Merrill v. Hurley
| Decision Date | 13 April 1895 |
| Citation | 62 N.W. 958,6 S.D. 592 |
| Parties | MERRILL v. HURLEY et al. |
| Court | South Dakota Supreme Court |
Syllabus by the Court.
1. As the business of a corporation is transacted only through its officers and authorized agents, the unconditional delivery at the principal office of a corporation of promissory notes together with a mortgage in the form of a trust deed securing the payment thereof, to its president acting officially for the corporation named therein, as payee and beneficiary constitutes a delivery to the corporation, and not to a third person in escrow.
2. The negotiability of a promissory note, otherwise unobjectionable, is not affected by a provision for a specified additional rate of interest after maturity, nor is a recital therein, to the effect that such note may, at the option of the holder and by reason of the default of the maker, become due and payable at a date earlier than that fixed, sufficient to destroy its character as a negotiable instrument.
3. In the absence of evidence to the contrary, it will be presumed that the managing president of a corporation engaged in loaning money, and in buying and selling negotiable instruments, has authority, as such, to transfer by indorsement a promissory note made payable to such corporation.
4. In order to destroy the negotiability of a promissory note by a writing on the back of such instrument designed to transfer the title thereof, words apparently intended for that purpose must be used. Comp. Laws, § 4478.
5. Upon the back of a negotiable interest-bearing bond made payable to a corporation, its managing president wrote the following and signed the same in his official capacity: "For value received, I hereby assign the within bond, together with all our interest in and all our right under the mortgage securing the same, to Mary E. Merrill, without recourse." Held to constitute a contract of indorsement, and not to be a mere assignment of the instrument.
6. A conveyance of real property to a third party, in trust as security for a debt which by its terms provides that the trust is to be executed by the creditor, and in which the trustee, in case of default, is authorized to perform no act in relation to the property described in such instrument operates as a mortgage, in accordance with the expressed intention of the parties thereto.
7. An applicant for a loan of money, who voluntarily executes and delivers his negotiable promissory note and a mortgage in the form of a trust deed, securing the same, to the payee and beneficiary, without receiving any consideration therefor, and afterwards, while charged with a knowledge that the mortgage was of record, and the note had been transferred, accepts, in settlement of a suit brought to procure a redelivery and cancellation of such instruments, a bond as indemnity against loss that he may sustain by reason of such note and mortgage, and at the same time procures a reconveyance of the property from the trustee named in the instrument designed to operate as a mortgage, is not in a position to defeat an action for the foreclosure of the mortgage by an innocent purchaser for value before maturity, although no assignment of such instrument appeared of record at the time the property was, without payment, reconveyed by the trustee to the maker of said note and instrument securing the same.
8. As plaintiff, the purchaser of the note and mortgage in suit, failed to record her assignment, and the recorded deed executed by the trustee appeared to reinvest the grantor and maker of the note with the unincumbered title to the property, a mortgage subsequently taken to secure a loan by a third person, without any knowledge of the existence of plaintiff's lien, is held to be superior thereto. Merrill v. Luce (S. D.) 61 N.W. 43.
Appeal from circuit court, Lake county; Frank R. Aikens, Judge.
Action by Mary E. Merrill against John M Hurley and others to foreclose a mortgage. There was judgment for plaintiff, and from an order granting a new trial she appeals. Affirmed.
Winsor & Kittredge, for appellant. Palmer & Rogde, for respondents.
The trial of this action, which was to foreclose a certain trust deed or mortgage, executed by the defendant Hurley and his wife to secure the payment of their bond or promissory note for $600, together with certain interest coupons thereto attached, resulted in plaintiff's favor, and a decree of foreclosure was accordingly entered, in which a sale of the incumbered premises was ordered and adjudged as prayed for by plaintiff, and in which the right, title, and interest of all defendants herein were forever barred and foreclosed, subject to the statutory right of redemption. Upon the application of the defendants John M. Hurley, Mary Hurley, and Thomas Fitzgerald, the court vacated its decree, and granted a new trial, and from the order thus entered plaintiff appeals. The facts apparently essential to an understanding of the questions presented are, in substance, as follows: On the 24th day of December, 1885, defendants John M. Hurley and Mary Hurley executed a mortgage and trust deed to E. H. Jacobs, as trustee of the American Mortgage & Investment Company, upon the premises in question, to secure the payment of $600 and interest, according to the terms of their promissory note, payable to the American Mortgage & Investment Company or order, bearing date December 1, 1885, the terms of which will receive more particular attention later on. It appears from the evidence that on the 18th day of February, 1886, plaintiff purchased for a valuable consideration and in the usual course of business the bond and mortgage above mentioned, together with other securities belonging to the American Mortgage & Investment Company, and that a default existed in the conditions of said bond and mortgage at the commencement of the suit to enforce by foreclosure the collection of the amount alleged to be due thereon. The trust deed or mortgage was duly recorded in the office of the register of deeds on the day of its execution, and the bond or principal note, when sold and transferred to plaintiff, contained on its back the following indorsement: "For value received I hereby assign the within bond, together with all our interest in and all our right under the mortgage securing the same, to Mary E. Merrill, without recourse. S.W.
Jacobs, Prest." And each of the interest coupons thereto attached was, upon its back, indorsed as follows: But no assignment of the trust deed was procured at the time, and none was placed of record, until the 11th day of October, 1888. It further appears from the evidence that although it was understood and agreed between the parties to the original transaction, at or subsequent to the time the papers were signed, that the same would be withheld from record by the officer of the defendant loan company, with whom the loan was negotiated, until the money was received and paid over to the defendant John M. Hurley, said loan company caused the trust deed to be placed of record, and neglected and refused to pay over the money, or any part thereof, for which the note was given, except the sum of $500, which was offered on the 28th day of January, 1886, in full consideration for the $600 note, and which the defendant Hurley refused to accept, for the avowed reason that it was not paid at the time agreed upon, and was not for the full amount of the loan; that subsequently to the sale and delivery of the note and trust deed to plaintiff, and on the 13th day of June, 1887, E. H. Jacobs, trustee, released and reconveyed to John M. Hurley the premises in controversy, and caused the instrument of reconveyance to be recorded in the office of the register of deeds, and apparently as a part of the same transaction, the American Mortgage & Investment Company, by its officers, S.W. and E. H. Jacobs, executed to the defendant Hurley a bond in the sum of $1,000, conditioned that they would cause to be returned to him the $600 note in question. On the 1st day of February, 1888, the defendant Fitzgerald loaned $300 to the defendant Hurley, and took a mortgage on the premises in controversy to secure the payment of the same, and said mortgage remains of record and in full force.
No effort has been made to present all the testimony offered at the trial bearing upon the issues raised by the pleadings, and should a proper determination of this appeal, viewed as we are disposed to regard it, require a consideration of the evidence contained in the record, to which no reference has been made, such facts and circumstances will receive merited attention in connection with an examination of the questions of law presented for our determination. To sustain the action of the trial court in granting a new trial, respondents' counsel maintain that the interest-bearing bond or promissory note in question is a nonnegotiable instrument; that no consideration was ever received therefor; and that said note, and the trust deed securing the same, were delivered in escrow only, upon the specified condition that such note and trust deed should be held by the defendant S.W. Jacobs, and should be of no force or effect until the money for which they were executed was paid to the defendant Hurley.
In determining whether or not the delivery of the note and trust deed was absolute or in the nature of an escrow, it will be necessary to briefly examine the evidence in relation thereto. The defendant Hurley testified, in effect, that he went to the principal office of the American Mortgage & Investment Company, the payee named in the note, and applied to S.W. Jacobs, the president of said company, for a loan of $600; that the papers, including the...
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