State Bank v. Waldron , 104 Neb. 81 ( 1919 )

Morrissey, O. J.

This action was broug'ht by the State Bank of Omaha to foreclose a mortgage of $7,090 on a tract of real estate in Douglas county. Herbert B. Waldron, Florence G. Waldron, Lizzie C. Morton Ruth, Edmund P. Dunlap, and Carrie J. Dunlap were defendants. Before judgment, plaintiff bank dismissed its cause of action, and trial was had on the pleadings hereinafter mentioned.

Appellee Ruth, by answer and cross-petition, set up a mortgage of $24,000 upon the real estate, signed and executed by defendants Waldron, alleged, default in payment and prayed a foreclosure. Appellees Edmund P. Dunlap and Carrie J. Dunlap, his wife, filed a cross-petition, alleging that, February 1,5,1916, in an action then pending in the district court for Douglas county, a decree was entered awarding the title and right of possession of the real estate involved in this action to Dunlap, subject, however, to a mortgage of $24,000 held by Lizzie C. Morton Ruth; and that an appeal was prosecuted from this decree to the supreme court, where the judgment was set aside and the action dismissed. It is further alleged that, pending the appeal in the supreme court, Dunlap, to protect his interests under the decree, and in order to prevent a foreclosure of the $24,000' mortgage held by Mrs. Ruth, purchased from her two of the interest coupon notes for which the mortgage was given as security, amounting at the Hate of the purchase to $1,354.85. The cross-petitioners Dunlap and wife prayed that the coupons be decreed a part of the mortgage, and be made to constitute a charge and lien against the real estate. Appellants Waldron filed a general denial to the cross-petition of appellees Dunlap. The court entered a decree of foreclosure in favor of Mrs. Ruth for the amount due on her mortgage, and in favor of Dunlap for the amount of the two coupon notes, and made the same a lien upon the premises, subject and junior to the lien found in favor of Mrs. Ruth.

Defendants Waldron, who appear to be the holders of the equity of redemption, do not appeal from the decree in so far as it is in favor of Mrs. Ruth, but prosecute this appeal solely from that part of the decree based upon the coupon notes held by appellee Dunlap. The position of appellant is that Dunlap voluntarily paid Mrs. Ruth the interest represented by the two coupon notes, and that the court, having finally determined in the action heretofore mentioned that he had no interest in the premises, Dunlap was not entitled to be subrogated to any of the rights or interests of Mrs. Ruth under the mortgage.

The controlling question is: Did Dunlap purchase the two coupon notes, or did he voluntarily pay them for the benefit of appellant? The principal note, with the coupons' attached, was in the hands-of Mr. Crossman, attorney for Mrs. Ruth. The coupons in question were due, and the attorney, in good faith, dealt with the attorney for Dunlap. As a result of these negotiations, Dunlap’s attorney paid the full amount due on the coupons to the attorney for Mrs. Ruth and, following the instruction of his principal, took over the coupon notes. The correspondence between appellee and his attorney, and between the latter and the attorney for Mks. Ruth, is set out in the record. Dunlap wrote his attorney: “I am sending a draft for $1,354.85 to take over the coupon note of Mrs. Ruth. Ñow, do what you think is best.” In another letter he wrote: ‘ ‘ Send those coupons here, and can take them to the bank and use them for collateral to the other interest.”

Letters from appellee’s attorney to his client are also in evidence, and in none of these is it suggested that the notes be paid, but the correspondence refers to the taking-over of the notes, or to assignments. There is also a letter from the attorney for Mrs. Ruth. In this letter he speaks of an offer which he had theretofore made to indorse the notes without recourse upon his client, but explains that such a proposition was with the understanding that any right of lien which appellee might acquire by reason of the coupon notes should be junior to the lien of his client. After some negotiations, the notes were delivered to Dunlap’s attorney and the money paid to the attorney for Mrs. Ruth.

Appellant called Mrs. Ruth, the owner of the notes, as a witness, and in answer to interrogatories she testified that she did not sell the notes to appellee; that she had not been asked to indorse them, and had not indorsed them; and that she had not authorized any one to sell them. She said that she had given them to her attorney to collect. She is a woman advanced in years, and was in feeble health. Her testimony shows that she had not seen the notes before and could not identify them when they were presented. She said: “Mr. Crossman does all my legal business and has all my papers. I have been sick for a long- time, and I have not been able to attend to anything. * * ' * I told you I put my papers in Mr. Crossman’s hands, and as he had legal ability and knew what to do, I was out of it, because I was sick, and this matter has been hanging in court and torturing me for four years, and it is ruining my health. ’ ’ This indicates that Mr. Crossman, her attorney, was instructed only in a general way to look after her business. She does not complain of the conduct of her attorney, but expressly compliments him upon his ability. _ He carefully guarded her interests; he received the money and preserved her lien as the first and superior lien upon the premises. She has not repudiated his transfer of the notes. The correspondence between appellee and his attorney indicates that appellee did not intend to pay the notes, but intended to acquire their ownership. This is indicated, not only by the fact that the notes we,re received without being marked paid, but by the fact that he intended to put them up as collateral. Neither of the attorneys use the word “paid” or “payment,” but the language employed indicates a transfer of ownership.

We are convinced that the trial court correctly found that the ownership of these notes was in appellee. They are a valid obligation, and the amount due thereon was properly made a lien upon the mortgaged premises, and the judgment is

Affirmed.

Sedgwick, J., not sitting.