. L. J. 313.)

“No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act. If, from the plaintiff’s own statement or otherwise, the cause of action appears to rise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because it will not lend its aid to such a plaintiff.” (Valentine v. Stewart, 15 Cal. 389; Wilcox v. Ellis, 14 KaS. 588; Gaston v. Drake, 14 Nev. 175; Drexler v. Tyrrell, 15 id. 114.)

2- ftfaulufent foreclosure^If Simon Pruessner is a bona fide owner and holder of the note for $450 and interest, we think he may be permitted to recover that amount, and have his foreclosure; but, if Henry transferred the note and mortgage to evade the paying of taxes on his interest therein, he cannot be permitted, through Simon Pruessner, to recover any part of the note and mortgage for his own benefit. As before stated, if the note and mortgage had been transferred in good faith as a gift, sale, or as collateral security, without any wrongful intent or purpose on the part of Henry to defraud the revenue laws of the state, the whole amount thereof might be recovered by any owner or holder of the same. But the evidence of Henry, as appearing in the record, unexplained, prevents, in this case, the rendition of the judgment upon the note and mortgage taken by him from the Sheldons, and now attempted to be enforced in the name of his father.

The claim that Joseph L. Sheldon did not own the mortgaged property on the 6th day of June, 1888, at the time of the execution of the note and mortgage, and, therefore, that there was no consideration given for the $1,700 note, is not tenable. Henry S. Pruessner, Joseph and Lizzie S. Sheldon exchanged places; the Sheldons conveying by joint deed their homestead in the city of Topeka to Henry S. Preussner for the 40 acres of land described in the petition, and giving the $1,700 note secured by the mortgage. Henry S. Pruessner may not have actually delivered the deed to the land to Joseph L. Sheldon until a day or two after the mortgage to him, but, at the time of the execution of the note and mortgage, the. negotiations for the exchange were completed. The deed to Joseph L. Sheldon is dated the 5th day of June, 1888, and was acknowledged on the 8th day of June, 1888. The mortgage is dated the 6th of June, 1888, was acknowledged on the 11th day of June, 1888, and recorded on the 14th day of June, 1888. Therefore, we suppose all of the papers were exchanged about the same time; that all the conveyances were a part of the same transaction. The note and mortgage were really a part of the purchase money, and the mortgage operates at least upon the estate acquired from Henry, the mortgagee. The only estate attempted to be foreclosed is that obtained from Henry S. Pruessner, and it is not contended that the Shel-dons succeeded to any after-acquired title from anyone except from Pruessner.

3. New homestead —prior mortgage 4' Ste-reOTvlry?1’ Another contention in the case is that the Motter mortgage of $1,000 was not entitled to be recorded, because it was acknowledged before an interested party, and therefore that Mrs. Sheldon had no constructive or valid notice thereof. The note held by Motter was originally given to J. N. Strickler, cashier, by Henry S. Pruessner and wife, and the mortgage was taken to J. N. Strickler, as cashier; the acknowledgment was taken before L. H. Pounds, notary public. There is nothing upon the face of the mortgage tending to-show that Pounds was an interested party. It appears, from the evidence outside of the mortgage, that J. N. Strickler was tbe cashier of the Investment Banking Company, at Topeka, and that T. L. Pounds was the vice president of that company — not L. H. Pounds, the person taking the acknowledgment. There is no evidence in the record that L. H. Pounds, the notary public, is or was interested in the Investment Bank-, ing Company. When the deed of the mortgaged premises was executed by Henry S. Pruessner and wife to Joseph L. Sheldon, the latter accepted the same upon the expressed condition that he assumed the payment of the Motter mortgage; therefore, he not only had personal knowledge of the mortgage, but agreed to pay the same to obtain the conveyance of the property. The amount of the prior mort- . r> i twt gage was in the nature oí purchase money. No property is exempt from the payment of obligations contracted for the purchase thereof. Further than this, it appears from the evidence that Joseph L. Sheldon was absent on business during a part of the negotiations for the exchange of properties, and that his wife, Mrs. Sheldon, had very much to do with the exchange. It is probable that she had actual notice of the Motter mortgage, or rather of the prior incumbrance on the premises received in exchange for her homestead. The note held by Motter was dated February 1,1888, and matured in three years thereafter. The rate of interest per annum specified in the note was 8 per cent, until maturity, and 12 per cent, after maturity. Where there is an express stipulation that a certain rate of interest shall run after maturity, interest at that rate is recoverable. (11 Am. & Eng. Encyc. of Law, pp. 416, 417, and eases cited in note; 3 Rand. Com. Paper, § 1713, p. 823, and cases cited; Ansel v. Olsen, 39 Kas. 767.)

The judgment of the trial court, as rendered and entered of record, is erroneous as a whole, because the judgment includes not only the amount of the note and mortgage given by the Sheldons to, Henry. S. Pruessner, but also provides that all of the costs, including the costs in the litigation over the Preussner note and mortgage, as well as the Motter mort- ' judgment-gage, are to be first paid from the proceed.s of the sale of the mortgaged premises. The order of sale also contains this erroneous feature. As the costs were improperly adjudged against the Sheldons upon the Pruessner note and mortgage, those costs ought not to have been included in the judgment or the order of sale.

Under these circumstances, the judgment will be set aside, and the cause remanded for further proceedings.

All the Justices concurring.

Case Details

Case Name: Sheldon v. Pruessner

Court Name: Supreme Court of Kansas

Date Published: Jan 15, 1894

Citation: 52 Kan. 579

Court Abbreviation: Kan.