Field v. Campbell

• Decision Date: 16 November 1904
• Docket Number: 20,479
• Citation: 72 N.E. 260,164 Ind. 389
• Parties: Field v. Campbell, Administrator
• Court: Indiana Supreme Court

72 N.E. 260

164 Ind. 389

Field v. Campbell, Administrator

No. 20,479

Supreme Court of Indiana

November 16, 1904

Rehearing Denied March 16, 1905.

From Washington Circuit Court; W. C. Utz, Special Judge.

Action by John A. Campbell as administrator of the estate of Van R Noblett, deceased, against Matilda E. Field. From a decree for plaintiff, defendant appeals. Transferred from Appellate Court under subdivision 2, § 1337j Burns 1901, Acts 1901, p. 565.

Reversed.

Gavin & Davis, M. B. Hottell, J. J. Giles and McCart &amp Talbot, for appellant.

Elliott, Elliott & Littleton and W. J. Buskirk, for appellee.

OPINION

Gillett, J.

This is a second appeal. See Field v. Noblett (1901), 154 Ind. 357, 56 N.E. 841. As the action now stands, John A. Campbell, as administrator of the estate of Van R. Noblett, deceased, is seeking to recover against appellant on a note and to foreclose a real estate mortgage which she and her husband executed to secure said note. Certain special paragraphs of answer sufficiently present the question of her suretyship. The general denial and special paragraphs of estoppel were pleaded by way of reply. The court found for appellee, and rendered a judgment and a decree in his favor. The question is duly presented whether the finding was contrary to law.

It appears from the evidence that in November, 1890, the term of Joseph J. Field as treasurer of Orange county expired. He was owing at the time, on account of his office, about $ 12,000, but the deficit was not discovered until subsequently, when a report was made to the State. January 10, 1891, he and his wife, the appellant herein, executed to his bondsmen a mortgage covering all of the real estate of each of said mortgagors, conditioned to save the mortgagees harmless on account of their suretyship. The mortgage was recorded January 12, 1891. A few days subsequently, Joseph J. Field applied to Van R. Noblett for a loan of the above amount, and proposed to secure the same by a mortgage upon his own real estate. Noblett offered to loan $ 9,000 on said real estate, but declined to loan more, for the reason that he regarded the security as insufficient. A few days later appellant applied in person to Noblett to borrow $ 3,000 upon her real estate. He asked her if she wanted the money for her own use, and she answered that she did. Noblett stated that he was willing to make the loan, provided the title was good and unincumbered and the land worth $ 6,000, she to pay the expense of the transaction. Appellant agreed to his proposition. He then directed one Hicks, who was at the time the cashier of a bank at Orleans, Indiana, to appraise the land, and, if it was worth $ 6,000, he was authorized to procure an abstract, and determine whether the title was good and unincumbered, and, if so, he was to make the loan. As to the relation of Hicks to the transaction, Noblett testified in part as follows: "I authorized Hicks to go and get the abstract and find out if the--whether it was good and unincumbered, and if he thought it was then he might take the mortgage for this amount." On cross-examination Noblett was asked this question: "Didn't you learn, Mr. Noblett, that Mrs. Field and her husband had mortgaged all of his property, and also her property, for the purpose of saving harmless the bondsmen of Mr. Field, while he was treasurer?" The witness answered: "Well, I'd heard say. I knew that. They had some fear about that--that their property was all mortgaged." Hicks appraised the lands offered as security for each loan, and he also procured and passed on the abstracts. Noblett further testified on cross-examination that he received a report from Hicks that the title to the real estate of appellant was good; that there was no incumbrance, and that it would be a sufficient security for $ 3,000. Afterwards, on February 2, 1891, Noblett deposited $ 12,000 in said bank, taking two certificates of deposit, one for $ 9,000 and the other for $ 3,000. The latter certificate was indorsed, "Pay to W. T. Hicks for benefit of Mrs. Matilda Field. Van R. Noblett," and the certificate was turned over to Hicks. The other certificate was apparently placed under the control of Hicks, since he closed up both loans. February 13, 1891, the bondsmen of Joseph J. Field executed to Hicks a power of attorney, authorizing him to release said indemnity mortgage upon the payment to the treasurer of Orange county of $ 12,701.74 "on the amount of his [Field's] indebtedness to said county." Hicks drew the notes and mortgages, and consummated both loans on the same day, February 14, 1891. On the morning of that day appellant came to the town of Orleans. She had no knowledge that a mortgage was to be executed at that time. A person, who was a notary public, met her at a drug store, and she there signed the note and mortgage in question, and also joined her husband in the $ 9,000 mortgage on his lands. She then accompanied the person who had taken her acknowledgment to the bank. One Ellis, who was her husband's successor in office, was in the bank at the time. Hicks counted out $ 3,000 to her, and she receipted the payment on the certificate. She took the money to the drug store at once, where her husband was in waiting, and handed the money to him. He immediately went with it to the bank. Ellis testified that on that day Field paid him $ 3,000 in cash and $ 8,334.74 in a check or checks on said bank, and that the aggregate of said amounts was the sum then due from Field according to the footings of the books. Hicks afterwards entered of record a release of the indemnity mortgage. There is and can be no question made upon the evidence that the $ 3,000 paid to Ellis was the money received by appellant. We are unable to find that Noblett testified that he believed the statement of appellant that "she desired the money for her own use" to be true.

Counsel for appellant contend that the note and the mortgage sued on are void under § 6964 Burns 1901, § 5119 R. S. 1881. That section is as follows: "A married woman shall not enter into any contract of suretyship, whether as indorser, guarantor, or in any other manner; and such contract, as to her, shall be void." It is the contention of appellee's counsel that the loan was made to appellant upon the representation that she desired it for her own use, and that Noblett was not bound to see to the application of the money which he furnished her. It is settled law in this State that whether or not a married woman is surety or principal on a promissory note or other obligation is to be determined, not from the form of the contract, nor from the basis upon which the transaction was had, but from the inquiry as to whether she received in person or in benefit to her estate the consideration upon which the contract depends. Field v. Noblett, supra; Harbaugh v. Tanner (1904), 163 Ind. 574, 71 N.E. 145, and cases cited.

It does not admit of question that a married woman may borrow money for herself, and that her subsequent disposition of it, whatever that may be, will not invalidate her promise to repay. Bouvey v. McNeal (1891), 126 Ind. 541, 26 N.E. 396; Cummings v. Martin (1891), 128 Ind. 20, 27 N.E. 173. If, however, it appears that an elaboration of outward details was, as both parties knew, but a cloak to cover an attempt to conclude a contract in violation of the statute, the indirection in method by which they have proceeded will not avail to save the transaction. Webb v. John Hancock, etc., Ins. Co. (1904), 162 Ind. 616, 69 N.E. 1006; Long v. Crosson (1889), 119 Ind. 3, 4 L.R.A. 783, 21 N.E. 450. As was said in the case last cited: "Whatever device may be resorted to for the purpose of evading the statute, if the person seeking to enforce the contract knew of, or participated in, the design, or purposely remained ignorant, courts will deal with the transaction according to its substance, regardless of the form in which it may have been disguised."

But it is not necessary that the party loaning the money should actually have been a party to the violation of the statute. Being advised of the fact that the woman is covert, he stands charged with a knowledge of her disability. A married woman has no power to deal as principal if she is in fact a surety. Vogel v. Leichner (1885), 102 Ind. 55, 1 N.E. 554; Andrysiak v. Satkowski (1902) 159 Ind. 428, 63 N.E. 854. There can be no evasion of the statute upon the part of the person who accepts an obligation that the woman is powerless to issue, and she could not escape the statutory prohibition except for the fact that she may be bound by an estoppel in pais. As the statute puts a married woman under disability, there can be no recovery upon her suretyship undertaking, except where the facts were such that the person who accepted it was reasonably justified in supposing, and did suppose, that she was not only a principal in name, but also in fact. In all ordinary circumstances, at least, there must be some degree of active diligence upon the part of a lender to ascertain the purpose for which a woman whom he knows to be married is borrowing money. It was said in Cupp v. Campbell (1885), 103 Ind. 213, 2 N.E. 565: " One contracting an encumbrance on the estate of a married woman, can not, however, deal with her at arm's length, knowing that she is married, and that by law she is prohibited from contracting for the benefit of another; and, knowing that she is about to encumber her separate estate in his favor, he is bound to inquire concerning the consideration, and ascertain, if he may, by reasonable inquiry from her whether it is for her benefit or for the benefit of another, and unless misled by the conduct or representations of the wife, he will be held to have acquired a knowledge of the facts which...