State Bank of Wheatland v. Bagley Bros.

• Decision Date: 10 May 1932
• Docket Number: 1708
• Citation: 44 Wyo. 244,11 P.2d 572
• Parties: STATE BANK OF WHEATLAND v. BAGLEY BROS. (Fidelity & Deposit Co. of Maryland, Intervener)
• Court: Wyoming Supreme Court

11 P.2d 572

44 Wyo. 244

STATE BANK OF WHEATLAND v. BAGLEY BROS. (Fidelity & Deposit Co. of Maryland, Intervener)

No. 1708

Supreme Court of Wyoming

May 10, 1932

ERROR to District Court, Platte County; SAM M. THOMPSON, Judge.

Action by State Bank of Wheatland against Bagley Bros., a co-partnership, composed of John R. Bagley and Nathan G Bagley; Mamie E. Bagley, executrix of the estate of Nathan G Bagley, deceased and Mamie E. Bagley, and others, wherein the Fidelity & Deposit Company of Maryland intervened. From judgment rendered, the named defendants appeal.

Affirmed in part as modified and reversed in part.

For the defendants and appellants there was a brief by Kinkead and Pearson, of Cheyenne, Wyoming, and W. B. Jones, of Wheatland Wyoming, and oral argument by Mr. W. C. Kinkead and Mr. A. A Pearson.

The District Court erred in holding D. W. Brice, the president and general manager of the plaintiff bank, to be a competent witness to transactions which occurred prior to the death of Nathan G. Bagley; against these appealing defendants and over their objections. Caldwell Merc. Co. v. May Co., (Minn.) 169 N.W. 797; Peterson v. Co., (Minn.) 126 N.W. 534; Hecht v. Shaffer, 15 Wyo. 34, and Stevens v. Short, (Wyo.) 285 P. 797. Brice was prejudiced in favor of the plaintiff, and his testimony is entitled to but little weight; it should be carefully scrutinized under the circumstances. Weidenhoft v. Primm, 16 Wyo. 340. The District Court erred in permitting the defendant John R. Bagley to testify in this action; (a) because he is incompetent as a witness against the appealing defendants; (b) because he is not an adverse party to the plaintiff, so as to permit plaintiff to call him as on cross-examination. Objection was made to his evidence under Sec. 5807 C. S.; Hecht v. Shaffer, supra. His competency was not shown by examination before he testified. 4 Jones on Ev., Sec. 796, p. 901; Ulman v. Abott, Admr., 10 Wyo. 97, 109; Wiedenhoft v. Primm, supra; Bliler v. Boswell, Admr., 9 Wyo. 57; First Nat'l Bank v. Illiboe, (N. Dak.) 114 N.W. 1085; Kempton v. Bartine, (N. J.) 44 A. 461; Bunker v. Taylor, (S. D.) 83 N.W. 555; Hubbell v. Hubbell, 22 O. S. 208; Am. Invst. Co. v. Coulter, (Kan.) 61 P. 82; Cooper v. Wood, (Colo.) 27 P. 884; Kirkpatrick v. Kirkpatrick, (N. J.) 151 A. 48. He was not an adverse party and should not have been called for cross-examination. Western Investment & Land Co. v. First Nat'l Bank, (Colo.) 172 P. 6; Bowler v. Fahey, (Minn.) 162 N.W. 515; O'Day v. Meyers, (Wis.) 133 N.W. 605. The trial court erred in decreeing the foreclosure of the real estate mortgage, plaintiff's exhibit No. twelve, because it was expressly waived by plaintiff. See record. The evidence shows (a) that the notes, plaintiff's exhibits 1 and 4 were paid by a sale of the cattle, and (b) that the bank waived any right it may have had to recover on said notes by taking possession of the cattle for the purpose of foreclosing the mortgages thereof, and the finding of the court that said notes were unpaid and decreeing the foreclosure of the mortgages, plaintiff's exhibits Nos. 12-13-15 and 16, to make the respective amounts thereof was error. Bank v. Ford, 30 Wyo. 110, 216 P. 691, 2 Jones on Ev. 26, Sec. 181. The rule is that proceeds of mortgaged property must be applied to the extinguishment of the mortgage debt. Nolan v. Farrow, (Ala.) 45 So. 183; Oliver v. Garrick, 2 F. (2nd) 132; First Nat'l Bank v. Ballard, (Okla.) 139 P. 293; Bank v. Hall, 203 F. 366; Illinois Tr. & Sav. Bank v. Lumber Co., (Wis.) 94 N.W. 777; First Nat'l v. Rush, (Tex.) 227 S.W. 378; Leath v. Hancock, (Okla.) 98 So. 274; Monroe Stock & Exc. Co. v. Thomas, (Ala.) 100 So. 348. The election made by the bank in Mamie Bagley's injunction suit, estops it from asserting that the mortgages on the cattle were foreclosed and notes paid. Robb v. Voss, 39 L.Ed. 52, 155 U.S. 13; Davis v. Wakelee, 39 L.Ed. 578, 156 U.S. 680; Jenigan v. Co., (Ala.) 100 So. 142; R. R. Co. v. Howard, 14 L.Ed. 157. John R. Bagley as surviving partner was obliged to wind up the partnership, pay its debts and distribute the remaining assets between himself and Mamie Bagley, executors of the deceased partner. Froess v. Froess, (Pa.) 137 A. 124; Big Four Imp. Co. v. Keyser, (Kas.) 161 P. 592; Grant v. Fletcher, 263 F. 243. The bank is liable for funds diverted from the partnership trust. Gray v. Elliott, (Wyo.) 255 P. 593; Bank v. Ins. Co., 104 U.S. 54. The trial court erred in finding and decreeing that the real estate mortgage, plaintiff's exhibit No. 13, should be reformed. Stone v. Nagle, 15 Wyo. 86; Lyman v. Ins. Co., 17 Johns 377; Pennock v. Goodrich, (Vt.) 146 A. 1; Lucas v. Body, (Ala.) 47 So. 1017; Herzerg v. Moon, (Wash.) 280 P. 41; Knox v. Pearson, (Kan.) 68 P. 613; Erickson v. Poole, (Wash.) 217 P. 715; Kanofshy v. Woerduhoff, (Ia.) 235 N.W. 305; Bott v. Campbell, 161 P. 955; Schuler v. Buccus, (Mich.) 235 N.W. 226; Grain Co. v. Grain Mut. Fire Ins. Co., (Ia.) 201 N.W. 568. There was no evidence of material mistake. Grieve v. Grieve, 15 Wyo. 358, 4 R. C. L. 507; Cherokee Oil & Gas Co. v. Lucky Leaf Co., (Okla.) 242 P. 214; Fraters Co. v. Comm., (Calif.) 290 P. 45; Allen v. Kitchen, (Ida.) 100 P. 1052. Appellants pleaded the statute of frauds in this connection, and are entitled to the benefits thereof. Glass v. Hulbert, 102 Mass. 24; Safe Dep. Trust Co. v. Diamond C. & C. Co., (Pa.) 83 A. 54; Heacock v. Hansley, (Okla.) 224 P. 184; Allen v. Kitchen, supra; Macumber v. Peckham, (R. I.) 17 A. 910; Stodolka v. Mootny, (Ill.) 33 N.W. 434; Vogle v. Ensor, (Ind.) 131 N.E. 416; Reigart v. C. & C. Co., (Mo.) 117 S.W. 61; Kirchner v. Sewing Machine Co., (N. Y.) 31 N.E. 1104; Mead v. White, 23 L. R. A. (N. S.) 1197. Courts of Equity refuse aid to litigants in the position that plaintiff is in in this case. DeWiese v. Rinehard, 165 U.S. 386, 390, 41 L.Ed. 757; Nat'l Fire Ins. Co. v. Thompson, 74 L.Ed. 881; Herzberg v. Gabelnick, (Mass.) 173 N.E. 495. The court erred in decreeing foreclosure of the chattel mortgage which is plaintiff's exhibit No. 17. The instrument is ineffective for any purpose as appears from its face. The notes marked plaintiff's exhibits Nos. 5 to 11, inclusive are invalid as against the partnership of Bagley Bros. and the finding that any amount is due on any of them from the partnership and the decree of the foreclosure of mortgages and pledges to make the respective amounts found due, was error. Gilmore v. Ham, (N. Y.) 36 N.E. 826; Wood v. Todd, 251 F. 531, 538; Froess v. Froess, supra. The principal is supported by the following cases: Mechanics and Traders Ins. Co. v. Richardson, (La.) 39 La. 290; Brown v. Pettit, (Pa.) 56 A. S. R. 742; Page v. Jones, (N. M.) 190 P. 541; Peoples Nat'l Bank v. Mulholland, (Mass.) 117 N.E. 46; Blue Valley State Bank v. Milburn, (Ia.) 232 N.W. 777; Note in 39 Am. Rep. 293; Note in 50 A. L. R. 432; Note in 12 A. L. R. 1049; Note in 10 A. L. R. 761; Note in 33 L.Ed. 696. The twelve shares of stock in the name of Nathan G. Bagley was, and is the sole and separate property of Nathan G. Bagley, and it was error to find that said stock was ever pledged and to decree that the same be sold under that pledge. Hayes v. Pierson, 234 P. 494. The Wheatland property was and is the homestead of Nathan G. Bagley and Mamie E. Bagley, and the mortgage thereof without the joinder of Mamie Bagley was invalid and void. The decree for foreclosure and sale of that property was error. The allowance of attorneys fees for the foreclosure of the various mortgages and the pledge of the filling station stock was error. The real property was owned by Nathan G. Bagley, individually. The trial court erred in finding that a partnership existed between John R. Bagley and Nathan G. Bagley in the ranching business. The record shows that the bank loaned money to John R. Bagley indiscriminately after the death of his brother without regard to his authority to bind the partnership for sums so loaned.

APPEAL NO. 1707

BRIEF OF DEFENDANTS ON PLAINTIFF'S APPEAL

The District Court committed no error in finding and decreeing that the Government homestead of John and Nathan Bagley were their separate and individual property, and never became property of the partnership. Federal homestead laws are designed for the purpose of enabling individuals to acquire land for their individual use. Entrymen are required to make sworn statements that lands so taken up are for the use of the entryman, and that no agreement has been made to acquire it for other persons. A contract in violation of that law is contrary to public policy, and absolutely void, so there could be no valid agreement to take up Federal homesteads for the benefit of a partnership. Shoreman v. Eakin (Ark.) 1 S.W. 559; Clark v. Bayley, 5 Ore. 343, 352; Armstrong v. Henderson, (Ida.) 102 P. 361, 364; Anderson v. Carkins, 34 L.Ed. 272, 135 U.S. 483; Kennedy v. Lonabaugh, 19 Wyo. 352, 359; Re Groome's Estate, (Cal.) 29 P. 487. There is no evidence of record that these homesteads were conveyed to the partnership. The case of Johnson v. Hogan, cited as an authority for conveying Government claims prior to patent, is not in point as to homestead entries. The District Court committed no error in finding and decreeing that John Bagley as surviving partner had no power or authority to execute and deliver the real estate mortgage, plaintiff's Exhibit No. 14, or in decreeing said mortgage to be null and void. Where a mortgage is ambiguous it will be construed most strongly against the party who proposed it. 41 C. J. 449. It is impossible to tell from Exhibit No. 14, what lands were mortgaged. A particular description will control a general description in case of repugnancy. Wentworth v. Daly, 136 Mass. 423. It is apparent that the taking of this mortgage...