Horn v. Thompson

Bell, J. It is objected to the assignment made by Sturtevant to the plaintiff, that no consideration is shown for it. This objection is not well founded. It is the settled doctrine of this court, that a mortgage is but an incident of the debt, and upon an assignment of the debt, passes with it. Southerin v. Mendum, 5 N. H. Rep. 420; Ellison v. Daniels, 11 N. H. Rep. 274; Rigney v. Lovejoy, 13 N. H. Rep. 247; Wilson v. Kimball, 7 Foster’s Rep. 300. The notes which here constitute the debt secured by the mortgage, are found to be indorsed by the payee, and such indorsement is prima facie evidence of an adequate consideration. McDonald v. Magruder, 3 Pet. Rep. 470; Herrick v. Carmand, 10 Johns. 224; Russell v. Ball, 2 Johns. 50; Babson v. Webber, 9 Pick. 163. And the notes being transferred, the mortgage passed with them. But if this fact did not appear, the assignment is under seal, and it recites a consideration ; and as between the parties to it, such an assignment is evidence of a sufficient consideration for the transfer. Morse v. Shattuck, 4 N. H. Rep. 229; Brown v. Pritchard, 4 N. H. Rep. 397; Foster v. Hall, 12 Pick. 89. As the party is bound, so those who claim under him, and are entitled to his rights, are bound to the same extent as himself; and any one who would take advantage of the «want of consideration, is bound to show himself either a bona fide purchaser, or a creditor, and as such, entitled to inquire into that matter, and he may then. [570] impeach the conveyance, because if it is without; consideration, it is a fraud upon him. Clapp v. Trull, 20 Pick. 247; Kimball v. Fenner, 12 N. H. Rep. 248; Belknap v. Wendell, 1 Foster’s Rep. 184. And in such case, the party who claims under the conveyance, cannot rely on the acknowledgment of consideration, in the absence of other proof, as sufficient evidence of consideration, because it is a mere recital of a fact, and so not evidence against a stranger. It is at least but hearsay evidence, the statement of a fact by a third person, w hieh is never the equivalent of testimony under oath. In this case, the defendant does not occupy the position of a creditor, or a purchaser without notice. He appears as the holder of the mortgaged premises, under the mortgager’s title, the latter having deceased. To him it is nothing whether the transfer was insufficient against creditors, as he does not assume to be a creditor; but as an assignee of the mortgager’s right, he is bound by the acts and admissions of the mortgager, as the mortgager would .be, if he was still living, and a party to this proceeding. II. The defendant claims that before the commencement of these proceedings, he paid a part of this mortgage debt to the creditors of Sturtevant, the mortgagee, under a judgment of the court of common pleas, rendered in a trustee process, against Sturtevant, ■ as principal, and himself, as trustee. The case shows that the trustee suit was commenced before the assignment to the plaintiff, and, of course, under circumstances which would render the trustee properly chargeable, if the proceedings had been regularly conducted. The power of the courts to charge the makers of negotiable promissory notes, as trustees of the payees, depends •on the provisions of the Revised Statutes, which are a revision of the statute of 1841, chapter 601. By section 18 of chapter 208, (Comp. Stat. 529,) it is provided that if any ¡person, summoned as trustee as aforesaid, (that is, in the court [571] of common pleas,) is indebted, at the time of such service, or afterwards, to such debtor, by a negotiable promissory note made or payable in this State, or the parties to which, at the time of making the same, resided in this State, the court may make a rule requiring such debtor to appear and answer on oath all interrogatories respecting the possession, transfer or other disposition of such note, and a rule or order of notice to be served upon any individual, or published in some newspaper, for the information of any person who may claim an interest in said note, so that such person may appear and show that the same was transferred to him in good faith, and for an adequate consideration, before the service of such trustee process; and the question whether the same was so transferred to him, shall be decided by the jury, if he or the plaintiff request it. “ Sec. 19. If it shall not appear that the note was so transferred, the promiser shall be charged as the trustee of such debtor, and the payment of the judgment rendered against him shall be a discharge from the note, or from such part thereof as is equal to the amount so paid by him, together with all costs taxed in his favor. “ Sec. 20. If any such debtor shall refuse to appear upon such order of court, he may be arrested and brought into court upon a capias, and fined not exceeding fifty dollars, and if he shall refuse to answer, may be proceeded against as for a contempt of court.” Before the passage of this act, it had been decided by this court that the maker of such a negotiable note could not be charged as a trustee of the payee, and consequently, independently of the statute, the power of the court did not extend to this case. A court of general jurisdiction may have special and summary powers, wholly derived from statutes, not exercised according to the course of the common law, and which do not belong to it as a court of general jurisdiction. In such cases, its decisions must be regarded and treated as those of courts [572] of special and limited jurisdiction. Morse v. Presby, 5 Foster’s Rep. 802. In such cases, in whatever way the jurisdiction is limited, whether as to cases, persons or process, the authority must be strictly pursued, or the proceedings must be held extrajudicial and void. That seems to us the position of the present case. There is no general power conferred in relation to negotiable paper; promissory notes alone are specified. All promissory notes are not embraced in the act, but such only as are made and payable in the State, or the parties to which, at the time of making the same, resided in this State. If an individual should be charged in a case where the negotiable paper was not included in the act, the judgment would be simply inoperative, from the want of power to render such a judgment. In the same way, the statute confers the power to charge the trustee, after a certain course of proceeding. The plaintiff may adopt that course, or not, at his election, but the trustee cannot be charged, unless the statute is pursued, or the safeguards of the statute are voluntarily waived by the parties for whose security they were provided. These proceedings were designed for the security of the parties claiming an interest in such notes, by transfer from the payee, and the aim of the statute was to secure to them notice of the proceeding by which their rights may be affected, and an opportunity to appear and defend those rights. To secure these objects, the statute provides two separate steps, first, an order upon the principal defendant to appear and disclose his knowledge relative to the possession, transfer or other disposition of the note of the trustee. Stringent remedies are provided to compel such appearance and disclosure, though a doubt has been intimated whether such remedies would be applied, unless the debtor’s'fees as a witness were previously paid. Hurd v. Fogg, 2 Foster’s Rep. 98. The object of this proceeding manifestly is to enable the court to judge what should be the form of the next pro573 needing, the rule or order of notice to be served upon any individual, or published in some newspaper, for the information of any person who may claim an interest in the note, that he may appear and show his interest. This is the great object of all the provisions; to cite the party really interested to appear and maintain his right, in pursuance of the great principle of justice every where acknowledged, that no man’s rights shall be affected or impaired by any judicial proceeding, unless an opportunity is afforded him to be heard. In this case, the first of the required orders was made and served, but the debtor did not appear. The statute does not, in terms, require further proceedings in all cases, but it evidently contemplates that such may be taken by direction of the court. The purpose in view was apparently not accomplished, and it does not appear that the judgment of the court was exercised upon the question whether further process ought to be issued or not. As no further proceedings were had, designed to ascertain what parties were interested in the note, or to give them notice to appear, it is not necessary to decide whether it was or was not necessary to proceed further with the debtor. We can easily imagine cases where no useful purpose could be answered by such proceedings, and they might seem properly dispensed with; as, if the claimant of the note appears, and is admitted to maintain his claim, or if the holder of the note is otherwise ascertained. ■ The second proceeding, the notice to the claimants personally, if known, otherwise a published notice to all parties interested, we think must be deemed indispensable in all cases where there is an attempt to charge a trustee upon a promissory note. Perhaps, in any case, where a party claiming an interest in a note, should appear and contest the liability of the trustee, he might be held to have waived the statute notice, and consequently to be bound by a judgment charging the trus [574] tee. But, in such case, there would be no color to say that-any other claimant could be bound. Here, where the judgment appears to have been rendered, there is nothing in the record which shows in whose hands the notes in question were, nor that any effectual measures had been taken to inform the court, nor any measures statutory, nor any other to give notice, to any person who might claim an interest in the notes, to appear and show his right. This was a complete failure to comply with the statute, and the court had, as we think, no jurisdiction to charge the trustee. But, independently of this ground, the present plaintiff was in no way bound by that judgment. He was a stranger to it. No point is clearer than that a party is not bound by a judgment to which he is not a party or privy. Warren v. Cochran, 7 Foster’s Rep. 339. Here the statute intended he should be made a party, but he was not. He was the only party really interested in the judgment, and was not notified of the proceeding. Under such circumstances, he is entitled, like other strangers, to treat it as a nullity. If, as has been suggested, there is an error in the ease, it may perhaps be amended. As it now stands, there must be Judgment on the verdict.