Case ID: ny_59/html/0603-01.html
Source: Caselaw Access Project
Author: {"author": "Andrews, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

George W. Flower, Guardian, etc., Appellant, v. George A. Lance, Executor, etc., Respondent.
    Where a parly voluntarily pays an illegal claim, there being- no duress of person or of goods, or fraud on the part of the claimant, the fact that he made the payment under protest does not preserve to him the right of subsequently contesting the validity of the claim; but he Is concluded by the payment.
    ifor does the concealment by the claimant of a fact entirely irrelevant to the matter, and which in no way affected or qualified the rights of the parties, give a right of action against him, to recover back the moneys paid.
    C. purchased certain mortgaged premises, subject to the mortgage. A. purchased the mortgage at O.’s request, and agreed to extend the time of payment upon 0. and her husband joining in a bond conditioned for the ultimate payment of the debt, payments made on said bond to be applied toward the principal and interest of the original bond and mortgage. These latter were given before the passage of the legal tender act. When the principal became due by the terms of the new bond, defendant’s intestate, who had become owner of the securities, demanded of plaintiff, guardian of the infant heirs of 0., then deceased, payment in gold. Plaintiff made payment in gold, accompanied with a written protest that gold could not lawfully be required. He was then ignorant of the existence of the new bond. Held, that the giving- of the new bond was simply as additional security, and did not operate in law as a novation of the debt; that b)rthe purchase, subject to the mortgage, the land became the primary fund for the payment of the debt, and the mortgagor stood as surety and if the extension of time had the effect of discharging him from personal liability upon his bond, the debt still continued a valid claim against the land; and that plaintiff having voluntarily paid the debt in coin as demanded, had lost the right to question the validity of the claim.
    (Argued January 19, 1875;
    decided January 26, 1875.)
    
      It seems, that as by the law as declared by the United States Supreme Court at the time, of payment (Hepburn v. Griswold, 8 Wall., 603), the original debt was payable in coin, the demand therefor was proper, and plaintiff was obligated to pay it; and the right of the creditor was not affected by the fact that the new bond could have been discharged by payment in legal tender, as by its terms such payment was to be applied upon the original bond and would have been credited at its gold value.
    Appeal from order of the General Term of the Supreme Court in the fourth judicial department, reversing a judgment in favor of plaintiff, entered upon a decision of the court upon trial without a jury.
    This action was brought to recover back an alleged excess of payment upon a bond and mortgage.
    The court found the following facts, in substance: On the 7th day of February, 1852, Norris M. Woodruff and others executed a bond and mortgage, on premises situate in Water-town, to the bank department, for $5,000, payable in ten years. Prior to the 21st day of April, 1863, Mary M. Cadwell became the owner in fee of the real estate described in the above mentioned bond and mortgage, having purchased the same subject to the said mortgage, and on that day one Merritt Andrus, at the request of the said Mary M. Cadwell, purchased and became the assignee of the said bond and mortgage, under an agreement that he would give time for the payment of the amount secured thereby for the period of eight years from the 1st day of January, 1863, upon the said Mary M. Cadwell joining with her husband in a bond to him covenanting to pay the debt at the expiration of the extended term, which bond was duly executed and delivered, and was conditioned as follows:
    “ The condition of this obligation is such that if the above bounden obligors, their heirs, executors, administrators or assigns, or any of them, shall and do well and truly pay or cause to be paid unto the above mentioned obligee, or to his certain attorney, executors, administrators or assigns, the just and full sum of $5,000, and interest thereon from the 1st day of January, 1863, as follows :
    “ The said principal sum of $5,000 in eight years from the said 1st day of January, 1803, and the interest semi-annually from the said 1st day of Jan nary, 1863, on the whole amount of principal unpaid at the times of the payment of said semiannual interest. But in case the said obligors shall so desire, they may and shall have the privilege and right, at any time of any payment of interest becoming due and payable as hereinbefore mentioned, to pay any part or portion of said principal sum of $5,000, but not less at" any one time than $1,000. And it is hereby understood and agreed between the parties hereto, and this instrument is expressly executed by the one party and accepted by the other on the understanding and agreement that all and every sum of money of principal and. interest, or either, paid upon and by virtue of tins instrument, is to apply and shall be applied on and towards the principal and interest unpaid and to become due on a certain mortgage, bearing date .February 7th, 1852, executed by Norris M. Woodruff and others and their heirs to D. B. St. John, Esq., to secure the payment of $5,000, and recorded in Jefferson county clerk’s office, in book No. 47 of mortgages, page 144, etc., and the bond accompanying the same, and which said mortgage and bond have this day been duly assigned to said Merritt Andrus; this bond and the aforementioned bond and mortgage being intended to and do secure the same indebtedness.
    “ Without fraud or delay, then the preceding obligation to be void; otherwise, to remain in full force and virtue. And it is hereby expressly agreed that should default be made in any payment of interest, or any part thereof, on any day whenever the same is made payable as above, and shall the same remain unpaid and in arrears thirty days, then and from thenceforth the aforesaid principal sum of $5,000 and all interest 0then accrued shall, at the option of the obligee and his representatives or assigns, become and be due and payable immediately, any thing hereinbefore contained to the contrary thereof notwithstanding.”
    Andrus, on the 2d day of August, 1870, sold and assigned to Anson Lance, the defendant’s testator, the original bond and mortgage and the new bond of Mrs. Cadwell and her husband. The interest had been paid, according to the condition of the new bond, to January 1st, 1870; the payment due July 1st, 1870, was not paid. Said Mary Cadwell and her husband died before the assignment, and Annie and Mellie Cadwell, as their only heirs, had become the owners in fee of •the real estate described in the mortgage. The said heirs were infants, and plaintiff was duly appointed their general guardian. Immediately after Lance became the owner of the bonds and mortgage, he demanded payment of the original bond and mortgage in specie, gold and silver or its equivalent, concealing from the plaintiff the fact of the existence of the second bond, and the plaintiff, in behalf of the infants, in ignorance of the existence of the second bond, and, under a written protest, to the effect that the claim was not legally payable in coin, paid the-whole amount demanded. Afterward, on discovering- the fact of the existence of the second bond, the plaintiff demanded back the premium on gold of $1,132.74, taking the ground that by the terms of such new bond the debt was not yet due.
    The court found, as matter of law, that the intentional concealment of the second bond from the knowledge of the plaintiff was fraudulent, and intended to mislead the plaintiff .and induce him to pay the said premium. That plaintiff, in consequence of the new bond, was not liable under the law, as it was then understood to be, to pay the amount in specie, and had. a clear right to pay the new bond in government greenbacks instead of specie, and a tender of the amount secured to be paid by the second bond would have discharged the original mortgage, and operated to satisfy the original bond and mortgage. That the premium mentioned was paid by the plaintiff under a mistake of fact induced by the fraud nlent concealment from him of such second bond, and that the defendant was liable to repay the same with interest.
    Judgment was directed and was entered accordingly.
    
      L. J. Dorwin for the appellant.
    The payment having been made under mistake of fact plaintiff can recover. (Fellows v. Prentiss, 3 Den., 512; Hart v. Hudson, 6 Duer, 304; Cary v. White, 52 N. Y., 138; Kerr on Mistake, 415.) No negligence can be imputed to plaintiff. (Bk. of Troy v. Bk. of N. Y., 43 N. Y., 452; Kingston Bk. v. Ellinge, 40 id., 391; Duncan v. Berlin, 11 Abb. Pr. [N. S.], 116 ; Lake v. Artisans’ Bk., 3 Keyes, 276; 3 Abb. Dec., 10.) The payment under protest preserved all of plaintiff’s rights on the gold question, the same as if payment had not been made. (Meyer v. Clark., 2 Daly, 497, 507-509; Coke Litt., 124, b ; Knox v. Lee, 12 Wall., 457.) The rule that money paid under mistake of law cannot be recovered back, only applies where there is full knowledge of all the facts. (Clark v. Dutcher, 9 Cow., 674; Lyon v. Richmond, 2 J. Ch., 51-60; Northrup v. Graves, 19 Conn., 548, 549; 7 Mass., 449, 453 ; Will. Eq., 68; Elliot v. Swartout, 10 Pet., 137; R. R. Co. v. Marsh, 2 Kern., 308; 2 Alb. L. J., 405; 3 id., 448; 4 id., 7.)
    
      F. W. Hubbard for the respondent.
    The original bond was payable in gold at the time the payment was made. (Bronson v. Rhodes, 7 Wall., 74, 75, 229 ; Hepburn v. Griswold, 8 id., 603; Harris v. Jex, 55 N. Y., 421.)
   Andrews, J.

We see no ground upon which this action can be maintained. The bond and mortgage from Woodruff to the bank department was a valid security in the hands of Andrus, the assignee, for §5,000.- It was executed in 1852, and he purchased it April 21, 1863, at the solicitation of Mrs. Gadwell, the owner of the equity of redemption in the mortgaged premises. It was then past due, and he promised Mrs. Gadwell to extend the time of payment for eight years, from January 1, 1863, upon her joining with her husband in a bond to pay the debt at the expiration of that time, with semi-annual interest. The bond was given, and this act, uniting with the antecedent promise, created a valid agreement for the extension of the mortgage debt. But it was not the intention of the parties' to discharge the obligor in the original bond or to affect the lien of the mortgage; nor did the giving of the new hond, in law, operate as a novation of the debt. The purpose of the transaction is plain : Mrs. Gadwell desired to have the time of payment extended, and Andrus consented, upon Mrs. Gadwell and her husband becoming personally bound for the ultimate payment of the debt. The new bond was taken simply as additional security. This appears, not only from the circumstances under which it was given, but from the terms of the instrument. It expressly provides that payments made upon it shall apply on and toward the principal and interest on the original bond and mortgage; showing that, in the contemplation of the parties, the original debt was to remain; and the recital that it was given to secure the same indebtedness, was inserted simply to exclude the inference that it constituted another and distinct liability. The taking by a creditor of a new obligation for a pre-existing debt, does not discharge the latter unless it is so-agreed ; and the intent that a new security shall extinguish the original indebtedness must be proved, or else it will be regarded as still subsisting, and the new obligation will be deemed to have been taken as security only. (Vail v. Foster, 4 N. Y., 312 ; Noel v. Murray, 13 id., 167.)

Mrs. Gadwell purchased the mortgaged premises subject to the mortgage, and the land thereupon became the primary fund for the payment of the mortgage debt, and the mortgagor stood in the position of a surety. If the extension of the time of payment had the effect of discharging him from his personal liability on the bond, the debt nevertheless con-tinned as a valid claim against the land to the same extent as if no equity had intervened affecting the personal liability of the original obligor. (Tripp v. Vincent, 3 Barb. Ch., 613.) In August, 1870, when Lance, the defendant’s intestate (who had become the owner of the securities), demanded payment of the mortgage, there was a present right to enforce the lien. The eight years’ extension had not fully expired, but the right to a credit for the balance of the time had, by the terms of the new bond, become forfeited by the omission to pay the interest, which fell due July first, for thirty days thereafter; and there is no ground upon which the claim made by the plaintiff, that Lance was estopped from insisting upon the default, can be supported. His declaration made before he became the owner of the securities, to a third person, who so far as it appears had no interest in the question, and without any intention that it should be communicated to the plaintiff, that the interest was paid in full, did not create an estoppel in pais. When therefore, Lance, in August, 1870, demanded payment of the mortgage he was insisting upon a strictly legal right. He required payment in coin. Whether a coin payment could be enforced was a question of law, depending upon the validity of the legal tender act as applied to debts contracted before its passage. The plaintiff acceded to the claim of the creditor, and paid the debt in gold, accompanying the act however with a written protest that a gold payment could not be lawfully required. As the law at that time was declared to be, by the Supreme Court of the United States, in Hepburn v. Griswold (8 Wall., 603), the mortgage was payable in gold. It stood as a security for a debt contracted in 1852, which was not discharged. The right of the creditor, who was seeking to enforce the original security, was not affected by the consideration that the new bond would be discharged by payment of $5,000 in currency. Payments in currency on the new security were by its terms to be applied on the original bond and mortgage, but if that was payable in gold, they would be credited at their gold value. The creditor in demanding gold required nothing but what the law as then declared authorized him to demand, and the plaintiff in paying it only complied with his legal obligation as the courts then construed it.

But if there was no legal right on the part of the creditor to demand payment in gold, or any obligation on the part of the plaintiff to pay it, and payment in gold was made under a mistake of law, the plaintiff cannot recall it. If he voluntarily yielded to the claim, and there was no duress of person or of goods, or fraud on the part of the creditor, the payment concludes him; and he could not avoid the force or effect of the act of payment, as an admission, or reserve the right to draw the matter into controversy thereafter, by paying" under protest. The act of payment was voluntary, and if he intended to litigate the right, he was bound at the time to take his position and resist the demand made upon him.

Uor can the action be maintained because the payment was made by the plaintiff in ignorance of the fact of the existence of the new bond, or that the defendant concealed the knowledge of it from him. Whether there was another bond was an immaterial circumstance. The new bond did not in any respect qualify the rights of the parties, and if its existence had been known it would have furnished the plaintiff no ground for resisting the payment of the mortgage. It cannot be presumed that the conduct of the plaintiff would have been influenced by knowledge of a fact which was irrelevant to the matter he was called upon to decide; and ignorance of an immaterial circumstance is not in law a ground for recalling a payment made voluntarily and under a claim-of right.

This leads to an affirmance of the order of the General Term, with judgment absolute on the stipulation against plaintiff, with costs.

All concur.

Order affirmed and judgment accordingly.