Martin v. Webb

Decision Date07 January 1884
Citation110 U.S. 7,28 L.Ed. 49,3 S.Ct. 428
PartiesMARTIN, Sheriff, etc., and others v. WEBB and others, Trustees, etc
CourtU.S. Supreme Court

Jeff. Chandler and Eppa Hunton, for appellants.

Jas. S. Botsford, R. T. Merrick, and M. F. Morris, for appellees.

HARLAN, J.

This is an appeal from a decree in two suits in equity commenced in one of the courts of the state of Missouri, and thence removed into the circuit court of the United States for the western district of that state, where by consent they were consolidated for final hearing. The question presented is whether the appellant the Daviess County Savings Association, a banking corporation of Missouri, doing business at Gallatin, in that state, is, under the circumstances of this case, estopped to deny that the cancellation, in its name and by its cashier, of certain notes secured by trust deeds upon real estate, and the release of record of the liens given by those deeds, was by its authority and binding upon it. The facts bearing upon this question, as they are disclosed by the pleadings, testimony, and stipulations of counsel, are substantialy as will be now stated. On the thirtieth day of June, 1879, one Patrick S. Kenney was largely indebted to that association. The indebtedness was secured by recorded deeds of trust upon several tracts of land, in some of which, embracing a large part of this indebtedness to the bank, his wife had not joined. These deeds bore date, respectively, February 8, 1872; November 17, 1873; December 20, 1873; August 28, 1874; September 21, 1874; May 24, 1875; and April 1, 1876. In three of them the trustee was Robert L. Tomlin, who, at the date of their execution and during the entire period covered by the transactions to be hereafter recited, was a director and the cashier of the bank. Kenney and wife had also executed and delivered a deed of trust upon a portion of the same lands, for the benefit of James D. Powers, to secure a debt of $5,000 and interest. As to the lands therein described, it gave a lien superior to that created by any of the before-mentioned deeds, except the one of date February 8, 1872. On the fifteenth day of July, 1875, and first day of November of the same year, respectively, the Exchange Bank of Breckinridge, Missouri, and one Thomas Ryan, obtained judgments for money against Kenney, which, on June 30, 1879, remained, or were believed by those interested in them to remain, liens superior to that given by the foregoing deed of April 1, 1876.

It was desired by Tomlin, the cashier, to have Kenney's indebtedness to the bank in better shape than it was, and to secure further time on his indebtedness to other parties. He also deemed it important that the liens upon these lands, (whether created by trust deeds or judgments,) which were prior to those held by the bank, should be removed, and that Mrs. Kenney's signature be obtained to a trust deed or deeds in favor of the bank, covering all the lands of her husband. He therefore requested Kenney to obtain a loan of money sufficient to satisfy all liens prior to those held by the bank. Tomlin did not wish his bank to make further advancements to Kenney, believing the latter would be more prompt with strangers than with the bank in paying interest as it matured. In order to effect the desired result, application was made by the cashier to Frank & Darrow, of Corning, Iowa, for a loan to Kenney. After some negotiations, that firm made an arrangement with Albert S. Webb, R. L. Belknap, and William H. Kane, of New York, trustees under the will of Henry R. Remsen, for a loan of money to Kenney for five years, at 8 per cent. interest, to be secured by a trust deed on his lands, which would give them a lien prior and superior to that held by all others, including the bank. It was expressly agreed between Frank & Darrow, representing the trustees of Remsen, on one side, and Kenney and Tomlin, the latter representing his bank, on the other side, that the money thus obtained should be applied, as far as necessary, to the debts secured by the before-mentioned Powers deed of trust, and to the two judgments against Kenney; that the balance should be paid to the bank, which should then cancel and surrender the notes held against Kenney, taking a new note from him, and enter of record satisfaction and release of its liens under the several deeds; that Kenney and wife should execute a deed of trust, giving a first lien to Remsen's trustees to secure the loan by them made; a like deed, giving a lien subordinate to that of Remsen's trustees, to secure Frank & Darrow in the sum of $1,000, the amount stipulated to be paid them for effecting the loan; that Kenney and wife should also make a deed of trust on the same lands to the Daviess County Savings Association, giving a lien subordinate to those given to Remsen's trustees and to Frank & Darrow, for the balance of their claims against Kenney remaining after crediting such portion of the $10,000 received from Remsen's trustees as should be paid to the bank.

No part of the sum received from Remsen's tr stees was paid directly to or disbursed by Kenney; but, conformably to the agreement between the parties, $5,200 of it was applied in satisfaction of the debt secured by the Powers deed of trust, $1,689.86 in discharge of the two personal judgments against Kenney, and the balance, $3,110.14, was paid to the bank. A new note was then executed to the bank by Kenney, and the $3,110.14 entered on its books as a partial payment thereof. Satisfaction was entered of record in the name of the bank by its cashier of all the debts held against Kenney, and the old deeds of trust held were also canceled of record in its name by the cashier. Deeds of trust executed by Kenney and wife, of date July 1, 1879, were then placed upon record, all on August 6, 1879, but distinctly giving liens upon the lands in the order already indicated. The new deed to the bank, in addition, expressly provides that the lien thereby created is subordinate to that given Remsen's trustees. The old notes of Kenney were marked by the cashier on the books of the bank as paid, and the new note general funds one Kenney was to pay. The $3,110.14 went into the general funds of the bank, and was used in its business. The old notes and deeds, being first stamped by the cashier as 'paid,' were placed by him in an envelope maked with Kenney's address. The cashier had promised, when this arrangement was consummated, to send them to Kenney, but finding the package containing them to be bulky, they were held for delivery to him when he should call at the bank.

The Daviess County Saving Association was organized in 1865. Of its...

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