People's State Bank of Lakota v. Francis
| Decision Date | 01 May 1899 |
| Docket Number | 6731 |
| Citation | 79 N.W. 853,8 N.D. 369 |
| Court | North Dakota Supreme Court |
Appeal from District Court, Cass County; Pollock, J.
Action by the People's State Bank of Lakota against Eliza A Francis. Defendant had judgment. Plaintiff appeals.
Affirmed.
J. E Robinson, Templeton & Rex, for appellant.
The burden of proving suretyship and facts entitling her to a discharge from liability rested upon respondent. Slate Co. v. Burdick, 60 Minn. 270, 62 N.W. 285; Guderian v. Leland, 61 Minn. 67. The giving and accepting of collateral security which does not fall due until a future date does not of itself extend the time or discharge the surety. There is no presumption on such a transaction that there was an agreement for an extension of time. Brandt Suretyship and Guaranty, 319, 320; Dugan v. Sprague, 2 Ind. 600; Mills v. Gould, 14 Ind. 278; Austin v. Curtiss, 31 Vt. 64; Remsen v. Graves, 41 N.Y. 471; Globe Co. v. Carson, 31 Mo. 218; German Inst. v. Vahle, 28 Ill.App. 557; Merriman v. Barker, 12 Ind. 74, 22 N.E. 992; Fireman's Co. v. Wilkinson, 35 N.J.Eq. 160; Schlager v Teal, 39 A. 963; Fisher v. Denver Nat. Bk., 45 P. 440. Respondent was only released by the agreement if at all to the extent of the value of the property as to which the debt was extended. Spencer v. Spencer, 95 N.Y. 353; Murray v. Marshall, 94 N.Y. 611; Travers v. Doer, 60 Minn. 173, 62 N.W. 269; Fallkill Nat. Bk v. Sleight, 37 N.Y.S. 155; Owings v. McKenzie, 133 Mo. 323, 40 L. R. A. 154; De Goey v. Van Wyk, 66 N.W. 787; Stewart v. Bank, 74 N.W. 865; Everly v. Rice, 20 Pa. 297; Saline Co. v. Bina, 65 Mo. 63; Brandt (2d Ed.) 426. The attorney for the receiver being a mere agent to collect had no authority to extend the time. Behrus v. Rogers, 40 S.W. 419; Ritch v. Smith, 82 N.Y. 627; Lockhart v. Wyatt, 44 Am. Dec. 481; Mechem, Agency, § 376-378; Story, Agency, § 99. The receiver's powers were limited to such as were conferred on him by statute. § 5224, Rev. Stat. U.S.; Case v. Small, 10 F. 722; Ellis v. Little, 27 Kan. 707, 41 Am. Rep. 434; High on Rec. 360; Beckham v. Sheckelford, 29 S.W. 200. The surety must affirmatively prove knowledge on the part of the creditor who grants the extension at the time he does so in order to establish his release from liability. Nichols v. Parsons, 6 N.H. 30; Norton v. Myers, 77 N.W. 298. Ecton, the receiver of the mortgagee and the person who granted the extension, was not an agent of the mortgagee. Ex parte Chetwood, 165 U.S. 443. He was not chargeable with the knowledge of his assignor as to whether an apparent principal was a mere surety. Davenport v. King, 63 Ind. 64; Wilson v. Foote, 11 Metc. 285. The mortgage which she signed apparently as principal binds defendant personally to pay the debt. § 4706 Rev. Codes. Under the facts and precedents there was no constructive notice that defendant signed the mortgages as surety. Spear v. Walker, 20 Cal. 660-667; Davenport v. King, 63 Ind. 64; Mullendore v. Wurtz, 75 Ind. 431; Gahn v. Niemcewiez, 11 Wend. 312. Constructive notice is not sufficient. Norton v. Myers, 77 N.W. 298. A married woman in this state can contract with her husband or any other party as though she were unmarried. § 2590 Comp. Laws; Col. & U. S. Mtge. Co. v. Stevens, 3 N.D. 265. It appeared upon the face of the mortgage that the defendant was not a surety for the land was not her separate property but the property of her husband and the correct doctrine is that the wife is presumed to be a surety only when she mortgages her separate estate and has not the rights of a femme sole. Brandt, § 22; Leary v. Shaffer, 79 Ind. 567; Tennison v. Tennison, 114 Ind. 424, 16 N.E. 818; Hawley v. Bradford, 9 Paige Ch. 200; Alexander v. Bouton, 55 Cal. 15. The agreement to extend if made was void. § 4699, Rev. Codes; Wells v. Harter, 56 Cal. 342.
David R. Pierce, for respondent.
The proposition that respondent executed the mortgages as surety for her husband is clearly established. Mr. Ecton, the receiver, took the same subject to all equities, burdens and offsets existing between the original parties. Porter v. King, 1 F. 755; Wetherall's Appeal, 3 Gratt. 281; Fisher v. Knox, 1 Harris, 622; Murray v. Lylburn, 2 Johns. Ch. 441; Union College v. Wheeler, 61 N.Y. 88; Simpson v. Del Hoyo, 94 N.Y. 189; Kleeman v. Frisbie, 63 Ill. 482; Wagner v. Winter, 122 Ind. 57; State v. Lake City, 25 Minn. 404. The respondent did not sign the notes which these mortgages secured. This was notice to the receiver that she was not a principal debtor. Alter v. inits, 21 La.Ann. 317. The receiver took possession of the assets by authority of § 5234, Rev. Stat. of U.S., and such change of possession and the rights accruing thereunder, would have effect like a complete change in the officers of the bank. Bank v. Kennedy, 17 Wall. 22; Price v. Abbott, 17 F. 507. The circumstances proven are sufficient to show an agreement to extend. Brooks v. Wright, 13 Allen 72. The fact that a collateral note was given with additional security, both maturing December 1, 1895, is strong and convincing evidence of the intention to extend the principal indebtedness to that date. First Nat. Bk. v. Lamont, 5 N.D. 393; Towle v. Greenberg, 6 N.D. 37. The agreed purpose between the parties when the mortgages were executed was that Mrs. Francis should sign them for the purpose of waiving any rights she might have in the land. When, therefore, the signed instruments containing covenants binding her beyond such agreement such additional undertaking was without consideration and void. Vanderbilt v. Schreyer, 91 N.Y. 392; Lattimore v. Harsen, 14 Johns. 330.
This case was tried by the Court. Plaintiff, failing to recover below, appeals, and demands a new trial in this Court upon all the issues raised by the pleadings. By the action plaintiff sought to recover a personal judgment against Eliza A. Francis, based upon the covenants to pay found in two certain real estate mortgages executed by Orin W. Francis and Eliza A. Francis, who were husband and wife. The defense successfully made by Mrs. Francis was that she was surety for her husband, who was the principal debtor, and that the creditor extended the time of payment to her principal without her knowledge or consent. The testimony is not voluminous, and we have examined it carefully, and find the facts to be as follows: On February 1, 1893, Orin W Francis was indebted to the First National Bank of Lakota in the sum of $ 4,482.70. On said date he executed and delivered to said bank nine certain promissory notes, representing said indebtedness, four of said notes being for $ 500 each, and maturing on December 1, 1893, with interest at the rate of 12 per cent. per annum. To secure the four notes last mentioned, Orin W. Francis and Eliza A. Francis executed a mortgage upon certain real estate owned by Orin W. Francis. This mortgage contained an express covenant that the mortgagors would pay said sum of $ 2,000 in accordance with the terms of said four promissory notes. At the time the notes were signed and the mortgage executed by Mr. Francis, Mrs. Francis was absent at a sanitarium in Michigan. The payee desired that Mrs. Francis should sign both the notes and the mortgage, but to this Mr. Francis objected. Finally, on the statement of the parties representing the bank that they desired to shut out any right of dower that Mrs. Francis might have, he sent the mortgage to her for execution. She says she signed it because her husband sent it to her and asked her to sign it. She received no money, nor was her separate estate ever in any manner benefited, by reason of the consideration for the indebtedness. On said February 1, 1893, Orin W. Francis executed to said bank five other promissory notes for the sum of $ 496.54, representing the balance of said indebtedness, and which said notes matured December 1, 1894. To secure said notes, said Orin W. Francis and Eliza A. Francis executed a mortgage upon other real estate belonging to said Orin W. Francis, which said mortgage also contained an express covenant on the part of the mortgagors to pay the sum secured thereby. The circumstances attending the execution of this mortgage by Mrs. Francis and her relations to the transaction were the same in all respects as in the mortgage first described. To secure his entire indebtedness to said bank, Mr. Francis also executed and delivered to the bank a chattel mortgage covering about 30 horses that he had on the farm. In the fall of 1893, the said First National Bank of Lakota was placed in the hands of a receiver. None of the notes were paid at maturity. In the spring of 1895, the receiver was threatening to foreclose the chattel mortgage. This Mr. Francis desired to avoid, and he testifies: "I made with them an arrangement whereby a part of the stock should be sold, and the proceeds applied on these notes, and part of the stock retained by me; that I should give an additional security, and notes would be extended,--that is, they would bring no action or proceeding against me for the foreclosure of the chattel mortgage or the real estate mortgage until the 1st of December of that year." The defense also called the attorney for the receiver, with whom the contract was made, as a witness. The attorney does not go so far as Mr. Francis in his testimony. When asked if he made an agreement not to foreclose the real estate mortgages, he says he thinks not; that the negotiation related to the chattel security only, and amounted to an extension of time, so far as the chattel security was concerned. Under the terms of these negotiations, a portion of the property covered by the chattel mortgage was sold at private sale by Mr. Francis, and the proceeds turned over to the...
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