Koch v. Hinkle

• Citation: 35 Pa.Super. 421
• Decision Date: 28 February 1908
• Docket Number: 231-1906
• Parties: Koch v. Hinkle, Appellant
• Court: Superior Court of Pennsylvania

35 Pa.Super. 421

Koch v. Hinkle, Appellant

No. 231-1906

Superior Court of Pennsylvania

February 28, 1908

Argued November 11, 1907 [Syllabus Matter] [Syllabus Matter] [Syllabus Matter] [Syllabus Matter] [Syllabus Matter] [Syllabus Matter] [Syllabus Matter] [Syllabus Matter]

Appeal by defendant, from judgment of C.P. Berks Co.-1902, No. 44, on verdict for plaintiff in the case of Arlean Koch v. John A. Hinkle.

Assumpsit by an assignee against an assignor of a mortgage to recover on an implied warranty of title. Before Endlich, J.

The court charged as follows:

Early in the month of August, 1897, the plaintiff in this case, Arlean Koch, became the owner of a certain mortgage for $ 400 by virtue of an assignment executed by the former owner of that mortgage, the defendant in this case, in which assignment the plaintiff's name appears as the assignee. Subsequently she undertook to collect this mortgage from the parties who had given it; she brought a suit on the mortgage against those parties, but she failed to recover on it on the ground that it had been paid before the date of the assignment that she held. Now she turns around and sues the defendant, the assignor of the mortgage, and asks you to give her a verdict against him for the sum of $ 400 which the mortgage calls for, together with interest and the court costs amounting to about $ 30.00 of the unsuccessful action that she brought against the mortgagors.

You have heard, gentlemen, that when this assignment was executed by the defendant and passed out of his hands the name of the assignee was not in the assignment. In that particular the assignment was in blank.

[When the defendant delivered the assignment in blank to Griesemer he made Griesemer his agent for the purpose of inserting the assignee's name and delivering to that assignee the assignment and the mortgage and bonds assigned. Thereupon necessarily the contract became one between the defendant and the plaintiff.]

On the other hand, it is equally true that the insertion of the plaintiff's name in this assignment and her acceptance of the assignment require her to be treated as in every sense a party to the contract with the defendant. She is therefore to be held affected with all the terms and stipulations in the assignment according to their true meaning and effect.

One who assigns a mortgage to another ordinarily warrants that it is a valid obligation for the amount appearing on its face to be due thereon unless he explains the contrary to the assignee, and it is upon the theory that that warranty is a salient part of this agreement that this action against the defendant is brought. You have heard that there is about this assignment peculiarity, viz.: that in its body it is declared to be made " without recourse to the assignors." You have heard that the defendant asserts that the insertion of this stipulation in the assignment relieves him of all liability, even though it turned out that the mortgage had been paid and was worthless. You have also heard that the plaintiff claims that this language in the assignment can have no such effect. Now what is the law upon that subject? Possibly you know that when added to an indorsement of negotiable paper, a promissory note, the words " without recourse" have a definite and well-understood meaning, viz.: that the indorser does not guarantee the collection of the paper as otherwise he would be held to do. In an assignment of a mortgage, however, no such promise is involved. Hence in such an instrument the use of the phrase " without recourse" has no such definite legal meaning. The meaning of a phrase or stipulation of that kind inserted in an assignment of a mortgage must depend upon the intention with which the language was used, the sense in which that language was understood by the parties. That meaning, that sense, is a question of fact to be gathered by the jury from all the circumstances surrounding the transaction and bearing upon the meaning of the language as used in the instrument. You will remember what the circumstances were under which this assignment was made. I think there are some undisputed facts about that which I may safely detail to you, but I don't mean in doing so to say that that is all that the jury may fairly consider as bearing upon the subject. You recall that the defendant had, through his counsel, if I remember rightly, declared a desire that this mortgage should be repaid; that notice to that effect had been given to Griesemer, who had originally brought the application for this loan to the office of the defendant's counsel, and who in the meanwhile if I remember the testimony rightly, had paid them the interest as it came due with more or less regularity. Then you will recall that it is testified -- I know of no contradiction of that -- that Griesemer suggested that this mortgage might be assigned, without, however, disclosing to whom, and it seems that the defendant agreed to assigning this mortgage. Then later on after the assignment had been drawn, Griesemer brought a check for the money, if I recall rightly, to the office of the defendant's counsel and received in exchange for it the papers after having been interrogated, if I remember rightly, as to who the assignee was, and stating that he didn't know what he was going to do about it, or something of that kind, and requesting that the paper should be given to him with that matter left blank. In the meanwhile the evidence is that Griesemer had received from the mortgagors the amount of $ 400, which is the sum for which this mortgage had been given. I don't know whether there is any dispute about that; the jury will remember it, and if so, it will determine what the true fact is. The allegation on the part of the defendant is that he was entirely ignorant of any such transaction, of any payment having ever been made of the principal of this mortgage. I think that the testimony on the part of the defendant's attorneys in this matter is that there had been some occasional delays about the payment of interest, and that for that reason they were anxious to be relieved of this investment. Now, looking at all of these matters and at anything else that you may see in the evidence which suggests to you a proper bearing upon this question, and considering also the question whether Griesemer was the defendant's agent or somebody else's agent in the transaction about this mortgage, what do these facts show to you as to the meaning in which this language " the assignment is without recourse to the assignors" was used and understood by the parties at the time? If all that was intended and understood was that Hinkle meant that he would not be responsible if the property turned out worth less than the mortgage, then that stipulation has no bearing on this case whatever. If what the defendant was after and what was understood was that he wanted to get rid of all responsibility in connection with the mortgage, every possible liability in respect to it, and if, under the circumstances, that was the meaning the phrase fairly conveyed to his assignee, then you notice that by the very terms of this assignment he would be relieved from the liability which in this case is sought to be fixed upon him, and in that event your verdict would be for the defendant.

If, however, you do not find that that is the meaning and effect of the clause as it is to be understood under the circumstances of the case, then the important question that you will have to pass upon is, was this mortgage paid before the date of the assignment or was it not? That question has been, as the evidence in this case shows, tried once before, and the record of the case in which it was tried is here and is part of the evidence in this case. The plaintiff claims that that trial settled the question once for all so far as this defendant is concerned, and that the defendant here is bound by the verdict on that trial which declared that the mortgage had been paid before the assignment. The defense, however, says " No, this defendant is not bound by the record, though we admit that that record is prima facie evidence in this case, yet we contend that it is overcome by other evidence and testimony that we have submitted."

Now gentlemen, the law on that question as applicable to the present case is this: The record of the former suit in which that question was tried and the fact that that suit was determined by a verdict which found that the mortgage was paid are at least prima facie evidence of payment of the mortgage against this defendant, if he had knowledge and notice of the suit -- and that in this case is not denied. But the effect of the record may be very much more than that. If it appears not only that the defendant had knowledge of the pendency of the other action and of the nature of the defense alleged, but that he either actively participated in the management of the suit or of the trial, or had a timely invitation or requirement from the plaintiff to take part in it, or that some notice was given to him by the plaintiff in such manner and under such circumstances as would indicate a desire or willingness on her part that he should assume at least a share of the burden of the management of that suit or trial and would fairly enable him to do so, then the verdict in the other case would be not only prima facie evidence against the defendant, but would be conclusive against him, and would settle the question here in this case against him. You understand that the plaintiff had a perfect right to manage her suit on that mortgage alone without regard to the defendant, the assignor of the mortgage; and it would not be easy to see just how the defendant, without an invitation from the assignee, suing in her own name, could make...