Foster v. Reynolds

Wagner, Judge, delivered the opinion of the court. The respondent in this cause made application to the Circuit Court to enjoin the appellant from selling certain real estate under and by virtue of a mortgage. The petition stated that on the 23d day of June, 1860, the respondent conveyed certain real estate in trust to secure the payment of a certain note, described in the deed of mortgage for the sum of |2,625; that the appellant advertised the mortgaged property for sale on the 25th day of September, 1863, and in the notice stated that the mortgage was to secure the note therein described, and also any demands which might be paid by appellant as security or endorser for the respondent, and that payments as such security and endorser had been made amounting in the aggregate to upwards of $70.0. The petition then averred that the mortgage was not given to secure any debt which appellant might ?pay; a\,security or endorser, and there was no such power' Vgiveit vdy) the said mortgage. The respondent by his petition then denied that appellant had paid for him the sum of f700, or- ppy part thereof, and denied also that he owed the note for $2;,625, or any part thereof. To this petition there was- a demurrer, which the court overruled. " ’" ^ [556] The appellant then filed his answer, stating in substance that previous to and at the time of executing the mortgage by the respondent, he, the said respondent, was greatly indebted and embarrassed ; that his property was about to be attached, and that in order to afford temporary relief to the respondent it was agreed by and between respondent and appellant, that the appellant should, endorse for the respondent, or become liable as security for his debts then immediately pressing him, and that in consideration thereof the mortgage and note in question were executed; that it was not known at the time of the execution of the mortgage to what extent the respondent was indebted and for what amount he would require the appellant to become his endorser or surety; that the mortgage note for $2,625 was given in consideration of the liability which the appellant would incur by his endorsing for and becoming respondent’s security, and that to secure him in such liability it was given in an amount sufficiently large to cover and include all sums which might be required to be assumed by the arrangement. The answer then set out specifically the debts which the appellant had paid for and on account of the respondent by reason his becoming his surety or endorser, and prayed that the temporary injunction which had been granted might be-dissolved. On a final hearing of the cause, the court excluded all the testimony relating to the agreement between the parties, and not embodied in the mortgage, on the ground that it tended to contradict, alter and vary the written contract, and then made the injunction perpetual. The court erred in refusing to sustain the demurrer to the petition; the allegation that the respondent did not owe the note was not sufficient. If payment, want of consideration, or any other defence was relied on, the nature of the defence should have been specifically set forth. We are not aware that the precise point has been adjudged in our courts, but the cases are very numerous showing that a mortgage or judgment may be given to secure future ad557 vanees, or as a general security for balances which may become due from time to time from the mortgagor or judgment debtor; and this security may be taken in the form of a mortgage or judgment for a specific sum of money sufficiently large to cover the amount of the floating debt to be secured thereby—Bk. of Utica v. Fink, 3 Barb. Ch. 303 ; Shirras et als. v. Craig et al., 7 Cranch, 34. The next question is as to the admissibility of the evidence, or whether the principle will apply when the mortgage does not* on its face provide for future advances and responsibilities. The mortgage is taken to secure $2,625, and it is recorded for that sum. Now, if there has been no money paid, it is clear by the well established principles of law that the mortgagor is not prohibited by his signature from showing that fact by parol. Parol evidence is often admitted not to contradict the written instrument, but to show with what purpose and intent it was executed. Such evidence is admissible to show that a deed or bill of sale absolute on its face was intended as a mortgage, or as a security for money only—Van Buren v. Olmstead, 5 Paige, 9; Johnson v. Huston, 17 Mo. 58. . We are therefore of the opinion that the evidence offered by the appellant and excluded by the court was admissible, not for the purpose of contradicting or explaining the written instrument, but for the purpose of establishing the fact that the endorsements were made and the liabilities resulting therefrom were paid on the strength of the security contained in the mortgage. The court should have proceeded to a complete adjustment of the equities between the parties and admitted the evidence. The judgment is reversed and the cause remanded for further proceedings in accordance with this opinion. Judge Holmes concurs; Judge Eagg absent.