McCrum v. Corby , 11 Kan. 464 ( 1873 )

The opinion of the court was delivered by

Valentine, J.:

Statement of case and proceedings. It appears from the record in this case that two actions were commenced in the court below — one entitled as follows: “Amanda Corby, executrix of the last will and testament of John Corby deceased, plaintiff, v. W. J. Vancuren, Henrietta Vanouren, H. W. Boone, and Joseph McCrum, defendantsthe other entitled as follows: “Willis J. Vancuren and Henrietta Vancuren, plaintiffs, v. Joseph McCrum, and Bay less Campbell, sheriff of Doni- . . phan county, defendants. inese two actions were consolidated by order of the court. W. B. Wood was appointed a referee to hear and determine evidence, and to report the amount of money paid by W. J. Vancuren to Joseph McCrum. This was the only question, submitted to said referee. The referee performed his duties, and reported that the amount so paid was $273.47. Other issues were tried by a jury, and the jury found thereon as follows:

“1. $.-Did the defendant H. W. Boone transfer the notes now sued on in this action to John Corby, plaintiff's testator, in his lifetime as collateral security for debts due from said Boone to said Corby? Answer. — Yes.

“ 2. §.-Are the notes still held by said plaintiff under the contract by which said John Corby received them from defendant Boone as collateral security for indebtedness from said Boone to said Corby? Answer.-Yes.

“3. Q — If the plaintiff is entitled to recover, what shall be the amount of his money? Answwr.-$1,995.23.

“4. Q.-Weve the notes sued upon in this action deposited with the said John Corby for safe-keeping by the said Boone? Answer .-No.''

These are all the findings in the case, or rather in the two cases. There is no general finding by either the court, or the referee, or the jury. And these special findings do not cover all nor any great proportion of the issues in the two cases. Can any one tell from said findings, with the aid of all the admissions in the pleadings, whether said notes were indorsed by Boone, or merely transferred by delivery to Corby? Were they transferred before due, or afterward? Did Vancuren have any notice that they were transferred to Corby as collateral security when Vancuren confessed judgment on them to Boone? By what authority was the said judgment rendered against Henrietta Vancuren ? (Moore v. Wade, 8 Kas., 380.) Was the real estate which was mortgaged to secure the payment of these notes the homestead of Vancuren and family? (Morris v. Ward, 5 Kas., 239.) Had Vancuren any notice that Corby held said notes as collateral security when he paid said $273.47 to McCrum? Had McCrum any notice that Corby held said notes as collateral security when he (McCrum) purchased said judgment from Boone, or when he received said money on the judgment from Yancuren ? Hid Boone owe Corby’s estate at the time of the trial in this case more or less than the amount of the said notes? Were the debts that these notes were intended to collaterally secure usu/rious, or not ? Where were these debts contracted ? If in Missouri, what are the laws of Missouri concerning usury? These questions cannot all be material, but any one of them may be material if the fact should be found in a particular way. This case, or rather the two cases, were very carelessly tried in every respect in the court below, if the record brought to this court is correct. As an instance of the careless manner in which the parties submitted interrogatories to the jury to obtain special findings of fact thereon, we would refer to the interrogatory upon which the third finding of the jury is based, to-wit: “If the plaintiff is entitled to recover what shall be the amount of Ivis recovery?” There were three plaintiffs in the two cases, not merely one. In the first case mentioned the plaintiff was a woman, and “his” would not be applicable. In the other case one of the plaintiffs was a man, and the other a woman. It will be obvious to any one who will examine the record now before us that we cannot at the present time determine all the rights of all the parties in this court. W.e shall therefore not attempt to do so, but 'shall decide one or two questions* and send the case back to the court below for a new trial.

1. Foreclosure by equitable assignee. Equities to be settled. 2. Assignment of notes payable to "order." The judgment of the court below was in favor of Amanda Corby, executrix of John Corby’s estate, and against Willis J. Yancuren for the full amount of the said notes with interest, and against all the parties who are now plaintiffs in error, to-wit: Willis J. Yancuren,HenriettaYancuren, H. W. Boone, and Joseph McCrum, for the sa]e 0f f[ie mortgaged premises. The plaintiffs in error raised the question in the court below, and now raise it here, that Corby’s estate could at most recover only for the amount of the indebtedness from Boone to said estate.' The court below seemed however to be of a different opinion. The plaintiffs in error asked the court to instruct the jury to make special findings upon the following questions of fact, to-wit: “Were the notes sued upon in this action deposited with John Corby by defendant Boone as a collateral security to said Corby for an indebtedness to him by Boone ? If yea, .how much is now due on suoh indebtedness f” The court refused to so instruct the jury. (Laws of 1870, page 173, §7.) “And the court instructed the jury that they must find for the plaintiff upon the third question of fact the full amount of the notes sued upon with interest.” We think the court erred. This, ruling of the court would perhaps have been correct-in an action brought by said executrix against Vancuren and wife alone. In such an action the executrix could have collected the full amount of the notes and then let Boone and his assignees look to her for any surplus remaining after paying her claim against Boone. But .in this action Boone, and his assignee, McCrum, were also parties; and they were entitled to said surplus. The rights of all the parties should have been determined in this proceeding. The said executrix should have received just enough to satisfy her claim against Boone, and costs, and no more, and the surplus should have gone where in equity it properly belonged. The court therefore erred in refusing to allow the jury to find whether there was any surplus or not, and in requiring that the jury “ must find for the plaintiff,” (said executrix) “the full amount of the notes sued upon, with interest.” Of course, if the notes were not sufficient to pay the amount of the indebtedness from Boone to Corby’s estate, then it would be right for the court to render a judgment in favor of the estate for the full amount of the notes. But this is a question of fact to be determined by the jury, and not a question of law to be de-' termined by the court. It is true, the amount due on the notes, aside from any payments on them, is a question of law; but the amount due from Boone to Corby’s estate, and secured by these notes, is a question of fact, and can be determined by the jury only, as the facts were submitted to the jury and not to the court. These notes with the mortgages given to secure them were probably transferred by Boone to Corby merel7 b7 delivery, and not by any indorsement thereon. If so, then Corby obtained only an equitable interest therein, and must be prepared, whether they were transferred before or after maturity, to meet all equities that may be set up against them. (Story on Promissory Notes, §120; Story on Bills, §201; 2 Parsons on Notes, 52, 53.) At common law no chose in action was negotiable, or even assignable. In equity every chose in action except a tort was assignable, but it was assignable subject to all equities that might be set up against it. Under our statutes every chose in action is assignable except a tort, the same as it was in equity; (civil code, § 26;) and under our statutes (the same as in equity) it is subject, after assignment, to all equities that may be set up against it, unless it be a negotiable bond, or a negotiable bill of exchange, or a negotiable promissory note. And if it be a negotiable bond, bill, or promissory note it can be assigned free from all equities only by being assigned in accordance with the provisions of the statute. Hence, even a negotiable promissory note, if payable to “order,” can be assigned free from all equities only by indorsement, (Gen. Stat. 114, ch. 14, §1, etseq.,) for there is no statute in this state that authorizes a negotiable promissory note payable to “order” to be transferred free from all or any equitable defenses or claims except by indorsement. Of course, the right of the assignee of a negotiable promissory note, or indeed of any note transferred by delivery merely, cannot be defeated, except by a paramount equitable right. The court below evidently entertained the opinion that the executrix must recover the full amount of the note sued on, without regard to any equitable defenses that might be set up against the notes or mortgages. In this we think the court erred. Boone continued to hold the legal title to said notes and mortgage, Corby obtained only the equitable title thereto, and hence the action of Corby’s executrix on said notes and mortgage might well be met by equitable defenses.

The j udgment of the court below must be reversed, and. cause remanded for a new trial.

All the Justices concurring.