Whitney v. Hale , 67 N.H. 385 ( 1892 )

The defendants, who are creditors of Hale, the mortgagor, attaching the equity in the mortgaged premises, object that the mortgage does not indemnify Whitney against the four-thousand-dollar note to the Keene National Bank. In January, 1883, Hale received of Whitney $5,000 upon an agreement to convey to Whitney a one-fourth interest in certain timber land, or to refund the money with interest. The land was never conveyed. Of the money received by Hale, $4,000 was borrowed of the Keene National Bank on a joint and several note signed by Whitney as principal and Hale as surety, and dated January 22, 1883. When the mortgage was executed, June 3, 1885, Hale had disposed of the land, and was bound to refund the money received of Whitney with interest: the note to the bank was outstanding and, as between Hale and Whitney, was then in fact Hale's debt. He had received the money for which the note was given, and by the contract with Whitney he was required to refund it, having failed to convey the land.

The condition of the mortgage so far as it relates to the note is, "and shall well and truly indemnify and save harmless the said Whitney from all loss, costs, damage, and expense to which he may be subjected by reason of his signing, at the request of said Hale and for his accommodation, a certain promissory note for four thousand dollars, with said Hale, payable to the Keene National Bank, . . ." It does not admit of a doubt that Hale intended to indemnify Whitney against his liability on the note. He treated the debt represented by the note as incurred for him, and executed the mortgage to secure Whitney against liability upon it. There is no error in the description of the note in the condition of the mortgage. The note described is for $4,000, payable to the Keene National Bank, and signed by Whitney and Hale. This corresponds with the note, which was the only note held by the bank signed by Whitney and Hale. It is no error in the description that it does not specify that Whitney signed as principal and Hale as surety, or that it states that the note was signed by Whitney at the request and for the accommodation of Hale. There is no variance between the note and the description in the condition of the mortgage. There is evidence in the case indicating that the transaction was in fact as described in the condition of the mortgage, — that the money was raised and the note signed at the request of Hale and for his accommodation. It appears that Hale offered an interest in the timber land for $5,000 and obtained that amount of money, of which $4,000 was raised on the note upon an agreement to convey the land or repay the money. The transaction as in effect an arrangement for obtaining a loan of $5,000 for Hale's accommodation. It seems to be assumed by the defendants in argument that the condition of the mortgage describes a note signed by Whitney as surety for Hale; whereas it describes a note signed by Whitney with Hale, for Hale's accommodation, which would naturally be signed by Whitney as principal.

The defendants do not set up want of notice, or infirmity, or fraud in the mortgage, but insist that the note is not covered by it because Whitney regarded the debt as his when the mortgage was made. The mortgage is to indemnify Whitney against the liability assumed by him on the note at Hale's request and for his accommodation. The indebtedness to the bank, for which the note was given, was incurred in consequence of Hale's agreement to convey the land or refund the money with interest. Hale's promise was the inducement for obtaining the loan, and therefore the note was signed by Whitney at Hale's request, as stated in the condition of the mortgage. Hale having failed to convey the land, and being liable to Whitney for the money obtained on the note, treating the indebtedness as incurred for him, executed the mortgage with the intention and for the purpose of indemnifying Whitney against loss by reason of procuring the loan and signing the note, of which he had received the proceeds. The defendants are creditors claiming title under Hale by an attachment and levy subsequent to the mortgage; and the only question is, whether the mortgage is valid as to the note. The description was sufficient to direct the defendants to the note and the character of the incumbrance created by the mortgage, and there is no intimation that they were misled or in doubt as to its being the note described in the condition of the mortgage and intended to be secured by it, and there is no suggestion of fraud or estoppel. When the mortgage was executed Hale had disposed of the land and put it out of his power to convey it, and it had become certain that Whitney's liability upon the note had been incurred for Hale's accommodation, and the undertaking of Hale to secure Whitney against loss by reason of the transaction was upon a sufficient consideration, and the mortgage is valid against the subsequent attaching creditors.

Whitney's supposition, at the time of Hale's failure, that Hale had conveyed or secured to him a quarter interest in the land, and the fact that he regarded the note to the bank as his own debt, are immaterial. As between him and the bank it was his debt. His understanding, founded upon a mistake of fact, did not affect his rights under the mortgage. Nor is it material whether he understood when it was made that it indemnified him against loss on account of the four-thousand-dollar note. The validity of the mortgage did not depend upon Whitney's knowledge of the extent of his rights under it, or even his knowledge of its existence. It was not a personal mortgage to which the affidavit of the parties was required. Being for his benefit, Whitney's acceptance of it would be presumed if no actual acceptance was shown. Frazier v. Perkins, 62 N.H. 69; Johnson v. Farley,45 N.H. 505; Peavey v. Tilton, 18 N.H. 151. As the validity of the mortgage did not depend upon it, the time of the actual acceptance is not material.

Case discharged.

SMITH, J., did not sit; the others concurred.