Webb v. John Hancock Mut. Life Ins. Co.

• Decision Date: 20 February 1903
• Citation: 66 N.E. 470
• Parties: WEBB et ux. v. JOHN HANCOCK MUT. LIFE INS. CO. et al.
• Court: Indiana Appellate Court

66 N.E. 470

WEBB et ux.

v.JOHN HANCOCK MUT. LIFE INS. CO. et al.¹

Appellate Court of Indiana, Division No. 2.

Feb. 20, 1903.

Appeal from circuit court, Marion county; Henry Clay Allen, Judge.

Action by the John Hancock Mutual Life Insurance Company against Benjamin L. Webb and others. From a judgment in favor of plaintiff, the defendants Benjamin L. Webb and wife appeal. Affirmed.Lewis C. Walker and Harding, Hovey & Wiltsie, for appellants. Upton J. Hammond, Leonard J. Hackney, and Edward B. Raub, for appellees.

WILEY, J.

The appellee the John Hancock Insurance Company brought this action to foreclose two separate mortgages. Appellants and all the other appellees were made defendants. All the defendants below, except appellants, were made parties because they were junior lienholders. As such, they filed cross-complaints setting up their respective liens, etc. Issues were joined, and upon request the court made a special finding of facts, and stated its conclusions of law thereon. The conclusions of law were adverse to appellants, and the only questions presented by the assignment of errors are the exceptions to the several conclusions of law. A more detailed statement at this time is unnecessary, for the facts to which we must apply the law are fully exhibited by the special findings. We deem it important to state fully the facts, which are as follows: That on January 6, 1894, appellants were husband and wife, and have ever since been, and still are, such. That on said day appellant Benjamin L. Webb purchased said real estate described in the complaint of one Harding, and caused the same to be conveyed to himself and wife as tenants by entireties. That the full consideration was paid by Benjamin L., who at that time was not indebted, and was worth over $50,000 in money and property. That appellants so held said real estate until September 23, 1896, when they joined in a deed conveying said real estate to one John M. Wall as trustee for the use and benefit of Benjamin L.; the consideration for such deed being stated therein to be $1, but no sum was in fact paid in money or property. It was expressly provided in said conveyance that said real estate should be reconveyed to Benjamin L. by said Wall on demand, which was, in fact, on said day, done. That in said last conveyance the consideration was expressed as being $1, but in fact no sum was paid either in money or property. Both of said deeds were entered of record in the recorder's office of Marion county, Ind., on said day; said real estate being situate in said county. Said deeds were made and procured by appellants to enable Benjamin L. to make a loan, and secure its payment by a mortgage on said real estate. Appellants agreed between themselves that, after executing said mortgage or mortgages, said real estate should be again conveyed to appellants, as husband and wife, as it was formerly held. September 26, 1896, appellant Benjamin made a written application to the said insurance company for a loan of $4,000, which was accepted; and the applicant agreed to pay all expenses for examining title, and also agreed to pay a certain commission. Said Benjamin procured an abstract of title to said real estate, and presented the same to the agent of the insurance company, which showed the conveyances from Harding to appellants, from appellants to Wall, trustee, and also the conveyance of Wall to Benjamin L. Webb. The insurance company had no knowledge of the purpose of making the conveyances from appellants to Wall and from Wall to Benjamin, except such as was disclosed by the record and abstract of title. Said insurance company, or any agent for or on its behalf, never made any inquiry of appellants, or either of them, or of any agent or other person, as to the purpose of said conveyances. The abstract showed that in the conveyance from appellants to Wall, trustee, the deed contained the following provision: “This deed is made upon the express condition that said trustee shall convey such described real estate to said Benjamin L. Webb upon demand being made by him for such conveyance.” That said insurance company, through one Upton J. Hammond, accepted said application, and examined and approved the abstract, and on September 30, 1894, appellants executed a mortgage on the said real estate to secure the payment of one principal note for $4,000, due in five years, and ten interest coupon notes, each for the sum of $120, due upon different succeeding dates. All of said notes provided for 5 per cent. attorney's fees, and also that upon failure to pay any one of them at maturity, or the interest when due, then they should all, at the option of the mortgagee, become due and collectible, and that the mortgage might thereupon be foreclosed. This mortgage was duly recorded on the day of its execution. The purpose of making said loan was to raise money to put into a certain manufacturing business in which Benjamin was interested, and for the purpose of raising money with which to pay his individual debts. His said wife had no interest in said business, and was not liable for any of his said debts. No inquiry was ever made by any one, on behalf of the mortgagee, of either of the appellants, or any one representing them, as to what was to be done with the money so borrowed. All the proceeds of said loan were paid to said Benjamin, and no part thereof was received by his wife, or was used to pay any debt of hers, or used for the betterment of her estate; nor did she receive any benefit from said loan in any way. The entire proceeds derived from said loan were used by said Benjamin alone in the payment of his individual debts and in his individual business. January 8, 1899, said Benjamin L. Webb made his second written application for an additional loan of $2,500 on said real estate, and therewith furnished an abstract of title which showed no changes in the title to said property. Said application was accepted upon terms similar to the first loan, and the money paid by said insurance company to Benjamin L. Webb, who used it in the same way as he did the first loan of $4,000, and his wife did not receiveany personal benefit therefrom. Neither did said insurance company, before making said second loan, make any inquiry of appellants, or either of them, or any one representing them, as to what was to be done with said money. At the time of or prior to the execution of either of said mortgages the mortgagee did not have any actual knowledge that said deeds of conveyance to and from said Wall were to enable said Benjamin L. Webb to secure a loan to himself, nor that it had been agreed between appellants that said property should be reconveyed to them as husband and wife; nor did it know anything of said two deeds in the chain of title, except as the same were shown in the abstract of title. Said mortgagee made said two loans to said Benjamin, relying in good faith upon the ownership in his own right of said real estate, as shown by the abstract. Appellant Sallie M. Webb, when said two mortgages were executed-she joining therein-knew that the said insurance company was loaning to her husband the sums of money stated therein, and that said mortgages were being executed. The court found there was due on the two mortgages the aggregate sum of $7,576.63, principal and interest, and the further sum of $378.82, attorney's fees. November 8, 1900, appellants executed a deed to John M. Wall conveying said real estate to him as trustee, who on the same day conveyed the same to appellants, as husband and wife, in pursuance to the agreement between appellants hereinbefore specified.

The 11th, 12th, 13th, 14th, 16th, and 17th findings state facts relating to subsequent lienholders, which are unnecessary to set out here, for it was announced in oral argument that some disposition has been made of such claims. The court further found that appellant Benjamin L. Webb was indebted to cross-complainant the State Bank of Indiana, one of the appellees, upon a note of $928.22, which was past due, and upon which the payee was threatening suit. To avoid being sued thereon, he executed a renewal note, and secured its payment by giving a mortgage to said bank upon the real estate in suit, which said mortgage was accepted by the bank and duly recorded. Said mortgage was executed October 6, 1900, and recorded November 8, 1900. Appellant Sallie M. Webb did not join in said mortgage, and no part of the proceeds arising therefrom was received or used by her, or went to the betterment of her estate. The amount due-principal and interest-on said note, was $1,000.83, together with an attorney's fee of $50.

The following conclusions of law were stated by the court: “(2) That said plaintiff's [appellee insurance company's] first mortgage *** is a valid and subsisting lien upon said property. (3) That said mortgage is senior and superior to each and all claims of the several defendants and cross-complainants, and should be foreclosed as to each and all of them. (4) That said plaintiff's [appellee insurance company's] second mortgage is a valid and subsisting lien upon said property. (5) That said mortgage is senior and superior to all claims of the several defendants and cross-complainants herein, and should be foreclosed against all of them.” “(7) That the State Bank should recover the amount found due, against Benjamin L. Webb, and that its mortgage should be foreclosed against all parties to the suit, except Sallie M. Webb.” The 6th, 8th, 9th, and 10th conclusions of law seek to declare the right of certain junior lien holders, but, for reasons above stated, need not be determined here.

It is insisted by counsel that the facts specially found, which show that appellants owned the real estate as tenants by the entireties, and that it was conveyed to a trustee, and by him to Benjamin L. Webb, to enable the latter to borrow money, and secure its payment by a mortgage, and after borrowing the...