Wilson & Herr v. Hayward

Lead Opinion

BALTZELL, C. J.,

delivered the opinion of the Court.

This case was before us at the January term, 1848, on an application of the defendant, Hayward, to foreclose undér the common law proceeding of this State, a mortgage executed by James Lunn. The proceeding was against the! administrator of Lunn, who resisted the application on the ground that other parties holding notes of prior date, had already foreclosed and had sale of the mortgaged proerty.

The Court considering that if the party had rights, they! could be more appropriately asserted in equity than in a Court of law, and especially that the purchasers under the sale already had, should be made parties so that a second «ale should be avoided if possible, and the conflicting rights and interests of the different parties properly adjusted, sent the case back with that view. It is now before us, with new parties and the facts presented are as follows:

Robert K. West was the owner of a mortgage on part of lot 167, in Tallahassee, executed to him by James Lunn, on the 4th day of June, 1840, to secure payment of five promissory notes, for one thousand dollars each, payable the 4th days of June, 1841-42-43-44 and ’45.

The first note seems to have been paid, the second, third and fourth, falling due in 1842-43 and ’44, were assigned and transferred by West on the first day of June, 1841, to Wilson and Herr. On the22d of August, 1843, two of these notes having become due, these parties filed their petition of foreclosure, and in January, 1844, procured a decree or judgement of the Superior Court for Leon County, under which the property was sold to pay said debt by the marshal.

The complainant, Hayward, claims to be the assignee of the last note, and of the mortgage by transfer bearing date the 6th of March, 1841. His bill alleges that 'the decree of Wilson and Herr, was obtained by collusion and that he is entitled to prior payment by virtue of his previous assignment, as well of the note as of the mortgage.

The enquiry becomes an important one in the very outset, whether Hayward in fact has the prior assignment.— In his bill he proposes to the defendants the question directly and expressly, whether West did not on or about the 6th of March, 1841, indorse and deliver the said note of Lunn, for one thousand dollars, and whether he did not at the same time assign the mortgage. In reply to this, D. C. Wilson says: “ when the notes received' by him for Wilson, and Herr, were offered, he is of opinion that said West produced and offered five notes of the same amount executed by the same person, all of which, as this defendant supposes, were secured by the mortgage which said West held and produced at the same time. That if the note which complainant holds is one of the five notes mentioned in said mortgage, it could not have been assigned and transferred to him on the 6th of March, 1841, if he is correct in the impression strongly fixed on his mind, that he saw said notes in the actual possession of said West, at a date posterior to the said 6 th of March. He therefore denies and calls ' for proof of the time of the alleged transfer to complainant.

Robert K. West is questioned for complainant on this point, and says in his direct examination, the assignment of the note and mortgage were made at the day they bear date, 6th of March, 184L

In his cross examination however, being asked how many notes he had in possession at the time of this assignment to Hayward, he says he had but one, Wilson had the other two, hence the reason of my assigning that particular one to Hayward. Again, being asked at the time of the transfer to Hayward how many of said notes of Lunn he had assigned, he replies, “that at the time of the transfer to Hayward he had assigned none but the two and those to D. G. Wilson, making in all three notes.” Again asked if he had other notes of Lunn in his possession falling due anterior to this transferred to Hayward, why he did not transfer them also, his reply is, “ I had no other notes of Lunn at the time, they had been transferred to D. C. Wilson.” His account of the transfer to Hayward is as follows: “ I made this assignment because Hayward was security for me on a note to Patterson and Hughes for $5,250, and I wished to save him harmless. When I found the crush was coming upon me I went to him and told him of it and said to him here take this, satisfy yourself and gave him the mortgage and the note of Lunn attached to it.”— Independent of the repeated declarations by him that he had assigned the prior notes to Wilson and Herr, this last statement strikes us as corroborating it with great force. Why if he was so anxious to secure Hayward in so large a sum and had four notes secured by mortgage, does he give only one for $1000 and that, the last due of five and payable at the distant period of four years 1

We are of opinion then that Hayward took his note and the assignment of the mortgage after the other notes were assigned to Wilson and Herr. Plaving ascertained that the notes obtained by the latter fell due first and were assigned and transferred first, the question arises as to the law of the case. As a general rule the assignment of a note secured by mortgage is in equity an assignment of the mortgage unless there is some special provision by the parties to the contrary. Where several notes have been assigned as in the present case lies the difficultju

The first case on the subject was decided by the Court of Appeals of Virginia, and is the leading case. A deed of trust was executed by William and Francis Sutten to trustees to secure payment of three notes to Barrett. The first note was paid, the second transferred to Ragland without any assignment to him of the deed of trust, the third endorsed to the Gwathmeys who took an assignment of the deed of trust for their security. The Trustees having advertised the land for sale to pay Ragland’s claim, the Gwathmeys filed a bill against Ragland and the Trustees to enjoin them from selling the property. An injunction was granted which was dissolved and the case taken to the Court of Appeals. The Court say that the deed of Trust being intended by the parties to it as additional security for the payment of the notes to Barrett or his assigns in the order in which they fell due, it followed the notes into the hands of the several holders thereof and that it was not competent to Barrett by an assignment of the deed to the Appellants, without the assent of the Appellee, to whom the second notes had been assigned to deprive him of his priority of right to demand a sale of the property, if necessary to the payment of the note assigned in the order of payment expressly directed by the deed. The deed being assigned to the Appellants, gave them full notice of the order in which the notes were to be paid to Barrett or his assigns, and at least, put them on the enquiry whether the first and second notes had been paid at the time they took the assignment of the third note and of the deed of trust. By not making that enquiry, if they relied on the trust fund as security for the payment of the note assigned to them, they may have lost their money ; however that may be as against the Appellee, the Court is of opinion that he has no claim to be preferred. Gwathmeys vs. Ragland, 1 Rand. 466.

The Supreme Court of Indiana say; “the meaning and construction given to a mortgage payable at different times by several promissory notes, must depend upon the law of the remedy upon such notes or mortgage for these contracts as well as others are made under and with an eye to the laws governing their enforcement. In this State a mortgage may be foreclosed, when there are instalments, on default of payment of the first instalment. The holder of the first note may, if he chose, when that becomes due, enforce the full payment of it out of the mortgaged premises, and the holder of the second note may in like manner obtain priority over the third, and so on. State Bank vs. Tweeds, 8 Black, 447. This is also the rule in New Hampshire, 10 N. H.

In Alabama a different rule prevails; there the prior' assignment seems to give preference of payment in case of dificiency of the mortgage fund. (Cullum vs. Erwin, 4 Alabama, 458.)

In that case the Court admits that in 5 Porter and also 9 Porter, 527, McVoy vs. Bloodgood, the same Court had decided that the assignee of the notes which first fell due, would have the prior right. They say that the same decision with the one established by them was made in Gwathmey vs. Ragland, under precisely a similar state of facts.

They also refer to Van Rensaleer vs. Hopkins, decided by the Supreme Court of New York. In reference to this case as well as the one just alluded to, we think that intelligentCourt was mistaken. Van Deusen, says the, Oourthad two mortgages, the first he assigned to Van Rensaleer for $ 1180;thoughmade to him it was intended for the use of Van Rensaleer, and to. secure him the unpaid balance of the land which he had sold Van Deusen. Van Deusen there-" fore in effect received and held the mortgage for $1180.. in trust for Van Rensaleer, and his intention was that this' mortgage should become the first incumbrance by a prior registry áse.

The assignment to Van Rensaleer was thus not merely an arbitrary preference by Van Deusen of the original mortgage to the mortgage retained, but it was a just discharge of duty, a fulfillment'of the confidence which Van Rensaleer had reposed in Van Deusen, and a substantial compliance with the antecedent rights of the parties. 1 Hopkins.

It is very true that the prior assignment is alluded to, but it will be perceived that the case is principally decided upon the peculiar equities of the case as existing between the parties. Equally unfortunate is the reference of the Court to and reliance upon the case of Gwathmey vs. Ragland. We have seen already that this case is not authority for payment to the party having the first assignment or transfer of the note, in preference to the one whose note fell due first.

In Mississippi a different rule still is held, as their Courts devide the proceedsof the sale of the mortgage property amongst all the notes agreeing with none of the authoritiesto which we have alluded. Here again the Virginia case is regarded as not being in conflict with the rule established by them. The leading case is that in 6 Howard, 320,' and with due respect to the very high intelligence and ability of that tribunal, the equity of the case and the rights of the parties depend on the peculiar facts and circumstances of the case, rather than the maintainance of any rule or principle of law obtained from the authorities cited.

Whilst we are free to declare our own opinion in favor of the Virginia rule as best agreeing with analogy,' as most certain and definite, leaving less to uncertainty and confusion, whilst we admit that there are equities to change its application, as in the New York and Mississippi cases, and in the ease of a mortgagee claiming after the assignment of part of the mortgage debt, yet it is unnecessary in the present case to assert the superiorly either of the rule of the Ya. or Ala. Courts. It is sufficient that the adoption of either is fatal to the case. The complainants Wilson and Herr have the first assignment of J;he notes; their notes were first due by the terms of the mortgage. They obtained a decree of foreclosure in January, 1844, and the property was sold on the fourth of March, 1844, upwards of a year previous to the time Hayward’s note became due. If Hayward has an equity, it must be because the property is worth more than the claim of Wilson and Herr, or there has been irregularity or fraud in the sale to invalidate it.

There is no allegation in the bill as to the value of the property, no assertion that it is more than sufficient to pay the three first notes. The Complainants’ bill is predicated on his prior right and equity. The amount bid at the sale is no where stated, tho’ Wilson says in his deposition, “ the. property brought but a small proportion of the draft ($2,-' 729). There is then no propriety in ordering another sale; this would be a vain and fruitless thing.

Is there an irregularity in not makin g Hayward a party to the judgment of foreclosure. As a general rule all incumbrancers should be parties. Prior incumbrancer’s rights are paramount, and they would seem to be necessary if not indispensable parties 7 Paige 444, 2nd Alaba. 415,2 Ed. Chy. 127.

A subsequent incumbrancer is not an indispensable party Cullum vs. Batie, 2nd. Ala. 415, Walker vs. Bank Mob. 6 Ala. 452;

A second incumbrancer is only affected and can only complain when there is a surplus after paying prior liens. His right to the surplus cannot with propriety arise until it shall be ascertained that there is a surplus, and this cannot be shewn before the mortgaged premises have been sold and the debt of the prior incumbrancer with all costs fully discharged. 2 Alabama 422.

The English practice is to allow the subsequent mort-' gagee to redeem by paying up the prior mortgage. Coote 522.

It remains to notice another allegation of the bill, that the judgment of Wilson and Herr was obtained by fraud; the defendants employed Counsel to institute suit against himself—waived the filing of the petition four months before the first day of the term ; waived the filing of the mortgage and substitued a copy thereof, and wrongfully allowed judgment to be entered up immediately. The answer of the parties denies collusion, and we find not a particle of proof to support it. The facts stated even if true, by no means Constitute fraud. The defendant alleges that he had no defence to the suit and desired to avoid delay and expense; what objection then was there to a direct confession of judgment without previous preliminary proceedings?

In the case of Finley vs. Bank U. S., the bill was filed fit the November term, stating the consent of the mortgagor to an immediate sale of the mortgaged property although the day of payment had not arrived, and on the same day an answer was filed consenting to a decree for the sale. A decree was immediately entered by consent ,of parties fit* recting the Marshal to sell the property, and yet no one complained of this as irregularity, much less fraudulent, although the decree was assailed by a prior mortgagee. 11 Wh. 304.

Independent of this, it is not allowable to attack a judg ment collaterally by asserting irregularities that might form the subject of reversal in an appellate Court. A judgment concludes the subject on which it acts, and those things are regarded as proved and done which ought to have been proved to entitle the party to judgment. Grignon’s lessee vs. Alston, &c., 2 Howd. S. C. R. 343, 3 Peters 204, 5, 10 Peters 473.

On the whole case we see no ground for disturbing the sale or for ordering another sale. The decree of the Circuit Court will therefore be reversed and set aside, and the case remanded with instructions to dismiss the bill with costs.

The following petition for a re-hearing was afterwards filed:

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Rehearing

PETITION POE BEHEAEING.

Richard Hayward, Appellee in this case, asks the Conrt for a re-hearing of this cause, on the following grounds :

I. The Appellee’s Counsel in this case supposed the case as was ordered by the decree of the Court below, would be referred to a master, to ascertain the amounts due respectively to Hayward and to Wilson and Herr, when it could be shewn that nothing was really due to the latter and therefore, he did not think it proper to discuss it here. But as the Court orders the bill to be dismissed, Appellee Respectfully asks the Court to open the judgment in this case, that he may now be permitted to show that the debt to Wilson and Herr was fully paid before they obtained their foreclosure at law.

II. The debt due for which West assigned the notes to Wilson as collateral security, has been paid.

It appears from the answers of D. C. Wilson, and^of Wilson and Herr, that on the 16th day of September, 1840, West only owed Wilson and Herr $2723,49, for which amount, they drew a draft on West in favor of D. C. Wilson, and which draft was accepted by West. No other evidence of indebtedness exists in the record. Wilson states in his answer that “ on the first day of June, 1841, West being indebted in the sum of $2723,49,/or which amount, West had accepted their draft, and being desirous to secure it and upon'such security being given to obtain further credit,” fyc. Wilson and Herr say that the sum of $2723,49, the amount of the draft, was the sum due them for goods, &c., furnished before that time. From all this, it is clear, that no other /■sum was due from West than the amount of said draft.— There is no pretence that there was any other sum due to which any subsequent payment by West could be applied. Certainly there is no proof of any other indebtedness.— Neither Wilson nor Wilson and Herr pretend or allege that there was any other indebtedness. See the answers of D. C. Wilson and of Wilson and Hen*, To secure then the only indebtedness from West to Wilson and Herr, on the 1st June, 1841, West assigned the notes mentioned in the record as collateral security, which notes were to be returned when the draft for which they were a security should be paid. We repeat there is neither proof nor pretence that there was any other indebtedness from West on the first day of June, 1841, than the draft for $2723,49.

Now if that sum was all he owed them at that time, the next question is what has he paid them since the draft Was given which ought to be credited on it.

The first payment of which We have any evidence is that of $681,43, made on the 33th January, 1841, as appears from their accounts filed with their answers. This credit, it is true, is placed on an account for $2027,84, but let it be recollected that this account is all for goods furnished before the date of the draft for $2723,49, and which latter amount, by the answers of Wilson and Herr and D. C. Wilson, was all that was due Wilson and Herr at the date of the draft, viz: 16th September, 1840. This account, it will be seen, was for 1839, &c., and consequently does not and did not constitute any evidence of debfe/especially as the defendants themselves do not claim any other indebtedness up to 16th September, 1840, than the amount of the draft. It is asked why was this amount of $681,43 not credited on the draft ?

Can it be .said that it was appropriated by Wilson and Herr to the payment of an indebtedness other and anteri- or to the draft, for goods sold before the date of the draft. We answer that there is no evidence or even pretence of any such indebtedness, but on the contrary, Wilson and Herr in their answer say that the draft was the amount in which West stood indebted for goods furnished previous to its date. No witness swears to any debt, nor does West acknowledge any but the draft. The simple presentation of an account subsequently, without any evidence, and against their own statements, does not authorize them to apply a payment made subsequently to the date of the draft, which they acknoweldge was all that was due to them.

The account is evidence of the payment to them, but no evidence of indebtedness. Even if the account was correct, it should have been proved, but we cannot presume it to be true, when the parties themselves say the draft was all that was due. But if it is claimed that this account is just and correct, let us enquire if it was not itself also paid. By it, it appears that in August, 1840, West paid D. 0 Wilson $1360.46, and by the receipts in the record, it is seen that Thompson and Hagner paid Wilson, 7 August,-1840, $952, and 10 August 1840, $700 by order of West, These last two sums together, make $1652, yet we ñnd no credit for them anywhere. This will go to strengthen the declaration of Wilson, and Herr themselves, that on 16th September, 1840, the amount of the draft was all that was due to them. Again, the item in said account, dated 27 August, of “ 5 p. c. exchange on amount of our bill of 13 November, 1839.” (The very date of this account,) “paid at Florida,” shows that this bill or account was paid when the draft of 16 September, 1840, was accepted, and furnishes still stronger proof, (although there is no proof of such indebtedness,) that Wilson and Herr were right when they say in their answer that the amount of the draft was all that was due them.

But why multiply instances when the parties themselves make no prenience of such a claim. There being no such claim, then the payment of $661,43, as of 30th January, 1841, should go as a credit on the draft. We cannot go behind the draft of 16th September, 1840, to enquire into the state of the accounts before that time. The defendants say themselves that the draft was for $2723,49, “ that being the amount in which he stood indebted for goods furnished previous to that time.” But if they had not said so, the presumption of law would be the same, for the law will not presume that a creditor will do so foolish a thing as to take the acceptance or promisory note of his debtor for a subsequent debt, and leave a prior debt unprovided for. The law presumes a prior debt, in such a case, to have been paid.

We will take the 16 Sept., 1840, as our starting point. At that date West owed D. C. Wilson or Wilson and Herr a sum which with interest on it for six months, (the time when the draft became due;) made it amount to $2723.49 for which West accepted a draft. One month and half before the maturity of the draft, to wit: 30 January, 1841, West made a payment of $661.43-100, he is entitled to interest on this payment until the maturity of the draft, to wit: $2.29, which with the principal makes $663.63.—■ Deduct this from the draft and it leaves on the draft $2059.86, due 16 March, 1841.

The next payment, (see Wilson’s receipt in the record,) was made on 23 October, 1841, amounting to $1000.00.— Wilson in his answer to the fourth interrogatory, states that he is satisfied this payment was made, for and on account of a draft for $2336.26, and yet 'his receipt shows the contrary.

On the production of this receipt, Wilson’s counsel abandoned such application, and yielded the point that the payment was made on the draft for $2723.49- This shows how much Wilson’s recollections are to be relied on. Add now the interest ($97) from 16 March, ’41, to 23 October, ’41, to $2059.86, the balance due on the draft on 16 March, and we have $2156.86, and then credit the payment of $1000.00, there remains $1156.86 due on the draft on 23 October, 1841.

The next credit we contend for, is that of $1000.00 made January 6th, 1842, It is true of this payment as of the other that D. C. Wilson denies that it was made as a payment on this draft. Being mistaken as to the other we will show that he is equally so as to this. But before discussing his testimony in regard to this payment, I premise that his testimony should be entirely rejected.

1. Because he is a party to the record, &c.

2. Because of his interest in the case.

The objection to Wilson’s competency was made before he was examined, as the record will show. A party to the record is sometimes allowed to be examined as a witness, but only where an order of Court for that purpose is first had and obtained.

Again, he is clearly interested. He claims a right here by his own testimony, of appropriating to himself a payment which West, who made it, swears was appropriated by him, at the time, to the draft, or to Wilson and Herr.

If the Court shall decide upon his testimony that he properly retained for himself the payment, he makes a thousand dollars. If the Court shall decide on the testimony of West, that the payment was on the draft to Wilson and Herr then he loses a thousand dollars. I can imagine no clearer case of interest. But let us continue to pursue the facts.

We have in evidence a check drawn by E. M. West on -D. C. Wilson for the amount of this last payment in favor of A. K. Allison who endorses on it, “pay to the order of R. K. West.” Then we have the positive assertion of R. K. West that his order was that it should be applied in payment of the draft to secure which the Lunn notes were assigned. West in answer to the nineteenth cross interrogatory, says : “ It was not used by me in a settlement with D. C. Wilson, but was- given to pay the Lunn notes.” Again, in answer to the 4th question he says : “ on the same day a few minutes after the cotton transaction, I called on D. C. Wilson and demanded the notes already referred to. Wilson refused to give them up, saying there was a balance of over three hundred dollars yet due.” This makes out a plain case. The check is endorsed pay to the order of R. K. West, and West swears that his order was that it should be paid on the Lunn notes. A debtor has the right to apply a payment to whatsoever debt he pleases. This principle is always recognized in every Court. David C. Wilson, without denying this, seeks to justify the appropriation to himself by speaking of some transaction between himself and Edward M. West and A. K. Allison. But it is submitted that what occurred between himself and Allison and E. M. West has nothing to do with the question. Here then is the undenied oath of R. K. West. West never consented that the check to Allison should go to an alleged indebtedness by him to D. C. Wilson nor does Wilson pretend that he ever did. A further evidence of the fact that he did not so consent is the pregnant fact that he did not at that time or at any time subsequent, take up the notes which Wilson alleges he held against him and produced in evidence by Wilson himself with his own endorsement on them. West not all only had the right to order the Allison check to be applied to the draft, secured by the Lunn notes, but did absolutely so order. It is presumed that his testimony is entitled lo more weight on this point than that of .any other person, particularly Wilson, who, it is shown, is ■deeply interested. West’s testimony, it is believed, is on this point, uncontradicted.

Add then to the sum due $1156,86, interest to 6th January, 1842 $19,28, and we have $1176,14, from which deduct the payment of a thousand dollars and it leaves due •only $176,14, 6th January, 1842.

The next payment of which we have any evidence is that of June 24, 1842, as shown by the account in the record, viz: “ by nett proceeds of cotton per Kennebeck to Boston his proportion” $243,47. I know no reason why this amount should not be credited on the draft of 16 September, 1840, at least enough of it to pay the balance due on said draft. That balance as we have seen was $176,14 on 6th January, 1842. Add interest $6,36 and it makes $182,50 due on 24th June, 1842, on which day $243,47 were paid, which paid the whole balance of principal and interest due on said draft of 16 September, 1840, and left $60,90 over-plus.

'It is true there is no direct testimony in the record of the specific application of this last payment, to the balance due on the draft of $2723.49. The only application as shown by the record, is to the joint amount of the two drafts, viz : the one for $2723.49, and the one for $2336.26.

According to this application, one half of the payment of $243.47 belongs to the balance due on the draft viz : $182.50 which would leave due only $60.

But we maintain that the whole of the $243 or so much thereof as was sufficient should be applied to extinguish the balance of $182.50, due on the draft of $2723.49, according to the principle admitted by this Court, in the case of Smith and Paramore vs. Randall, 1 Florida, 428, and cases there cited. In the case of Devane vs. Noble, cited by the Court, 1 Merivale, 606, the master of the Rolls says: The debtor has first the right to apply. If he does not then the creditor. If neither apply the payment, the law makes the appropriation; and the rule of law, is to apply to the most burdensome debt,—one that carries interest rather than one that does not. And if the debts are equal, then to that which has been first contracted. And if there are other parties interested, the justice of the case requires that the application should be made for the benefit of such other parties. So that in whatever light this last payment is viewed, the conclusion must be that it extinguished the whole of the draft for $2723.49, for which the Lunn notes were transferred as collateral security.

It thus seems most incontrovertibly that the claim of Wilson and Herr on the Lunn notes, ceased before they instituted their suit for a foreclosure, and they ought to have returned those notes to West according to the agreement of Wilson in the record.

Hayward had no opportunity in the suit of Wilson and Herr, vs. D. C. Wilson, administrator of Lunn, to show these facts, as he was not made a party. Wilson who conducted the whole affair for both parties, was interested in the whole business, and if Hayward is not permitted to claim that the foreclosure decree is all wrong, in a proceeding in which he makes all persons concerned, parties, then there is no remedy left him, and no means allowed to show that when the foreclosure was obtained, Wilson and Herr had not a particle of interest in the mortgage; for let it always be remembered, that the Lunn notes were not assigned out and out in payment of Wilson and Herr, but only as collateral security, and by agreement, they were to be returned when the draft of $2723.49 was paid.

We are not left to the Ldeductions I have made from the whole evidence to show that nothing was due on the draft of $2723.49. West in his evidence says, that that draft was fully paid by him. Is this statement of West a simple wanton assertion ? The facts in the record distinct ly show that his statement is correct. This statement of West goes further, and shows [that he intended the last payment of $243.47, to be applied to pay off the final balance due on that draft. West says that the draft was paid. This is his testimony, as positive as any declaration made by him, and the other separate facts in this record prove the same thing, notwithstanding the statement of D. C. Wilson, who is so deeply interested in this cause.

Counsel for appellee, begs leave to present another point not presented in the argument, viz: That if he is right in the position that the foreclosure at law, was not warranted by law, even if there was any balanee due on the draft, then we say that Wilson and Herr having taken possession of the mortgage property, have been paid more than was due them, and more than the value of the improvements by the receipts of rents and hires.

Let us next enquire whether Wilson and Herr, had really any interest in the Lunn notes. The draft for $2723.49, was in favor of D. C. Wilson individually. The acceptance of said draft by West made it a debtto D. C. Wilson, and to D. C. Wilson did West assign the Lunn notes as collaterals. This being so, D. C. Wilson, and not Wilson and Herr, could foreclose the mortgage. But D. C. Wilson could not sue himself, as adm’r of Lunn, and he procured a lawyer to bring suit against himself, in favor of Wilson and Herr. Here is the anomaly of a person holding a debt against himself, procuring a suit to be brought in the name of a third person, without making anybody parties, or giving them an opportunity to show that really there was nothing due.

If I have succeeded in showing that the draft for which the Lunn notes were collateral security, had been fully -paid before the foreclosure suit, then I maintain that Richard Hayward has in this proceeding the right to have the decree of foreclosure aforesaid, set aside and a decree in his favor to foreclose the mortgage. Any other result under such a state of things, would be grossly unjust, and would be a premium to men to act wrongfully.

For these reasons, Counsel for. appellee, respectfully prays the Court for a rehearing in this case.

The rehearing being granted, and after argument, BALTZELL, C. J., delivered the following opinion of the Court on the matters presented in the petition:

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Rehearing

OPINION ON PETITION FOR REHEARING .'

The subject of payment of the mortgage notes, held by Wilson and Herr, on which judgement of foreclosure was had, was not presented to us in argument, but considered, as abandoned and so treated in the opinion delivered by the Court. The Counsel for complainant, has explained this omission by saying that a reference was had to the master in the Court below, to ascertain this fact, and under the impression that the case would go back and this subject be thereby ascertained, he did not think proper to discuss it here. Inasmuch as the unexpected turn which the case has taken, cut him off from this resource, and inasmuch as the point of payment, was in his consideration, vital to his client’s case, the Court on his application granted a rehearing, which has been had and we now proceed after due deliberation, to give the conclusion to which we have arrived, premising that nothing has been wanting to present the case which the zeal and industry of Counsel could effect.

No doubt if payment was made of these notes, before judgement, the right of complainant to'relief is clear and unquestionable. He alleges payment in general terms, without specifying particulars, or items, or sayings when, or how, or by whom payment was made. Pie calls upon defendants to state whether any and what payments were made by said West, on account of said debt and howmuch was due thereon at the time of foreclosure, and that a full statement be made and exhibited, showing the amount of said debt and all payments made thereon, and securities realized and its true condition.” To this, defendants answer that “ no payments were made under said debt, and the whole amount was due at the date of said foreclosure, and they exhibited a full and perfect statement taken from the books of the firm of Wilson and Herr, showing the bill of goods at various times, sold to said West by said firm, and the payments made thereon, to which they refer as a true and accurate exhibit of their business and dealings with said West.”

This exhibit presents three different accounts, the first for $2027.89, dated 13th November, 1839. The second for $2723.49, dated the 16th September, 1840, secured by three notes of Lunn of $1000 each. The third for $2336.26, dated June the 25th, 1841, making an aggregate of $7088.14.

To the account of November, 1839, are attached two credits, one of $1366, dated 27 August, 1840, and another of $661.43, of the date of 30 January, 1841,—to the two accounts of 1840 and 1841, is attached a credit of $243.

Complainant claims that the credits of $661, $1366 and $243, should be applied to the second acct of 1840, secured by the mortgage, and that there are other payments also applicable to it, to wit: $1652, paid by Thompson and Hagner ; $1000 paid in bills of the Life Insurance and Union Bank, and $1000 in a draft by E. M. West and A. K. Allison for cotton.

The credits of $1366 and $661, it is said should be applied to the draft of $2723, or in other words be applied to the mortgage notes.

The reliance for this position is upon the alleged admission of defendants in their answer, “ that the draft of $2723.49, was the amount in which West stood indebted for goods, furnished previous to that time.” The inference drawn from this is that West owed at this time, 16 September, 1840, the sum of $2723.49, and nothing more.— We cannot consent to such construction. If the sentence stood alone and by itself unconnected with others, it might pos.'ibly admit this construction. In connection^ however, with and in express reference to this very subject, the defendants give a copy of an account of previous date, 13th November, 1839, in which there is an indebtedness of $2027.89, closed by these very payments. The accounts and these very credits then constitute as much a part of the answer as the expressions cited, and to com strue them as contened for, would be to exclude a material and important part of their statement, and be doing the utmost violence to the clear and manifest intent of defendants, as declared in their answers. R. K. West had no such opinion. He is particularly questioned as to these items and this account, and says, “he does not know whether the charges are correct or not. The credits he knows are not. The payments therein credited, are not the only payments ever made by me, on account of my indebtedness to Wilson and Herr.”

Here the objection is not to the credits made, but to the want of some which he thinks ought to have been made. It is not a little singular that if this account of 1839s showing indebtedness previous to the draft is excluded, there is no other evidence in the record as to their payment. We are of opinion then that there is no ground for contending that these items should be applied differently to what they have been by defendants.

The next sum claimed, is a payment by Thompson and Hagner to D. C. Wilson, made on the 7th and 10th days of August, 1840. The credit of $1366, bears date of the 20th August, predicated on a part note of the Union Bank, dated 10 of August, 1840, so that the inference seems a fair one, that these relate to the same transaction. There is no other money shown to have been received about that time. Had the whole sum of $1652 been credited, little doubt could remain. We, however, think it the same transaction, excepting that the entire sum received by Wilson, was not remitted. The sum of $286 not forwarded to Wilson and Herr, nor credited in any other account, will then form a just credit upon the acct. of $2723.49, at that time the oldest account unsettled.

The next claim is a sum of $1000, paid 26 January, 18-42, through cotton of E. M. West, and a draft of A. K. Allison. There is no question as to this sum of money being received by D. C. Wilson, the only question is whether if was for his own individual account, or for the account of Wilson and Herr. For anything appearing in the record, the latter seems never to have had anything to do with this transaction, nor to have been informed of it even.—Wilson claims it as an individual transaction of his own, and files a statement of the manner of its adjustment, showing the draft of Allison and the notes and account of his firm with which it was paid. In a transaction of this kind, where a party was indebted to an agent in his individual right, jointly with a debt to another concern, prudence would seem to require that the debtor would specify distinctly the debt to which payment should be made, that he should take a receipt and close the transaction by taking up the note or debt paid. Nothing of the kind takes place here. West does not even say that he directed the application of this payment to the Lunn notes, or to the Wilson and Herr debt. His statement in his deposition is “the notes given as collateral security have been paid, $1000 in cash, and in the draft of Allison for $1000 more.” Again he says: “I did pay it, I paid it to Wilson, (the draft of $2723.49,) I gave Wilson an order on L. A. Thompson for $ , and the balance I paid in current money of the country.”

Now, if there were nothing else in the case but this statement of West, we should feel bound to disregard it in oppositinn to the denial of the answer. It is true this does not deny this payment in so many words, but makes a denial as large as the allegation of the bill. The bill charges payment of the mortgage notes. The answer denies it.— But there is other evidence. E. M. West examined by complainant, in his deposition says : “ in the early part of 1842,1 sold to D. C. Wilson cotton to the amount of $1500 I drew an order on D. G. Wilson in favor of A. K. Allison" for the sum of $1000, with the. understanding that Allison, was to transfer said draft back to said Wilson, for and on account of R. K. West.” Questioned as'to the application of the payment he says: “ The draft was to be applied to the general account of R. K. West with said Wilson, or such was my impression.”

Now, E. M. West seems to have been the chief and active agent in the transaction, and his evidence as to the application of the draft to a particular subject, is more to be relied upon and greatly preferred to a general allegation of another witness, that the note was paid. We have remarked upon the importance of receipts being taken in a case of this kind, to identify the debt which the debtor designed paying, for obviously in the present case if West paid Wilson $1000, without an agreement or direction to apply it to the debt of Wilson and Herr, Wilson would have a right to apply it to a debt of his own; (as far as this case, is concerned, we say he had a right to do it, for . they do not claim the payment to themselves,) hence the necessity of a receipt. R. K. West says, speaking ofthis payment, “he has no receipts in his possession.” Yet, E. M. West in his deposition says: “111 ave seen receipts of D. C. Wilson to and in the possession of R. K. West. I have seen them within the last twelve months. I have no recollection of the amount of any of them. I don’t know where they are at this time. They were receipts for so much money without specifying on what account.”

We find too in the record a receipt for $1000 in the Life In. & Trust Ob. and Union Bank Bills, the subject of another claim, specially applicable to this draft. Under these facts we are fully justified in holding that this sum was paid, not to Wilson and Herr as claimed, but to the private and individual account of David C. Wilson, and that R. K. West had no receipt for it as a payment on the draft of $2723.49.

The claim of $1000 paid October, 1841, is sustained by the receipt of David C. Wilson, applying it to this draft and is not contested, although we are constrained to say the evidence is very strong that it was designed to be applied to the account of June 25, 1841. Daffin and E. M. West, in their depositions, both speak this way, and this was the decided impression of D. C. Wilson.

The item of $243 .is put to both the accounts of 1840 and 1841. It will be allowed to the oldest account, the one secured by the mortgage notes.

The payments allowed on the draft of $2723.49, are $1000, October 23, 1841; $218 January 4, 1842, and $243 June, 1842. Giving credit for these with interest, and deducting this amount from the sum due on the draft writh interest to the date of the judgement, and there remains the sum of sixteen hundred and seventy-one dollars due, which defendants Wilson and Herr, have the right in equity to have paid before the interests of Hayward ean intervene, according to the decision and opinion we have made. We are then of opinion that the complainant has not made out or sustained his position, that the debt due and secured by the mortgage was paid and satisfied before the judgement of foreclosure was rendered.

The decree made herein on a former day of the term, will then stand and remain as the final decree of this. Court, and the petition of complainant will be dismissed.

Case Details

Case Name: Wilson & Herr v. Hayward

Court Name: Supreme Court of Florida

Date Published: Jan 15, 1855

Citation: 6 Fla. 171

Court Abbreviation: Fla.