Barnes v. Upham

• Decision Date: 11 June 1919
• Citation: 93 Conn. 491,107 A. 300
• Court: Connecticut Supreme Court
• Parties: BARNES et al. v. UPHAM.

107 A. 300

93 Conn. 491

BARNES et al. v. UPHAM.

Supreme Court of Errors of Connecticut.

June 11, 1919

Appeal from Superior Court, Fairfield County; Howard J. Curtis and Donald T. Warner, Judges.

Action by Jennie C. Barnes against George A. Upham, in which the Citizens' National Bank of Waterbury was made a party plaintiff. From a judgment in part for plaintiff, in part for plaintiff bank, and in part for defendant, both parties appeal. Affirmed.

Action on four promissory notes. Judgment for the plaintiff on the first, third, and fourth counts of the complaint and for the defendant on the second count.

The complaint is in four counts. The first second, and fourth counts are on notes executed and delivered by the defendant. The third count is on a note originally executed by the plaintiff to one Partree, which the defendant afterward agreed in writing to assume and pay.

In addition to the usual admissions and denials, special defenses were pleaded. The first special defense, covering all four counts, was that all of the indebtedness in question had been attached in the hands of the defendant by garnishment proceedings in an action still pending and undetermined in the superior court. This defense was eliminated by making the garnishee a party to the action, and is not now insisted upon.

A second defense to the first count alleges that on the date of the note the defendant owned certain real estate in Waterbury subject to a first mortgage; that the note counted on was secured by a second mortgage of these premises; that the defendant afterward parted with his equity in said premises that thereafter, and while the plaintiff still held the note and the second mortgage, proceedings to foreclose the first mortgage were brought to which the plaintiff was a party and defendant not; that plaintiff failed to redeem and gave defendant no notice of the pendency of the action, but permitted the second mortgage security for the note to be extinguished, though it was of great value. Under this defense it is alleged that the defendant was damaged in the sum of $3,000.

By way of counterclaim, a second defense to the third and fourth counts alleged that the note given by the plaintiff to Partree was a mortgage note; that in the assignment of the note back to the plaintiff the security was also assigned and that, if the defendant is compelled to pay the note, he is entitled to an assignment of the mortgage security. The same claim-that it is a mortgage note, and, if the defendant is compelled to pay, he is entitled to an assignment of the mortgage as security-is asserted as to the note described in the fourth count.

A third special defense to the third and fourth counts alleged that the plaintiff has pledged the notes in question, which are still held by pledgee; that the defendant has been notified by pledgee and will be liable to the pledgee if compelled to pay the plaintiff. This defense also was eliminated by making the pledgee a party and is no longer relied on.

All of the special defenses were successfully demurred to.

The Citizens' National Bank of Waterbury-the plaintiff creditor referred to in the first special defense and the pledgee referred to in the third special defense to the third and fourth counts-was made a party to the action and filed a pleading stating its claims as creditor and pledgee.

The cause went to trial on the defendant's admissions and denials, and judgment was rendered against the defendant on the first, third, and fourth counts for $10,501.01 payable in part to the plaintiff and in part to the pledgee bank; and against the plaintiff on the second count. Both parties appealed. Other facts are sufficiently stated in the opinion.

Gager J., dissenting in part.

Nathaniel R. Bronson, Lawrence L. Lewis, and Charles E. Hart, Jr., all of Waterbury, for appellant Citizens' Nat. Bank of Waterbury.

Carl Foster and Frederick E. Morgan, both of Bridgeport, for appellant Barnes.

BEACH, J.

The second special defense to the first count is based on the theory that the defendant, after having parted with the equity of redemption, was entitled to notice of the pendency of the proceedings for the foreclosure of the first mortgage, and that it was the duty of the second mortgagee, if she elected not to redeem, to give such notice in case she desired to hold the defendant on the note. Neither of these propositions is sound. In the first place, the defendant, by a conveyance of the equity, had parted with his entire interest in the premises. As the record title stood, he had no interest in the premises sufficient to give him a standing in the foreclosure proceedings, and therefore was not in law entitled to notice.

Nor was the second mortgagee under any equitable obligation to give the defendant notice. The case is not analogous to that of a pledgee who allows the pledge to be taken out of his hands on the demand of a stranger without notifying the pledgor to give him an opportunity to defend. Independently of the fact that the plaintiff never had physical custody of the premises, the security which she held had been already, by the defendant's own act, subjected to be taken on foreclosure before the second mortgage was executed. Consequently, both the parties to the second mortgage knew that the first mortgage was liable to be foreclosed, and that the security of the second mortgage was liable to be extinguished by such foreclosure. Admittedly, it was not the duty of the plaintiff to protect the defendant against the extinguishment of the security of the second mortgage note. The defendant knew all the facts, and the plaintiff was legally and equitably entitled to assume that, if he chose to part with the equity and with his right to notice of foreclosure proceedings, he would protect his own interests in his own way. The answer does not expressly allege whether the defendant has or has not done so by requiring the grantee of the equity to assume and agree to pay the second mortgage note. But the material consideration is that he had full knowledge of the risk which he ran when he parted with the equity in the premises. Presumably he received a satisfactory consideration for assuming that risk. At any rate, he was not dependent upon, and therefore was not entitled to, any assistance from the second mortgagee in looking after his own interests.

The second special defense to the third and fourth counts stands on the claim that, as a condition of recovery on the mortgage notes, the plaintiff must tender or offer an assignment of the mortgage security. That is not our law. The mortgagee has always been permitted to bring foreclosure, ejectment, or an action on the note. 2 Swift's Digest, 167. He is not bound to tender or offer a release of the mortgage until the debt is satisfied. Resort to a court of equity in order to compel a release is no longer necessary, for by section 5105, G. S., the execution and delivery of a release of the mortgage, after written request and satisfaction thereof, is required under a penalty for failure to do so.

Turning now to the plaintiff's appeal from the judgment for defendant on the cause of action stated in the second count, the finding of facts is that the note for $1,900, described in the second count, was assigned by the plaintiff to a third party to secure an indebtedness of $500, that the plaintiff has not paid the $500 for which the note was pledged as collateral security, and that the note was not in the possession of the plaintiff at the time of the trial, but is now " in the hands of some other person, and was produced upon notice by her to counsel of defendant, having passed by indorsement through the hands of several parties, and neither the Waterbury Coal & Lumber Company (the original pledgee) nor the true holder of the note is a party to the case."

The finding that the plaintiff was not the " true holder" of this note justifies and requires the conclusion that the plaintiff had not sustained the burden of proving her ownership.

There is no error.

PRENTICE, C.J., and RORABACK and WHEELER, JJ., concurred.

GAGER J. (dissenting in part).

While I concur in the result reached by the majority of the court so far as the disposition of the case upon the pleadings is concerned, I must, with great deference to the other members of the court, record my dissent with respect to the discussion of the second special defense to the first count and the legal propositions upon which the case is decided so far as this defense is concerned. By the pleadings it appears that the defendant owned the property subject to a first mortgage. Contrary to the...