Mutual Mill Insurance v. Gordon

Mr. Justice Scholeield delivered the opinion of the Court: The Appellate Court, by affirming the judgment, leave us only to inquire whether there was error of law in giving and ** refusing instructions, and in admitting evidence over appellant’s objection. In the view we take of the case, there are but two questions of law: First, was there material error in giving the instruction, at the instance of appellee, set out in the preceding statement ? Second, was there material error in permitting the witness Gordon to state the circumstances under which he answered that the value of the property was $25,000? First—The objections urged against the validity of the agreement recited in the instruction are, first, that it was without consideration; and second, that it was not in writing. 1. The objection that it was without consideration assumes that there was simply an agreement to accept a less security for a greater, whereas the real agreement is, that parties who have hitherto been tenants in common of an entire property upon which, there is a mortgage, shall divide the property and the mortgage debt, and each enter upon, and thenceforth hold and use in severalty, the part set off to him by the division, and each pay, severally, the portion of the mortgage debt assigned to him. The agreement is an entire one, and the consideration of each part enters into and forms a part of the consideration of every part of the agreement. We think this was sufficient. 1 Chitty on Contracts, (11th Am. ed.) 28. 2. The Statute of Frauds can have no application to the case. A parol release, or accord and satisfaction of the notes, as between the parties, is plainly sufficient. 2 Chitty on Contracts, (11th Am. ed.) 114-7, and authorities cited in note k. The payment or discharge of the debt evidenced by the notes operates to release the mortgage, which is but an incident to the debt. (Ryan v. Dunlap et al. 17 Ill. 40; Pollock et al. v. Maison et al. 41 id. 516; McMillan et al. v. McCormick, 117 id. 79.) And if the notes should be assigned before due, although the assignment would carry the mortgage in equity, yet Since it is only in equity that the assignment can have that effect, the same equitable defences may be interposed against the promissory notes in the hands of the assignee, that can be interposed against them in the hands of the payee. (Olds v. Cummings, 31 Ill. 188; Shippen et al. v. Whittier, 117 id. 282; Petillon v. Noble et al. 73 id. 567.) And so, the contract being valid as between the mortgagor and mortgagee, the mortgage was for but $17,000, and the instruction was right. This insurance, moreover,' is for the benefit of these mortgagees, and the insurance policy having been issued upon the faith that that was the extent of their mortgage, the mortgagees would, upon familiar principles, be equitably estopped to contend, as against the insurance company, that it was more. And so, also, upon the doctrine of Olds v. Cummings and Shippen v. Whittier, supra, any subsequent assignee of the notes would, in this respect, but stand in their shoes, and be entitled to interpose the same defence to the assertion of rights in equity, under the mortgage. Second—It was error to allow the witness to state why he valued the property at $25,000, but, in our opinion, it could do no harm. The questions put were somewhat ambiguous, and are, therefore, to be construed most favorably for the insured. We are of opinion, that in view of that ambiguity there was reasonable ground that he might have believed that he was required to give the whole value of the property, excluding the land,—not merely that of the mill machinery,— which he did, correctly. And this was the purport of the answer of the witness,—that he supposed the question alluded to the whole value of the property. It was the duty of the company, if they desired explicit and lucid answers in this respect, to frame their questions so that they could not mislead. The views expressed in the opinion of the Appellate Court (Mutual Mill Ins. Co. v. Gordon, 20 Bradw. 559,) upon this point, are somewhat more extended, and have our entire concurrence. In conclusion, it is only necessary to add, that we concede the court erred in refusing to state to the jury whether the clause in the insurance policy in relation to the amount of the incumbrance wras a warranty; but since the first instruction, given at the instance of appellee, was correctly given, that error can have worked no harm to appellant. Had that instruction been correctly given as asked, the result must have been just as it is. The judgment is affirmed Judgment affirmed.