Healy v. Fid. Sav. Bank

• Decision Date: 20 May 1941
• Citation: 238 Wis. 12,298 N.W. 170
• Parties: HEALY et al. v. FIDELITY SAV. BANK et al.
• Court: Wisconsin Supreme Court

238 Wis. 12

298 N.W. 170

HEALY et al.

v.FIDELITY SAV. BANK et al.

Supreme Court of Wisconsin.

May 20, 1941.

Appeal from a judgment of the County Court of Langlade County; A. N. Whiting, Judge.

Reversed and modified in part; and affirmed as modified.

Action brought by Richard Healy, Jr., et al., against the Fidelity Savings Bank, administrator of the estate of Theresa Feichtner, and Clara N. Feichtner, et al., to recover $1,500 as the balance owing on a loan of $3,000, and also $500 owing on an additional loan, and for the foreclosure of a mortgage on real estate to secure both amounts. Defendants admitted that the sums of $1,500 and $500 with interest were due on the loans, but denied that the latter amount was secured by the mortgage. The court found and concluded that the $500 loan was intended by the parties to be secured by the mortgage which was given originally to secure the loan of $3,000, and that plaintiffs were entitled to recover the total sum of $2,000 owing on both loans and the foreclosure of the mortgage as security therefor. From a judgment entered accordingly, the defendants, Clara N. Feichtner and the special administrator, appealed.

Vernon J. McHale, of Antigo (David W. Goodnough, of Antigo, of counsel), for appellants.

Arthur H. Strochan, of Antigo, for respondents.

FRITZ, Justice.

It is undisputed that $1,500 and interest are owing to plaintiffs by the defendants, Clara Feichtner and the estate of Theresa Feichtner, as the balance owing on their note for $3,000, secured by a mortgage on real estate given by them to plaintiffs. Plaintiffs claim that when the amount owing on the note had been reduced to $1,500, the makers thereof obtained an additional loan of $500 under an oral agreement between the parties that the mortgage was to stand as security for also the additional loan. Appellants' principal contention is that the mortgage originally given to secure the $3,000 note cannot be effectively extended five years later by a mere oral agreement to secure the subsequent loan of $500. On the other hand, plaintiffs contend that the mortgage to secure the debt which had been reduced to $1,500 can be so extended to secure the subsequent $500 loan, where there are no intervening equities.

[1][2] In contending that the alleged oral agreement is invalid, appellants rely principally upon the provision in sec. 240.06, Stats., that: “No estate or interest in lands, other than leases for a term not exceeding one year *** shall be created, granted, assigned, surrendered or declared unless by act or operation of law or by deed or conveyance in writing, subscribed by the party creating *** the same ***.” In view of this provision, “No rights in and to real property, nor trust or powers over the same, can be granted by parol.” (Florsheim v. Reinberger, 173 Wis. 150, 179 N.W. 793, 794); and, consequently, no additional mortgage lien or encumbrance on real property can be created by a subsequent parol agreement to secure other indebtedness than that which was intended to be secured when the mortgage was executed. As is stated in 19 R.C.L. p. 306, sec. 82: “But a mortgage cannot, subsequent to its execution, be extended by parol agreement to secure debts or obligations other than those which it was executed to secure. Such an extension, if effective, would be equivalent to the execution of a new mortgage to secure the additional obligations. It therefore falls within the prohibition of the Statute of Frauds. *** It is quite true that oral testimony is admissible to show what obligations were intended to be secured by a mortgage and will be received to establish that the mortgage was in fact given to secure obligations distinct from those expressed. But this doctrine permits parol testimony only to show the intention of the parties at the time the mortgage was executed and not to establish a subsequent agreement, in effect creating a new mortgage, to extend the mortgage to secure additional obligations.” To the same effect, see 41 C.J. p. 468, sec. 371, “Where, however, a statute exists prohibiting the admission of proof of a verbal mortgage, it has been held that mortgages are so far stricti juris that they cannot be extended by any implication to secure another obligation than that expressly mentioned in the instrument”; 27 C.J. p. 218, sec. 199; 41 C.J. p. 467, sec. 371; and also the annotation in 76 A.L.R. p. 579, where it is...