Island Pond Nat. Bank v. Lacroix

• Decision Date: 04 February 1932
• Citation: 158 A. 684
• Parties: ISLAND POND NAT. BANK v. LACROIX et al.
• Court: Vermont Supreme Court

158 A. 684

ISLAND POND NAT. BANK

v. LACROIX et al.

Supreme Court of Vermont Orleans.

Feb. 4, 1932.

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Appeal in Chancery; Julius A. Willcox, Chancellor.

Proceeding to foreclose a mortgage by the Island Pond National Bank against Alfred Lacroix, Frank Gray, and Solon Gray, administrator. Decree in favor of plaintiff against all defendants, and defendant Prank Gray appeals.

Decree for plaintiff against defendant Frank Gray reversed, and cause remanded, with mandate.

Argued before POWERS, C. J., and SLACK, MOULTON, and THOMPSON, JJ.

Lee E. Emerson, of Barton, for appellant.

Oliver H. Cameron, of Island Pond, and Searies, Graves & Waterman, of St. Johnsbury, for appellee.

THOMPSON, J.

The plaintiff is the assignee of a mortgage executed by the defendant Alfred Lacroix on July 7, 1915, to one Oscar N. Nadeau to secure the payment of his promissory note of that date for $900, payable to said Nadeau or order, in yearly payments of $50 or more, with interest annually.

This is a proceeding to foreclose the mortgage. The bill was taken as confessed as to defendants Lacroix and Solon Gray, administrator. Defendant Frank Gray answered to the bill. The substance of his answer is that he has a title which is superior in equity to that of the plaintiff. There was a hearing before the chancellor and a finding of facts was filed. Defendant Frank Gray excepted to various findings, and a bill of exceptions was allowed and filed. There was a decree against all of the defendants. Defendant Frank Gray, hereinafter called the defendant, was allowed and took an appeal from the decree.

The plaintiff claims that the defendant's bill of exceptions is not before this court and cannot be considered a part of the appeal because it was not filed within twenty days from the date of the decree, that being the time within which an appeal from a final decree may be filed. G. L. 1561. G. L. 1511 provides that exceptions taken on the trial of controverted questions of fact before a chancellor shall be available on appeal in the same manner as in county court causes tried by the court. This question was before this court in Essex Storage Elec. Co. v. Victory Lumber Co., 93 Vt. 437, 445, 108 A. 426, and it was there held that, under the provisions of G. L. 1511, construed with the provisions of G. L. 1609, a party excepting to the findings of a chancellor has thirty days from the day on which a final decree is filed in which to file his exceptions. Gray v. Brattleboro Trust Co., 97 Vt. 270, 273, 122 A. 670; Fire District, etc., v. Graniteville Water Co., 102 Vt. 511, 150 A. 459. Also, see, United States v. Cano, 100 Vt. 111, 135 A. 1. It appears from the record that the defendant's exceptions were seasonably filed, so they are properly before us for consideration.

It appears from the finding of facts and exhibits referred to that on July 7, 1915, the defendant, by his warranty deed, conveyed a farm of about 174 acres in the town of Morgan to said Alfred Lacroix; and on the same day said Lacroix executed and delivered a note for $4,800 and a mortgage of said premises securing said note to the defendant. Said note was given for the purchase price of the premises, and included a mortgage for $1,400 to the plaintiff, which the defendant assumed and agreed to pay. There is a notation on the mortgage from Lacroix to the defendant that said mortgage of $1,400 had been paid by the defendant. On the same day, Lacroix also gave a note for $350, secured by a second mortgage of the same premises to Charles J. Oben, and a note for $900, secured by a third mortgage of the same premises, to said Oscar N. Nadeau. This third mortgage states that it is given to secure the payment of a part of the purchase price of said premises, and, also, that the premises "are free from every encumbrance except a mortgage to Frank Gray, this day given for $4800.00, and a mortgage to Charles J. Oben, also this day given for $350.00."

On November 25, 1925, Lacroix and his wife executed and delivered to the defendant their note, dated June 1, 1925, for $4,400, the amount then due on the note for $4,800, and a mortgage securing the same on the identical premises covered by the mortgage securing the note for $4,800, and it was recorded in the land records of Morgan on November 27, 1925. This mortgage describes the premises as "free from every encumbrance." On the same day the defendant discharged his mortgage securing the note for $4,800, and on November 27, 1925, the discharge was recorded on the same page on which the mortgage was recorded.

The chancellor finds concerning this transaction as follows: "The defendant Frank Gray testified that he was induced to discharge his $4800. mortgage and surrender to Lacroix the $4800. note and accept the $4400. mortgage and note by statements made to him by Lacroix that the $900. Nadeau mortgage had been paid and discharged, and that he, Lacroix, desired to give a new note and mortgage because of the fact of the change of title from himself alone to that of his wife alone and because of the fact that the $4800. note had become mutilated and written all over, and the defendant Frank Gray admitted that he did not inquire further or examine the records in any way to determine the truthfulness of the statement of said Lacroix. Defendant's Ex. C (the $4400. mortgage) shows that the property described therein was conveyed by said Lacroix and wife as free from every encumbrance. The fact is, said Gray relied upon, and was induced to accept the new note and mortgage and discharge the old mortgage and surrender the old note upon such statements and representations made to him by said Lacroix."

The defendant excepted to these findings for the failure of the chancellor to find that the defendant discharged his first mortgage and note because he was induced to do so by the fraud practiced upon him by Lacroix. There is no error here, as the only conclusion to be drawn from these findings is that the act of the defendant in discharging his mortgage and note was induced by the fraud of Lacroix. Roberts v. Hughes, 86 Vt. 76, 79, 83 A. 807; Ste. Marie v. Wells, 93 Vt. 398, 108 A. 270. It is true that the chancellor says that the defendant admitted that he did not inquire further or examine the records in any way to determine the truthfulness of the statement of Lacroix; but the defendant was not required to make any inquiry nor to examine the records, as he was entitled to rely upon the statement made to him by Lacroix. Manley v. Johnson, 85 Vt. 262, 265, 81 A. 919; Oben v. Adams, 89 Vt. 158, 162, 94 A. 506; Maidment v. Frazier, 90 Vt. 520, 527, 98 A. 987; Ste. Marie v. Wells, supra.

Paragraphs 6 and 8 of the findings of facts, to which the defendant took several exceptions, are as follows:

"6. The history of the $900. Nadeau note as disclosed by the evidence is as follows: Within a short time after Nadeau received the $900. mortgage and note he sold and delivered the same to one A. C. Fellows. Just when did not appear. Fellows lost both note and mortgage, but the mortgage had been recorded before he lost the same, as shown by the certificate of the town clerk on Plaintiff's Ex. 1, and he obtained a certified copy of the record of said mortgage on the 19th day of June, 1926, and on June 25th, 1926, procured said Nadeau to reassign said mortgage to him, as shown by Plaintiff's Exhibit 1, and said Fellows also obtained a new note from said Lacroix, as shown by Plaintiff's Ex. 2. The evidence also discloses that Plaintiff's Ex. 2, the new $900. Nadeau note, was never seen or indorsed by Nadeau until the day the hearings on this case began at St. Johnsbury, when, at the request of one of the solicitors of the plaintiff bank, Nadeau indorsed said note without recourse, as shown by Plaintiff's Ex. 2. While Fellows was the owner of the said new $900. mortgage note, he offered the same to the defendant Gray, but the defendant Gray did not desire to purchase said note and mortgage. Just when this offer was made the evidence does not disclose, but thereafter on July 24, 1926, said Fellows sold and assigned the $900. Nadeau mortgage and note to the plaintiff in this case, as shown by said assignment on Plaintiff's Ex. 1. The evidence does not disclose whether Fellows had any information from the defendant Gray that he had obtained from Lacroix and wife the $4400. mortgage and note. The evidence does show that the plaintiff bank learned from Fellows that the $4800. mortgage and the $350. Oben mortgage had been discharged of record and that said plaintiff bank verified this information by an examination of the records in the town of Morgan, before it took the $900. Nadeau note and mortgage from Fellows, and the case does not disclose that the plaintiff bank, when it took said Nadeau note from said Fellows, knew that any indebtedness from Lacroix to Gray had not in fact been paid or that defendant Gray then held the $4400. mortgage and note. On the contrary the evidence disclosed that the first the plaintiff bank knew that the defendant Frank Gray claimed any interest in the property in question was when he caused a petition for foreclosure to be served upon the plaintiff bank, December 11, 1926."

"8. It is found that on July 24, 1926, the plaintiff bank loaned A. C. Fellows $1,434.41 upon the demand note of the said Fellows (Plff.'s Ex. 7) which loan was secured only by the Lacroix-Nadeau note and mortgage for $900, and which was taken by said bank as collateral. This mortgage the plaintiff bank is now seeking to foreclose and it is found that the plaintiff bank, at the time of said loan to Fellows, took an assignment from said Fellows of said Lacroix-Nadeau mortgage and received said $900 note as security for said loan to Fellows in good faith, and gave full value therefor, namely $1,434.41, as shown by Plaintiff's Exs. 5 and 6, and without any knowledge that the defendant Frank Gray had...