Dangerfield v. Brown
| Decision Date | 07 July 1936 |
| Docket Number | 14327. |
| Citation | 186 S.E. 641,181 S.C. 120 |
| Parties | DANGERFIELD v. BROWN et al. |
| Court | South Carolina Supreme Court |
Appeal from Common Pleas Circuit Court of Charleston County; E. C Dennis, Judge.
Foreclosure action by Leila G. Dangerfield, as administratrix of Edward A. Burdette, deceased, against Clara Farnum Brown and R. S Cathcart. From a judgment for plaintiff, second named defendant appeals.
Reversed and remanded with directions.
Hagood, Rivers & Young, of Charleston, for appellant.
Mitchell & Horlbeck and E. L. Willcox, all of Charleston, for respondent.
The "statement" set out in the record states so clearly and succinctly the cardinal facts which preceded the litigation that we reproduce it here:
"This action was commenced about December 20, 1932, and is for foreclosure of a purchase-money mortgage given by the defendant R. S. Cathcart to Mary L. McAlister dated 23d December, 1920, recorded in the R. M. C. office for Charleston county on the same date in Book L-28, page 250, and assigned to the plaintiff on 22d December, 1923, which assignment was recorded on the same day.
The mortgaged premises were conveyed by Cathcart to James S. Farnum on 30th April, 1921, for $10 and the assumption of the outstanding mortgage on the premises, which deed was recorded on the same day in the R. M. C. office aforesaid in Book F-31, page 162.
The complaint, hereinafter set out, is the usual form of a complaint for foreclosure.
The defendant Clara Farnum Brown, who is the widow of James S. Farnum, and to whom he devised the mortgaged premises, defaulted.
The defendant R. S. Cathcart answered and set up as a defense that in all the transactions with Mary L. McAlister, both in the purchase of the mortgaged premises and in the giving of the bond and mortgage, he was acting solely as the agent of James S. Farnum, which fact was made known at the time to Mary L. McAlister and that the plaintiff bought the bond and mortgage subject to all the equities between the original parties and that the debt was not his debt but the debt of Farnum. He did not oppose the foreclosure of the mortgage and sale of the premises but only a money judgment against himself.
By order dated 20th February, 1933, the case was referred to the master under a general order of reference."
We supplement the "statement" by a recital of the further facts, gathered from the record and stated as follows:
James S. Farnum, a citizen of Charleston, was a man of considerable means; he desired to purchase the real estate covered by the mortgage herein sought to be foreclosed. It was owned by Mrs. Mary L. McAlister. The Farnums and McAlisters were not on friendly terms. Being apprehensive that Mrs. McAlister would not sell the property to him, Farnum procured his friend, Dr. Robert S. Cathcart, who was also the friend of Mrs. McAlister, to purchase the property for him; this Dr. Cathcart did for the price of $20,000; one-fourth cash, the balance in three equal annual installments, with interest at 6 per cent., secured by bond and mortgage of the premises. Dr. Cathcart disclosed to Mrs. McAlister that in the purchase of the property he was acting for James S. Farnum. He signed the agreement of sale and purchase as agent. The bond and mortgage were signed R. S. Cathcart. The cash portion of the purchase money was paid by the check of James S. Farnum, and the subsequent payments, which reduced the amount of the mortgage debt to less than $5,000, were made by Mr. Farnum. The transaction of purchase was consummated the 23d day of December, 1920, and the mortgage executed as of that date. April 30, 1921, Dr. Cathcart conveyed the mortgaged property to James S. Farnum, the stated consideration being "Ten ($10.00) Dollars and the assumption of the present outstanding mortgage upon the premises." This deed was recorded by and was delivered to Messrs. Mitchell & Horlbeck, the attorneys who represented the plaintiff as guardian when she purchased the bond and mortgage herein involved from Mrs. McAlister December 22, 1923.
Dr. Cathcart had no personal financial interest in the transaction, and received no benefit nor gain from it; he never had possession of the premises. Mr. Farnum died in 1922. He collected all the rents from the date of the transfer by Mrs. McAlister, and paid all the taxes; made the initial payment for the property and all installments of principal and interest up to the time of his death. By his will he devised this property to his widow, Mrs. Clara Farnum, who subsequently married Mr. Brown. After the death of Mr. Farnum, she continued to make the payments on the mortgage debt up to December 22, 1931. On or about the 22d day of December, 1923, Mrs. McAlister assigned the bond and mortgage to Mrs. Leila G. Dangerfield as guardian of Edward A. Burdette, a minor who died before attaining his majority, and Mrs. Leila G. Dangerfield was duly appointed administratrix of his estate and in that capacity brings this action for foreclosure.
It appears that no demand for the payment of the bond or interest was ever made of Dr. Cathcart by Mrs. McAlister, or by Mrs. Dangerfield as the assignee thereof.
The complaint is in the usual form of foreclosure. Mrs. Clara Farnum did not answer the complaint. Dr. Cathcart answered setting out that he acted as agent for James S. Farnum in the purchase of the property and in executing and delivering the bond and mortgage to Mary L. McAlister, who at the time of the transaction knew and agreed thereto that the debt was the obligation of James S. Farnum, and thereafter recognized that it was the debt of James S. Farnum by always calling on him, and never calling on Dr. Cathcart, for the payments made thereon. And that the plaintiff when she purchased the bond and mortgage purchased it before its maturity, and took it subject to all the equities between the original parties, and he alleges on information and belief that plaintiff, when she purchased the bond and mortgage, knew that it was the debt of James S. Farnum. Dr. Cathcart does not object to the foreclosure and sale of the property, but does object to a deficiency judgment against him.
The case was referred to the master under an order of general reference, who in due time, after taking the testimony, made his report to the court of common pleas, by which he held Dr. Cathcart personally liable on the bond for any deficiency due on the mortgage indebtedness, and recommends the foreclosure of the mortgage and sale of the mortgaged premises.
The defendant R. S. Cathcart excepted to the master's report on the following grounds:
"1. That the testimony shows that both Mary L. McAlister, the owner and holder of the bond in this suit, and the said R. S. Cathcart knew and recognized the fact that the bond and mortgage were in truth and in fact the bond and mortgage made by James S. Farnum through an agent, and the plaintiff herein took it subject to all equities as between the parties.
2. That from the time of the purchase of the said mortgage by the late Edward A. Burdette that the said plaintiff and her predecessors recognized that the bond was the obligation of the late James S. Farnum and are estopped now from claiming the same to be the bond of the defendant R. S. Cathcart.
3. That the said plaintiff as guardian purchased the said bond on the day before the said bond was due, to wit, on the 22nd day of December, 1923, with knowledge that James S. Farnum had assumed the payment of the said bond, which was duly recorded, and thereafter looked only to the said James S. Farnum or his estate for the payment thereof and made no demand on the said R. S. Cathcart for any payment thereon and forebore from demanding or collecting payment from the said James S. Farnum in his lifetime, or a sale of the said property when the same would have brought the amount of the mortgage due thereon, and allowed taxes to accumulate thereon until it is doubtful whether the said property will be sufficient to pay the amount due on the said bond secured by the said mortgage."
The Honorable E. C. Dennis, presiding in the court of common pleas for Charleston county, confirmed the report of the master, and from this order the defendant R. S. Cathcart appeals to this court.
The exceptions are more numerous than those filed to the report of the master, but they are in effect but an amplification of those and more in detail thereof.
The appellant states the questions to be considered in this wise:
"1. (a) That Cathcart disclosed to Mrs. McAlister (to whom the bond and mortgage were given) that he was acting as agent; that he disclosed to her his principal and therefore was not in any way obligated to her.
(b) That a purchaser of a bond (a non-negotiable instrument) takes it with all the equities and rights existing between the original parties thereto, and the purchaser stands in the shoes of the original obligee, and therefore the plaintiff has no claim on the defendant Cathcart for a personal judgment.
2. That the plaintiff made a new contract with Mrs. Brown and so released Cathcart from any obligation, if any ever existed.
3. That the plaintiff knew, or had cause to know that the debt was the debt of Farnum and not that of Cathcart.
4. That by her conduct the plaintiff lulled the defendant Cathcart to sleep and is estopped now to make any claims against him."
The testimony of James A. McAlister, a witness on behalf of the defendant Cathcart, was offered to prove that Mrs. McAlister was the mother of the witness and had died before the reference was held. It appears that the witness was testifying to what occurred between his mother and Dr Cathcart at the time the contract of sale was made. He was asked: ...
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