United Loan & Dep. Bank v. Bitzer, 117 Ky. 443

United Loan & Dep. Bank v. Bitzer

117 Ky. 443 | Ky. Ct. App. | 1904

Opinion of the court by

JUDGE HOBSON

Reversing.

On July 18, 1892, Micheál Gleason executed to John I. Galloway bis note for $2,000, and a mortgage to secure it on some lots on Floyd street, in tbe city of Louisville. Tbe note and mortgage were assigned by Calloway to appellant, itbe United Loan & Deposit Bank, wbo filed this suit to enforce its lien. Peter Bitzer was made a defendant to tbe action, and set up tbe fact that Michael Gleason in tbe year 1893 made a contract with tbe city of Louisville for the improvement of Floyd street between tbe center line of ¡Magnolia avenue and tbe center line of Burnett avenue; that, upon tbe execution of this contract, Gleason desired to borrow money from Bitzer to purchase tbe necessary materials and to pay for tbe work required in tbe construe*447tion of the improvement as provided by his contract; that, with the express agreement between Mm and Gleason that Gleason should assign over to him the contract with the city, and all the warrants to be received thereunder, Bitzer advanced to Gleason, in money, the full value of the contract, pud all of the warrants to be received thereunder, and Gleason assigned to Bitzer all his rights under the contract, and pH money and warrants to be received thereunder, of all Which the city of Louisville had due notice; that, under ¡Bitzer’s supervision, and by his direction, and with his means and money, the improvement was made; that Bitzer paid with his own means for all of the material used in, and the work done on the improvement; that Gleason did not furnish any of the material, or pay for any of the material »or work, but the improvement was wholly constructed by ¡Bitzer, andl at his expense; that three warrants were issued by the city for the cost of the improvements, which was chargeable to Gleason’s property, and these warrants were issued to Bitzer. On these facts Bitzer claimed a lien on the land for the amount of the warrants. A demurrer having •been sustained to this pleading, Bitzer filed an' amended pleading, in which he alleged that the improvement in front of the property of Gleason enhanced its value to the extent of its cost. The court thereupon overruled the demurrer to the answer as amended, and, the case being submitted for final hearing, entered judgment giving Bitzer preference over the mortgage executed to Galloway,, and from this judgment the bank appeals.

We need not consider whether the allegations of 'the answer as amended were sufficient to entitle Bitzer to precedence over the mortgage. The allegations of the answer were aptly denied by a reply, and the only proof taken to sustain the allegations of the answer is the deposition *448of Bitzer himself, and the deposition of his clerk, Wilkes. Exceptions were filed to the 'evidence of Bitzer on the ground that, Gleason being dead, he could mot testify for himself as to any transaction between him and Gleason. This exception was well taken. The testimony of Bitzer as to transactions between him and Gleason, who is dead, can not be considered, for he can not testify for himself, under section 606 of the Code, as to a transaction with the decedent. Turner v. Mitchell (22 R., 1784) 61 S. W., 468; Trail v. Turner (22 R., 100) 56 S. W., 645; Murray v. East End Improvement Company (22 R., 1477) 60 S. W., 648. Wilkes states that he kept books for Bitzer; •that Bitzer was the surety of Gleason in the contract; that Bitzer furnished groceries and money to Gleason to do the work with, commencing in the first of April, 1898; that .they were furnished under the agreement that Bitzer was to have an apportionment warrant for enough to cover the .amount advanced, the arrangement having been made before the work was ■ done or the advances made. He filed •with his deposition an itemized account, running from April 11, 1893, to August 31st and footing up $1,766.64. This, he says, is the correct account of the advances. The entire amount of Gleason’s contract was $6,012.92. There were ■three warrants issued against the property of Gleason — one for $119.19, another for $1,631, and the third for $182.91. All of the other warrants, nineteen in number, appear to have been colected by Gleason or by E. F. Finley, his assignee. Only ■the three warrants against Gleason’s ■ own property appear .to have come into the hands of Bitzer. These were directed by the city to be issued to Gleason, and were indorsed by ■Gleason to E. F. Finley, and by Finley to Bitzer. Each ,of them orders M. Gleason to pay to M. Gleason the amount therein specified for improving; Floyd street from Burnett *449to Magnolia avenue. The warrant of the city in favor of Gleason on himself must stand as a note where the same person 'is both the obligor and the obligee. When Gleason received the warrant from the city, directing himself to pay himself so much money, he, being both the payor and the payee of the paper, could not, by assigning it, vest any right of action in h'is assignee, or give him any lien on the land as against third parties. Thus, where a note has been paid off, which is secured by a lien on land, the obligor can not again put it out in circulation, and thus create a lien on .the land as to third persons. If Gleason had!'continued to hold these warrants, he could not have set them up himself, .as against the mortgage executed to Calloway, and Bitzer, as his assignee, is simply substituted to h'is rights. Allen v. Shadburne’s Ex’r, 1 Dana, 68, 25 Am. Dec., 121; Morrison v. Stockwell, 9 Dana, 172; Muhling v. Sattler, 3 Metc., 285, 77 Am. Dec., 172; Logan County Bank v. Barclay, 104 Ky., 97, 20 R., 773, 46 S. W., 675. It is true, Bitzer was Gleason’s surety in the contract, and he made advances to him upon the promise of an apportionment warrant. His account seems to consist, in the main, of merchandise to the hands, or feed, and ran along from day to day in small amounts, from April to August. By furnishing this money ito his principal, he stood in no different light than any other surety making advances to his principal in carrying out the contract. The fact that Gleason promised to assign him an apportionment warrant to secure him does not help him, when this promise was not carried out in the making of a valid assignment. This assignment by Gleason of the warrants payable to- himself on himself was, as to third parties, in law, no assignment. There is nothing in the case to sustain the allegations of the answer that Bitzer, *450as surety, took charge of the work, and performed the contract at his expense. The authorities relied on for appellee Are therefore inapplicable, and we have the case simply of a debtor assigning to his creditor, for his security, a paper Which, as to third parties, was unenforceable. Ryan v. Doyle, 79 Ky., 363. 2 R., 354; Thompson v. George, 86 Ky., 311, 9 R., 588, 5 S. W., 760.

We therefore conclude that, as to the mortgage executed by the decedent to Calloway, Bitzer has no lien bn the land [by reason of the apportionment warrant assigned to him [by Finley.

The judgment is therefore reversed, with directions to enter a judgment in favor of the bank.