Peoples Nat. Bank & Trust Co. v. Pora

• Decision Date: 15 June 1937
• Docket Number: 26827.
• Citation: Peoples Nat. Bank & Trust Co. v. Pora, 9 N.E.2d 83, 212 Ind. 468 (Ind. 1937)
• Court: Indiana Supreme Court
• Parties: PEOPLES NAT. BANK & TRUST CO. et al v. PORA et al.

9 N.E.2d 83

212 Ind. 468

PEOPLES NAT. BANK & TRUST CO. et al v. PORA et al.

No. 26827.

Supreme Court of Indiana

June 15, 1937

Appeal from Superior Court, Lake County; Maurice E Crites, judge.

Wildermuth Force & Barr, of Gary, for appellants.

Willard B. Van Horne, Jr., and Winslow Van Horne, both of East Chicago, Geo. Panea, of Hammond, and Willard B. Van Horne, of East Chicago, for appellees.

TREMAIN Judge.

This is an action by the appellants against the appellees to foreclose a mortgage against the appellees' real estate located in Lake county, Ind.A copy of the mortgage is attached to the complaint as an exhibit and made a part thereof.

The mortgage recited the fact that the appellees were the owners of the real estate described, and executed the mortgage to secure the payment of $14,000 loaned by appellants to appellees.The mortgage contained a clause whereby appellees promised to pay the indebtedness described.The mortgage was complete within itself in that it recited the amount of the loan, the security given, and the promise to pay.The complaint as originally filed did not contain a copy of the note, but was based solely upon the mortgage.

Summons was issued and served upon the appellees.Each appeared and filed a motion to require the appellantsplaintiffs, to make the complaint more specific by filing as a part thereof a copy of the note given at the time the mortgage was executed, evidencing the indebtedness.The court sustained the motion, and over appellants' objections ordered the note to be filed as an exhibit and part of the complaint.Thereupon, appellants filed an amended complaint reciting all the facts contained in the first complaint, and further alleging:

'That in compliance with said order and for no other purpose these plaintiffs say that the said bonds or notes referred to in Exhibit 'A'(appellants' mortgage) hereto attached are in the following words and figures, to-wit.'

Then followed a copy of a note calling for the principal sum of $14,000, dated at East Chicago, Ind., October 3, 1928, and payable to the Peoples Stock Yards State Bank, Chicago, Ill.This note contained the following provision:

'And to secure the payment of said amount we hereby authorize irrevocably any attorney of any Court of Record without process, to appear for us in such court, in term time or vacation, at any time hereafter, and confess a judgment in favor of the holder of this Note, for such amount as may appear to be unpaid thereon, together with costs and reasonable attorney's fees, and to waive and release all errors which may intervene in any such proceedings and consent to immediate execution upon such judgment hereby ratifying and confirming all that said attorney may do by virtue hereof.'

The mortgage was acknowledged by John and Anna Pora before a notary public in Lake county, Ind.

Upon the filing of the amended complaint, the appellees filed a motion to strike the amended complaint from the files and to dismiss the cause of action, for the reason that the complaint, as amended, sought to foreclose a mortgage given to secure the payment of a note containing a clause authorizing an attorney to confess a judgment contrary to the law and public policy in the state of Indiana.Sections 2-2904and2-2906, Burns'Ins.St.1933, sections 399and398, Baldwin'sInd.St.1934.The motion to strike the amended complaint from the files and dismiss the cause of action was sustained by the court.The appellants excepted to the ruling and prayed an appeal to the Appellate Court.The questions before this court are based upon that ruling.

The appellants contend that they should not have been required to amend their complaint as ordered by the court, and that the court erred in dismissing their cause of action.There is nothing in the record before this court to show definitely whether the mortgage was executed in the state of Indiana or in the state of Illinois, where the execution of a contract containing a cognovit feature is valid.The record shows that the real estate is located in Indiana and the mortgage was there acknowledged, but payable to a bank in the city of Chicago, Ill.There is no allegation in the complaint or other pleading indicating where the mortgage and note were delivered.

This court in American Furniture Mart Bldg. Corp. v. W. C. Redmon, Sons & Co.(1936)1 N.E.2d 606, 609, held that a contract containing a cognovit clause executed in the state of Illinois and sued upon in the state of Indiana, the cognovit feature not being relied upon, was valid, and the action could be maintained.It is said in that case:

'We have found no authority in this or any other state which prevents recovery upon a contract, which contains cognovit features and valid where made, if the cognovit features are not relied upon in the action to recover.We think it is clear that under said chapter 227, supra [Section 2-2906, Burns' Ind.St.1933], no criminal proceeding could be sustained against a party who brings an action upon a cognovit contract, valid in a state where made, and not relying upon the cognovit features of the contract, but proceeding upon proper issuance and service of process.The act does not pretend to make it a crime or misdemeanor to bring an action upon such a contract when there is a proper issuance and service of process when the cognovit features are abandoned.'

The mortgage contained in the plaintiffs' complaint was complete in all its parts.The note was not a necessary part of the mortgage.This state has always recognized that a mortgage executed by a husband and wife upon real estate owned by the husband and containing a promise to pay, gave the mortgagor authority to take a personal judgment against the wife, although she...