Leahy v. Haworth

• Decision Date: 07 November 1905
• Docket Number: 2,168.
• Parties: LEAHY et al, v. HAWORTH.
• Court: U.S. Court of Appeals — Eighth Circuit

141 F. 850

LEAHY et al, v. HAWORTH.

No. 2,168.

United States Court of Appeals, Eighth Circuit.

November 7, 1905

On July 12, 1887, the appellants borrowed $3,000 from a Massachusetts corporation, called the Dakota Mortgage Loan Corporation, and executed their note or bond for that sum payable to the order of the corporation, maturing July 1, 1892. This note was negotiable on its face. To secure its due payment, appellants hereinafter called defendants, executed and delivered to the corporation, a mortgage conveying real estate owned by them and situated in the state of Nebraska. Soon after receiving the note the corporation sold it, together with the mortgage to John Stuart & Co., brokers, of Manchester, England, and placed on the back of the note the following indorsements (1) 'For value received the Dakota Mortgage Loan Corporation hereby assigns and transfers the within note and coupons, together with all its right, title and interest under the real estate mortgage securing the same, without recourse, to . . . . The Dakota Mortgage Loan Corporation, by Allison Z. Mason, Treasurer.'

(2) 'The Dakota Mortgage Loan Corporation in consideration of value received, hereby guarantees the payment of each coupon at maturity and collection of the within bond; provided however, that the said corporation reserves the right to repurchase this bond at any time, at its face and accrued interest to the time of repurchase, and a refusal to legally convey the bonds and mortgage deed shall release said corporation from further liability. In witness whereof the Dakota Mortgage Loan Corporation has signed and delivered these presents by its treasurer, this 13th day of August 1887. By Allison Z. Mason, Treas.'

Subsequently, and before maturity of the note, John Stuart & Co. sold the note and mortgage for value to Walter Haworth, a citizen of Great Britain and resident of Manchester, England, who died before the maturity of the note. Jesse Haworth and Isaac H. Morris became executors of his will by appointment of an English tribunal. Morris died, and Jesse Haworth, the appellee, was left the sole surviving executor under the English appointment. Prior to the maturity of the note the name of the Dakota Mortgage Loan Corporation was by an act of the Legislature of Massachusetts changed to Globe Investment Company. Shortly after the maturity of the note the defendants Mary, Richard, and Joseph Leahy borrowed from their codefendant, William Eugene Hayward, $3,000, executing to him as security therefor a mortgage on the same premises which they had before conveyed to secure the loan to the Dakota Mortgage Loan Corporation, and with this money paid the Globe Investment Company the entire amount of principal and interest then due and owing on the first-mentioned loan. At the time of making this payment defendants had no actual knowledge that the Globe Investment Company was not the owner of the note and mortgage. The Globe Investment Company, instead of remitting the money to England and actually paying the note in question, appropriated the same to its own use and continued to report to John Stuart & Co. that the debt remained unpaid and that the borrowers were paying interest semiannually. The Globe Company for some time remitted to John Stuart & Co., the semiannual installments of interest as they were supposed to accrue. These remittances were received by the last-named company, for itself or its transferee, with no knowledge of the payment made to the Globe Investment Company. Subsequently the Globe Company failed, the remittances to England ceased, and shortly thereafter, on September 23, 1896, this suit, a bill in equity to foreclose the mortgage, was instituted in the Circuit Court for the District of Nebraska, by Jesse Haworth and Isaac H. Morris, the English executors, not in their capacity as executors, but as owners and holders of the note and mortgage in question. Subsequently, and after the death of Isaac H. Morris, Jesse Haworth, hereinafter called complainant, filed an amended bill disclosing the death of his co-complainant, but still seeking to recover in his individual capacity. The suit came on for trial and after an intimation by the trial judge that complainant could not maintain the action, he took leave to file an amended bill. This last amended bill was filed June 28, 1902. It was a suit to foreclose the mortgage first mentioned, given to secure the note for $3,000 held by Walter Haworth at the time of his death. It differs in no respect from the former bills, except that the complainant styles himself 'sole executor of estate of Walter Haworth, deceased. ' He sets forth his own and Isaac H. Morris' appointment as executors of the estate of Walter Haworth in England, their due qualification, the death of Isaac H. Morris, and his sole survivorship in the trust. He further alleges that afterwards he applied to the probate court in Harlan county, in the state of Nebraska, having jurisdiction over such matters, and was on September 20, 1902, duly appointed executor of the last will and testament of Walter Haworth, deceased; that he still is the acting and qualified sole executor of such estate. Issues were properly joined and on the trial a decree of foreclosure was rendered. To reverse this decree an appeal was duly prosecuted to this court. There are 14 assignments of error, but counsel for defendants in their brief reduce them, for the purpose of our consideration, to the following 3: '(1) That the court erred in assuming that the complainant had qualified as executor under the laws of Nebraska and had thereby qualified himself to sue in his representative capacity. (2) That the court erred in holding that, although the proceedings in the probate court in Nebraska were not commenced until more than 10 years after the maturity of the debt, still that those proceedings might relate back to the date of the filing of the last amended bill, not only for the purpose of qualifying the plaintiff to sue, but also for the purpose of bringing the suit within the period of the statute of limitations. (3) That the court erred in holding that the assignment placed upon the back of the note had the same legal effect as an indorsement.'

T. J. Mahoney (J. A. C. Kennedy, on the brief), for appellant.

C. C. Flansburg (R. O. Williams, on the brief), for appellee.

ADAMS Circuit Judge, after stating the case as above, .

The first and second assignments of error arise from facts so interwoven that they may well be considered together. By the statutes of Nebraska in force at the time the transactions now under consideration were had the statute of limitations barred complainants' right to foreclose the mortgage in question in 10 years after the maturity of the note. Section 5596, Comp.St.Neb. 1901. The note was executed in 1887, payable July 1, 1892. On June 30, 1902, therefore, the right to foreclose the mortgage given to secure the payment of the note was barred. The suit instituted in 1896 by the English executors in their individual capacity was on the theory that, inasmuch as Walter Haworth dies before the note matured, he having at the time of his death no cause of action against the defendants, no such cause of action descended to or was vested in his executors; that what was vested in them was the legal title to all chattels of the testator in trust for the purpose of administration under the law; and that as such legal owners they might, in their own names, sue to recover the same or to enforce any right, like that of foreclosure, incidental to the ownership of the chattels. This seems to have been a recognized theory of the common law. See Griffith v. Frazier, 8 Cranch, 9, 3 L.Ed. 471; Kane v. Paul, 14 Et. 33, 10 .Ed. 311; Giddings' Executors v. Green (C.C.) 48 F. 489, and cases cited. But the learned trial judge ruled that this common-law right was superseded by sections 5618 and 5621 of the Compiled Statutes of Nebraska of 1901 relating to civil actions. He made this ruling on June 13, 1902, and gave complainant 15 days within which to amend his bill. Complainant, instead of standing on his right to sue in his individual capacity, acquiesced in the ruling and availed himself of the leave to amend, and on June 28, 1902, two days before the statute of limitations had run, filed his last amended bill. In this he made substantially the same averments as were made in the prior original and amended bills concerning the execution of the note and mortgage and the breach of the condition of the mortgage and further made allegations showing the original appointment in Great Britain of himself and Isaac H. Morris, the death of Morris, and that he afterwards, on September 20, 1902, was duly appointed executor by the probate court of Harlan county, in Nebraska.

In this last-mentioned bill Haworth remained complainant as before, but in a new capacity; then as an individual, now as sole executor of the estate of Walter Haworth, deceased. The cause of action remained as it was from the beginning, a breach of condition in the mortgage, entitling complainant to foreclose the same, and the action remained the same as at the beginning, an action to foreclose the mortgage given to secure payment of a note for $3,000 held at all times by himself. Such being the case, the amendment, as we have heretofore held, was permissible practice, and related back to the commencement of the suit. McDonald v. State of Nebraska, 41 C.C.A. 278, 101 F. 171, and cases cited. See, also, Herron v. Cole, 25 Neb. 692, 41 N.W. 765, and Hines v. Rutherford, 67 Ga. 606.

The next question for consideration is whether the filing of the last amended bill by complainant without having secured his appointment as executor in Nebraska until after the filing thereof is fatal to his right...