Davis v. Duncan

Decision Date02 April 1936
Docket Number15,173
Citation200 N.E. 727,102 Ind.App. 42
PartiesDAVIS, TRUSTEE v. DUNCAN ET AL
CourtIndiana Appellate Court

1. MORTGAGES---Foreclosure by Action---Set-Off---Bank Deposit.---Where a mortgagee bank assigned a note and mortgage to a trustee to secure mortgage certificates, the mortgagors were not entitled to set-off a certificate of deposit in the mortgagee bank against the debt in a foreclosure action by the assignee, notwithstanding the fact of such assignment was unknown to the mortgagors at the time the mortgagee bank became insolvent. p. 45.

2. MORTGAGES---Assignment---Recording---Effect of Failure to Record---Between Original Parties.---In mortgage foreclosure action, where the mortgagors sought to set-off a certificate of deposit in the mortgagee bank, the fact that a written assignment of the mortgage was not recorded until after the mortgagee bank closed did not make the assignment void as against the mortgagors, who were general creditors of the mortgagee. p. 47.

From Howard Circuit Court; Joseph Cripe, Judge.

Action by Harry O. Davis, as successor trustee to Citizens National Corporation, against John H. Duncan and others on note and to foreclose a mortgage, wherein defendants pleaded a set-off. From the judgment allowing set-off, plaintiff appealed.

Reversed.

Elliott & Fell, for appellant.

Marshall Hillis & Coffel, for appellees.

OPINION

DUDINE, J.

This action was instituted by Citizens National Corporation, as Trustee, against appellees John H. Duncan and Hazel D. Duncan (his wife), to recover on a note, and to foreclose a mortgage given by said appellees to secure said note. Appellee Floyd E. Kelly was made a party defendant because of a judgment lien held by him against his co-appellees, which lien was held to be inferior to appellant's mortgage lien. During the pendency of the action appellant was appointed by the Howard Circuit Court as successor trustee and plaintiff in this case in lieu of Citizens National Corporation. (Hereafter, by use of the word "appellees" we will refer to appellees John H. Duncan and Hazel D. Duncan, and not appellee Floyd E. Kelly. )

The complaint was in the usual form of complaint to recover on a note and foreclose a mortgage given to secure the payment of a note.

Appellees Duncan and Duncan filed six paragraphs of answer, including a general denial. It is not necessary that we discuss said paragraphs of answer except to say that by their sixth paragraph of answer, appellees sought to have the amount due them from Citizens National Bank (of Kokomo), on a certificate of deposit issued by the bank to appellee Hazel D. Duncan, set off against any amount found due from appellees on said note and mortgage. The issues were closed with replies, and the cause was submitted to the court for trial without the intervention of a jury.

The court found for appellant on his complaint and for appellees on their sixth paragraph of answer, and allowed a set-off as prayed by appellees. Appellant filed a "motion to modify the judgment" by striking out that part of the judgment which allowed the set-off.

The motion was overruled. Appellant also filed a motion for new trial, which was overruled, whereupon this appeal was perfected.

The errors assigned upon appeal, and discussed in appellant's brief, are: (1) Error in overruling said motion to modify the judgment; (2) error in overruling said motion for new trial. The causes for new trial set forth in the motion therefor, are: (1) The decision of the court is not sustained by sufficient evidence; (2) the decision of the court is contrary to law.

We will first consider the alleged error in overruling the motion for new trial.

The evidence indisputably shows that on February 24, 1919, appellee John H. Duncan executed and delivered to Kokomo Trust Company his promissory note in the principal sum of $ 2,500.00, which matured February 24, 1924. He and appellee Hazel D. Duncan, his wife, executed and delivered to the trust company a mortgage on certain real estate, to secure the payment of said note. The mortgage contained an unconditional promise to pay the indebtedness secured thereby. The note was renewed, and the renewal note matured on February 24, 1929. On that date the Citizens National Bank of Kokomo held the note and mortgage; and on that date said bank was indebted to appellee Hazel D. Duncan in the principal sum of $ 2,000.00, which indebtedness was evidenced by a certificate of deposit issued by the bank in her name. The loan was again renewed at maturity, with said certificate of deposit pledged as additional collateral to secure the payment of said loan. This pledge was evidenced by a receipt which was issued by the bank, and accepted by Duncan, and which was in the following words and figures:

"Received of John H. Duncan certificate of deposit for $ 2,000 which...

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