Farm Land Mortgage & Debenture Co. v. Elsbree

• Decision Date: 06 July 1895
• Citation: 55 Kan. 562,40 P. 906
• Parties: THE FARM LAND MORTGAGE AND DEBENTURE COMPANY v. MANSON ELSBREE et al
• Court: Kansas Supreme Court

40 P. 906

55 Kan. 562

THE FARM LAND MORTGAGE AND DEBENTURE COMPANY v. MANSON ELSBREE et al

Supreme Court of Kansas

July 6, 1895

Error from Marion District Court.

THIS was an action brought by Manson Elsbree to recover upon a promissory note for $ 1,000, executed by Ferdinand Wahl and Louise Wahl, and payable to the order of Joseph M. Young five years after its date, to wit, May 6, 1886. The petition averred that at the same time the makers of the note executed and delivered to Young a mortgage upon a tract of land which they owned in Marion county, to secure the payment of the promissory note. The mortgage was duly recorded upon the same day. Copies of the note and mortgage were attached to the petition, and it was alleged that the note was duly indorsed by Young to the plaintiff before maturity, who was now the legal owner and holder of the same, together with the mortgage securing the same. It was further alleged that default had been made in the payment, and the plaintiff in exercise of his option had declared the whole sum of money mentioned in the note due and payable. In addition to the makers of the note, C. A. Grimes, N. C. Elsbree, and the Farm Land Mortgage and Debenture Company were made defendants because they claimed to own an interest in the mortgaged land. N. C. Elsbree, one of the defendants, filed an answer or cross-petition setting up a promissory note executed by Wahl and wife to Joseph M. Young for $ 900, on March 6, 1886 due in five years, and which was secured by the mortgage already referred to. He further alleged that the note, a copy of which is attached to his pleadings, was duly indorsed by Young to him before maturity, and that he was then the owner and holder of the same. The written indorsement upon the note, as shown by the copy, is as follows:

"For value received, I hereby assign and transfer the within note and coupons, together with all my interest in and rights under the mortgage securing the same, to N. C. Elsbree, and guarantee the payment. JOS. M. YOUNG."

It is alleged that there is still due and unpaid on the note the sum of $ 533.20, with interest from January 19, 1889, at 12 per cent. per annum. The Farm Land Mortgage and Debenture Company filed answers and also a cross-petition, denying generally the averments of the Elsbrees, except that there was an admission of the execution by the Wahls of the note and mortgage to Young on March 6, 1886. There was an averment that on January 19, 1889, Wahl and wife procured an actual loan from them of $ 6,000, and on that day executed a note for that amount, payable January 1, 1894, with interest at the rate of 9 per cent. per annum, payable semi-annually, and that to secure the payment of the note they executed a mortgage upon the land previously mortgaged to Young, which was duly recorded. Copies of the note and mortgage were set forth. It was further alleged that at the time of making this loan and before the payment of the money, Joseph Young, to whom the other note and mortgage were given, agreed in writing with the company that in consideration of the sum of $ 848.10, then and there paid out of the $ 6,000 loan, to discharge of record the $ 1,900 mortgage before referred to and to make it subsequent and subordinate to the $ 6,000 mortgage, and that the $ 848.10 should be used as a part payment of the $ 1,900 mortgage. It is alleged that Young did discharge the mortgage of record in accordance with his agreement, and also by indorsing upon the margin of the record of the $ 1,900 mortgage the following words:

"I J. M. Young, the within-named assignee and mortgagee, for a valuable consideration, do hereby consent that the mortgage of $ 6,000 in favor of the Farm Land Mortgage and Debenture Company shall become the first and superior lien on section 8, township 19, range 5 east, in Marion county, Kansas.

"January 19, 1889. J. M. YOUNG.

"Attest FERD. J. FUNK, Register of Deeds."

It is alleged further that it had no notice at the time of making the loan that the Elsbrees had or claimed any right or interest in the mortgage of $ 1,900, or the notes secured thereby, but dealt with Young as the owner and holder thereof. It is alleged that Young is the real owner and holder, and was at the time of the negotiation of the loan and that the transfer of the notes to plaintiff is a sham and subterfuge, made for the purpose of cheating and defrauding the company. There is a further averment that the mortgage is fraudulent, without consideration, and that it has been paid and satisfied. It is averred that the mortgage of the company is a first and superior lien upon the premises mortgaged, and judgment is asked against the Wahls for the amount of the loan, with interest thereon, and also that it be decreed a first and superior lien upon the mortgaged premises, and that they be sold in satisfaction of the judgment and lien. At a trial had on September 18, 1890, judgment...