Linnenkemper v. Kempton

Babtol, C. J., delivered the opinion of the Court: This is an appeal from the decree of the Circuit Court of Baltimore City, setting aside a sale made by a trustee under a decree passed upon petition of the apjDellant, in pursuance of the terms of a mortgage of Kempton and wife to Kerchner, dated January 15th 1876¿ exhibited with the petition. The decree from which the appeal was taken also declared the mortgage to be void. Kerchner, the mortgagee, having become bankrupt, the appellant was duly appointed his assignee, and in that character, instituted these proceedings for the purpose of enforcing the mortgage. ■ The property embraced in the mortgage was the separate property of Mrs. Kempton. Two exceptions to the ratification of the sale, and which also impeached the validity of the mortgage, were filed by the appellees; as briefly stated in the opinion of the Judge of the Circuit Court, they are as follows: . 1st. “That Mrs. Kempton was coerced 'into the execution of the mortgage by acts of her husband which deprived her of her free will, she being then in such — 165 — bodily and mental condition as prevented her from resistance.” 2nd. “That Kerchner, the mortgagee, deprived her husband by certain legal proceedings against him, of the power to fulfil the condition of the mortgage, and therefore cannot equitably take advantage of the breach of them.” The second exception was overruled by the learned Judge of the Circuit Court; but being of opinion that the first was supported by the proof, he decreed the mortgage to be void and set the sale aside. Most of the material facts and transactions which preceded the execution of the mortgage, as well as those which followed, are set out in the case of Kerchner vs. Kempton, 47 Md., 568, and need not be repeated here. By the agreement of the solicitors contained in this record, “all the record containing the documentary evidence, and the evidence taken under the commission in the case of Kerchner vs. Kempton, may be used, and to have the same effect as if taken under a commission in this cause, so far as either party may deem the same to be applicable, and subject to all just exceptions, with leave to either party to take such other testimony as may be admissible.” In Kerchner vs. Kempton, 47 Md., 568, the appeal was from an order setting aside a sale made under a decree which purported to have been passed by agreement of the parties. The agreement referred to was entered into by Kerchner & Kempton, and their respective solicitors, and also by the creditors of the firm of Kerchner & Kempton. Mrs. Kempton was not a party thereto, and it did not appear that Mr. Trippe, who was acting as solicitor for Kempton, had been employed by Mrs. Kempton, or was authorized to represent her as counsel, and for that reason, as it appears from the opinion of this Court, 47 Md., 591, the order setting aside the sale and annulling the decree — 166 — under -which, it was made was affirmed. In that case, the exceptions to the sale not only impeached the validity of the decree for the reason above stated, but also assailed the mortgage as invalid, upon the same grounds as are now urged in the present case; but this Court did not express any opinion thereon, although the same testimony now relied on was then produced for the purpose of proving the alleged duress and coercion upon Mrs. Kempton by her husband, whereby it was charged she had been deprived of her free will, and induced to execute the mortgage. We have examined that testimony most carefully, as well as that taken under-the commission in this case,-and have reached a different conclusion from that expressed by the learned Judge of the Circuit Court; and are of opinion the alleged duress, or undue influence coercing Mrs. Kempton to execute the mortgage in question, has not been satisfactorily established by the testimony. It appears from the proof that she was a lady of good intelligence, in full possession of her mental faculties. The instrument shows upon its face that she appeared with her husband before a justice of the peace, and solemnly acknowledged the same to be her act. To set aside a solemn deed of this kind upon the grounds here alleged requires the clearest and most satisfactory evidence. To judge of the weight of the evidence here relied on, it is necessary - to advert briefly to the circumstances which preceded the execution of the mortgage and those immediately attending the transaction. Kerchner and Kempton were co-partners in business till the latter part of the year 1875, when the former filed a bill praying for a dissolution of the partnership and the appointment of a receiver, charging a misappropriation by Kempton of the partnership funds, and among other things, specially charging that the money of the firm had been used by Kempton in the purchase of a house and — 167 — lot, with the furniture therein, which liad been conveyed to his wife and was held in her name. Mrs. Kempton ■was made a party defendant, appeared and answered the bill separately under oath. At that stage of the case, negotiations for a settlement were begun between the parties. Kerchner offered to buy out Kempton, and an agreement to that effect was made December 28th, 1875 by which Kerchner agreed to pay for the assets and business of the firm §975, (of which §175 was to lie paid in cash, and the balance to be secured by note) and to indemnify Kempton against its debts. Kerchner had_/«;(; days within which to perform this contract; the time was afterwards extended for ten days longer, which ended on the 12th day of January 1876. That arrangement having fallen through, three days thereafter Kempton made a proposition to buy out the concern. According to the evidence this proposition was made for the first time on the 15th day of Jcmuary 1876, about half past one o’clock. It was accepted; on the same day the papers were prepared and signed, one of them being the agreement between Kempton and Kerchner, containing the terms of their contract, and among other things providing for the execution of the mortgage in question; the other paper being an agreement of the creditors assenting to the arrangement and granting an extension of time for paying their debts. The mortgage was also then prepared, was taken by Kempton to his home, executed by him and his wife, and recorded at 4^- o’clock, p. m. on the same day. The fact that the mortgage in question was not in contemplation of any of the parties before the 15th day of January 1876, and that the whole transaction was begun and completed within the short space of time mentioned, entirely precludes the idea that the execution of the instrument by Mrs. Kempton was procured by means of the long continued exercise of coercion •and persecution by her husband deposed to by the witnesses. — 168 — Besides Mrs.. Kempton herself, the witnesses who testified on this subject are her daughter Glara, her sister Mrs. Mundorf, and her brother-in-law Samuel 0. Kempton; all of them testified that Kempton importuned his wife for a considerable time to sign a mortgage, and to induce her to comply with his wishes threatened to take his own life'—or to abandon her if she refused. According to the testimony of these witnesses and of Mrs. Kempton herself, these importunities and threats had continued for several weeks. The testimony further shows that she persistently refused to comply with his request. It is evident from the whole testimony in the case, that the mortgage of January 15th is not, and could not have been the mortgage in relation to which these witnesses testified. There is evidence in the case that there had been some talk between Kempton and Kerchner before any controversy had arisen between them, about Kempton getting the house mortgaged to put more money in the businessthis appears from the testimony in chief of Samuel C. Kempton, and all the circumstances indicate that the mortgage which Kempton had so long importuned his wife to sign was a mortgage for that purpose, and not the mortgage now in question. By the arrangement made on the 15th day of January 1816, Kempton secured the purchase from Kerchner of the assets and business of the firm for $115 in cash and his two promissory notes of $400 each, payable in four and eight months, and from the creditors he secured an extension of time for the payment of the debts of the firm for periods of three, six, nine and twelve months. To secure the fulfillment of his engagements to Kerchner and the creditors, it was agreed that the mortgage should be executed. It is evident from all the facts and circumstances that in the estimation of Kempton the arrangement was one eminently desirable for him, and which promised to secure to him a lucrative and profitable busi — 169 — ness. Mrs. Kempton says in her testimony (fifth erossinter.) “that she was aware that by the settlement of the first suit Mr. Kerchner left the business, and that the whole of it passed into the hands of her husband.” Considering all the facts as they then existed, there was no reason why she should hesitate to concur in the arrangement. The promptness with which she united with her husband in executing the mortgage, which then, for the first time, had been proposed or called to her attention, is a significant fact to show that no coercion or importunity on the part of her husband was necessary. We have been constrained to reach the conclusion that the defence of coercion and duress was an after-thought. Nothing of that sort was heard of till long after the transaction. On the 19th day of June 1816, Kerchner filed a bill charging Kempton with wasting and misapplying the trust funds in his hands; on the 6th day of July following, the agreement was made to which we have referred, by which that controversy was settled, and under which the decree of July 6th 1816, was passed. Under that agreement, all the furniture in the house which had been included in the mortgage was released, and Mrs. Kempton took the same into her possession and moved to Pennsylvania. While there, she claimed to be entitled as a creditor of the firm, to participate in the fund, as is. shown by her letter to George 0. Jenkins, the trustee, dated July 10th 1816. Mr. Trippe testified that “the question of undue influence was never suggested to him during his connection with the case,” which continued till the settlement of July 1816. The first intimation in the record of that defence appears in the exceptions to the ratification of the sale filed on the 11th day of September 1816, eight months, after the mortgage was executed. Under the commission issued in the present case, Sydney Kempton was examined on the 3rd day of February 1881, — 170 — and stated that he “coerced his wife to sign, the mortgage,” that he “threatened to commit suicide for one thing—abandonment; ” told her “ she would have to sign it,” &c., and added, “token I look back and think of it, I am very much surprised at the way I acted.”. In his answer to the 14th interrogatory he says, “ I persuaded her a great many times, in fact it was the principal conversation between myself and her, for at least two or three Aveeks; she cried and went on at a great rate, and did hot want to sign the mortgage. I told her she would have to do it, that I hadn't any money to go to market with.” This testimony is remarkable, especially when it is considered that the witness is speaking of the mortgage of January 15th 1876, which had never been contemplated or proposed till the day when it was prepared and executed ; and it is still more remarkable that the same witness, when he was examined on the 31st day of January 1877, in the case, of Kerchner vs. Kempton, in which the mortgage had been impeached as invalid, and the same issue was involved, said not one word about having used any importunity, coercion or threats to induce his wife to execute the paper. There is no doubt that in the interval of time between the filing of the first bill by Kerehner, on the 10th day of December 1875, and the amicable settlement of that suit, on the 15th day of January following, Kempton was in a state of great pecuniary embarrassment and trouble, and the condition of his afiairs was doubtless a subject of anxious discussion between himself and his wife; and the scenes to which the witnesses refer, evidently occurred during that period; when his importunities to induce his wife to unite with him in mortgaging her property for his benefit, spoken of by the witnesses, took place. And it is a significant fact, that during that period she had persistently refused to yield to his importunities. — 171 — (Decided 22nd March, 1882.) The settlement of January 15th 1876, put a new face on his affairs, the distressing law suit was compromised, and settled,—the indulgence of the creditors had been obtained, and the opportunity was afforded to Kempton to continue the business on his own account, with a fair prospect of pecuniary profit and success. The house and furniture which had been claimed as belonging to, and equitably constituting part of the assets of, the firm, were released from that claim, and as the acknowledged property of Mrs. Kempton were merely pledged for the faithful performance of her husband’s engagements. Whatever may have been the cruel and unmanly conduct of Kempton towards bis wife, and his persistent efforts to coerce her into a compliance with his wishes for the accomplishment of his previous plans and purposes, it is clear that those importunities had no reference to the mortgage of January 15th 1876, and had no influence in inducing her to execute it. Without extending this opinion further, we remark as our conclusion upon the whole case that the attempt to impeach the mortgage iu question on the ground of coercion and duress, has not been supported by the evidence. With respect to the second exception to the sale, before stated, we fully concur in the opinion expressed by the Judge of the Circuit Court, and for the reason stated hy him, think it was properly1 overruled. But differing from him on thq first exception, the decree below will be reversed and the cause remanded, to the cud that the sale may be ratified and further proceedings had in the case. .Reversed and remanded.