Lassas v. McCarty

• Citation: 47 Or. 474,84 P. 76
• Parties: LASSAS v. McCARTY.
• Decision Date: 30 January 1906
• Court: Supreme Court of Oregon

84 P. 76

47 Or. 474

LASSAS v. McCARTY.

Supreme Court of Oregon

January 30, 1906

Appeal from Circuit Court, Baker County; Robert Eakin, Judge.

Action by George Lassas against Lettie McCarty. From a judgment for defendant, plaintiff appeals. Reversed.

This is a suit by George Lassas against Lettie McCarty to foreclose a mortgage. The complaint states that the defendant, on November 21, 1900, gave to one G.L. Webb her promissory note for the sum of $1,500, payable in one year, with interest thereon at the rate of 8 per cent. per annum, and to secure the payment thereof she at the same time executed to him a mortgage of certain real property in Baker county, which mortgage was duly recorded. Various assignments of the note and mortgage are set out, and it is alleged that on July 2 1901, the plaintiff for a valuable consideration became the owner and holder thereof, and that no part of the debt so secured has ever been paid. The answer admits the making of the note and mortgage, but denies that they were given for any consideration, or that plaintiff is the holder thereof without notice, or that any condition of the mortgage has been broken. As a separate defense facts are stated which show that the execution of the note and mortgage were induced by the fraudulent representations of the original mortgagee and that the several pretended assignments were without consideration and with notice of such fraud. For a further defense it is alleged that at the time the note and mortgage were given the defendant's mind was weak and she was easily imposed upon in business and financial matters, and that by reason of such incapacity, superinduced by the fraudulent representations of Webb and his agents, she was imposed upon and induced to give the note and mortgage without any consideration therefor. The allegations of new matter in the answer having been denied in the reply, the cause was referred, and from the testimony taken the court found that by reason of the defendant's mental condition and of the fraud practiced upon her the note and mortgage were void, and, having rendered a decree dismissing the suit the plaintiff appeals.

A.B Winfree, for appellant.

C.A. Moore, for respondent.

MOORE J. (after stating the facts).

In support of the conclusion reached by the trial court, it is contended by defendant's counsel that as the pretended assignments of the mortgage were not evidenced by written instruments, signed, sealed, witnessed, acknowledged, delivered, and recorded, the plaintiff failed to show a right to maintain the suit, and hence the decree should be affirmed. It will be remembered that the answer denies that the note and mortgage were assigned to plaintiff. The testimony shows that the note was assigned in blank by Webb, the payee, but that the persons who severally owned the mortgage as an incident of the note did not attempt to transfer it with the formalities required to convey real property. It also appears that a person who at one time held the note as collateral security did not assign it to the owner thereof when the principal debt was paid, but surrendered it to the owner, from whom it passed in due course of business to the plaintiff. Whether or not the statute, providing that mortgages may be assigned by a written instrument, executed and acknowledged with the same formalities as prescribed in deeds and mortgages of real estate and recorded as directed (B. & C. Comp. §§ 5362, 5363), is controlling, we do not deem necessary to a decision herein; for if the mortgage was not transferred according to the established mode, the proper manner to present the question was by a plea in abatement (1 Chitty, Pl. *446; Pomeroy, Code Rem. [ 3d Ed.] § 697), but such defense having been joined with a plea to the merits, which was in bar of the suit, the special defense now insisted upon was waived ( Winter v. Norton, 1 Or. 43; Hopwood v. Patterson, 2 Or. 49; Murray v. Murray, 6 Or. 26; Chamberlain v. Hibbard, 26 Or. 428, 38 P. 437; Elder v. Rourke, 27 Or. 363, 41 P. 6; Fiore v. Ladd, 29 Or. 528, 46 P. 144).

Considering the case on its merits, the defendant, as a witness in her own behalf, testified that in November, 1900, she was the owner of a farm in Baker county which was subject to a mortgage of $3,500, and desiring to sell the land, she listed it for that purpose with one James Cole, a real estate agent, who introduced G.L. Webb and M.R. Hansen to her, saying he had secured purchasers for her ranch; that Cole and Hansen went with her to examine the land, and after returning the latter told her that Webb would buy the premises and pay her therefor $3,000 in cash, assume the payment of the mortgage of $3,500, and transfer to her the exclusive right to manufacture and sell a motor pump in certain counties in Utah, and that Webb also assented to and reiterated such offer; that she executed the note and mortgage in question in pursuance of an agreement on the part of Webb and Hansen that if they did not buy her farm they would at any time within six months return the note and mortgage, if she was dissatisfied with the transfer of the right to sell such pump in the counties named. The right in question was evidently valued at $1,400, for the further sum of $100 in cash was paid her as the consideration for the note and mortgage. This latter sum was advanced to enable her son to secure a model of the pump and to canvass the territory specified to sell the right assigned. She further testified that about three days after the note and mortgage were given Webb told her he had no money with which to buy her farm, whereupon she demanded a return of the instruments so executed, telling him she was dissatisfied with the transfer, but he asserted that he could not comply with her request, claiming that he had sold the note and mortgage to Hansen. On cross-examination she said: "I knew I was signing a mortgage, but I didn't know I was executing an ironclad note." She further said: "I don't remember ever signing a note." She also testified that she tendered to Webb the sum of $100 which she had received, but, as he refused to accept it, she had deposited that sum in a bank for him, where it had since remained. This witness on recross-examination testified as follows: "Q. You did not understand the effect of those papers you say? A. No, sir. Q. You didn't even know what you were signing, did you? A. I thought it would be a part of the payment upon the ranch. Q. And was it to be a part payment upon the ranch? A. Yes, if they would pay me three thousand in cash and assume the first mortgage as they promised, and that would bring it to the price I asked for it. Q. And upon that understanding by you, you signed the note and mortgage, thinking it was part of the payment? A. Yes, sir; I did." The testimony further shows that no patent had been issued protecting the pump, which Webb claimed to have invented. He promised the defendant, however, that he would secure a patent therefor; but, so far as can be ascertained from the testimony, he failed in this respect. The testimony also disclosed that about 1890 the defendant's husband and a son were shot and killed at the same time.

Monroe Masters, appearing as defendant's witness, having testified that he had been acquainted with the defendant 30 years, her counsel, referring to the consequence of such deaths upon her, inquired: "What effect, if any, did that seem to have upon Mrs. McCarty's mind?" And he answered: "Well, it had a pretty bad effect upon her mind; she has not been the same woman that she was before. Q. What is the condition of her mind at this time with reference to the transaction of business, and what has it been since Mr. McCarty's death? A. Well, she has not been able to attend to her own business affairs. She has had to have other people do it. Q. During this time has her mind been strong or weak? A. It has been weak. Q. State whether or not she is susceptible to undue influences in her business affairs. A. Yes, sir; she is, and has been during all of this time. Q. Are you able to state some instances of her susceptibility to such influence? A. Well, in a business proposition she will ask you one thing, and then go and ask somebody else the same question, you know, and the last party always generally has the influence. Well, maybe just...