Swanby v. Northern State Bank

WiNsnow, C. J. Upon the principal question in this case, namely, the question whether the plaintiff or the bank was shown by the evidence to be the owner of the mortgage, there is no serious doubt. The notes were negotiable, payable to the order of Swanby, and had never been (so far as the evidence shows) indorsed, assigned, or transferred either by writing or by parol to the bank or any third person. In the absence of other evidence this proves ownership in Swanby. The possession of the bank was under no agreement of any kind with the payee. [575] Mere naked possession of negotiable paper payable to order does not prove title. Andrews v. Powers, 35 Wis. 644. The same result manifestly follows from the provisions of the negotiable instrument law. By sec. 1676 — 21, Stats. (Supp. 1906: Laws of 1899, ch. 356), it is provided that the holder of a negotiable instrument may sue thereon in his own name, and by sec. 1675, Id., the holder of a note payable to order is defined as the payee or indorsee in possession thereof. True, the payee of such a note may transfer it for value without indorsement, and in such case the transferee not only acquires the transferrer’s title, but also the right to have the note indorsed (sec. 1676' — 19, Stats.), but no such transfer was shown here. Mere naked possession does not prove or tend to prove it. The second contention made is one of form rather than of substance. It is to the effect that the judgment is erroneous because not in conformity with the statute governing judgments in foreclosure actions, and particularly because it contains a personal judgment against the bank for the recovery of the two instalments paid to it by Marion before the commencement of the action. It is true that the judgment does not conform to the foreclosure statute. It entirely omits any provisions for the foreclosure of the mortgage or sale of the premises. But all this was for a very good reason. The mortgage had ceased to be a lien upon the premises before judgment was rendered, and hence could not be foreclosed. By the interpleading of the bank and the deposit of the money.represented by the mortgage, in court the action had practically ceased to be a foreclosure action and had become an equitable action of inter-pleader in which the two rival claimants to the notes and mortgage were fighting out their respective claims. Sec. 2610, Stats. (1898). It would be manifestly absurd to hold that when the action has reached this stage the mandatory provisions of the statute [576] relating to judgments in foreclosure are applicable. Tbe action is no longer an action of foreclosure under tbe statute, but an action of interpleader, in wbicb there is no question of foreclosure left, but only tbe question of tbe title to tbe proceeds of tbe mortgage after payment thereof. With reference to an analogous situation this court said in Hemenway v. Beecher, 139 Wis. 399, 121 N. W. 150: “Stec. 2610, Stats. (1898), relating to tbe interpleading of additional parties, and sec. 2656a of tbe same Statutes, relating to cross-complaints and proceedings where controversies arise between defendants, are very broad in their terms and were intended to give courts plenary powers not only to call in new parties, but to mould tbe pleadings and dispose of all branches of a controversy in one action after having obtained jurisdiction of tbe necessary parties. Tbe idea in both sections is to enable tbe court to grasp all tbe issues germane to tbe main controversy, whether arising between tbe plaintiff and tbe defendant, or between defendants, or between a defendant and an outside party, and dispose of them in one and tbe same action, and thus avoid circuity of action and multiplicity of suits. This purpose should be encouraged rather than discouraged by tbe courts. It is in line with tbe idea that courts are formed to decide controversies without unnecessary delay and without undue refinement as to pleading or procedure so long as tbe parties are before tbe court and tbe issues understood.” There was really but one question between tbe plaintiff and tbe bank, and that was tbe question of tbe ownership of tbe notes and mortgage. When that question was finally decided in this case it was decided for all time and for all future actions between these parties. If tbe plaintiff was held to be tbe owner, she would not only own tbe fund in court but also be entitled to receive tbe money which tbe bank bad previously collected from Marion. Why compel her to go out of court by one door and come in by another in order to recover this sum, when tbe question of liability is no longer open and tbe only effect of such a proceeding would be to charge tbe bank with an [577] other bill of costs ? Such rulings aré the kind of rulings which furnish foundation, if foundation. there be, for recent complaints as to the efficiency of the courts. - As indicated in the foregoing quotation from the Hemen-way Case, secs. 2610 and 2656a, Stats. (1898), were intended to give the trial court very broad powers, not only in the calling in of parties but in the moulding and adapting of the pleadings so as to finally dispose of all branches of the controversy, and if that was the intention of the legislature it is certainly the duty of the courts to carry it out. The controversy between the plaintiff and the bank was over the ownership of the notes. The question of the right of the plaintiff to recover the instalments theretofore paid to the bank by Marion was simply a subsidiary branch or detail of -the controversy over the ownership, which ought in principle to be disposed of in the one action for the benefit of the bank as well as for the benefit of the plaintiff. It is true that the complaint first served after the order of interpleader contained no allegation with regard to the payment of these instal-ments to the bank and demanded no judgment for any specific relief thereon. On the trial, however, the complaint was amended by adding an allegation that Marion had failed to pay to the plaintiff the two instalments which the bank in its answer admitted and. alleged that it had received. So the fact was before the court both by the pleadings and evidence, and without objection. The trial court was thus fully apprised of the fact that this subsidiary controversy, depending entirely on the decision of the main controversy, existed, and it seems that it was practically its duty, under the general principles laid down' in the Hemermay Case, to direct the pleadings to be so amended as to sustain and justify the judgment. "When such a situation exists this court will, of course, treat the pleadings as properly amended in order to support a judgment which in all other respects is manifestly right. By the Court. — Judgment affirmed.