Scanlan v. Grimmer

• Court: Minnesota Supreme Court
• Writing for the Court: COLLINS, J.
• Citation: Scanlan v. Grimmer, 71 Minn. 351, 74 N. W. 146 (Minn. 1898)
• Decision Date: 26 January 1898
• Docket Number: 10,883 - (261)
• Parties: MARY SCANLAN v. JOHN GRIMMER and Others

74 N.W. 146

71 Minn. 351

MARY SCANLAN v. JOHN GRIMMER and Others

Nos. 10,883 - (261)

Supreme Court of Minnesota

January 26, 1898

Appeal by defendant John Grimmer, fro a judgment in favor of the plaintiff entered in the district court for Redwood county upon the findings and order of Webber, J. Reversed.

SYLLABUS

Person May Contract under Assumed Name -- Identity.

A person, not having a fraudulent or criminal purpose in so doing, may enter into a contract by any name he may choose to assume. All that the law looks to is the identity of the individual, and, when that is ascertained and clearly established, the act will be binding upon him and upon others.

Person May Contract under Assumed Name -- Loan upon Mortgage Security.

Rule applied in a case where, for the purpose of loaning money and taking a real-estate mortgage, one S.D. assumed a wholly different name, there being no fraudulent or criminal intent shown on his part.

Person May Contract under Assumed Name -- Knowledge of Mortgagors.

It is wholly immaterial that the mortgagors were induced to believe that they were dealing with a person bearing the assumed name, and would not have entered into such a transaction with S.D., the real mortgagee.

Usurious Mortgage -- Assumption by Grantee -- Estoppel.

A vendee who accepts a conveyance of lands subject to a mortgage thereon, and containing a covenant whereby such vendee assumes and agrees to pay the mortgage, is estopped from asserting that the obligation secured thereby is usurious.

S. L Pierce, for appellant.

In the absence of fraud a person may do business and execute contracts under any name he chooses to assume. 16 Am. & Eng Enc. 118. All that the law looks to is the identity of the individual, and when that is established the act will be binding upon him and others. In re Snook, 2 Hilt. 566; Toole v. Peterson, 9 Ired. 180; Thomas v. Wyatt, 31 Mo. 188; Wakefield v. Brown, 38 Minn. 361.

In this case the mortgagors were not placed in any worse situation in borrowing of Davis than would have been the case had they borrowed from a stranger in Wisconsin. The deception practiced by Davis was not to obtain the security but to conceal his identity as lender. But that the concealment of his identity by taking the mortgage in an assumed name was a fraud by which he obtained the mortgage is not true.

The covenant on the part of the plaintiff to assume and pay the mortgage to Alexander is as binding and operative as the covenants of the mortgagor contained in the same instrument. Finley v. Simpson, 22 N.J.L. 311. And an action can be maintained by the mortgagee against the mortgagor's vendee upon such a covenant. Follansbee v. Johnson, 28 Minn. 311. The vendee under an assumption clause is estopped from disputing the validity of the mortgage which he has assumed to pay. Calkins v. Copley, 29 Minn. 471; Freeman v. Auld, 44 N.Y. 50; Gibson v. Lyon, 115 U.S. 439; Green v. Houston, 22 Kan. 35; Pidgeon v. Trustees, 44 Ill. 501; Comstock v. Smith, 26 Mich. 306; Crawford v. Edwards, 33 Mich. 354; Miller v. Thompson, 34 Mich. 10; Thorp v. Keokuk, 48 N.Y. 253; Garnsey v. Rogers, 47 N.Y. 233; Hoff's App., 24 Pa. St. 200; Kennedy v. Brown, 61 Ala. 296; Klein v. Isaacs, 8 Mo.App. 568; Corbett v. Waterman, 11 Iowa 86; Bassett v. Hughes, 43 Wis. 319; Durham v. Bischof, 47 Ind. 211; Schmucker v. Sibert, 18 Kan. 104; Pence v. Arbuckle, 22 Minn. 417.

If under any circumstances the court should deem the plaintiff entitled to relief it should be subject to the requirement that she restore to the defendant Grimmer, who has succeeded to the rights of Davis, the proceeds of the loan which was received and appropriated by the mortgagors. Carlton v. Hulett, 49 Minn. 308; Horman v. Hartmetz, 131 Ind. 558.

J. A. Sawyer, for respondent.

The mortgage here in question, having been obtained from the mortgagors by representations made to them for that purpose and believed in by them, as in reality running to a real person whose true name was John B. Alexander, and who is the actual person from whom they were borrowing the money, is void for the want of a grantee as well as for fraud. No man can compel another without his consent to become his debtor, much less his mortgagor. The cases are numerous that a conveyance running to a supposed person as such, and not intended by the grantor as a nom de plume, when such supposed grantee has no existence, is void. Shirley v. Burch, 16 Ore. 83; Thomas v. Wyatt, 31 Mo. 188; U.S. v. Southern, 18 F. 273; Bailey v. Gilliland, 2 Kan.App. 558; Douthitt v. Stinson, 63 Mo. 268; Downing v. Bartels (Colo.) 3 P. 225; Upton v. Archer, 41 Cal. 85; Arguello v. Bours, 67 Cal. 447; Lillard v. Ruckers, 9 Yerg. 64; Newsom v. Thompson, 2 Ired. 277; Wunderlin v. Cadogan, 50 Cal. 613; Muskingum v. Ward, 13 Ohio 120.

So a promissory note cannot be treated as payable to bearer unless the maker knows the payee to be fictitious and actually intends to make the note payable to a fictitious person. Shipman v. Bank, 126 N.Y. 318; Phillips v. Mercantile, 140 N.Y. 556. The existence or nonexistence of a mortgage contract must depend upon principles applicable to other contracts, and, to their existence, assent of the parties is indispensable. Alliance v. Eaton, 86 Tex. 401; Clark v. National, 66 F. 404; Gibson v. Miller, 29 Mich. 355. Even if this mortgage could be treated as running to Davis as mortgagee it would still be void for want of delivery to him, for the intention was to deliver to Alexander, not to Davis. Jordan v. Davis, 108 Ill. 336; Lee v. Fletcher, 46 Minn. 49.

Both the power of attorney, Alexander to Davis, and the assignment thereunder of this mortgage by Davis to Mrs. Henningsen, are void. Confessedly there was but a single party to the power of attorney. The assignment not only wants an assignor, but on its face is, and purports to be, made under and by force of the void power. It nowhere purports to be an assignment by Davis in his own right, nor of any interest he had in the mortgage. Upon the same considerations the note secured by the mortgage is void and its transfer a nullity. Shipman v. Bank, supra; Armstrong v. National, 46 Oh. St. 512; Meridian v. First Nat., 7 Ind.App. 323.

The assumption clause in plaintiff's deed does not aid defendant; for all there is of this clause is the agreement by the grantee to pay a mortgage to "John B. Alexander," which mortgage the parties believed had a legal and actual existence, whereas in fact the supposed mortgage which plaintiff agreed to pay never had an existence. She agreed to pay nothing. There was no intention to validate a void mortgage. Magie v. Reynolds, 51 N.J.Eq. 113. There being no intention to assume any mortgage to Davis, neither he nor appellant can claim under this covenant. Maxfield v. Schwartz, 45 Minn. 150; Rogers v. Castle, 51 Minn. 428; Gold v. Ogden, 61 Minn. 88; Meech v. Ensign, 49 Conn. 191. The so-called estoppel here invoked is never extended beyond the literal terms of the covenant. Moore v. Graves, 97 Iowa 4. The mortgagee can only work out a right under such covenant through the mortgagor-grantor. Keller v. Ashford, 133 U.S. 610; Willard v. Wood, 135 U.S. 309; Union v. Hanford, 143 U.S. 187. Such mortgagor-grantor is not prevented from contesting the mortgage. Knickerbocker v. Nelson, 78 N.Y. 137, 153; Bennett v. Bates, 94 N.Y. 354, 369.

It is settled law in New York and other jurisdictions that whenever the grantor is not personally liable to pay the mortgage debt, the mortgagee cannot enforce the covenant against the grantee. King v. Whitely, 10 Paige, 465; Vrooman v. Turner, 69 N.Y. 280; Pardee v. Treat, 82 N.Y. 385; Dunning v. Leavitt, 85 N.Y. 35; Lorillard v. Clyde, 122 N.Y. 498; Carter v. Holahan, 92 N.Y. 498, 504; Nelson v. Rogers, 47 Minn. 103; Brown v. Stillman, 43 Minn. 126. In this case both note and mortgage being usurious, no personal responsibility or obligation to pay it rested upon the original grantors, hence not on any grantor.

OPINION

COLLINS, J.

Action to determine adverse claims to real property, the actual purpose being to set aside and cancel a mortgage thereon of date January 12, 1894, purporting to have been executed and delivered to one John B. Alexander, as mortgagee, to have been assigned to one Maggie A. Henningsen by Sylvester Davis, as attorney in fact for said Alexander, and subsequently assigned by Henningsen to defendant Grimmer, who alone answered in the action.

The primary and principal question in the case grows out of the fact that the money loaned to plaintiff's husband, Martin Scanlan, who then owned the land, belonged to Davis himself, and was furnished by him for the express purpose of making the loan, under an agreement entered into by him with one Gleason, who was found by the court to have been his agent in the matter, that, for all of the necessary purposes of the transaction, Davis should assume the name of John B. Alexander, that the money should be loaned to Scanlan as belonging to a man bearing that name, that the note should be made so payable, and that John B. Alexander should be named as mortgagee in the mortgage. The agreement was carried out; the note and mortgage were so written; Davis delivered the amount of the loan, $2,000, to Gleason in Scanlan's presence; and the former paid out for the latter, and upon his authority, in liquidating existing liens on the land, between $1,800 and $1,900. It appears that Gleason kept the balance of the money for himself. The note and mortgage were delivered to Davis, and by him the mortgage was put upon record.

Subsequently Scanlan and his wife sold, and by warranty deed conveyed, the premises to a son, Joseph Francis. The latter soon afterwards sold, and by warranty deed conveyed, the same to another son Patrick, and then he...