Paulausky v. Polish Roman Catholic Union of America
| Decision Date | 09 February 1942 |
| Docket Number | 27675. |
| Citation | 39 N.E.2d 440,219 Ind. 441 |
| Parties | PAULAUSKY et al. v. POLISH ROMAN CATHOLIC UNION OF AMERICA et al. |
| Court | Indiana Supreme Court |
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Willard B. Van Horne, Winslow Van Horne, and Willard B. Van Horne Jr., all of East Chicago, for appellants.
A. H. Sambor, Stanley T. Kusper, and Joseph J Wasko, all of East Chicago, for appellees.
The appellants, Paulausky and Paulausky, are the owners in fee simple of certain real estate located in Lake County, Indiana, which real estate they acquired, January 30, 1930, from the appellees, Matusik and Matusik, to whom it had been conveyed, April 22, 1926, by the appellees, Sekulski and Sekulski.
On December 14, 1922, the Sekulskis, while they were the owners of said real estate, obtained a loan of $15,000 from the appellee, Polish Roman Catholic Union of America, which loan was evidenced by a promissory note and was secured by a mortgage on said real estate. The subsequent transfers to the Matusiks and then to the Paulauskys were each made subject to this mortgage and the amount secured thereby was considered as a part of the purchase price in each of the transfers. Both the note evidencing the loan and the mortgage securing it were executed and made payable in the City of Chicago, in the State of Illinois, and were prepared on printed forms which had been printed for the mortgagee.
In September, 1933, payment of the principal and interest on said note and mortgage were in default and foreclosure proceedings were instituted in the Superior Court of Lake County, Indiana. The first two paragraphs of the complaint asked for a personal judgment on the note and the foreclosure of the mortgage. A third paragraph of complaint, filed in June, 1936, asked only for the foreclosure of the mortgage.
To the complaint there was filed an answer and cross-complaint in eight paragraphs. All affirmative paragraphs of answer were addressed to an alleged fraudulent and material alteration of the $15,000 note by the mortgagee after its execution and delivery and without the consent of the makers of said note. The various paragraphs of answer and cross-complaint asked that the note and mortgage be adjudged void; for damages for the unlawful detention of the note and mortgage; that the mortgage be declared satisfied and the clerk ordered to enter satisfaction thereof; for judgment for the amount paid on the note and mortgage subsequent to the alleged alteration; and that liens on the said real estate, subsequent in point of time, be declared to be prior liens.
The alteration complained of was the striking out of the last paragraph of the note which read as follows: 'And any attorney at law is hereby irrevocably authorized to appear for the undersigned in any Court of Record in term time or vacation, at any time after maturity and confess a judgment in favor of the holder of this note, for such amount as may be unpaid thereon, together with costs and reasonable attorney's fees, and to waive and release all errors which may intervene in any such proceedings; hereby ratifying and confirming all that such attorney may do by virtue hereof.'
The findings of the trial court pertinent to a decision here are: that the last payment of interest on said note and mortgage was made on June 13, 1931, and no further payment of either principal or interest was thereafter made; that at the time of the trial there was due, for principal and interest on said note, the total sum of $20,747.50; that after the default in the payment of interest on said note, the mortgagee delivered said note to its general counsel for the purpose of collecting and enforcing said note and mortgage; that thereafter, in 1933, the note and mortgage were forwarded by said general counsel to local counsel in Indiana for foreclosure and collection; that while the note and mortgage were still in the office of the general counsel in Chicage, Illinois, he caused his stenographer to strike out the cognovit paragraph in question; that the cognovit paragraph was a part of the printed note form; that at least twenty-four or twenty-five other mortgages belonging to appellee, Polish Roman Catholic Union of America, which were in default, had also been forwarded by said general counsel to local counsel in Indiana for foreclosure and collection and in each instance, as in this case, the cognovit provision of the note was struck out in the office of the general counsel before the papers were forwarded to local counsel in Indiana for foreclosure; and that said alteration was not fraudulently made.
The court further found that at the time of the alteration there was in force in Illinois, as a part of the Negotiable Instrument Law of that state, a statute which provided as follows:
'Where a negotiable instrument is fraudulently or materially altered by the holder without the assent of all the parties liable thereon, it is avoided except as against a party who has himself made, authorized or assented to the alteration and subsequent indorsers.' Smith-Hurd Stats.Ill. c. 98, § 145.
'Any alteration which changes:
'1. The date.
'2. The sum payable, either for principal or interest.
'3. The time or place of payment.
'4. The number and the relations of the parties.
'5. The medium or currency in which payment is to be made.
'Or which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect, is a material alteration.' Smity-Hurd Stats.Ill. c. 98, § 146.
This Illinois statute is practically the same as our Indiana statute. Burns' 1933, §§ 19-901, 19-902; Baldwin's 1934, §§ 12942, 12943.
The court concluded as a matter of law: (1) that all matters concerning the execution and delivery, the validity, interpretation, effect and capacity of the parties to execute the note in question were governed by the laws of the State of Illinois; (2) that all matters respecting the remedy, the bringing of the suit, service of process, and admissibility of evidence in this action were governed by the laws of the State of Indiana; (3) that the striking out of the cognovit provision of said note was an immaterial alteration and was not fraudulently made; (4) and (5) that the lien of the plaintiff's mortgage was prior and paramount to the lien of the two junior lienholders named as defendants to the action; (6) and (7) that the defendants, Paulausky and Paulausky and Matusik and Matusik, should take nothing by their affirmative paragraphs of answer; (8) and (9) that the law was with the plaintiff and against each of the defendants; and (10) that the plaintiff was entitled to the foreclosure of its mortgage as against all defendants and cross-complainants.
The court thereupon entered judgment foreclosing said mortgage.
Appellants assign as error that the court erred: (1) in allowing the appellees to file amended answers to certain interrogatories; (2) in overruling their motion for a new trial and (3) in each of its conclusions of law.
As to the first assignment of error it would seem to be within the discretion of the trial court to permit the filing of an amended answer to an interrogatory. Interrogatories are matters connected with the pleadings. In chancery such interrogatories were always regarded as a part of the pleadings, and since we have adopted the practice from chancery it follows that we should treat interrogatories as part of our system of pleading. Cates v. Thayer, 1883, 93 Ind. 156. The granting of permission to amend pleadings is within the discretion of the trial court and consequently it should be within the discretion of the court to permit the amendment of answers to interrogatories.
In Pool v. Harrison, 1850, 18 Ala. 514, the court said:
See, also, Investment Co. v. Trueman, 1912, 63 Fla. 184, 57 So. 663; 27 C.J.S., Discovery, § 63, p. 93. We see no abuse of discretion in the trial court permitting the filing of the amended answers.
Appellants contend that the court erred in holding that the alteration of the note, by striking out the cognovit provision thereof, was not a fraudulent and material alteration. The appellants insist that the alteration was both material and fraudulent. The court found that the alteration was not fraudulent. We believe this finding was sustained by the evidence. There was sufficient evidence to support the inference drawn by the court that the cognovit provision was struck out in the office of the general counsel preparatory to sending the papers into Indiana for the foreclosure of the mortgage. The cognovit provision could not be exercised in Indiana, but this court has held that a contract containing such a provision, executed in Illinois where a cognovit provision is valid, may be enforced in this state where the cognovit provision is invalid, if the cognovit provision is not relied upon. American Furniture Mart. Bldg. Corp. v. W. C. Redmon, Sons & Co., 1936, 210 Ind. 112, 1 N.E.2d 606. It is difficult to see how the mortgagee, under these circumstances, could have intended any fraud by striking out the provisions for the additional remedy which, although legal in Illinois where the contract was made, could not be taken advantage of in Indiana where the mortgage was to be foreclosed.
Appellants say that 'the plaintiff demanded and received an unconscionable and cutthroat contract'; that it then 'attempted to overreach appellants by clandestinely...
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