Haynes, Hutt & Co. v. Seachrest

Wright, J. Whether the deed of trust was so defectively acknowledged as that the recording of the same wou-ld not impart constructive notice of its contents to the subsequent mortgagees, we need not determine, as an examination of the testimony satisfies us that complainants had actual notice of said trust deed. And in arriving at this conclusion, we have not considered the testimony of Tod-hunter, who took the acknowledgment. He is a party to the record, and his testimony was properly excluded by the court below. Aside from this testimony, however, we are satisfied that complainants knew, at the time they took their mortgage, of the existence of the “prior deed, and that their lien was subject to that of respondents. And this knowledge carried with it the further fact that there was a mistake in the first conveyance. That there was a mistake, is indis [458] putable. And that complainants believed and understood that tbe land described in tbe deed was tbe same as that covered by tbeir mortgage, is very clearly shown. The mistake evidently occurred without any fault of any person, the scrivener inadvertently writing the figures 22 instead of 23, as applied to the land in section 25. It was not until long after both instruments were made that the mistake was discovered. Indeed, it is questionable from the pleadings, whether it was fully known to complainants at the time of the institution of this suit. The mortgagees having actual notice, therefore, of the deed and of the mistake, the sufficiency of the acknowledgment is not material. The deed was good as between the parties, and all persons having actual knowledge of its existence, without any acknowledgment. Miller v. Chittenden et al., 2 Iowa, 315; Blain v. Stewart, Id., 378; Bell & Co. v. Thomas, Id., 384; Dussaume v. Barnett, 5 Id., 95. "We are then next to inquire as to the amount of interest acquired by respondents by the trust deed. It will be remembered that Seachrest did not sign, nor acknowledge the deed. He was absent at the time, and there is no testimony whatever that he gave authority in writing or otherwise to his co-partner to make the conveyance. It is claimed, however, that upon his return he ratified the act, and that this was effectual to pass his title. The ratification, if any, was verbal, and not in writing. The doctrine of the English courts is, that a sealed instrument, when made by one partner for the others, can only be made valid by a prior authority or subsequent ratification, evidenced by writing, under seal. This rule, however, is not followed in this country, it being well settled by the current of decisions, thafr a prior authority or subsequent ratification, express or implied, verbal or written, is sufficient to make the deed binding upon the firm. (Story on Part., § 122, and note 2.) [459] "Was there a ratification, then, of this act of Meek, in signing the name of Seachrest to the deed ? The want of original authority, is clear. The interest of Seachrest did not pass, therefore, by the deed, unless there was a ratification. Upon this point the burden of proof is upon respondents. Not only so, but the ratification should have taken place before the making of the mortgage. Does the proof establish this fact? We are constrained to hold that it does not. Two witnesses speak of conversations had with Seachrest on the subject. But the time of these conversations is left entirely indefinite. Not only so, but his admissions, that he recognized the act, are stated in a loose manner, nor is there any proof as to when he first knew, and attempted to ratify, the deed. A recognition which shall have the effect of making valid a deed, which, but for. such ratification would be ineffectual to pass the title, as against the party or subsequent incumbrancers, should be clear and express, or be implied from circumstances equally clear and undisputed. The party having the affirmative must fail, unless he brings his proof up to this standard. Another point in this case is made upon the following facts: The mortgage to complainants was to secure two notes. One of these was assigned to Brown & Co. They commenced an action at law on this note, and attached personal property sufficient to satisfy the same. The property was released by giving a delivery bond, and a judgment was recovered on the note. Brown & Co. were not made parties to this proceeding. The decree in this case finds in favor of complainants for the whole amount of both notes, and directs the mortgaged premises to be sold to satisfy the same. The mortgagees insist that this was error, and that there should have been no recovery beyond the amount due on the note still held by complainants. And this position we think is correct. [460] Complainants were not tbe owners of this note. Brown & Co. were not parties, nor did they ask a foreclosure. The liability of complainants as indorsers, would not give them the right to foreclose the mortgage for that amount.. They were not in a position that they could elect which to prosecute, the action at law on the note, or the foreclosure proceedings, for the suit on the note was not under their control. Not only so, but until the property attached was exhausted, Brown & Co. even could not, as against another incumbrancer, resort to the mortgage. If they could not, then it is very manifest that the indorsers, who were only contingently liable, would have no greater right. Our conclusion, then, is, that complainants* were entitled to a foreclosure for the note still held by them. That the deed of trust held by the creditors, Stadler, Bros. & Co. and Lauer Bros., is entitled to priority of lien upon the interest of C. M. Meek in all the lands, and that the prayer of the cross-bill, (or the answer which is made such,) to correct the mistake to this extent, should be granted, and that the mortgage of complainants, to the amount of the debt still due them, should have priority, as to the interest of all the other mortgagors beside the said O. M. Meek. The decree will bo thus modified, in this court, or remanded for that purpose, as complainants may prefer, at their costs.