Shirley v. Burch

Strahan, J. This is a suit commenced by the plaintiff against the defendants, H. C. Burch and wife, W. McGee, BL C. IVandt, Gilbert Brothers, J. A. Stratton, B. B. Gaunt, M. E. Campbell, Meier and Frank, and G. N. Townsend, to foreclose a mortgage on certain real property in Yamhill County. Burch and wife are alleged to be the makers of. the mortgage, and the other defendants are alleged to have liens on the mortgaged premises subsequent to that of the plaintiff. The complaint amongst other things alleges in substance the making of the note sued on to one Joseph Chandler, or bearer, for two thousand five hundred dollars, on the 24th of March, 1882, by the — 84 — defendant H. C. Burch; the making of the mortgage to secure the same at the same time, which was executed and delivered to “said Joseph Chandler, payee, in said promissory note.” The complaint also contains the following allegation: “ That the plaintiff is now the lawful owner and holder of said promissory note and said mortgage, having purchased the same for a valuable consideration long before the maturity thereof of said mortgagee, who duly assigned the same to the plaintiff by delivery to him of said note and mortgage. All of the defendants except Meier and Frank answered, denying the material allegations of the complaint, and the alleged junior lien-holders each set up his particular claim, and claimed priority over the plaintiff’s mortgage. They deny the execution or delivery of said note and mortgage to Joseph Chandler, or the assignment or delivery thereof to the plaintiff, and allege that said Chandler is a fictitious person. The cause being at issue, it was referred to take the evidence and report the same to the court, and upon the report being filed, the case was heard by the court and a decree rendered postponing the plaintiff’s lien to that of all of the other lien claimants, and settling their equities and priorities between themselves, and decreeing the sale of the premises described in the mortgage to satisfy the claims in the order specified in the decree. From that decree the plaintiff has appealed to this court, and the cause has been ably argued here, both on the facts and law. The court below found a number of facts which are stated in the record, a part of which are as follows: (1) That on the twenty-fourth day of March, 1882, the defendant executed the note described in the complaint for the sum of two thousand five hundred dollars, due in two years from date thereof, interest at the rate of ten per cent per annum, and agree by the terms thereof to pay a reasonable attorney’s fee in case suit should be brought to collect the same, and delivered said note to one E. J. Dawne. (2) That on the twenty-fourth day of March, 1882, said defendant H. C. Burch executed the mortgage mentioned in the complaint with the intent on his part to secure the payment 'of said note, and delivered said mortgage to said E. J. Dawne; — 85 — and that on the twenty-fifth day of March, 1882, said E. J. Dawne caused said mortgage to be filed in due form in the county clerk’s office of Yamhill County, and that the same was duly recorded in the records of mortgages in said county. (3) That the interest on said note was paid up to the twenty-fourth day of March, 1884, being two years from date, but that nothing more has been paid of principal or interest on said note, and that the sum of two thousand five hundred dollars, principal and interest, at ten per cent thereon, from the twenty-fourth day of March, 1884, is now due on said note. (4) That at the time said E. J. Dawne received said note and said mortgage from said H. C. Burch, he, said Dawne, was the agent of said plaintiff, and as such agent received said note and mortgage for the plaintiff and for his use and benefit. (5) That the consideration of said note and mortgage received by said Burch was paid to him by said E. J. Dawne as the agent of said plaintiff, and that such consideration, when so paid to said Burch, was the money or property of the plaintiff, and not the money or property of Joseph Chandler. (6) That as to said note and mortgage, Joseph Chandler named as the payee and mortgagee thereof, was and is a fictitious person, who had no interest in or knowledge of the same. (7) That said note and mortgage was never delivered to said Chandler, or assigned by him to the plaintiff. (8) That said H. C. Burch, at the date of said note and mortgage, received from E. J. Dawne the full consideration of said note, and at the time believed that the same was the money or property of Joseph Chandler. 1. On the argument in this court the only questions of fact which were contested were those presented by findings numbered 6 and 7. For the purpose of determining the correctness of those findings we have carefully examined the evidence. Joseph Chandler, the alleged payee of said note and mortgage, was examined as a witness, and from his evidence it is apparent that neither the note nor mortgage were at any time delivered to him, nor did he ever see or hear of them until after the commencement of this suit, and to all intents and purposes he was an entire stranger to the transaction. It is equally apparent from Chandler's evidence that he never assigned or delivered — 86 — said note or mortgage to the plaintiff, and that the pretended assignment offered in evidence is a forgery. But appellant’s counsel contend that inasmuch as the evidence tends to show that said Dawne had, before the signing of the note and mortgage, been engaged in loaning some money for Chandler, that we ought to infer that the money delivered to Burch by Dawne at the time the note and mortgage were signed was Chandler’s money, and that Dawne in that transaction was acting as Chandler’s agent. If the evidence left any room for such an inference for the purpose of upholding and sustaining the transaction we would cheerfully adopt it; but unfortunately for the plaintiff it does not. It does not appear from the evidence how much of Chandler’s money, if any, Dawne then had in his hands; but it does appear that Dawne’s authority to loan had been expressly withdrawn before the date of the note and mortgage, and there is no evidence whatever tending in any manner to prove that in taking the note and mortgage by Dawne in Chandler’s name, he was acting as agent for Chandler. Chandler was entirely ignorant of the transaction, and never in any manner approved or ratified it, or claimed any interest in or benefit from it, or knew of its existence until after this suit was commenced. All the evidence in the record tends to support findings 6 and 7, and we adopt them as the findings of this court upon the points covered by them. 2. But counsel for the appellant contend that, assuming these findings of fact to be correct, the conclusions of the court below as to the law were wrong. They claim that assuming this note to have been made to a fictitious person, it is valid under section 3191 of Hill’s Code, which provides: “ Such notes made payable to the order of the maker thereof, or to the order of a fictitious person, shall, if negotiated by the maker, have the same effect and be of the same validity as against the maker, and all persons having knowledge of the facts, as if payable to bearer.” There was such a person as Joseph Chandler. The evidence discloses this fact, but it discloses the further fact that he had no interest in. the note, and was not intended to become a party to it. In such case, the payee is to be deemed fictitious. (1 Daniel on — 87 — Negotiable Instruments, § 140.) But we need not consider or decide the question of Burch’s liability to Shirley on this note. The question was not argued, and we do not wish to decide it without argument. Burch’s liability was not contested by respondents’ counsel. Their contention was as to the validity of the mortgage, and that presents the real question in this case. 3. Appellant’s counsel contend that if one make a note and mortgage complete in every particular except that the name of the payee and mortgagee are left blank, and they are then delivered to an agent with authority to procure money from any person who will advance it on the securities, that such agent may fill the blanks and deliver the note and mortgage, and that they will be enforced. (Van Etta v. Evenson, 28 Wis. 33; Druny v. Foster, 2 Wall. 24.) These authorities support the proposition stated by counsel, but they only show that a parol authority to fill a blank by the mortgagor’s agent before the delivery is good, and that authority to do that act need not be in writing. The mortgage is not delivered in blank or without the name of the mortgagee being inserted, and therefore it is not perceived how these authorities in any way support the appellant’s contention. One of the first requisites of every deed is the necessary parties. There can be no deed without a grantor and a grantee, and the principle applies to all deeds, including mortgages. A mortgagee capable of holding real estate must be named in every mortgage. (1 Hilliard on Mortgages, p. 10, § 5.) So it was held in Chauncey v. Arnold, 24 N. Y. 330, that an instrument in the form of a mortgage, but containing the name of no mortgagee, does not become effectual by its delivery to one who advances money upon the agreement that he shall hold the paper as security for his loan. So a patent to a fictitious grantee is null and void. (U. S. v. Southern Colorado Coal & T. Co. 1 West. C. Rep. 11.) And the same principle is held in Downing v. Bartels, 2 West. C. Rep. 506; Thomas v. Wyatt, 31 Mo. 188; 77 Am. Dec. 640; Kelley v. Bourne, 15 Or. 476. 4. It has thus far been assumed that this mortgage is to be treated as if made to a fictitious person, or contained the name of no mortgagee capable of acquiring an interest in real property — 88 — in this State, and such we think must be its legal effect. Joseph Chandler was not a party to .the transaction. He had no knowledge of it. He never assented to it, nor did he in any manner authorize it. Neither the note nor mortgage was ever delivered to him, and he had no more knowledge of or interest in the transaction than if made to any other stranger. Under these facts the mortgage lacked another indispensable requisite, it was never delivered. Without delivery it could not take effect or create any valid lien upon the land described in it. Delivery is just as necessary to the completion of the transaction as the signing, sealing, or acknowledging of the mortgage. (Goodwin v. Owen, 55 Ind. 243; Dole v. Bodman, 3 Met. 139; Eames v. Phipps, 12 Johns. 418; Freeman v. Peay, 23 Ark. 439; Chauncey v. Arnold, supra; 1 Devlin on Deeds, § 260; Fain v. Smith, 14 Or. 82; 58 Am. Rep. 281.) It is not necessary to consider what is a sufficient delivery, or what acts of the parties are requisite to constitute a delivery, for the reason that what these parties did would not constitute a delivery within any rule of law with which we are acquainted, or to which reference has been made by counsel. 5. The court in effect found that the note sued on was not made or delivered to Chandler, or by him sold, assigned, or delivered to the plaintiff, but was delivered directly to the plaintiff through the agency of Dawne. This finding is at variance with the allegations in the complaint, and if the evidence had been objected to, or if it had been contested here, the variance would have been fatal to the plaintiff’s recovery on the note, on the elementary principle that a party cannot declare one state of facts and recover on other and altogether different facts. The proofs and allegations must agree. But no objections have been made to the decree against Burch on any ground, and for that reason we will not disturb it. 6. Counsel for appellant seemed to assume in his argument that the necessities of the plaintiff’s case ought to furnish some reason or excuse for the interposition of equity to aid him. But this is not enough, no difference how pure may have been a party’s motives, or how meritoriously he may have acted in the — 89 — particular transaction. Tbe rules of equity have the same certainty, and are administered with the same regularity as the rules of law, and to enable a party to obtain relief in that form he must bring his case fairly under some one or more of the acknowledged heads of equity jurisdiction. A very careful examination of the whole case leads us to the conclusion that there was no error committed by the court below, and the decree will therefore be affirmed, except the costs will be adjudged as suggested in the concurring opinion of my brother Thayer.