Lamoille County Sav. Bank & Trust Co. v. Belden

• Citation: 98 A. 1002
• Case Date: October 30, 1916
• Court: United States State Supreme Court of Vermont

98 A. 1002

LAMOILLE COUNTY SAV. BANK & TRUST CO.
v.
BELDEN et al.

Supreme Court of Vermont. Lamoille.

Oct. 30, 1916.

98 A. 1003

Appeal in Chancery, Lamoille County; Frank L. Fish, Chancellor.

Petition to foreclose a mortgage by the Lamoille County Savings Bank & Trust Company against Harry W. Belden and others, with answer and cross-bill by defendant Belden. Heard in chambers on pleadings and master's report, and decree for plaintiff, and defendants appeal. Decree affirmed and cause remanded, with directions that it be altered so as to include the dismissal of a cross-bill, and to fix a time for redemption.

The mortgage sought to be foreclosed was executed by C. F. Eddy and his wife, Dora S. Eddy, and delivered to the plaintiff on December 12, 1910; and on the same day it was duly recorded in the land records of the town of Stowe, this state, the town in which the lands covered by the mortgage are situated. The mortgage is conditioned for the payment by the said C. F. Eddy and Dora S. Eddy to the plaintiff bank, its successors and assigns, the sum of $3,000 specified in a promissory note dated December 12, 1910, payable to the order of the bank, $500 on the 15th day of June and of December, respectively, of each year thereafter, with interest, according to the tenor and effect of said note (the condition continuing), "and shall pay said bank all further sums we or either of us now

98 A. 1004

owe it or may become owing it in any way," etc.

The findings of fact show that on December 23, 1912, C. F. Eddy, W. B. Macutchan, and M. C. Lovejoy made and delivered to the plaintiff two other promissory notes for the sum of $1,000 each, and that there was due thereon, August 28, 1915, the sum of $2,275.80; that Macutchan and Lovejoy were accommodation signers, the avails of the notes passing to the sole benefit and use of Eddy, and the same were paid by the bank in the belief that the notes were secured by the mortgage in question; that Macutchan and Lovejoy knew of this mortgage and relied upon it in signing these notes with Eddy; that on September 29, 1913, C. F. Eddy made and delivered to P. D. Pike & Son, a promissory note for $1,000, payable to their order seven months after date, with interest annually, which note was indorsed by the payees to, and became the property of, the plaintiff bank on the 3d day of October, 1913, the avails thereof being paid by the bank to the payees; that there was due on this note, August 28, 1915, $1,118.30; that all the aforementioned notes were past due when these foreclosure proceedings were commenced, and the aggregate amount, due thereon August 28, 1915, was $6,808.41.

It is found that on October 6, 1913, Belden became accommodation indorser for Eddy of two notes to the City Trust Company of Burlington, aggregating $3,000, and for protection from loss or liability thereon, took a mortgage on the same property covered by the plaintiff's mortgage, and on other property called the Smalley place, subject to a mortgage to the Union Savings Bank of Morrisville, for $500, and subject to the mortgage to the plaintiff; that on November 18, 1913, C. F. Eddy sold to Belden the same property described in the plaintiff's mortgage, also the Smalley place, and on the same day Eddy and his wife conveyed the property by warranty deed, in which the premises are warranted free from every incumbrance "except $3,000 mortgage held by the Capitol Trust Co., $3,000 held by Lamoille Co. Sav. Bank & Tr. Co., and $500 held by Union Sav. Bank & Trust Co., all which mortgages said grantee assumes and agrees to pay." It is further found that the consideration given by Belden for this deed was a note for $500, payable to Mrs. C. F. Eddy, which he afterwards paid, and the assumption by him of the payment of certain notes aggregating $3,000, to the City Trust Company of Burlington, and said note for $500 to the Union Savings Bank of Morrisville, and the note for $3,000, described in the plaintiff's mortgage, making a total of $7,000; that on July 16 and 23, and September 4, 1914, Belden offered to pay the plaintiff the two notes signed by Macutchan and Lovejoy as accommodation signers, and the note given by Eddy to P. D. Pike & Son, and by the latter negotiated to the plaintiff bank as stated above, provided that the bank would surrender these notes to him uncanceled; but the bank refused to accept the money with such condition attached, on the ground that the transaction would amount to a sale, not a payment, and that they would not sell the notes.

No answer was filed by the defendant Mt. Mansfield Creamery Association. Defendant Belden filed answer and cross-bill. The plaintiff filed answer to the cross-bill, and replication. The case was heard by a special master.

The decree is:

"That all the notes held by the plaintiff against C. F. Eddy and described in the petition are secured by the mortgage in question. A decree may pass according to this decision. Done," etc., "this 11th day of February, 1916."

From this decree, defendant appealed.

Argued before MUNSON, C. J., and WATSON, HASELTON, POWERS, and TAYLOR, JJ.

M. G. Leary and V. A. Bullard, both of Burlington, for appellants. B. W. Hulburd, of Hyde Park, and J. W. Redmond, of Newport, for appellee.

WATSON, J. It is contended by the appellant that the note given by C. F. Eddy to P. D. Pike & Son (hereinafter called the Pike note), and by them negotiated to the plaintiff bank, is not secured by the mortgage in question, it not being a note given by the mortgagors or either of them to the bank, but a note given to third persons and by the latter negotiated to the bank, basing such contention on the ground that a construction by which the mortgage stood as...