Kernohan v. Manss
| Decision Date | 11 June 1895 |
| Citation | 41 N.E. 258,53 Ohio St. 118 |
| Parties | KERNOHAN v. MANSS. |
| Court | Ohio Supreme Court |
Error to circuit court, Hamilton county.
The action below was a proceeding in the probate court of Hamilton county for the sale of lands of Gano Martin deceased, to pay debts, in which the plaintiff in error and the defendants in error were cross petitioners, each claiming to hold a lien prior to that of the other upon the lands in question. That court found in favor of John and Louis Manss from which Kernohan appealed. On error, the circuit court affirmed the judgment of the court of common pleas, and Kernohan brings error. Affirmed.
On the trial in the common pleas, the following undisputed facts appeared, viz.:
On January 1, 1879, Gano Martin, the then owner of the real estate sold in this action, being in feeble health, and desiring to make some sort of settlement of his estate before he died, providing as well for his children and widow as for certain creditors (amongst whom was one William R McGill, to whom he was then indebted in the amount of $7,602.72), executed a mortgage deed covering his said real estate. The consideration named was $16,113.69. The grantees were said McGill and seven others. The mortgage was conditioned to secure the payment of eight promissory notes, each dated January 1, 1879, payable five years after date, with 8 per cent. interest, payable annually, except one on which no interest was payable until after Gano Martin's death. The mortgage deed was then delivered to McGill, with the consent of the other mortgagees, he (McGill) stating he would put it in his safe for safekeeping. It was left for record, January 20, 1879, with the recorder of Hamilton county, and duly recorded, and thereafter without objection by the other mortgagees, remained in the possession of said McGill until delivered to said Kernohan, as hereinafter stated. The note for $7,602.72 was also delivered to McGill at the same time, and the notes to order of three other mortgagees were also delivered, unindorsed, to McGill, at the same time, for safe-keeping. Some time afterwards one of the mortgagees (George Martin) sold his note to William R. McGill, and, so far as appears, McGill never owned, or had any interest in, any of the other notes. The note for $7,602.72 remained in the possession of McGill until delivered to John and Louis Manss, as hereinafter stated.
On the 8th day of February, 1879, being prior to the maturity of the notes secured by said mortgage, Robert Kernohan made a loan of $11,000 to McGill, who, among other collateral, transferred and assigned to Kernohan the said mortgage, and what purported to be all the notes secured thereby. At the time of the transfer, McGill was the owner and holder of the genuine note for $7,602.72, secured by said mortgage. This transfer was made in the following manner: Before the payment of the $11,000, McGill produced to Kernohan and his attorney the original mortgage deed from Gano Martin, and the following assignment was indorsed thereon:
The assignment was then and there signed by William R. McGill. At the same time, eight certain papers, answering in form to the eight notes described in the mortgage, including one for $7,602.72, were produced by said McGill as the original genuine notes secured by said mortgage. The said papers were, at the time they were produced, indorsed in blank with the name of the payees thereof, except that for $7,602.72, which was indorsed as hereafter stated. At the same time he signed the said assignment on the back of the mortgage, McGill indorsed each of said papers (including that for $7,602.72 drawn to his own order, which hitherto had been unindorsed) with his own signature, and the words ‘ protest waived,’ as appears thereon; and thereupon the said papers and mortgage were delivered to Kernohan, with the other collateral, and said sum of $11,000 paid. The mortgage, so assigned and delivered, was the genuine mortgage deed executed by Gano Martin and wife; but the papers purporting to be the notes secured thereby, and so delivered and indorsed by said McGill, are each and every one of them forgeries (except the indorsements of McGill thereon), though they were delivered to Kernohan by McGill as genuine. Kernohan received the mortgage and what purported to be the real notes, as above, duly indorsed and delivered to him, in good faith and for value, supposing said notes to be genuine, and they remained in his possession until after the death of McGill, which took place July 2, 1884, and until this action was begun. Kernohan did not know, or have any cause to know, of such forgery, and that said notes were not genuine, until after the death of McGill. Interest on said loan of $11,000 was paid by McGill up to his death. The amounts realized from the other collateral, together with any amount that has been or may be ordered paid to him in this case, will not discharge said debt of $11,000. The estate of said Gano Martin is insolvent. The assignment on the mortgage was not left for record or entered, until April 25, 1884.
On or about April 1, 1879, being after the transaction with Kernohan, but prior to the maturity of said note for $7,602.72, the defendants John and Louis Manss loaned William R. McGill the sum of $4,000 taking his note, dated May 8 1879, for same, McGill at that time transferring to them, by indorsement and delivery, as collateral for said loan, the original genuine note for $7,602.72 made by Gano Martin, which, notwithstanding his transaction with Kernohan, he had retained possession of. John and Louis Manss did not learn, until a week or 10 days after McGill's death, of any other note purporting to be of the amount of the note so indorsed and delivered as collateral. At the time of the transaction between McGill and the Manss brothers, McGill stated that the note was secured by a mortgage; that it was given to secure other notes, to other payees, and that he, by and with the consent of all the other mortgagees, was holding the mortgage, for himself and as custodian for the other holders of notes secured by the mortgage; and also told them that he thought the mortgage notes safe. Before loaning the money, they had an examination made of the records, which showed that the mortgage was as represented, and that there was no other mortgage against the property. They did not ask McGill to let them see the mortgage deed, nor did they at any time see it, but relied upon McGill's statement that he had it. They, before and after the maturity of the note, made other advances to McGill, to the extent of $11,300, additional to said sum of $4,000, and also received other...
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