Guy v. Liberenz

• Decision Date: 05 November 1902
• Docket Number: 19,972
• Parties: Guy et al. v. Liberenz et al
• Court: Indiana Supreme Court

65 N.E. 186

160 Ind. 524

Guy et al. v. Liberenz et al

No. 19,972

Supreme Court of Indiana

November 5, 1902

Rehearing Denied May 12, 1903.

From DeKalb Circuit Court; E. A. Bratton, Special Judge.

Suit by William J. Guy and wife against William Liberenz and wife to foreclose a mortgage. From a judgment for defendants plaintiffs appeal. Transferred from Appellate Court, under clause 2, § 1337j Burns 1901.

Affirmed.

C. H Bruce, F. S. Roby, S. A. Wood, E. D. Salsbury and S. A. Harper, for appellants.

J. E. Rose and J. H. Rose, for appellees.

OPINION

Monks, J.

Appellants brought this action against appellees on a promissory note secured by a mortgage executed by appellees. A special finding of facts was made by the court, and conclusions of law stated thereon. Over a motion for a new trial by appellants, a judgment in accordance with the conclusions of law was rendered. That the court erred in each of the conclusions of law is the only error assigned and not waived.

It appears from the special finding that appellee William Liberenz, on November 24, 1896, contracted, on his individual account, with Yount & Yount, to erect a livery barn for them on a lot for which they held a contract for a deed on the payment of $ 270, the balance of the purchase money. The contract price for the erection of said barn was $ 1,850. Liberenz began the erection of the barn, but, needing money to complete the same, borrowed $ 1,000 of appellants, $ 800 of which was to be used in completing said barn under said contract, for which he and his wife executed the note sued upon, and to secure the same executed the mortgage on real estate owned by them as tenants by the entireties. The money was delivered to the husband after the note and mortgage were executed. The said husband used about $ 800 of said borrowed money in the construction of said barn, under his contract with Yount & Yount, and the remainder thereof he used in the payment of his individual debts. Louisa Liberenz, the wife, did not negotiate said loan, nor did she see appellants in reference thereto until the execution of said mortgage. No statement was made in her presence to appellants, or either of them, as to the purpose for which said money was borrowed, nor as to what was to be done with the same. "No part of said $ 1,000 was received by the said Louisa, nor was any part thereof expended in the betterment of said real estate described in said mortgage, nor any other real estate then owned by her or in which she had any interest, and that she did not receive the consideration for which said note and mortgage were executed, except as herein set out." Said William Liberenz, after the completion of said barn, no part of the contract price having been paid, took a mechanic's lien thereon for $ 1,850. On the 18th day of October, 1897, said Yount & Yount, being unable to pay said Liberenz for the erection of said barn, on his request, and in payment of said mechanic's lien, assigned the written contract they had for said real estate to one Charles Kent, by a written assignment on the back of said contract.

At the time said contract was assigned to said Kent, he was surety for said William Liberenz to various persons for about $ 1,200, the individual indebtedness of said William Liberenz; and, in consideration of said assignment of said contract, said Kent promised and agreed to pay the same. The said livery barn was at said time encumbered by liens other than the lien of said William Liberenz, amounting to $ 690, and the lien for unpaid purchase money for $ 270--in all $ 960--and the said property was at this time of the fair value of $ 1,300. After the assignment of said contract to said Kent, he became dissatisfied with said contract with said William Liberenz for the payment of said $ 1,200 for which he was surety; and thereupon said William Liberenz, his wife joining therein, conveyed to said Kent another piece of real estate, of the fair value of $ 2,500, which said William Liberenz owned in his own right, the same being encumbered by a mortgage for $ 1,250 executed by him; and the said Kent assigned to said Louisa Liberenz all his right, title, and interest in the contract assigned to him by said Yount & Yount. Said Kent and wife on said 18th day of October, 1897, executed a quitclaim deed for said real estate upon which said barn was built to said Louisa Liberenz; and she on November 13, 1897, received a deed therefor under the contract assigned to her by said Kent. On said 18th day of October, 1897, said Kent paid said Yount & Yount $ 100, and said William Liberenz paid them $ 6, as a further consideration for the assignment of said contract to said Kent. Afterwards said Louisa Liberenz sold and conveyed said barn, and the real estate upon which the same was built, for $ 1,000 over and above all claims and liens against the same, $ 400 of which she received in cash, and $ 600 in mortgage notes. After appellees had learned that said mortgage could not be enforced, on account of being the note and mortgage of a married woman, they made an affidavit under the act of 1899 (Acts 1899, pp. 422, 423, § 8417a et seq. Burns 1901, § 6272a et seq. Horner 1901), and filed the same in the office of the auditor of DeKalb county, and obtained a deduction of $ 700 from the assessed value of the real estate described in the mortgage sued upon.

The court stated thereon the following conclusions of law: "(1) That the defendant Louisa Liberenz is not liable upon the note and mortgage sued on in the plaintiffs' complaint, and set out in the findings of facts herein; (2) that the defendant Louisa Liberenz signed the note and mortgage sued on in the plaintiffs' complaint as surety for her husband William Liberenz; (3) that the mortgage described in the findings herein, and set out in the plaintiffs' complaint, is void, and ought not to be foreclosed; (4) that the plaintiffs are entitled to recover, and should have judgment against the defendant William Liberenz for the sum of $ 1,345, without relief from valuation and appraisement laws."

It is the law in this State that when it appears that the obligation sued upon is that of husband and wife, and is secured by a mortgage on real estate held by them as tenants by the entireties, there is no presumption that the consideration was not used for the benefit of the said real estate so held by them, or that she is surety on said obligation, but the burden is upon her to allege and prove facts showing that she executed the note and mortgage as surety, and not as principal. Cook v. Buhrlage, 159 Ind. 162, 64 N.E. 603, and cases cited; Crisman v. Leonard, 126 Ind. 202, 203, 25 N.E. 1101; Security Co. v. Arbuckle, 119 Ind. 69, 71, 21 N.E. 469. Under this rule the appellants contend that the first, second, and third conclusions of law can not be sustained, because there is no finding of the ultimate fact that Louisa Liberenz executed the note and mortgage sued upon as surety for her husband. Citing Bartholomew v. Pierson, 112 Ind. 430, 14 N.E. 249.

It has been uniformly held by this court 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. Cook v. Buhrlage, supra, and cases cited; Andrysiak v. Satkoski, 159 Ind. 428, 63 N.E. 854; Field v. Noblett, 154 Ind. 357, 360, 56 N.E. 841, and cases cited; Leschen v. Guy, 149 Ind. 17, 19, 48 N.E. 344, and cases cited; Nixon v. Whitely, etc., Co., 120 Ind. 360, 362, 22 N.E. 411, and cases cited; Crisman v. Leonard, supra, and cases cited; Vogel v. Leichner, 102 Ind. 55, 60, 1 N.E. 554.

It was said by this court in Security Co. v. Arbuckle, supra, on page 71, where there was a special finding: "General statements to the effect that the defendant Mary E. Arbuckle executed the note and mortgage as surety for her husband, are not a sufficient statement of facts. Whether she was surety or not depends upon the purpose for which the money was borrowed, and to which it was applied. If it was borrowed and used to pay off debts of her husband, which did not constitute valid encumbrances on the joint estate, or if it was not in some way used for her benefit or the benefit of her estate, she was a surety. These facts are not directly averred in the pleadings nor are they found by the court."

In Voreis v. Nussbaum, 131 Ind. 267, 16 L. R A. 45, 31 N.E. 70, the note was executed by the wife, and a mortgage was executed by the husband and wife...