65 Minn. 118 | Minn. | 1896
This action was brought to foreclose a mortgage upon a quarter section of land situate in Polk county, in this state, made by Emilie G-oessler to Elsie Weber to secure the payment of a promissory note described as follows, viz.: “$500.00. Minneapo
After the delivery of the note and mortgage to Elsie Weber, she indorsed the note and assigned the mortgage to James Williams, treasurer, and one of the partners of the firm, to be by him used as a part of the capital of said company, and delivered the same to him. The note and mortgage therefore belonged to the partnership, although, for convenience, it was put in the name of its treasurer, Williams, as trustee. On June 6, 1889, when Williams resigned as treasurer, he transferred them to the president, T. England, also as a trustee for the partnership. Soon afterwards, — although the exact date does not appear, — T. England embezzled and appropriated them to his own use, by assigning them to W. H. England, who, if not a party to the fraud, was at least cognizant of it, because, knowing that the note and mortgage belonged to the partnership, he applied the greater portion of it in payment of a debt which T. England individually owed him; and therefore W. H. England was not an innocent purchaser. Neither of the Englands informed the other partners of the assignment. In ignorance of this assignment, and supposing the note and mortgage were still in the hands of T. England as their trustee, the partners, late in June, 1889, dissolved the partnership, and made a division of the assets among the partners, by the term's of which this note and mortgage were to be satisfied and destroyed, and surrendered to Elsie Weber as the equivalent of her share. On this state of facts, Elsie Weber, or her accommodation mortgagor (the defendant, Goessler), could have compelled W. H. England, if he still held the note and mortgage, to surrender them and discharge them of record. Defendant did bring such an action,
These facts constitute a good defense to the mortgage, which is not negotiable, although the note is clearly a negotiable instrument on its face. This court has steadily adhered to the rule that the negotiable character of the note is not thereby imparted to the mortgage which secures its payment, and consequently the mortgage is not free from the immunities or privileges which attach to the secured negotiable note. Johnson v. Carpenter, 7 Minn. 120 (176); Hostetter v. Alexander, 22 Minn. 559; Oster v. Mickley, 35 Minn. 245, 28 N. W. 710; Redin v. Branhan, 43 Minn. 283, 45 N. W. 445; Smith v. Parsons, 55 Minn. 520, 57 N. W. 311. While, so far as the personal liability of the mortgagor on the note is concerned, the assignee may, if an innocent purchaser, before maturity and for value, taire it free ■from the equities, the mortgage in his hands is subject to them. Tiedeman, Com. Paper, p. 533, § 305.
The ninth finding of fact, viz. that, at the time of the sale of the note and mortgage by T. England to W. H. England, the said T. England had the lawful right and authority, as a member of said company, to sell and dispose of the same free of any defense on the part of the maker thereof, is unsupported by the facts, and the evidence is directly to the contrary. As parties to whom the mortgage was assigned prior to the assignment to Watkins could not deprive the defendant of an equitable defense in this action, it is evident that upon well-settled principles, and upon the facts disclosed herein, Watkins, being a purchaser of a chose in action (the mortgage), took it subject to the equities between the original parties, and that his assignor could give no better title than he himself had. There must therefore be a new trial as to the mortgage.
While this might be done, and a new trial denied as to the note, if the facts warranted such a procedure, yet there is evidence tending to show that the plaintiff was not a bona fide purchaser of the note as well as of the mortgage. His evidence and that of W. H. England are very suspicious, and strongly indicate that the two were in collusion. Watkins, testified that he could not tell where he got the money to pay for the note and mortgage, and was unable to state what kind of money — whether currency or not — he paid him, and that
In its seventh finding of fact the trial court states “that at the time of said sale T. England represented to W. H. England that the money then paid by the said W. H. England was for the benefit and use of said company,” but this finding'is evidently a mistake, as it is entirely unsupported by the evidence.
As a new trial must be granted as to the mortgage, we think that, under the circumstances, a new trial should be ordered of the whole case. So ordered.
Order reversed.