Harrington v. Samples

Dickinson, J. The question is here presented whether, in an action by a mortgagor of chattels to recover the property from the mortgagee, who had taken it under the mortgage, the mortgagor may show by parol evidence the facts that, although the mortgage in terms secures contemporary promissory notes of the mortgagor therein described, yet the mortgage and notes were really given for the purpose ■of securing a pre-existing debt of the mortgagor to the mortgagee, and also to indemnify the mortgagee on account of the making of ■certain notes for the accommodation of the mortgagor; and that the ■obligations of the mortgagor, for which the mortgage was intended as security, have been fully performed. The rule against contradicting or varying the terms of a written instrument by parol evidence did not exclude the evidence offered for the purpose of showing the real consideration for which the mortgage security was given, and that it had been discharged by the perform [202] anee of the obligations to secure which it had been executed. Chester v. Bank of Kingston, 16 N. Y. 336; Juilliard v. Chaffee, 92 N. Y. 529; Truscott v. King, 6 N. Y. 147, 161; McKinster v. Babcock, 26 N. Y. 378; Bank of Utica v. Finch, 3 Barb. Ch. 293, (49 Am. Dec. 175;) Walters v. Walters, 12 Ired. Law, 28, (55 Am. Dec. 401;) Crossman v. Fuller, 17 Pick. 171; Shirras v. Caig, 7 Cranch, 34, 50; Brick v. Brick, 98 U. S. 514. And see Jones v. Rahilly, 16 Minn. 283, (320;) Minor v. Shehan, 30 Minn. 419, (15 N. W. Rep. 687.) And this might be done in this action, although it was of a legal nature. Jones v. Rahilly, supra. In Schurmeier v. Johnson, 10 Minn. 250, (319,) the purpose of the parol evidence was not to show that the written obligation was intended as collateral security, and that it had been satisfied by the performance of the principal obligation, but it was sought to avoid the written agreement by parol evidence of a contemporaneous agreement, unperformed, that a different contract should be substituted for that embodied in the written instrument upon which a recovery was claimed. The mortgagee being now dead, the plaintiff offered to prove, by the testimony of one Duffy, who was neither a party to the action nor interested in it, that the consideration of the mortgage and notes was such prior indebtedness of the mortgagor, which indebtedness it is admitted has now been satisfied. Such evidence was excluded as being prohibited by the statute. Gen. St. 1878, c. 73, § 8. That statute does not exclude the testimony of one not a party to the action, and not interested in the event thereof. Marvin v. Dutcher, 26 Minn. 391, (4 N. W. Rep. 685.) The evidence offered was admissible. The plaintiff offered to show, by his own testimony, “independent of any conversation” had with the deceased, the consideration for the mortgage and notes. The statute as construed in Chadwick v. Cornish, 26 Minn. 28, (1 N. W. Rep. 55,) does not render the surviving party to the contract an incompetent witness, except as to conversations with or admissions of the deceased party. We understand the offer to have been rejected in part upon the theory that the witness was incompetent to testify upon the subject. We hold otherwise, in accordance with the decision last cited. Judgment set aside, and a new trial awarded.