Chesaning State Bank v. Branton

• Citation: 207 N.W. 826,234 Mich. 263
• Decision Date: 20 March 1926
• Docket Number: No. 80.,80.
• Parties: CHESANING STATE BANK v. BRANTON et al.
• Court: Michigan Supreme Court

234 Mich. 263

207 N.W. 826

CHESANING STATE BANK

v.BRANTON et al.

No. 80.

Supreme Court of Michigan.

March 20, 1926.

Appeal from Circuit Court, Sanilac County, in Chancery; Xenophon A. Boomhower, Judge.

Suit by the Chesaning State Bank against Thomas Branton and others to foreclose a mortgage. Decree for defendants, and plaintiff appeals. Reversed and rendered.

Argued before BIRD, C. J., and SHARPE, SNOW, STEERE, FELLOWS, WIEST, CLARK, and McDONALD, JJ.Chas. W. Cheeney, of Chesaning, for appellant.

Robert J. West, of Sandusky, for appellees.

FELLOWS, J.

On November 12, 1909, defendant Thomas Branton executed to his father, William Branton, Sr., a note for $1,800 secured by a real estate mortgage on a farm in the township of Sanilac in Sanilac county, which he that day purchased from his father. The note was payable on or before ten years after date, with interest at 7 per cent., payable annually on the 1st day of April of each year at the Exchange Bank of M. N. Mugan, Port Sanilac, near which town the farm was located. This bank was a private bank. William Branton, Sr., kept his papers there until he moved to Chesaning, when he took the mortgage, which had been recorded, with him. On July 11, 1916, he assigned and transferred the mortgage and note to plaintiff for its face value, there having been no payments on the principal and the interest having been kept up. The assignment of the mortgage was recorded the following day. Plaintiff purchased in entire good faith. It claims to have promptly notified defendant Thomas of its purchase, but the testimony on that subject is hearsay and we do not consider it. There is competent testimony, however, that annually it sent notice to defendant Thomas at Port Sanilac about two weeks before the interest was due, but Thomas denies receiving any of these notices before the spring of 1922, and shows his post office was another town. Each year at about the time interest was due plaintiff received a draft of the Exchange Bank for the interest and receipted for the same. March 31, 1921, plaintiff received a telegram from the Exchange Bank saying that defendant Thomas desired to pay the mortgage, and requesting it to send discharge and abstract. Plaintiff complied with the request, but directed that the papers be not turned over until the mortgage and the charges of the Exchange Bank were paid. A short time later it received from the Exchange Bank the interest, and later at its request the mortgage and other papers were returned to it. In reply to its notice sent in the spring of 1922 that interest was due, Thomas wrote them he had paid the mortgage to the Exchange Bank, and informed them that his address was at Croswell. The proof conclusively establishes that he had in fact paid to the Exchange Bank of Mugan the full amount of both principal and interest, the payments on principal being as follows: April 2, 1917, $300; April 1, 1918, $300; April 7, 1919, $500; April 5, 1920, $500; August 31, 1920, $200.

It will be noted from this statement that when plaintiff bought the mortgage no payments had been made on the principal, and that it had the mortgage in its possession when defendant made such payments to Mugan's private bank; so that we have not a case of payment to the holder having actual possession of a negotiable instrument. Mugan did not have the mortgage or note in his possession when any of the payments were made, nor until long after, when he requested that it be sent so that defendant could pay it. Had defendant made payment to Mugan upon presentation by Mugan of the note, mortgage, and discharge, another question would be before us. The trial judge seems to have found as a fact that the money was in Mugan's hands to pay the mortgage when at his request, and when apparently he was acting for defendant, plaintiff sent him the papers, and to have concluded that such fact was decisive of the case. But the only testimony bearing on that subject was testimony that Mugan had so stated, and this was hearsay as to the plaintiff. Defendant gave testimony that Mugan had repeatedly lied to him,...