Seibold v. Ruble

Decision Date23 December 1913
Docket NumberCase Number: 3037
Citation137 P. 696,41 Okla. 267,1913 OK 748
PartiesSEIBOLD v. RUBLE et al.
CourtOklahoma Supreme Court
Syllabus

¶0 1. BILLS AND NOTES--Action by Assignee--Defense--Payments to Payee. Where one, who assumes the payment of a nonnegotiable note and attached interest coupons, has no notice of the assignment of the note and coupons, or of the mortgage given to secure the payment thereof, proof of the payment of the note and coupons to the payee named therein, at the designated place of payment, is a good defense against proceedings on the part of the assignee to enforce payment.

2. SAME--Nonnegotiable Note--Defense. A nonnegotiable note, transferred to an innocent purchase before maturity and for a valuable consideration, without notice to the maker thereof, or to one who assumes its payment, is subject to all legal defenses which might be interposed against the note in the hands of the original payee.

3. SAME--Action by Assignee--Defense--Payment. Where the assignee of a nonnegotiable note, to which are attached interest coupons, which note and coupons are secured by real estate mortgage, takes the same by indorsement on the principal note alone, and by written assignment of the mortgage, which assignment is not put of record for over four and one-half years, and fails to give the maker any notice of the assignment, and allows the original payee to collect the interest coupons at the designated place of payment, either from the maker of the coupon notes or the subsequent owner of the mortgaged lands, and to forward the canceled coupons to the one making payment, the subsequent payment in good faith and without notice of the principal note, though before maturity, to the payee named therein, at the designated place of payment, protects the one making payment against liability to the assignee, although the note was not produced and delivered at the time it was paid, it not being known to the payer that the note was not in the possession or under the control of the one to whom payment was made.

4. SAME--Effect to Discharge Liability. Under the facts stated in the preceding paragraph, where Such original payee is also the agent of the subsequent owner of the mortgaged land, for the purpose of procuring a new loan and paying off the old, his failure to pay over the proceeds of the loan by him received to the assignee of the note does not render the payer liable to a second liability thereon, the money having been received by the former and ostensible owner in settlement of the note.

5. SAME. Payment in such case having been made to the ostensible owner, who thereupon executes a release of the outstanding mortgage, it cannot be said that the failure to pay over to the assignee the money paid was an act for which the one causing payment to be made would be liable.

George T. Webster, for plaintiff in error.

M. L. Holcombe, for defendants in error.

SHARP, C.

¶1 On July 28, 1903, James Abernathie executed to the defendant Winne & Winne his promissory note in the sum of $ 720, payable ten years after date. To said note were attached eleven interest coupons, of which the first was for $ 8.41, due October 1, 1903, nine for $ 50.40, due October 1st of each succeeding year thereafter, and one for $ 41.59, due July 28, 1913. The note and interest coupons were secured by a real estate mortgage on a quarter section of land in Custer county. On June 18, 1904, James Abernathie sold said land to J. F. Lamb, who assumed the payment of the Winne & Winne mortgage indebtedness. On the 4th day of December, 1906, the land so mortgaged was sold by Lamb to the defendant in error, Ruble, who likewise assumed the payment of said mortgage indebtedness. July 12, 1907, defendant in error, Ruble, made application to the Union Central Life Insurance Company of Cincinnati, Ohio, for a loan of $ 1,200 on said land, naming the defendant Winne & Winne as his agent for that purpose. A loan of $ 1,100 was thereafter made, and the proceeds thereof paid to the order of Winne & Winne by the insurance company. The payee of the $ 720 note, Winne & Winne, on August 5, 1903, executed an assignment of the mortgage given to secure the same to the plaintiff in error, W. F. Seibold, which assignment, however, was not placed of record in Custer county until April 13, 1908. On August 8, 1903, defendant Seibold claims to have purchased said note and mortgage, paying therefor the face of the note. An indorsement in blank was written upon the back of the principal note, assigning without recourse both it and the attached coupons, and, together with the written assignment of the mortgage, they were on said last-mentioned day delivered to defendant at his home in Danbury, Iowa. On October 9, 1907, Winne & Winne, claiming to be the owner of said original mortgage, executed a release thereof, which was duly recorded in Custer county on October 14th following. This, according to the record, perfected the title in Ruble, and made his mortgage of July 25, 1907, to the Union Central Life Insurance Company, a first lien on said land. This action is brought by the plaintiff, Ruble, who claims to have paid to Winne & Winne, the payee of the original note, the amount thereof out of the proceeds of the loan obtained from the Union Central Life Insurance Company, and seeks to cancel the assignment of the mortgage and indebtedness secured thereby, made by defendant Winne & Winne to the codefendant, W. F. Seibold, it being charged that the assignment of said mortgage, appearing of record, constitutes a cloud upon plaintiff's title to the land. Defendant Seibold in his answer seeks to recover a judgment on the indebtedness assigned him, and foreclosure of the original mortgage. It is said by counsel for plaintiff in error in his brief that there is but one question involved in the case, namely, that of agency, and, if it be found that Winne & Winne was Ruble's agent to procure the loan from the insurance company, then that the former's embezzlement or wrongful application of the proceeds would be an act for which the principal, Ruble, must suffer. This is the single issue upon which plaintiff in error seeks a reversal. The first question necessary to determine is that of the negotiability of the Abernathie note, given Winne & Winne July 28, 1903, for $ 720. We do not understand it is seriously urged that the note is negotiable. Under the decisions of this court construing sections 4626 and 4627, Comp. Laws 1909 (which must control and determine its character), on account of the provisions of said note, obviously it is nonnegotiable. Dickerson v. Higgins et al., 15 Okla. 588, 82 P. 649; Clevenger v. Lewis, 20 Okla. 837, 95 P. 230, 16 L. R. A. (N. S.) 410, 16 Ann. Cas. 56; Clowers et al. v. Snowden et al., 21 Okla. 476, 96 P. 596; Farmers' Loan & Trust Co. v. McCoy & Spivey Bros., 32 Okla. 277, 122 P. 125, 40 L. R. A. (N. S.) 177; Bell v. Riggs, 34 Okla. 834, 127 P. 427, 41 L. R. A. (N. S.) 1111; Citizens' Savings Bank v. Landis et al., 37 Okla. 530, 132 P. 1101. Being nonnegotiable, the rights of the transferee would be governed by the rule announced by this court in Randall Co. v. Glendenning et al., 19 Okla. 475, 92 P. 158, in a very similar case:

"That where a nonnegotiable note is transferred to another, although that party is an innocent purchaser, and the transfer is made before maturity and for a valuable consideration, yet if made without notice, either actual or constructive, to the makers thereof, it is subject to all the legal defenses which might be interposed against the note in the hands of the original payee."

¶2 There was no evidence that either Abernathie, Lamb, or Ruble had any knowledge of the assignment of the note by Winne & Winne to Seibold, but, on the other hand, each of these witnesses testified they had no such notice, while the defendant Seibold made no attempt to show that either of the respective owners of the land had any notice whatever of the assignment of the note and mortgage, except that, at the time of delivery to him, Winne & Winne had said that Abernathie would be notified of the assignment. Although, as already seen, the assignment of the mortgage was executed at Wichita, Kan., on August 5, 1903, and delivered to defendant at Danbury, Iowa, on August 8th following, it was not placed of record in the county where the land was situated...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT