Maas v. Rettke

Grace, J. Appeal from the judgment of the District Court of Mercer County, North Dakota, Honorable J. M. Hanley, Judge. This is an action to recover the sum of $500 with interest on a certain covenant contained in a mortgage on land signed by the defendants. The facts in the case are as follows: Dittus Brothers was a copartnership engaged in the machinery business. The defendant, William H. Rettke, became indebted to them in the sum of $500 for said machinery, and on the 3d day of May, 1910, he gave Dittus Brothers his note for $200 payable June 1, 1910, and on the same day gave his note to them for $300 payable October 1, 1910. He was a single man at this time and was the owner of the N.W. J of section 34, township 143, range 88. After the execution and delivery of said notes, and on the 29th day of October, 1910, he married, and th.e other defendant in this case, Johanna Rettke, is his wife. After their marriage, they moved to and continued to live upon the land hereinbefore described and were living thereon at the time of the execution and delivery of that certain real estate mortgage upon said land, which contained the covenant, to recover upon which this suit is brought. The complaint states the cause of action by setting out therein the terms of the notes which Avere executed and delivered by William H. Rettke at the time stated, and the further cause of action upon the covenant contained in the mortgage which was executed and delivered the 22d day of August, 1911, and which was afterward recorded in the office of the register of deeds in Mercer county. At the time — 67 — Johanna Rettke married William H. Rettke, sbe was the owner of ber separate property, among wbicb was certain land wbicb sbe had proved np as a government homestead. Defendant William H. Rettke, for his separate answer, admitted the execution and delivery of. the notes but pleaded as a bar to any recovery thereon, his discharge as a bankrupt, under the Uniform National Bankruptcy Act. That he was discharged from all his debts and obligations is undisputed. It is admitted that he was discharged in bankruptcy. This being true, he was discharged from all provable debts against his estate in bankruptcy contracted prior to the time he was so adjudged to be bankrupt. The present action as to him was dismissed. The covenant in the mortgage in question upon which recovery is .sought against Johanna Rettke, reads thus: "And said William H. Rettke and Johanna Rettke, his wife, do further covenant and agree to and with the said parties of the second part, their heirs, executors, administrators and assigns, to pay said sum of money above specified, at the time and in the manner above mentioned together with all the costs and expenses.” The amount specified in the mortgage is $500 and was according to the condition of two notes which' are the identical notes heretofore referred to and which were signed only by William H. Rettke. The defendant, Johanna Rettke, by her separate answer, interposed as her defense to any recovery upon the covenant in question: First, a total want of consideration; second, that her signature to the mortgage was procured by false and fraudulent representations upon which she relied and by which she was deceived, and that she was unable to read English and relied upon the Dittus Brothers to tell her the meaning of what the said mortgage contained, and that she was deceived by said Dittus Brothers in the amount of the notes described in the mortgage; that the plaintiff bought the mortgage after the maturity of the notes. The mortgage, after its execution and delivery, was assigned by written instrument by the Dittus Brothers to the plaintiff in this action. After the close of the testimony the plaintiff moved for a directed verdict in his favor against the defendant, Johanna Rettke, for the sum of $500 with interest thereon from May 3d, 1910, at 10 per — 68 — cent, wbieb amount was tbe sum of tbe two notes executed by defendant, William H. Rettke, at tbe time and in tbe manner hereinbefore stated. Tbe defendant, Johanna Rettke, moved for a directed verdict in her favor on tbe ground that there bad been no showing of any new consideration for her covenant in tbe mortgage to pay their debt. Both parties having moved for a directed verdict, tbe trial court held that tbe action became a court case so far as tbe defendant, Johanna Rettke, is concerned. Tbe defendant, Johanna Rettke, interposed some further defenses which we do not deem material to consider. The court, after due consideration, entered judgment against defendant, Johanna Rettke, for the full amount demanded. She has perfected an appeal to this court from such judgment. The questions presented in this appeal are: What is the relation of Johanna Rettke to the transaction? What, if any, is her liability? The answers, to these two questions will dispose of the case. We have no hesitancy in stating that her relation to the transaction is that of surety. It is stated in the syllabus of the People’s State Bank v. Francis, 8 N. D. 369, 79 N. W. 853, that “where Francis executed certain promissory notes and a mortgage upon certain real estates belonging to himself to secure the same, and, at his request, his wife also executed the mortgage, and the mortgage contained an express covenant that the mortgagors would pay' the debt thereby secured in accordance with the terms of said notes, but the wife did mot sign the notes, and the mortgagee knew that the debt secured was -the debt of Francis, the obligation assumed by the wife in the covenant, contained in the mortgage was, to the knowledge of the mortgagee, that of surety for Francis.” In that case, Mrs. Francis declined to sign the notes. She signed the mortgage. on the statement of the parties representing the bank that they desired to shut out any right of dower Mrs. Francis might have. Among other questions asked the defendant, Johanna Rettke, were the following: Q. Did you say that you would have to sign the mortgage to make it good on the homestead? A. Yes. Q. On his homestead? A. Yes. — 69 — The testimony of defendant, Johanna Rettke, also tends to show clearly that she would not have signed the mortgage had she believed that it would have affected her own property. In other words, create a liability which might be collected from her out of her own separate property. Agnes Johnson, a daughter of the defendant, Johanna Rettke, testified that Dittus, at the time of the execution of the mortgage on the 17th day of August, 1911, told her (Johanna Rett!"') it would not affect her claim any or any of her property if she would sign it. On the cross-examination of Emmanuel Dittus, there is the following testimony: Q. What time of the day was it when you got out there ? A. You got me on that. Q. You don’t remember the time of the day? A. I think it wus in the forenoon. Q. Did you tell Mrs. Rettke that this mortgage was a mortgage on her husband’s place? A. No, I did not. Q. Did Mr. Nathan tell her that ? Did he fell her that without her signature on this mortgage it would not be a valid mortgage on her husband’s place? A. Yes. Q. Did she first refuse to sign it ? A. I think she said if it won’t affect her quarter she would sign it. Q. She said she would not or she did not want to become liable for her husband’s debts? A. No. Q. She was willing to become liable for her husband’s debts? A. She agreed. Q. She said, “I will agree to pay it but I don’t want it to affect my land?’’ A. No. Q. Did she say that she did not want to become liable for any of her husband’s debts contracted before her marriage? A. No. We think the effect of the testimony as a whole is to show that — 70 — Johanna Rettke signed the mortgage'to make it good against the land in question, the land at the time of the execution of the mortgage in question being a homestead under the laws of this state, and that the testimony further clearly shows that she did not intend to become personally liable for the payment of the debt of her husband nor assume any personal liability so that her husband’s debts might be realized upon or out of her separate property. In any event, we do not believe there was any consideration for the mortgage at the time of the execution and delivery of it. The husband’s debts to Dittus Brothers, that is, the notes, were long past due, there had been no extension of time of payment of the same; there was no new consideration; there was no independent consideration to make it obligatory upon the surety; she received no part of the consideration of the notes, and the contract, that is, the mortgage, was entered into long after the notes had been executed and delivered and accepted by the payee, and long after they had become past due; and there was no surrender by the Dittus Brothers at the time of the taking of the mortgage of any existing legal right. In the case of Bank of Carrollton v. Latting, 37 Okla. 8, 44 L.R.A. (N.S.) 481, 130 Pac. 144, it is said in the syllabus : “The signing of a note as surety some days after the principal had executed the same and after the delivery and acceptance thereof and after. the consideration had passed without any agreement, that the surety’s name would be secured to the note, is without consideration.” “When a note has been fully executed and delivered and subsequently thereto, a hew party signed it as surety, there must be an independent consideration to make it obligatory upon the surety. The defendant’s contract (whether it be that of guarantor or surety) having been entered into after the note had once been delivered and accepted by the payee, and the transaction had become fully executed, required proof of a distinct consideration to support it; and, in the absence of evidence tending to establish a new consideration, the undertaking is nudwm pactvm.” The note in the L.R.A. report above referred to, is as follows: “Necessity of new consideration to bind third person who signs as surety, endorser, or guarantor, after execution and delivery of orig — 71 — inal contract by principal,” then follows abundant and unlimited authority supporting this principle. In the case at bar, defendant, Johanna Rettke, is a surety, and the mortgage which she signed without any new or independent consideration long after the delivery of the notes by her husband to the Dittus Brothers and long after the maturity thereof, is, as we view it, wholly without consideration. We are of the opinion, also, that there being no consideration for the execution and delivery of the mortgage, it is entirely unnecessary to discuss the question of fraud. As we view the case, the fact that there was no consideration for the mortgage, as has been fully shown, fully disposes of the case. Judgment appealed from is reversed and the case is remanded for further proceedings in harmony with this opinion. Appellant is allowed the statutory costs on appeal.