Walsh v. Morgan

• Decision Date: 21 April 1938
• Docket Number: No. 1372.,1372.
• Citation: 198 A. 555
• Parties: WALSH et al. v. MORGAN.
• Court: Rhode Island Supreme Court

198 A. 555

WALSH et al.

v. MORGAN.

No. 1372.

Supreme Court of Rhode Island.

April 21, 1938.

[Copyrighted material omitted.]

Appeal from Superior Court, Providence and Bristol Counties; G. Frederick Frost, Judge.

Suit by Michael J. Walsh and another against Marshall Morgan, administrator, to enjoin the foreclosure of a mortgage. From a decree dissolving a temporary injunction and dismissing the bill of complaint, plaintiffs appeal.

Appeal sustained, and decree reversed.

McKiernan, McElroy & Going, Edward F. McElroy, and Patrick J. McElroy, all of Providence, for complainants. Morgan & Morgan, of Providence, for respondent.

MOSS, Justice.

This is a suit in equity brought by Michael J. Walsh and his wife, Theresa Walsh, on July 19, 1935, against the respondent as administrator of the estate of Mary Coyle, late of the city of Philadelphia, Pa. She was named as the payee in a promissory note made by the complainants under date of January 19, 1903, for $3,200, and as the mortgagee in a power of sale mortgage deed of the same date and recorded on January 22, 1903, securing the payment of that note and covering real estate in the city of Providence in this state. This real estate was then, and until after the commencement of this suit continued to be, owned in fee simple by the complainants and in their possession.

Mary Coyle died intestate on February 7, 1908, and on February 15, 1935, the respondent, by a decree of the probate court of the city of Providence, was appointed the administrator of her estate in Rhode Island. Later, purporting to act under the power of sale in the mortgage deed, he, as such administrator, advertised the property for sale at public auction, to take place on July 22, 1935. The note and mortgage have been lost, and no evidence that either of them was discharged or transferred was produced.

In their bill of complaint the complainants set forth, in substance, the above facts, and alleged that the mortgage was unenforceable and barred from foreclosure by reason of the fact that they had remained in possession as mortgagors of the mortgaged real estate for more than twenty consecutive years next before the filing of their bill, and during that period had not acknowledged or recognized the fact of the validity of either the note or the mortgage as a valid obligation and lien, respectively; and they denied that the note and mortgage were enforceable.

They prayed that the agents, attorneys, and servants of the respondent be temporarily and permanently restrained and enjoined from proceeding with the sale of the real estate; that the note and mortgage deed be canceled and discharged; that the discharge thereof be recorded in the proper recording office; and that the note and mortgage deed be removed as a cloud on the title of the complainants to the mortgaged real estate. No other specific or general relief was prayed for. A motion was later filed by the complainants for leave to amend the bill by adding a prayer for general relief; but apparently no such amendment was ever made.

In his answer the respondent neither admitted nor denied the ownership by the complainants of the mortgaged real estate. He denied that the mortgage was unenforceable and barred from foreclosure for the reasons alleged by the complainants. He admitted all the other allegations of the bill, but alleged that although on January 19, 1903, the complainants executed a mortgage deed and note in the name of Mary Coyle, they were delivered to, became the property of, and always did remain the property of, Thomas Dorsey; that he died on October 15, 1934; that at his death and for a long time prior thereto he was insane; and that "the said Marshall Morgan on February 15, 1935, was appointed administrator of the estate in Rhode Island of said Thomas Dorsey and duly qualified as such administrator and is now so qualified." However, no appearance was entered by him as such administrator.

Before the case was heard in the superior court on its merits, the complainant Michael J. Walsh died, his death was suggested on the record, and his heirs entered their appearance as complainants. Apparently, they and Theresa Walsh have continued to own the real estate. After the case had been heard on bill, answer, and replication before a justice of the superior court, he filed a rescript, in which he discussed the evidence and found from it that the money which was loaned to Michael J. Walsh, and for which the note in question was made, was the money of Dorsey, who was the brother of Mary Coyle; that Dorsey retained the note and mortgage and enjoyed all the benefits accruing from the investment; "that Mary Coyle in her lifetime held the legal title only to the mortgage and that a trust resulted in favor of Thomas Dorsey, who paid the consideration for the mortgage which was in the name of Mary Coyle."

He likewise found that, according to the testimony for the complainants, the last payment on the note was made in 1913, and that about $1,200 of the principal of it still remained unpaid. He also found that Dorsey had been insane for many years before his death on October 15, 1934; and that his mental condition was "a complete bar to the running of any period of time in favor of the mortgagors." He further found that the evidence did not show that the mortgagors ever held adversely to the mortgagee. The final conclusion of the justice was, "that no valid reason has been shown why the respondent should not be permitted to foreclose his mortgage and the bill of complaint must therefore be dismissed."

Later, there was a reargument, granted on the motion of the complainant, and then the justice filed a supplemental rescript in which he found that inability to produce the original note and mortgage, because they could not be found, is not a bar to foreclosure by the administrator. He therefore adhered to his previous decision and a decree was entered, by which a temporary injunction against foreclosure by the respondent was dissolved and the bill of complaint was denied and dismissed. The case is now before us on the complainants' appeal from this decree.

We agree with the justice of the superior court in his last finding. The production of a certified copy of the mortgage as recorded in the land records, in the absence of any proof, from the records or otherwise, of its having been discharged or transferred, makes out a prima facie case of the continued existence of the rights and obligations created by its execution and delivery. Wilson v. Stevens, 105 N.J.Eq. 377, 148 A. 392, 393. In that case the court said that a mortgage bond is not the debt, but only evidence of its existence, and that the loss or destruction of the bond cannot per se defeat the right to foreclose under the mortgage. The court added: "At the hearing, the recorded mortgage was produced, and its execution and delivery thereby duly proven." The evidence in the instant case satisfactorily accounted for the failure of the respondent to produce the note and mortgage, without giving rise to any inference or presumption that they had been discharged or transferred.

It is our opinion, after a consideration of all the evidence, that all the findings of fact by the justice of the superior court are either admitted by the parties or supported by the evidence. We also agree with his conclusions that Dorsey was the equitable owner of the note and mortgage, Mary Coyle having only a bare legal title; and that, under the circumstances, the lapse of time was no bar, either at law or in equity, to the foreclosure of the mortgage now.

As to the former of these conclusions, the only evidence against it was the fact that Mary Coyle was named in the mortgage as the mortgagee and as the payee of the note, without any mention of Dorsey; and that a number of times, in asking the mortgagors for payments by them, he stated that Mary Coyle needed the money.

On the other side of the issue there was uncontradicted evidence that the mortgagors never met her or had any communication with her or any information about her; that, according to the uncontradicted testimony of her daughter, Mary Coyle and her husband were very poor and, for a considerable time before her death in 1908, were dependent on the daughter for support; that upon her death she left no estate, and no papers of any kind belonging to her were found. There was nothing to show that she knew anything about the mortgage.

There was also evidence that Dorsey was a man of some means and made investments in other mortgages; that the money represented by the mortgage was actually paid by him to the mortgagors; that all payments by them, continuing to about the end of the year 1913, were made to him, all the later ones for some years being in the form of postal money orders payable to him and sent to his address in Philadelphia. All of the numerous receipts that were put in evidence were signed by him in his own name only. It is quite possible that she made to him a transfer of the mortgage and that it was lost with the note and mortgage, without having been recorded. In this state of the evidence, we cannot say that the justice of the superior court was not justified in finding that Dorsey was the real and equitable owner of the mortgage. See Hudson v. White, 17 R.I. 519, 23 A. 57.

The latter conclusion of the justice, namely, that under the circumstances of this case the lapse of time was no bar, either at law or in equity, to the foreclosure of the mortgage now, was based by him, in large part at least, upon the ground that the insanity of Dorsey for many years before his death prevented time from running against him during that period. Without passing upon the validity of that ground, we have reached the same conclusion upon a different ground, which to our minds is conclusive and less controversial.

The burden of proving that the right to foreclose the mortgage has been barred by the lapse of time is upon the complainants. T...