Marling v. Jones

• Decision Date: 16 February 1909
• Citation: 119 N.W. 931,138 Wis. 82
• Parties: MARLING v. JONES ET AL.
• Court: Wisconsin Supreme Court

138 Wis. 82

119 N.W. 931

MARLING

v.JONES ET AL.

Supreme Court of Wisconsin.

Feb. 16, 1909.

Appeal from Circuit Court, Milwaukee County; J. C. Ludwig, Judge.

Action by Celia Ellis Marling against Everett H. Jones and another to foreclose a mortgage. From a judgment dismissing the complaint, plaintiff appeals. Modified and affirmed.

Among other references upon the part of the appellant were the following: Cooper v. Jackson, 4 Wis. 537;Prutsman v. Baker, 30 Wis. 644, 11 Am. Rep. 592; Wiltsie, Mortgage Foreclosure, § 395; Reichert v. Neuser, 93 Wis. 513, 67 N. W. 939;Cleveland v. Southart et al., 25 Wis. 479; 3 Pom. Eq. Jur. § 1205; Winkelman v. Brickert, 102 Wis. 50, 78 N. W. 164;Loizeaux v. Fremder, 123 Wis. 193, 101 N. W. 423;Marling v. Nommensen, 127 Wis. 363, 106 N. W. 844, 5 L. R. A. (N. S.) 412, 115 Am. St. Rep. 1017;Nix v. Wiswell, 84 Wis. 334, 54 N. W. 620.

Among other references upon the part of the respondents were the following: Section 2241, St. 1898; 1 Am. & Eng. Ency. Law (2d Ed.) p. 364; Hodge v. Wallace, 129 Wis. 84, 108 N. W. 212, 116 Am. St. Rep. 938; sections 1676-22, 1675-54, Sanborn's St. Supp. 1906; Butler v. Bank of Mazeppa, 94 Wis. 351, 68 N. W. 998;Griswold v. Nichols, 117 Wis. 267, 94 N. W. 33;Kellogg v. Fancher, 23 Wis. 21, 99 Am. Dec. 96;Grand Rapids Bank v. Ford, 143 Mich. 402, 107 N. W. 76, 114 Am. St. Rep. 668;Bautz v. Adams, 131 Wis. 152, 111 N. W. 69, 120 Am. St. Rep. 1030;Bennett v. Keehn, 67 Wis. 154, 29 N. W. 207, 30 N. W. 112;Remington v. Dental, etc., Co., 101 Wis. 307, 77 N. W. 178; Jones on Mortgages, § 859; Croft v. Bunster, 9 Wis. 503.Goff, Hayes, & Hannan, for appellant.

Charles E. Estabrook and M. H. Brand (Frank T. Boesel, of counsel), for respondents.

TIMLIN, J.

The findings establish that on September 21, 1898, Everett H. Jones executed his promissory note for $2,000, payable two years after date to the order of Henry Herman, and bearing interest, and at the same time, and as security for the payment of the note, executed a mortgage to Henry Herman in due form, upon lots 11, 12, 13, 14, 15, 16, 17, 18, and 19 in block No. 1, Lindsay's subdivision in the seventeenth ward of the city of Milwaukee, which mortgage was recorded on September 22, 1898, in the proper office. Jones executed and delivered this note and mortgage to Herman, with the understanding that Herman would negotiate the same and raise money thereon, but Jones received no consideration, and the note and mortgage were executed by him merely for the accommodation of Henry Herman. June 2, 1901, Jones conveyed the mortgaged premises subject to this mortgage of $2,000 to one Raymond, the confidential agent for Henry Herman, who was acting for the latter in all the transactions herein mentioned. This deed was recorded February 11, 1902, in the proper office. Jones never had, or claimed, any real interest in or to the mortgaged property. April 2, 1902, Henry Herman assigned to the plaintiff's assignor, under whom she claims, and after it was past due, the note and mortgage aforesaid, and indorsed the note, and delivered the instruments so assigned and indorsed to plaintiff's assignor as collateral security to a promissory note of $2,000 then executed for value by Henry Herman to plaintiff's assignor, and bearing even date with said assignment. This assignment was not recorded until April 16, 1903. October 16, 1902, Henry Herman delivered to the defendant Lindsay a warranty deed of the mortgaged premises running from Raymond to Lindsay, containing the statement in the covenant against incumbrances that the mortgaged premises were free and clear of all incumbrances whatever, except one mortgage for the sum of $2,000. This deed was dated and acknowledged February 28, 1902, and recorded in the proper office October 17, 1902. On October 16, 1902, at the time of the delivery of the deed to Lindsay, Herman also delivered to Lindsay a satisfaction piece or release in writing of the mortgage first mentioned, which release is dated October 16, 1902, and was recorded October 17, 1902, in the proper office. The consideration of this conveyance of land and satisfaction of mortgage to the defendant Lindsay was that Lindsay credited Henry Herman with a payment of $2,475 on a note of $4,500 dated November 27, 1900, belonging to Lindsay, upon which Herman was liable as indorser. Lindsay took possession of the premises in question immediately after the transfer, and paid the taxes thereon since said date. The transaction between Herman and Lindsay was at one and the same time a purchase of the lots from Herman by Lindsay for $2,475 and a payment of the mortgage of $2,000 thereon by Lindsay; both incidents being part of the same transaction. Lindsay had no knowledge or information of any kind of any claim by the plaintiff's assignor to the premises. He acted in good faith, and relied upon the record title to the premises with respect to the title as well as to the mortgage; but he did not require the production of the note and mortgage in question, and the same were not produced. There is due and owing to the plaintiff upon the note in question $2,575, and, except as hereinbefore stated, no part has ever been paid. In addition to these findings of fact the undisputed evidence showed that the lots in question were, at the instance and request of Herman, conveyed by the National Realty Company to Jones immediately prior to the execution of the note and mortgage in question by Jones, and for the purpose of having Jones execute the mortgage thereon as an accommodation to Herman.

As conclusions of law from the foregoing facts the court below found that the note and mortgage executed by the defendant Jones are void for want of consideration, but that the defendant Lindsay is estopped to set up this invalidity because Lindsay purchased the mortgaged premises subject to the mortgage; that the plaintiff's assignor and the defendant Lindsay were negligent in their dealings with Henry Herman in the matters herein involved--plaintiff's assignor in not recording his assignment after the same was delivered to him, and Lindsay in not demanding the note and mortgage in question at the time the release of the mortgage and warranty deed to the lots were delivered to him--that the plaintiff cannot come into equity asking relief because his negligence was prior to, and greater than, that of the defendant Lindsay; that the defendants, Jones and Lindsay, are entitled to judgment dismissing the plaintiff's complaint with costs. The reasons given in the foregoing conclusions of law do not meet the approval of this court, but we review results, not reasons assigned.

Was the action properly dismissed as to Jones? No consideration moving to the accommodation maker is necessary to uphold an accommodation note. The very name of the paper suggests this. The consideration in such case which supports the promise of the accommodation maker is that parted with by the person taking the accommodation note and received by the person accommodated. Nor is it any defense by the maker of an accommodation note that the taker other than the person accommodated, whether indorsee or transferee for value, knew before and when he took the note that the accommodation maker received no consideration. This would be merely showing that such taker, indorsee, or transferee knew that it was an accommodation note. If this were sufficient to defeat the note, there could be no such thing as accommodation paper, except in cases of ignorance of this fact on the part of the taker, indorsee, or transferee, and this would be contrary to common experience, and avoid many of the daily transactions in banking and other branches of business. Section 1675-55, vol. 3, Sanborn's Supp. 1906 to St. 1898. But the accommodation note in question was transferred by the party accommodated, namely, the payee therein, after it became due. Does this circumstance permit the accommodation maker to avoid the note on the ground that he received no consideration? If the effect of a transfer, after due, is merely to leave the transferee subject to notice or knowledge of the true circumstances attending the execution of the note in question, and for this reason subject him to defenses, then, as actual knowledge that the note was accommodation paper would be no defense by the accommodation maker as against the transferee for value from the party accommodated, it would seem that it could make no difference in the liability of the accommodation maker upon this ground whether the note was transferred before or after due. Aside from this imputed notice or knowledge, or actual notice or knowledge, it is not true that the taker for value from the party accommodated stands in the shoes of the latter. The difference between them is that one has parted with value for the note and the other has not. In neither case has the maker received a consideration moving to him. So that between the party accommodated and the accommodation maker there is no consideration parted with or received by either, while between the transferee for value and the accommodation maker there is a consideration moving from the former at the instance of the latter sufficient to support the contract. There is considerable conflict among the decisions on this point, and those text-writers who profess to have...