Hyatt v. Bell

Riddick, J., (after stating the facts.) This is an appeal by Hyatt from a judgment in an action of replevin brought by Bell against him in the Hempstead Circuit Court for the recovery of a “jobber,” paper cutter, type stands and type such as is used in a printing office. The facts which are set out in the statement of facts are practically undisputed. The court in his charge to the jury told them in .substance to find for the defendant “unless,” to quote the language of the instruction, “you believe that, when Hill sold to the Bank of Ozan the note and mortgage executed by Turner tó Hill he told Clark, the cashier of the .said Bank of Ozan, of the note he held belonging to W: J. Old, and that Clark, acting for the Bank of Ozan as its cashier, purchased the note and mortgage from Hill without the Old note, and thereby waived the rights secured by Old in the note executed by Turner to him; and if you so believe, your verdict will be for the plaintiff.” This instruction was excepted to by the defendant. It is not disputed that Hill at the time he sold the note to the bank told the cashier of the bank that he held a note executed by Turner to Old, and that the bank purchased the note and mortgage from Hill -without the Old note. This instruction was erroneous and misleading for the reason that it left it to the jury to say whether, under the facts stated, the rights of Old to the property were not superior to those of the bank, whereas there is nothing in the evidence to justify such a finding. The facts are that Old held a note from Turner reciting that the title of the property in controversy should be in Old until Turner paid the note. After this Turner, with the knowledge'and consent of Old, mortgaged the property to Hill to secure a loan from Hill to Turner. This loan, though made on a note and mortgage executed by Turner, was in fact intended for the benefit of Old, who actively assisted in inducing Hill to make the loan, and who received the benefit of the loan when it was made. But Hill, knowing that Old held a note from Turner reciting that the title of the property was in 01dr refused to make the loan until Old had delivered him this note to be held as additional collateral. Hill then held not only the note of Turner to him for the amount of the loan and a mortgage on the property in controversy executed by Turner with the consent of Old, but also the note Turner had given to Old for the property. But, even had Old retained the note, still, as-he had consented to the mortgage, his rights were subordinate to those of the mortgagee. It was no doubt prudent for Hill to hold the note also -to prevent other parties to whom it might be transferred from being misled by it, but his right to hold the property as against Old did not depend on the note but on the mortgage also. When this note was delivered to Hill by Old, Hill promised to return it to Old so soon as Turner paid the note he had executed to Hill for the loan. When the note to Hill' became due, Turner was unable to pay it, and he induced the Bank of Ozan to purchase the note and mortgage from Hill. But this was not a payment of the note by Turner, and it did not entitle Old to a return of his note, for the agreement was to return -it when Turner paid the note to Hill. And the note to-Hill was never paid by Turner until the property mortgaged had been sold under the power contained in the mortgage and purchased by defendant. But, after the bank purchased the note and mortgage from Hill and paid him therefor, he returned to Old the note which he had deposited as collateral. The cashier of -the bank consented to the return of this note to Old, but at that time the cashier had never seen the note and did not know that it contained a stipulation that the title should remain in Old until the note was paid. But there was nothing in this act of the cashier, even if he had known these facts, to estop the bank from asserting its rights under the note and mortgage it had purchased, as -against Old or anyone purchasing from him. On the contrary, Old, having consented to the mortgage of this property to Hill and induced him to make the mortgage, thereby waived, as against the mortgagee or those holding under him, any -right to assert, as against them, the title retained by him in the note from Turner. The plaintiff, who brings this action to recover the property mortgaged, claims it by reason of a transfer of the Old' note to him. This transfer was made after the maturity of the note; though, as this is not a suit on the note, that may not be material. The defendant holds by a purchase under the mortgage, and, as we have stated, the undisputed facts of the case make out a clear case in his favor; and we are of the opinion that the motion for new trial should have been granted. Judgment reversed, and cause remanded for further proceedings.