Young v. Pitts

• Decision Date: 25 March 1930
• Docket Number: 12866.
• Citation: 152 S.E. 640,155 S.C. 414
• Parties: YOUNG v. PITTS et al.
• Court: South Carolina Supreme Court

152 S.E. 640

155 S.C. 414

YOUNG v. PITTS et al.

No. 12866.

Supreme Court of South Carolina

March 25, 1930

Appeal from Common Pleas Circuit Court of Laurens County; C. C Featherstone, Judge.

Action by John H. Young against W. H. Pitts, E. Lee Pitts, J. M Pitts, and the First National Bank of Clinton. Decree for plaintiff, and the last two named defendants appeal.

Affirmed.

The decree of Circuit Judge Featherstone was as follows:

This case was heard by me upon exceptions to the Report of Special Referee, O. L. Long, Esquire.

The facts out of which the litigation arises are as follows:

In 1911, the defendant, Wash M. Pitts, who has filed no answer herein, gave the plaintiff John H. Young a mortgage on two tracts of land, one of 123 acres known as the Benjamin Place and the other containing 62.89 acres, known as the Dendy Place, to secure a debt of twenty-two hundred ($2,200.00) dollars. The mortgage was duly recorded 20th of January, 1911.

Upon this mortgage there was due at the date of the Referee's report, including 10% attorneys' fee, the sum of three thousand seven hundred sixty-eight and 23/100 ($3,768.23) dollars.

On December 15, 1916, Wash M. Pitts sold the 123-acre tract to one W. L. Riddle, and paid to plaintiff, from the purchase money thereof, fourteen hundred ($1,400.00) dollars.

On that same day there was spread on the records in the Clerk's office, what purports to be a satisfaction of the entire mortgage debt.

The original of this paper can not be found; but from the testimony, we must assume that Young signed it and that it was properly executed. It is clear, however, from the testimony that the satisfaction was executed through mistake Young only intending to release the tract of land sold to W L. Riddle and hold the mortgage on the other tract. This mistake is clearly established by the testimony of Young Wash M. Pitts, J. D. Bell and from all the surrounding facts and circumstances.

The Referee makes no finding of fact as to the mistake, but only finds that Young executed the satisfaction. But if he had passed upon the question he would have been forced to find that Young did not intend to satisfy the mortgage, but only to release the tract sold to W. L. Riddle.

I start the consideration of the case with no doubt in my mind as to this fact.

On December 15, 1916, Washs M. Pitts executed to his brother, J. M. Pitts and E. Lee Pitts, his note for two hundred sixteen $216.00) dollars, and his mortgage on the 62.89-acre tract of land, to secure the same. This mortgage was recorded 12th of February, 1917. It contains the following statement following the description of land: "I hereby declare that I own the above described land in fee simple in my own name except the balance due John H. Young and the mortgage herein created." J. M. Pitts is the sole owner of this paper and he testified that the consideration was an old debt, or rather to secure endorsements formerly made.

On January 20, 1921, Wash Pitts executed to First National Bank of Clinton, his mortgage on the 62.89-acre tract of land securing two notes, which now aggregate, including attorney's fees, the sum of three thousand nine hundred ninety-seven and 01/100 ($3,997.01) dollars.

It is admitted that these notes were renewals of old notes executed by Wash M. Pitts and one of them endorsed by J. M. Piits. How far back the indebtedness was created does not appear, certainly as far back as 1920, but no money passed at the time of the execution of the mortgage.

The first question that I desire to pass on relates to a matter of practise and the Statute of Limitations. The plaintiff first brought his action for foreclosure on the note and mortgage without reference to the satisfaction endorsed upon the record. The defendants answered setting up, by way of defense, the satisfaction. The plaintiff filed no reply, but in reply undertook to show that in fact there was no payment, but that the paper purporting to show payment was executed in mistake, the defendants objecting to the testimony. Later the defendants made a motion to strike out the testimony as to mistake. The Referee, upon this motion ruled that as the pleadings originally stood, he regarded the testimony as incompetent and would have to strike it out, but that he would allow plaintiff to amend by setting up mistake and then reforming the satisfaction. In other words, he held that plaintiff must first reform the satisfaction by showing that it was executed in mistake, before he could recover on the notes and mortgage. Following this suggestion the plaintiff did so amend and the defendants were allowed to amend by pleading the Statute of Limitations to the action to reform. The Referee then sustained the plea of the Statute not passing at all upon the question of mistake. The exceptions question the soundness of the Referee's rulings in that respect. I think these exceptions will have to be sustained.

As I view it, the plaintiff denying that his mortgage had been paid, had a perfect right to bring the ordinary action of foreclosure and when defendants pleaded satisfaction, had the right without even filing a reply, to show that the satisfaction was executed in mistake and thereby destroy its force. The fact that the satisfaction was spread upon the record did not give it any peculiar efficacy, or destroy this right. See, Montague v. Priester, 82 S.C. 495, 64 S.E. 393. Suppose, for instance, Young had undertaken to show that he never signed the paper, that it was a forgery, can it be doubted that he could have proceeded to foreclose his mortgage and when it was set up, broken it down by showing forgery? Again, even if it showed he conceded that he must first bring his action to reform, coupled with the action to foreclose, I think the action would not be barred, unless the right to foreclose was barred. See Montague v. Priester, 82 S.C. 495, 64 S.E. 393. The only object of reformation would be to get the satisfaction out of the way so as to enable him to foreclose. But, as I have already stated, I do not think the allegations looking to a reformation were at all necessary.

And now we come to a consideration of the case on its merits. I have already held that the plaintiff has shown that the satisfaction piece was executed in mistake, if it was executed by him at all. He says he has no recollection of signing a satisfaction at all; that he only intended to release the larger tract bought by W. L. Riddle. The matter was attended to for him by others, Mr. J. D. Bell, at that time President of the Commercial Bank of Clinton, amongst the number. And Mr. Bell is as positive and strong as Mr. Young, even suggesting that if the original paper could be found it would show the mistake to have been that of the Deputy Clerk. And Wash M. Pitts, the mortgagor, corroborates Young and Bell. But there is the satisfaction, duly recorded on the record staring us in face. As before suggested, I think it will have to be held that Young signed the paper, but that he signed it through mistake. With this holding we go to the next step.

What is the legal effect upon the rights of the defendants; the junior mortgagees? I am not considering its effect upon the mortgagor, for beyond question, as against him, the mortgagee has the right to show the mistake and hold his mortgage. The junior mortgagees do not contend that they were actually misled by seeing the satisfaction on the record before taking their mortgages. But as I understand it, their contention is that the satisfaction being there, where they could have seen it, they occupy the position of bona fide purchasers for value without notice. Let's see about that. In the first place, are they purchasers for value? I do not think they are according to their own testimony. Pitts' mortgage was executed on the very day that the satisfaction was spread upon the record, and he says that no money was passed at that time, but the consideration was an old endorsement. What about the Bank's mortgages? Again, we have old debts as the consideration. How old we do not know, but certainly prior to the execution of its mortgage, for there is no testimony to show. Clearly then they are not purchasers for value, for the mortgages were given to secure antecedent debts. See Marsh v. Ramsay, 57 S.C. 121, 35 S.E. 433; Summers v. Brice, 36 S.C....