Wilhelmi v. Leonard

BALDWIN, C. J. The first error assigned, is, that the court erred in sustaining an objection to a question ashed the witness, Henry Ott, upon the cross-examination. The witness is asked whether plaintiff did not tell him at or about the time of the levy, that he knew the property levied on belonged to Veiths, and his creditors could hold it. The plaintiff objected to this question upon the ground that it was not proper upon cross examination, as no such conversation was referred to on the direct examination. The evidence is not before us in the shape of questions and answers, but is detailed in the record in a narrative form, the questions asked not given, but the substance of the answers only are stated. We are unable to determine from the record that the plaintiff, on the direct examination, called out any conversation in relation to what the plaintiff had said to said witness, about .the property belonging to Veiths, and that his creditors could hold it. If, as maintained by counsel, the record showed a partial conversation upon this subject, elicited by the plaintiff, there is no question as to the right of the. defendants to the whole of such conversation. From the record before us, we are not satisfied that the court erred in refusing to allow the question to be asked. — 336 — Tbe instructions asked were each refused, except in so far as they were given in tbe charge of tbe court. error give certain instructions asked; and tbe third assignment, is that the court erred in its charge to tbe jury. These errors are argued by counsel in connection with each other, and we propose to follow this order, as far as we can. The instructions asked are very lengthy, each being hypothecated upon a complicated statement of facts, as detailed by the testimony. The- charge of the court is also very full, covering some twenty-two pages of the record. As the instructions asked are marked refused, except so far as they are given in the charge of the court, it becomes necessary to consider those instructions asked, and those given, at the same time, in order to determine whether the court omitted to charge the jury correctly, upon the propositions asked by the defendants. We are necessarily confined to a mere statement of these propositions, as their extreme length would not admit of their being given by us in detail. A preliminary question is raised by the counsel for the appellee, as to the form of the exceptions by the appellants to the charge of the court. It is objected that the exception is to the whole of the charge, and that it fails to. point out specifically the particular- portions that are claimed to be erroneous. Prior to the adoption of the Revision, this manner of excepting to the charge of the court, that is, by a general exception, was held to be sufficient, and would entitle the party thus excepting to present to this court for its review an erroneous position in any portion of the charge of the court. See Eyser v. Weissgerber, 2 Iowa, 463. This same preliminary question was presented for our consideration in the case of the Gas Light and Coke Co. v. The City of Davenport, ante. It was held, in that case, that under the provisions of §§ 3058 and 3059, of the Revi — 337 — sion, a general exception to the charge of the court presented no question for our consideration, unless the whole of such charge was erroneous, This action, however, was commenced prior to the taking effect of the Revision, and under § 4172, either party can claim the right to have the cause determined under the law in force prior to the taking effect of the Revision. From the pleadings and evidence, it appears that the plaintiff, to secure the debt due him from Nicholas Yeiths, had taken not only the chattel mortgage, as above stated, but also a mortgage upon certain real estate. This land was encumbered by a prior deed of trust to one Darlington, executed by Yeiths. The land was sold by Darlington, under the trust deed, and purchased by the plaintiff. Subsequent to this sale, Yeiths quit-claimed all his right, title and interest in this land, to the plaintiff. Upon this state of facts, the defendants asked the court to instruct the jury, that if¡ when plaintiff took from Yeiths a quit-claim deed of the land mortgaged by Yeiths to him to secure the same debt secured by the chattel mortgage, under which plaintiff claims, and there was no agreement between them to keep the debt subsisting, the debt, and the lien of the chattel mortgage as incident thereto, were thereby extinguished. The court, in its charge, upon this point instructed the jury, that taking the quit-claim deed satisfied the debt, if such was the intention of the parties, and that it would also presumptively satisfy it, if there was no intention to keep it alive and subsisting; that the intention of the parties was to be gathered, by the jury, from all the circumstances of the transaction, and the acts of the parties cotemporaneous with and subsequent to the making of the quit-claim deed; the interest of the parties; why the notes which evidenced the debt were not surrendered, &c., &c. That if the jury found that it was the intention of the — 338 — parties that tbe taking of tbe quit-claim was in satisfaction of tbe plaintiff’s debt, or that tbe plaintiff bad no interest or intention to keep alive bis mortgage when be received tbe quit-claim deed. In tbe case of a mortgage upon real estate, we believetbe rule to be that when a mortgagee purchases or takes a release of tbe equity of redemption, tbe whole estate is vested in him, and tbe mortgage is extinguished, and with it tbe mortgage debt, unless intention or interest in the mortgagee intervenes to prevent tbe merger. See James v. Morey, 2d Cow., 246. This must, however, depend upon the express or implied intention of tbe parties in whom tbe estates unite. See Gibson v. Crehore) 8 Pick., 475. In tbe case of Wickersham v. Reeves & Miller, 1 Iowa, 413, in which it was claimed that tbe mortgage bad been extinguished by a purchase of the legal title, Isbell, J., in delivering tbe opinion of tbe court, says: “ We think this view is not sustainable. Tbe evidence clearly shows that this was not the intent of tbe parties to tbe sale of tbe legal title to petitioner, nor was it for tbe interest of tbe petitioner. We therefore conclude that this mortgage continues to exist as a lien on tbe premises.” Tbe cases cited by tbe counsel for tbe appellants to show that tbe extinguishment of tbe debt follows from tbe merging of tbe title in the mortgage, suppose tbe existence of but the one mortgage to secure tbe debt, and these authorities lay down tbe rule, that when a mortgagee takes a conveyance of pari of tbe mortgaged property, tbe debt is extinguished only pro tanto. In this case there were two mortgages, one chattel, tbe other on realty, to secure tbe one debt. Conceding tbe rule to be that tbe merger of tbe title in tbe mortgagee extinguished tbe lien, and, as incident thereto, tbe debt, so far as it was secured by tbe land, tbe rule we do not think will bold good so far as it applies to tbe chattel mortgage, — 339 — at least without some evidence of an intention to that effect, either express or implied. The controversy, in this case, is about the property embraced in the chattel mortgage, and the mere fact that the mortgagee, who was compelled to purchase in the real estate described in his mortgage at a trustee’s sale, to secure himself in his subsequent lien, and who, by such purchase, had already acquired a title from the trustee, accepts of a quit-claim for the same property from the mortgagor, without evidence of a relinquishment of the debt, should not deprive him of his lien upon the other property mortgaged to secure the same debt. But conceding the rule to be as claimed by the counsel of appellants, that the acceptance of the quit-claim is jprima, facie evidence of an intention to relinquish the debt, yet we think this intention can be shown to be otherwise, by the surrounding circumstances attending the transaction. This was a matter of which the jury could inquire, and the court, we think, very properly so charged. It is next assumed that the court erred in the refusal to give the third and fourth instruction asked by the defendants. These instructions substantially involve the same proposition. The court, in its charge, omitted to refer to the positions herein stated, and the question is whether or not these instructions should have been given, as asked. When the chattel mortgage was executed, one of the notes secured thereby was given to Asmus Yeiths. Afterwards this note was given up to the maker, and a new note for a larger amount, founded in part on the same consideration was given to the same payee, Veiths. A suit was brought upon this note by Hauman, the assignee, and the maker confessed the amount due, and consented to a rendition of the judgment thereon. No claim is made by Hauman for a foreclosure of the chattel mortgage, or that he have alien upon the property therein described, by virtue of the security, but an ordinary judgment is rendered for the amount of the — 340 — note and interest. It is claimed by tbe counsel of defendants, in tbe instructions refused, that a levy on tbe mortgaged property, under sucb judgment, will bold tbe property, as against tbe lien of tbe other creditors in tbe mortgage, because, under tbe mortgage, tbe note first maturing, would in tbe application of the proceeds of tbe property, be entitled to priority of payment. We tbink that when tbe payee of tbe note secured by tbe mortgage gave up tbe same, and took a new one, and different in amount, and without any agreement to show that it was still to be secured by tbe chattel mortgage, be lost bis right to tbe security, as against other creditors. Tbe defendant denies tbe validity of tbe mortgage; claims that it was merged by tbe quit-claim; that it was a fraud upon tbe rights of other creditors, and we tbink be cannot claim tbe benefit of lien under a mortgage which be thus attacks. Independent of these considerations, we tbink the court did not err in refusing these instructions, because tbe lien of tbe judgment of Hauman exists only from the date of tbe rendition of tbe confessed judgment. Granting that tbe new note was still secured by tbe chattel mortgage, the defendants did not ask for a foreclosure of this mortgage, but relied upon tbe judgment alone as their security for tbe debt. Tbe fifth and seventh instructions asked, were substantially given by tbe court. Although the counsel claimed that they were so modified as to take away from them their essence, yet we tbink tbe court, in its charge, presents to tbe. jury tbe questions therein involved, in a clear and correct manner, and even favorable to defendants. Tbe eighth instruction asked, involves tbe position that tbe possession of personal property by tbe mortgagor, in a chattel mortgage, for his own benefit, renders tbe mortgage fraudulent and void, as against other creditors. It is .admitted that this instruction was given, but modified. — 341 — Tbe court directed tbe jury, that tbe remaining in possession, of tbe mortgagor, did not render tbe. mortgage fraudulent, recognizing tbe rule, as settled by tbis court, in tbe case of Kuhn v. Graves, 9 Iowa, 303; and Torbert v. Hayden, 11 Iowa, 435; and Campbell v. Leonard, Id., 489. Tbe court, however, charged tbe jury that there may be, notwithstanding tbe rule, as above laid down, a retention of possession under such circumstances as will be a badge or evidence of fraud. “ If” says tbe court, “ tbe retention after tbe debt is inconsistent with tbe nature of tbe property, if it is long continued; if meanwhile, the property is depreciating, and tbe debtor is getting tbe benefit of it, and no reduction of tbe debt secured by tbe mortgage is made, these circumstances, unless explained, and shown to be fair and honest, would, I think, justify a jury in inferring that tbe mortgage was not bona fide.” Under tbe rule, as laid down by tbis court in tbe cases above cited, tbis charge of tbe court is certainly not unfavorable to tbe defendants. Tbe appellants next insist that tbe court erred in its refusal to charge the jury that tbe good faith of tbe judgment confessed by Veitbs, to defendant, Haaman, could not be inquired into by tbe plaintiff in tbis proceeding, and that, so far as Haaman is concerned, it matters not whether tbe judgment was fraudulent, or otherwise. Tbe plaintiff claims that tbe defendant cannot justify taking the property, sued for, under tbe writ of execution, -for the reason that tbe judgment upon which it issued was void, first in being irregular on its face, second, because it ■ was obtained through fraud. Tbe court, in its charge, -directed 'the jury that they bad nothing to do with tbe .question as to whether tbe judgment was void, on account of tbe irregular manner in which it was.obtained. Of tbis ■ portion of tbe charge tbe defendant does not complain, as it — 342 — is in accordance with the instruction asked. The verdict of the jury being for the plaintiff, he makes no objection to this ruling. We do not, therefore, propose to determine the question as to whether the judgment is void upon its face. The court, however, instructed the jury that it was their province to inquire whether, in point of fact, the judgment, by confession, was fraudulent. We are inclined to the opinion, that upon principle, as well as upon authority, this ruling was correct. “ Fraud is an extrinsic, collateral fact, which vitiates the most solemn proceedings of a court of justice.” Lord Coke says it “ avoids all judicial acts, ecclesiastical or temporal. In civil suits, all strangers may falsify for covin, either fines, or real or feigned recoveries, and even a recovery by a just title, if collusion was practised to prevent a fair defense.” See Opinion of Lord Ch. J. De Gray, in the “ Duchess of Kingston’s Case,” 2 Smith’s Leading Cases,. 508. Where a judgment and execution were obtained upon a fraudulent contract, and the sheriff is sued for a false return of the execution, on account of paying the money to another execution creditor, held it was competent to show the fraud in defense. PARSONS, C. J., says: “ The judgment appears to be fraudulent against creditors; any creditor on whom it is a fraud may give the facts in evidence, and if the .creditor would be defrauded by it, the defendant, (sheriff,) whom he has indemnified, may give them in evidence.” See Pierce v. Jackson, 6 Mass., 242; Gregg v. Bingham,, 1 Hill S. C., 299; Bunell v. Johnson, 9 John., 248; Craig v. Sprague, 12 Wend., 41; Atkinson v. Allen, 11 Vermt, 619. Nor do we think that the rule urged by the defendants, that the plaintiff cannot attack the judgment without judgment and execution in his favor, will apply in this case. The plaintiff relies upon the chattel mortgage, as giving him a right to the possession of the property seized under the execution. He has no judgment, nor does he desire — 343 — one. By bis possession, be bas acquired every right that be can obtain by virtue of bis security. Tbe defendants attack tbe validity of tbe plaintiff’s title, and tbe plaintiff certainly bas a right to show that tbe defendants’ claim is based upon a fraud. Tbe court properly directs that none but bona fide creditors can attack a mortgage as fraudulent, and that defendants, ■unless they were bona fide creditors,.could not molest tbe plaintiff in bis possession. Tbe next error assigned is, that tbe court erred in overruling tbe defendants’ motion for a new trial. This motion is based upon tbe grounds usually assigned as causes for a new trial. We cannot say that the verdict was against tbe evidence. There is, to our minds, sufficient evidence to show that tbe plaintiff’s chattel mortgage was taken in good faith, and for a proper purpose. He bad a right, under tbe rulings of this court, based, as they are, upon a statutory provision, to leave tbe property mortgaged in tbe possession of tbe mortgagor, without such possession being evidence of fraud, although we think that tbe jury bad good cause to conclude that before tbe levy of defendants, tbe property was not in tbe possession of Yeitbs. This mortgage, being duly executed and recorded, and given for a good consideration, tbe .right of tbe plaintiff to tbe possession was complete. prior to tbe date of defendants’ judgment, even if tbe defendants should show that it was not obtained through fraud. It is claimed that this motion should have been sustained; because tbe special findings of tbe jury are in conflict with their general verdict, and that tbe judgment of tbe court should have been rendered in favor of tbe defendants, upon these special findings, non obstante veredicto. We need only say, in answer to this position, that not all of tbe issues made by tbe pleadings were submitted to tbe jury for their special findings. Eor instance, it does not — 344 — appear that tbe jury found specially, whether the judgment by confession was obtained by fraud. If they did ■ so find, and we think they could have so found from the •evidence, the verdict should have been for the plaintiff, notwithstanding their 'finding upon the special issues. But 'the record shows that four of the special issues, out of the five submitted, were found by the jury favorable to the .plaintiff, and we could readily justify the judgment for plaintiff upon these special findings. Affirmed.,