Gregg v. Thurber

• Decision Date: 17 March 1899
• Parties: GREGG v. THURBER.
• Court: New Hampshire Supreme Court

45 A. 241

69 N.H. 480

GREGG

v. THURBER.

Supreme Court of New Hampshire. Hillsboro.

March 17, 1899.

Exceptions from Hillsboro county.

Suit by David A. Gregg against Lester F. Thurber, assignee in insolvency of the Security Trust Company. From a judgment in favor of defendant, dismissing the petition, plaintiff brings exceptions. Overruled.

Petition alleging that the Security Trust Company was a corporation lately doing business in Nashua, in said county, and in the state of North Dakota; that, while engaged in business, it would take notes secured by mortgages on real estate running to itself, and negotiate the same to such parties as might desire to buy; that Anna Slack gave her promissory note to said trust company for $3,500, and executed and delivered to said trust company her mortgage, covering 480 acres of land situated in the county of Grand Forks and state of North Dakota, and said trust company afterwards sold said note and mortgage to the plaintiff for the sum of $3,500, representing to him that the same was a first mortgage upon the land described therein, as the mortgage stipulates; that at the time the plaintiff bought said mortgage and note there were two prior mortgages upon the same property, aggregating $2,000, which are still outstanding upon it; that, while the plaintiff held said mortgage undischarged on said land, said trust company sold 160 acres of said mortgaged premises for $1,750 to one Joy, who sold the same for $2,250 to one Naigle, who is now in possession of the same. Wherefore the plaintiff prays that said Thurber, assignee of said trust company, may be ordered to pay to him the full amount of said mortgage, with interest, or that he may be ordered to pay said prior mortgages and incumbrances, and adjust matters with said Joy and said Naigle, to the end that the plaintiff may have a first mortgage as was intended, and for such other relief as may be just. Facts found by the court: The Security Trust Company was organized in 1889, and continued in business until July, 1803, when it suspended. It resumed business again, January 29, 1894, and finally suspended, and went into the hands of the assignee, October 9, 1896. The plaintiff was a director and president of the company until July, 1896. The company did a general banking business, receiving deposits subject to check. It also did a savings-bank business, having a savings-bank department separate and apart from its other business. It also loaned money upon Western mortgages. The Western office was in charge of one Clifford, of Grand Forks, who loaned the money sent to him from the Nashua office upon such security as he chose to take. The general manager of the Eastern office was one Sargent. Clifford made the loans upon his own judgment, and the notes or bonds were sent on to the East, and generally the mortgage security, with the abstract of title, the application, and other papers connected with each particular loan. Sometimes the papers came together. At other times the abstract was forwarded subsequently, and sometimes it was not forwarded at all. Sargent had nothing to do with making the loans. They were brought before the executive board, and accepted, but before accepting them every member had an opportunity to investigate them. In all cases of first mortgage loans, however the money was paid to the Western borrower by Clifford, and the papers were then forwarded to the Nashua office for sale. They had confidence in Clifford, and supposed his investigation was all right. They had confidence, also, in Sargent. The plaintiff knew that all Western loans were placed on Clifford's judgment, and the executive board acted when required. After the mortgages were received from the Western office, they were sold by Sargent, as Eastern manager and treasurer of the Security Trust Company, to investors, and the money received was from time to time reloaned upon like securities, which were in their turn forwarded and sold. In May, 1893, the company became somewhat embarrassed. At that time the plaintiff held the notes and obligations of the company to a large amount. For the purpose of supplying cash to the company, he surrendered to it his notes and obligations, and in their place took a certificate of deposit for approximately $60,000, with $90,000 of what purported to be first mortgages upon Western property as collateral. October 8, 1894, the plaintiff purchased $00,000 of the collateral securities, and gave up his certificate of deposit and his excess of collateral. Sargent made the sale under a special vote of the executive board. Among the securities so purchased were the Slack note and mortgage, which were inclosed in a paper wrapper bearing, among others, the following statement: "No. 4,509. Guarantied First Mortgage. Anna Slack and Husband, Grand Forks Co., N. D. To Security Trust Company, Nashua, N. H. $3,500." Up to July 3, 1897, there was no formal assignment of the mortgage to the plaintiff. It was done on that day, and the assignment recorded on July 30th following. The mortgage was not a first mortgage, but was in fact a third mortgage upon a portion of the land. The prior mortgages were for $800, $1,200, and $1,255, respectively. The $800 mortgage is an asset of the company's savings-bank department, and came into the hands of the assignee as such. The $1,200 mortgage is owned by a resident of Pennsylvania, having been sold to him by a representative of the company. The third mortgage, of $1,255, was owned by the company from...