Bloomfield State Bank v. Miller
| Decision Date | 19 May 1898 |
| Docket Number | 8045 |
| Citation | 75 N.W. 569,55 Neb. 243 |
| Parties | BLOOMFIELD STATE BANK, APPELLANT, v. H. N. MILLER ET AL., APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court of Knox county. Heard below before ROBINSON, J. Affirmed.
AFFIRMED.
A. A Welch, for appellant:
An equitable mortgage may arise from non-payment of purchase money, deposit of title deeds, or an unsuccessful attempt to make a valid mortgage deed. (Gale v. Morris, 29 N.J.Eq. 222; Griffin v. Griffin, 18 N.J.Eq. 104; Hackett v. Reynolds, 4 R. I. 512; Chase v Peck, 21 N.Y. 584; Carpenter v. Black Hawk Gold Mining Co., 65 N.Y. 51.)
An equitable mortgage may be created by an unsuccessful attempt to make a valid mortgage deed or to appropriate specific property to the discharge of a particular debt. (Peckham v. Haddock, 36 Ill. 38; Abbott v. Godfrey. 1 Manning [Mich.] 179.)
A mortgage defectively executed, or an imperfect attempt to create a mortgage upon specific property for the purpose of securing a debt, will create a specific lien upon the property so intended to be mortgaged. (Daggett v Rankin, 31 Cal. 321; Love v. Sierra Nevada Lake, Water & Mining Co., 32 Cal. 639; Peers v. McLaughlin, 88 Cal. 294; Remington v. Higgins, 54 Cal. 620.)
An equitable mortgage may be created by deposit of title deeds of a legal or an equitable estate, as security for the payment of money, or by a conveyance legal in its form of an equitable estate for that purpose. (Jarvis v. Dutcher, 16 Wis. 326; Hutzler v. Phillips, 26 S. Car. 136.)
Right of plaintiff to equitable relief: McCarty v. Brackenridge, 20 S.W. 997; Garland v. Wells, 15 Neb. 298; Read v. Morton, 24 Neb. 760; Van Etta v. Evenson, 28 Wis. 33; Swartz v. Ballou, 47 Ia. 188; Field v. Stagg, 52 Mo. 534; Drury v. Foster, 2 Wall. [U. S.] 24; Curtis v. Buckley, 14 Kan. 449; Cribben v. Deal, 21 Ore. 211; State v. Young, 23 Minn. 551; Nelson v. McDonald, 80 Wis. 605; Burnside v. Wayman, 49 Mo. 356; Chauncey v. Arnold, 24 N.Y. 330; McNab v. Young, 81 Ill. 11; Putnam v. Sullivan, 4 Mass. 45.
Other references: Craig v. Leiper, 2 Yerg. [Tenn.] 193; Polk v. Gallant, 34 Am. Dec. [N. Car.] 410; Mowry v. Wood, 12 Wis. 460; Smith v. Clarke, 7 Wis. 468; Boman v. Griffith, 35 Neb. 361; Pleasants v. Blodgett, 39 Neb. 741; Veith v. McMurtry, 26 Neb. 341; Garmire v. Willy, 36 Neb. 340; Savage v. Hazard, 11 Neb. 323; Warner v. Trow, 36 Wis. 195.
Carter & Brown, contra:
The English rule that a mortgage by the deposit of title deeds may be enforced has been criticised or repudiated as being inconsistent with our system of conveyancing and registry laws, and as being in violation of the statute of frauds.
A court of equity is bound by the statute of frauds.
D. C. Main held a contract with the state for the purchase of the northwest quarter of section 32, township 32 north, of range 3 west, in Knox county, said land being state educational land. He also held a number of leases of other educational land in the vicinity. In 1892 he entered into contracts with H. N. Miller, which had for their effect the transfer to Miller of Main's rights to the land, payment of the consideration or a part thereof being deferred. The contract first referred to, and out of which this action arises, was assigned to Miller by a separate instrument. January 20, 1893, Miller made his note to the Bloomfield State Bank for $ 500, representing in part an overdraft and in part a loan made at that time by the bank to Miller. At the same time Miller wrote his name on the back of the assignment from Main to himself, and delivered the assignment in that condition to the bank, intending thereby to have it operate as security for the note. Prior thereto he had, by formal written assignments, transferred his rights to the other lands to French, to secure a debt he owed the latter. In April or May, 1893, finding that he would be unable to meet the payments to Main, Miller negotiated for the sale of his rights to Sexton, Comstock & Co. Sexton, Comstock & Co. not being prepared or not desiring to make immediate payment to Main, an arrangement was made among Miller, Main, French, and Sexton, Comstock & Co., evidenced by a preliminary memorandum agreement, two formal contracts, and certain letters. No single contract was joined in by all the parties to the transaction, but the nature of the arrangement is made plain by a comparison of the different documents. Its precise nature is not material; its general object was to procure contracts of purchase in lieu of the leases, to pass all rights eventually to Sexton, Comstock & Co., and to this end that French should pay to Main all moneys accruing to him under his contracts with Miller, obtain the assigned contracts from Main and hold them until Sexton, Comstock & Co. should repay French his advances to Miller and to Main, when he should assign them to Sexton, Comstock & Co. Accordingly French paid Main what was due him, including the money due on the contract first mentioned. Down to this point neither Main, French, nor Sexton, Comstock & Co. knew of the transactions between Miller and the bank. Learning thereof Main refused to transfer the contract with the state to French. The bank on its part, learning of the other transactions, wrote above Miller's signature on the assignment an assignment thereof to itself. Then it began this action against Miller, Main, and French, alleging in its petition the debt to the bank and that to secure the payment thereof Miller agreed to assign the contract with Main, that he wrote his name on the back thereof and delivered it to the bank with authority to fill in above the signature a formal assignment. It prayed a foreclosure. Miller made default. French answered, denying all the material averments of the petition and alleging that for the purpose of securing title and conveying to Sexton, Comstock & Co. in accordance with his contract obligations he had bought the land of Main and paid him therefor, all in ignorance of any claim by plaintiff. By way of cross-petition he prayed that Main be required to assign the contract to him. Main in his answer pleaded his good faith and offered to assign to whomsoever the court might determine and to refund to French what he had paid if the court should so order. The findings were against the plaintiff and the court ordered a conveyance by Main to French. Plaintiff alone appeals.
By comparing the statement of facts with the issues it will be seen that neither of the contesting parties succeeded in establishing the facts precisely as he pleaded them. The bank wholly failed to show that it had any authority to write the assignment over Miller's signature, or that the signature was placed there for such a purpose. Even if there had been such authority, the assignment was not written until after French's rights had accrued in his ignorance of the bank's. The bank therefore can claim nothing under the written assignment. On the other hand, French pleaded only an assignment from Main. Main had already assigned to Miller, so that under that pleading French could claim only a subrogation to Main's right to the unpaid purchase-money, provided the bank had any right derived from Miller, although under the evidence French, or Sexton, Comstock & Co., whom he represented, was shown to have acquired Miller's rights also. If the bank obtained no right, then it cannot complain of the decree between the other parties. If it did obtain any right from Miller, then the decree must at least be modified. The proof showing that the written assignment to the bank was unavailing, but also showing that the contract between Main and Miller was by the latter deposited with the bank with the clear intention on the part of both that it should stand as security for a debt in part then contracted, we have thus distinctly presented for the first time in this state the question whether the doctrine of an equitable mortgage by a deposit of title deeds is sound.
It is unnecessary to review the English cases. When the doctrine was there first announced it provoked much opposition, being justly considered a further invasion of the statute of frauds. Lord Eldon expressed his emphatic disapproval of it but considered the rule too well fixed in his time to justify its overthrow. It must therefore be accepted as the established doctrine of the English courts, and as a part of the law of England. The common law is not with us an estate by inheritance, but one by purchase. It is here in force by virtue of statute, which provides: "So much of the common law of England as is applicable and not inconsistent with the constitution of the United States, with the organic law of this territory, or with any law passed or to be passed by the legislature of this territory is adopted and declared to be law within said territory." (Compiled Statutes, ch. 15, sec. 1.) No one would assert that the phrase "common law" was there used in contradistinction to the rules of equity; it undoubtedly includes the law derived from the English court of chancery. On the other hand, it was not the whole body of the English law which was adopted, but only...
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