Hutchison v. Myers

The opinion of the court was delivered by JOHNSTON, J.: This was an action brought by Willis G. Myers against G. T. Jones and Abbie C. Jones, his wife, to recover $2,000 which he had loaned them, and to foreclose a mortgage or deed of trust given by the Joneses to secure the payment of the indebtedness. Edward E. Holmes, who was named as trustee in the mortgage deed of trust, was made a party defendant, as well as the Kansas City Investment Company, J. G. Hutchison, and others who claimed an interest. The investment company answered, setting up a second mortgage to the premises, executed by the same parties. A demurrer was filed by Hutchison, alleging that there was a defect of parties plaintiff, which was overruled, after which he filed an answer, which consisted of a general denial, and a further allegation that when Jones and wife executed the notes and mortgage to Myers, the state of Kansas was the owner of the premises, and that neither the legal nor equitable title had passed from the state to the Joneses, and that, on January 20, 1887, when the mortgage was executed to Myers, the Joneses had not the fee-simple title to the premises, nor any right to mortgage the same. He alleged further, that the land was not conveyed to Jones by patent from the United States until four days after the mortgage was executed. He then alleged [294] that on May 3,1888, a judgment was recovered against Jones which became a lien upon the real estate, and that subsequently upon an execution a sale was made, which, on January 4, 1889, was confirmed in the purchaser, who thereafter transferred the title to Hutchison. He alleged that he thereby became the owner in fee simple of the premises, free from the lien or mortgage of the plaintiff, and askéd judgment decreeing title in himself. Replies to this answer were filed by the mortgagees, but subsequently Hutchison amended his answer by an admission that a default had occurred in the payment of the sums secured by the plaintiff’s mortgage, as plaintiff had alleged in his petition, and thereupon the replies were withdrawn,'and, upon motion of Myers, a judgment of foreclosure upon the pleadings was rendered. gage — bene-iiciavy — right to maintain action. The first question presented for review is the ruling upon the demurrer, it being contended .that Myers, the third party, and the beneficiary in the mortgage trust deed, could not maintain the action. It is conceded that he might prosecute an action in his own name to recover a personal judgment for the amount of the debt secured, but as the property was cpnveyed to Holmes for the benefit of Myers, it is claimed that Holmes alone could maintain the action for foreclosure. This claim is based on § 28 of the civil code, which, among other things, provides that the trustee of an express trust may bring an action without joining with him the person for whose benefit it is prosecuted. Although the trust deed purports to convey to the trustee, it was made for the mere purpose of securing a debt, and is no more than a mortgage, and can only be enforced as such. (McDonald v. Kellogg, 30 Kas. 170.) But granting that Holmes, who is named as trustee in the instrument, is the trustee of an express trust, we see no reason why the beneficiary may not properly bring , . T . , _ - the action, in this case the trustee was made a defendant, and was thereby enabled to secure any right or protect any interest which he might have in the trans-ation. The general rule in this state is, that the party beneficially interested shall bring the action; but, for convenience [295] and necessity, provision is made for the prosecution of actions by representative parties. Section 26 of the code provides specifically that “ every action must be prosecuted in the name of the real party in interest, except as otherwise provided in § 28.” And § 28, as we have seen, provides “that an executor, administrator, guardian, trustee of an express trust, a person with whom or in whose name a contract is made for the benefit of another, or a person expressly authorized by statute, may bring an action without joining with him the person for whose benefit it is prosecuted.” As will be observed, the provision authorizing the trustee, to bring an action is permissive rather than mandatory in its terms, and hence will not preclude the maintenance of an action in the name of the real party in interest. (Price v. Insurance Co., 17 Minn. 497.) 2’ judgment on pleadings. Complaint is next made of the action of the court in entertaining a motion for judgment upon the pleadings, and in allowing judgment against Hutchison without testimony. The motion for judgment on the pleadings was equivalent to a demurrer to Hutchison’s answer, and is a common and permissible practice. If the averments of the petition were sufficient, and the answer did not allege a ° defense, and no amendment was asked for or allowed, plaintiff was certainly entitled to a judgment. As the case then stood, the execution of the note and mortgage, not being denied under oath, was admitted, and it was also conceded that default had been made in the payment of the indebtedness secured by the mortgage. This was the extent of the admissions of the plaintiff in error, who had filed a general denial. It was alleged in the petition that Myers was the owner and holder of the note. This was put in issue, and the averments in his own pleading tended to show that the title and ownership were in another. Upon the principal note, and each of the coupons, there was the following indorsement: “Pay to the order of John Jeffries & Sons, trustees, without recourse. — Willis G. Myebs.” This in-dorsement was not only permitted to remain upon the notes, but it was carefully copied into and made a part of the peti [296] tion of plaintiff, Myers. The transfer was sufficient to transfer the title to the indorsee, and Myers has thereby made a prima facie showing that he is not the owner of the note upon which he sues. (Whittenhall v. Korber, 12 Kas. 618.) judgment1 It is contended for Myers that, as he was the payee of the note and had possession of the same, there was a presumption that he still held and owned it, and was therefore entitled to judgment on the pleadings without testimony. It is true that the possession is prima facie evidence of ownership, where the note itself and the indorsement thereon do not show who the owner is, or that the title has been transferred to another. (Eggan v. Briggs, 23 Kas. 710; Challiss v. Wylie, 35 id. 510; Durein v. Moeser, 36 id. 441; O’Keeffe v. National Bank, 49 id. 347.) Here, however, it was not shown that Myers had the possession of the note, and, more than that, the indorsement on the same as set out by himself tended to show that the title had passed from him. If Myers had the possession of the note, and had produced it at the trial, it would have furnished prima facie evidence of ownership in him, and, in the absence of any testimony which would overcome such prima facie proof, he would have been entitled to judgment. (O’Keeffe v. National Bank, supra.) Myers contends that, having possession of the original, he had the right to cancel the indorsement, and it is true that, if he had legally acquired the paper after having transferred it, he might have canceled the indorsement. . But, as we have seen, instead of striking out the indorsement, he made it one of the allegations of his petition; aüCh hence, a judgment without prooi oi possession or ownership cannot be sustained. In addition to the authorities cited, see Brotherton v. Street, 24 N. E. Rep. (Ind.) 1068. It is the safer, and believed to be the general practice, in district courts to require the production and cancellation of notes and mortgages in all foreclosure cases before the rendition of judgment, regardless of whether there has been a defense or a default. No other defense is alleged. The claim that only the possessory right was mortgaged .by Jones is based upon the term “property” used in the grant [297] ing clause of the trust deed;, but when all of the provisions of the instrument are read together, they show clearly that it was a conveyance or mortgage of the land itself, and neither Jones, nor anyone claiming under him, is entitled to set up an after-acquired title as against the mortgagee. The error mentioned, however, cannot be overlooked, and, hence, the judgment must be reversed, and the cause remanded for another trial. All the Justices concurring.