Illinois Life Insurance Company v. Young

• Citation: 235 P. 104,118 Kan. 308
• Decision Date: 11 April 1925
• Docket Number: 25,848
• Parties: ILLINOIS LIFE INSURANCE COMPANY, Appellee, v. WILLIAM F. YOUNG, Appellant (J. E. STILLWELL et al., Appellees)
• Court: United States State Supreme Court of Kansas

235 P. 104

118 Kan. 308

ILLINOIS LIFE INSURANCE COMPANY, Appellee, v. WILLIAM F. YOUNG, Appellant

(J. E. STILLWELL et al., Appellees)

No. 25,848

Supreme Court of Kansas

April 11, 1925

Decided January, 1925.

Appeal from the Comanche district court; LITTLETON M. DAY, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. BILLS AND NOTES--Liability of Indorser--New Notes Collateral to First. The facts concerning the execution of a second series of promissory notes as collateral to a first series evidencing the same secured indebtedness, examined, and held, that the indorser of the first series of notes was not discharged of liability thereon by reason of the execution and delivery of the second series.

2. SAME--Judgments--Res Judicata--Elements. In a cross action against the makers and indorser of a first series of notes secured by a second mortgage on real estate, a defense was interposed that the indorser, in a later action in California by another holder, had defeated a recovery on all except one of a second series of notes pertaining to the same indebtedness, and that in yet another action in California he had obtained judgment awarding him possession of the first series of notes: Held, that the essentials of res judicata were wanting and the judgments in the California litigation were not a bar to a recovery and judgment on the first series of notes against the indorser and in favor of a litigant who was not a party to the California litigation and who did not claim under any person bound by the California judgments.

3. COURTS--Jurisdiction--Parties--Subject Matter. The issues formed by the pleadings and admissions of the parties, and the fact that the notes and security were not in the possession of the appellee at the time the cause was tried, but were in court in possession of appellant, who had raised an issue of ownership concerning them and had asserted a right to recover thereon in his own behalf and to foreclose the mortgage given as security therefor, considered, and held, that the trial court had full jurisdiction of the parties and of the subject matter, and properly entered final judgment in the cause presented by the parties.

4. SAME--Subsequent Action--Different Jurisdiction. The commencement of another action in another jurisdiction between the same litigants over the same subject matter, which other action is still pending and undetermined, does not affect the judgment of the court of prior jurisdiction.

F. Dumont Smith, of Hutchinson, for the appellant.

F. C. Price, F. N. Cossman, both of Ashland, Dick H. Rich, and Horace Rich, both of Coldwater, for the appellee.

OPINION

DAWSON, J.:

This appeal is concerned with the rival and adverse interests of parties who were codefendants in a suit to foreclose a first mortgage on a 9,300-acre ranch in Comanche county.

The controversy which is of present concern arose thus: William F. Young sold the ranch to L. D. Alexander, subject to a first mortgage held by the Illinois Life Insurance Company, taking in part payment therefor nine coupon promissory notes of Alexander and wife, aggregating $ 44,900, dated March 12, 1919, due in five years, bearing 6 per cent interest, and to draw 10 per cent on delinquent interest. These notes were secured by a second mortgage on the ranch.

Before their maturity, Young sold, assigned and transferred these notes to third parties, who in turn transferred them to J. E. Stillwell.

L. D. Alexander sold the ranch to J. E. Alexander, and the latter made default in the payment of interest on these second-mortgage notes, so Stillwell elected to declare the whole debt due and payable and commenced foreclosure proceedings thereon; but these proceedings were halted and dismissed about November 1, 1920, as a result of a contract between Stillwell and J. E. Alexander by which the latter executed a second series of notes, ten in number, aggregating $ 49,400, as collateral to the original series. Young indorsed each of this second-series of notes thus:

"The endorsers hereof each waive presentment, protest, notice of protest of nonpayment of this note.

W. F. YOUNG."

The written contract, executed on the same date as these new notes, November 1, 1920, among other matters, expressly stipulated that it should not be construed to waive the rights of the holder of the second-mortgage notes, and that if default were made in the payment of interest on either, or if default were made in the first- or second-mortgage debt, or in payment of taxes, then the holder might declare the entire amount secured by said mortgage due and payable.

Stillwell took this second series of notes to California and they passed into divers other hands, with consequences to be referred to later.

On December 2, 1922, the Illinois Life Insurance Company instituted this action to foreclose its first mortgage, making L. D. Alexander, William F. Young, J. E. Stillwell and others defendants. Plaintiff's action was unopposed and it was given judgment as of course.

The issues involved herein were raised by the answer and cross petition of Stillwell (filed December 22, 1922) against his codefendant Young and his codefendants L. D. Alexander and wife, in which Stillwell set up the original series of notes secured by the second mortgage, Young's indorsement, default in payments of interest due thereon and in payment of taxes, the consequences thereof as provided by the second-mortgage contract, and prayed judgment against L. D. Alexander and wife and William F. Young and for foreclosure of the second mortgage.

To this pleading Young filed an answer and cross petition, admitting the execution of the notes and mortgage and his own indorsement thereof, designating the notes sued on by Stillwell as the "first series," and alleging that in November, 1920, J. E. Alexander, who by then had acquired the ranch, had executed and delivered to Stillwell a second series of ten notes, aggregating $ 49,403, for the purpose of taking up and extinguishing the notes set forth in Stillwell's cross petition. Young alleged that Stillwell had made misrepresentations to him which had induced him to indorse the second series of notes:

"That this defendant would not have indorsed the second series of notes but for the said statements and promises of the said Stillwell, whereby this defendant was released from any liability upon the said first series of notes sued on herein, and the said Stillwell ought not to have and recover upon said notes herein as against this defendant."

Young further answered that Stillwell had disposed of the second series of notes to third parties, "all of whom but one took the said notes with full knowledge of all the facts," who assigned them to one Fred E. Graham, and that Stillwell had caused Graham to bring suit on such notes against Young in the superior court of Los Angeles county, California; that Young set up the facts in that action and recovered judgment against Graham, except on one of this second series of notes for $ 5,000, on which judgment had been rendered against Young, and which judgment Young had satisfied. That the Los Angeles lawsuit was an election by Stillwell, and was taken with his full knowledge--

"Whereby the said Stillwell cannot now seek a recovery upon the said first series against this defendant, and the said judgment of the said superior court of said county in said case is res adjudicata and has determined all the issues between the said Stillwell and this defendant in favor of this defendant except as set forth in the cross petition herein contained."

Accompanying the foregoing answer, Young presented a cross petition against Stillwell, alleging that by reason of the transfer of one of the second series of notes to an innocent holder, whereby judgment had been entered against Young, and he had been--

"Compelled to and has paid in full, this defendant has become the equitable assignee pro tanto of $ 5,000, with interest, of the said first series of notes sued upon herein by the said Stillwell, and all rights thereunder, including a participating interest pro tanto in the said mortgage, and upon a foreclosure thereof and sale of the mortgaged property is entitled to participate in the avails of such sale for a share of the proceeds thereof equally with the said Stillwell, if he recover herein.

"Wherefore, the defendant prays judgment that he have and recover against the said defendant Stillwell upon this his answer. That upon his cross petition he be adjudged to be the equitable assignee and owner of a $ 5,000 interest, with interest thereon, in the first series of notes and the mortgage securing the same. That he have judgment against the said defendant L. D. Alexander for the said sum of $ 5,000, and that upon foreclosure of said mortgage this defendant be paid the said sum out of the sale of said property, if sufficient, and if not his pro tanto share out of the avails of the said sale, and for such other and further relief as to the court may seem proper." (Filed July 21, 1923.)

Stillwell filed a reply and answer, in which he made general denial of the allegations of Young's pleadings, except Young's admissions, and alleged that J. E. Alexander and Young agreed with Stillwell that a second series of notes, as collateral, should be executed and indorsed to Stillwell.

"And thereupon, and in consideration of the said agreement made with the said defendants, J. E. Alexander and William F Young, and in consideration of the execution of said collateral notes, and the indorsement thereof by said William F. Young, this defendant waived the declared default on the mortgage notes set up in his cross petition herein, and did on or about the day of December, 1920, dismiss, without prejudice to a further...