Nelson v. Southworth

• Citation: 144 P. 835,93 Kan. 532
• Decision Date: 12 December 1914
• Docket Number: 19,077
• Parties: WILLIAM M. NELSON, Appellee, v. HILAND SOUTHWORTH et al., Appellants, and MINNIE L. WILCOX, Appellee
• Court: United States State Supreme Court of Kansas

144 P. 835

93 Kan. 532

WILLIAM M. NELSON, Appellee, v. HILAND SOUTHWORTH et al., Appellants, and MINNIE L. WILCOX, Appellee

No. 19,077

Supreme Court of Kansas

December 12, 1914

Decided July, 1914.

Appeal from Trego district court; JACOB C. RUPPENTHAL, judge.

Judgment affirmed.

SYLLABUS

SYLLABUS BY THE COURT.

1. NOTES AND MORTGAGES--Procured through Concealment and Misrepresentation--Cancellation Ordered. S. loaned to N. $ 2500, taking a principal note and mortgage for that amount and a note and mortgage for commissions. He transferred the principal securities to Mrs. W. but afterwards collected and transmitted to her the semiannual interest, until the last coupon was due. This was not paid, but he sent the amount to W. and held the coupon and the last annual installment on the commission note. Before the maturity of the debt, he notified N. that it would not be renewed but must be paid. Thereupon N. entered into negotiations with W. for an extension. Learning of this S. sent a check to W. for the full amount then due upon the principal note with a request that the papers be sent to him. Mrs. W. declined to accept the check and returned it. After sending the check and before its return, which was delayed by the absence of W. from home, S. prepared notes and mortgages for a renewal of the loan and presented them to N. and wife and told them that he had paid off the debt to W.; that W. had nothing to do with it; and that he (S.) had the papers in his possession and would return them on the execution of the prepared renewals. Relying upon these representations N. and wife signed and delivered the new notes and mortgages to S. for $ 2500 and $ 187.50 respectively. Learning that S. had not taken up and did not have the old papers, which were still held by Mrs. W., N. tendered payment of the coupon and installment note still held by S., and demanded the cancellation of the new notes and mortgages. It is held that the findings of the district court that the new securities were obtained by a concealment of facts and false representations amounting to fraud, and should be canceled, are sustained.

2. NOTES AND MORTGAGE--Plaintiff Not an Innocent Holder. The holders of the new securities to whom S. had transferred them are held to have no better right than the payee--one of the notes being non-negotiable, and the other transferred by assignment only.

E. C. Flood, of Ellis, G. W. Hurd, Arthur Hurd, and Bruce C. Hurd, all of Abilene, for the appellants.

Herman Long, of Wa Keeney, for appellee William M. Nelson.

OPINION

BENSON, J.

The defendants appeal from a judgment canceling two notes, and mortgages securing them, made by the plaintiff and his wife to the defendant Southworth.

The following facts appear either from the undisputed evidence or are established by the findings and decisions of the district court. On January 1, 1907, the plaintiff borrowed $ 2500 from the defendant Southworth, and gave two promissory notes therefor, one for $ 2500, payable in five years with interest at 6 per cent per annum, payable semiannually, secured by mortgages on his farm of the same date, made by himself and wife. On the same date he gave to Southworth another promissory note for $ 187.50 secured by a second mortgage, referred to in the evidence as a commission mortgage. The $ 2500 note and mortgage were assigned to Minnie L. Wilcox in the year 1910. Payments of interest were made to Southworth and by him transmitted to Mrs. Wilcox after she became the owner. In a few instances the remittances were made to her husband for her.

On December 20, 1911, Southworth wrote to the plaintiff:

"Your loan, principal $ 2500.00, and interest $ 87.50 will be due Jan. 1st. This money is due in our office at that date. Make your arrangements in ample time to get the money here by Jan. 1st. We could not possibly under any circumstances extend this loan."

On January 15, 1912, Southworth again wrote to the plaintiff:

"Your letter of Jan. 3rd. was duly received. You have been very slow in the payment of your interest and that is the reason I do not want to make you a new loan. Your interest which came due on Jan. 1st, is still unpaid. This now amounts to $ 88.20. Send this in by return mail."

About January 1 Mrs. Wilcox, who lives at Abilene, called up Southworth, whose office is in the same city, in regard to this loan, and was informed that Nelson was very slow and that he (Southworth) refused to renew the loan or to let the borrower have any more money. She then conferred with her husband, and afterward informed Southworth that she and her husband would take care of the loan, to which he responded "All right."

On March 27 Southworth went to the office of his agents, Ross & Waldo, at Ellis, in the vicinity of which the plaintiff resides, to close up a renewal of the loan, which he had in the meantime asked them to negotiate according to the terms of notes and mortgages he had sent to them for the plaintiff and his wife to execute. Upon the request of these agents the plaintiff and his wife came in, but objected to signing the papers for the reason that they had been negotiating with the Wilcoxes to renew or carry the loan. Southworth, however, insisted that they should renew the loan with him, and stated to them that he had paid Wilcox off and had the papers in his possession at home, and that Wilcox did not have a thing to do with it; that he would return the papers by the next Saturday; and that the plaintiff must either fix up the papers then or he would foreclose. The plaintiff needed more money, and finally, on Southworth's agreement to let them have $ 700 more, he and his wife signed a note and mortgage for $ 2500 to be due in five years, and a note and mortgage for $ 700 due in two years, and a commission note and mortgage for $ 187.50, payable in annual installments, all bearing date January 1, 1912. These are the instruments which the plaintiff asks to have canceled. At the time of this transaction Southworth held a coupon for $ 68.75 due January 1, 1912, on the old $ 2500 note, and also the old $ 187.50 note on which $ 18.75 was due. He also claimed a credit for $ 25 on account of the difference between 6 per cent and 10 per cent on the old $ 2500 note after its maturity. It was the understanding that out of the proceeds of the new $ 700 note these items and the taxes should be paid and the balance should be turned over to plaintiff as soon as the abstract then in Southworth's possession at Abilene should be brought down to date. The transaction was to be closed at Ross & Waldo's office, the money or check to be sent there. Considerable delay occurred and correspondence followed between Southworth and his agents relative to an adjustment of the matter. Each party blamed the other for the delay, but the merits of that controversy need not be considered now. The proceeds of the $ 700 note were never paid to the plaintiff or sent to Ross & Waldo for him. Finally, on April 18, the plaintiff learned that Southworth did not have the $ 2500 note, and that it was...