Case Name: Betsy A. Webb, plaintiff in error, v. Eugene Hoselton, Monell and Lashley, and John P. Lantz, defendants in error
Court: Nebraska Supreme Court
Jurisdiction: Nebraska
Decision Date: 1876-01
Citations: 4 Neb. 308
Docket Number: 
Parties: Betsy A. Webb, plaintiff in error, v. Eugene Hoselton, Monell and Lashley, and John P. Lantz, defendants in error.
Judges: Gantt, J., dissented.
Reporter: Nebraska Reports
Volume: 4
Pages: 310–321

Head Matter:
Betsy A. Webb, plaintiff in error, v. Eugene Hoselton, Monell and Lashley, and John P. Lantz, defendants in error.
1. Married Women. The promissory note of a married woman, given by her in a transaction relative to her separate property, is valid under the act of 1871. Gen. Stat., 465.
2. Mortgage: assignment. A bona fide purchaser, for value, of a negotiable promissory note, secured by mortgage, before maturity and without notice, takes the mortgage as he does the note, discharged of all equities which may exist between the original parties.
3. -: -. The mortgage is a mere incident to the debt, and passes with it.
4. -: WHAT constitutes. A conveyance in the form of a deed of trust to secure the payment of a promissory note, and conditioned that in case of failure to pay, the trustee shall sell, or upon payment, reconvey, is in effect only a mortgage.
This was an action brought by the plaintiff in error, a married woman, in the district court of Lancaster county, against Hoselton, to whom she had executed a promissory note, secured by a mortgage on her separate,estate, and Monell and Lashley to whom the note had been transferred. Before the assignment of the note, she executed a deed of trust to the same premises, in which the defendant Lantz, was named as trustee. By the terms of this deed, the trustee was empowered, in case of default in the payment of said note, to sell the premises at public auction, but upon full payment of the same, with interest, a reconveyance should be made. The prayer of the petition was that the note and deed of trust be declared void, that' upon payment to Hoselton of the just value of certain personal property, which constituted part of the consideration of the note, the same should be delivered up and cancelled, and the said defendant Lantz required to reconvey the premises to the plaintiff. The cause was sent to a referee who reported as follows:
First. That on the 3cl day of February, 1873, the plaintiff made her promissory note in writing whereby she promised to pay to the defendant Hoselton or order the sum of $1150.00, one year after the date thereof with interest at the rate of ten per cent, per annum and to secure the payment of said note the plaintiff executed a mortgage on the premises described in the petition, bearing the same date as the note.
Second. That on the 22d dap of February, 1873, the plaintiff at the instance of the defendant, Hoselton, executed a trust deed, a copy of which is annexed to the petition, on the same premises upon which the mortgage was given, in which the defendant, John P. Lantz, was named as trustee, and in case of his death, refusal, or inability to act, Seth Robinson was made his successor, and which was to secure the same note described in the mortgage, and the mortgage was to be cancelled.
Third. That immediately after the trust was givevt, the note which it was given to secure was indorsed by said Hoselton and transferred before it became due to the defendants, Monell & Lashley, for the consideration of $800, without notice of any defense, and the note and trust deed were delivered to Monell & Lashley as their property.
Fourth. That the plaintiff at the time she gave the said note, mortgage and trust deed, was a married woman, that her husband was temporarily absent, but that the premises described in said mortgage was her sole and separate property.
Fifth. That the consideration for which the note, mortgage, and trust deed were given was made up as follows:
1. The defendant, Hoselton, had a pre-emption filing on a piece of government land situated in Adams county, Nebraska, which right of pre-emption or filing he relinquished, so that the plaintiff might get a pre-emption filing on the same land, which was valued by the parties at $400.
.2. Improvements on the land above referred to, which. Ploselton had placed thereon, consisting of a house, a stable, a well and about twenty acres of breaking which were valued by the parties at $265.00. One span of horses and harness valued by the parties at $300.00. One mowing machine valued by the parties at $135.00. One breaking plow valued by the parties at $25.00. One hay rack valued by the parties at $7.00-. One hay rake valued by the parties at $10.00; total, $1142.00. TIow the other $8.00, was made up does not appear.
Sixth. That the defendant Hoselton did relinquish his pre-emption filing and turned over his possession of the land with the improvements thereon and all of the personal property above referred to, to the plaintiff, who took possession of the same sometime between the middle and last of February, 1873.
Seventh. That the plaintiff remained in the possession of the land and premises until about the 12th of Ma/reh, 1873, when she abandoned the possession of the same and moved to the city of Lincoln, .Nebraska.
Eighth. That while she was in possession of said land and premises she either lost or disposed of all the personal property turned over to her by the defendant Hoselton.
Ninth. That immediately upon the abandonment of the land by the plaintiff, the defendant Hoselton made a homestead filing on the south half of the premises, which the plaintiff had abandoned, in his own name and for his own benefit. That all the improvements on the land turned over by Hoselton, to the plaintiff were on the south half and that immediately upon abandonment of the land by the plaintiff, the defendant Hoselton; took possession of the house and all the improvements on said land as his own, and holds them for his own benefit.
Tenth. That the plaintiff at the time she executed the note, mortgage, and trust deed, was in the possession of the premises described in said trust deed and ever since lias been and now is in possession of the same.
Eleventh. That at the time plaintiff purchased the pre-emption filing, improvements, and personal property for which the mortgage was given she supposed she could take a pre-emption filing in her own name, and that she was led to this conclusion by representations of defendant, Iloselton, and that Iloselton at the time of the sale supposed she could. That Iloselton is not a lawyer and did not claim to be, but he did claim to be familiar with the laws of Congress pertaining to preemptions, and the rules and practice under these laws.
Twelfth. That at the time Iloselton delivered over the property and land to the possession of the plaintiff, he did what he could to cancel his own filing and with the knowledge and consent of the plaintiff procured a pre-emption filing on the land in the name of B. G-. "Webb, who is the husband of the plaintiff.
Thirteenth. That at the time plaintiff executed the trust deed, she did not understand its full scope and effect, but she might, had she exercised reasonable prudence, diligence, and care, and that the defendant Hoselton, was not guilty of any active fraud in her being misled as to its contents.
As conclusions of law the referee found:
First. The note having been given by a married woman is void at law, and the payment of it can only be enforced if at all by a proceeding in equity; hence, it follows that any defense which can be made against the payee is equally available against the indorser of the note, and that the plaintiff is entitled to claim similar relief in this action that she would be, had an action been brought on the note.
■ Second. The sale of the pre-emption right was abso lutely void by the law of Congress which provides that all assignments and transfers of the rights hereby “ secured ” (meaning the pre-emption right) prior to the issuing of the patent shall be null and void.
Third. It being agreed that the value of the preemption right should be $400 and the transfer of the same being absolutely void, so much of the consideration for which the note was given has completely failed, and this amount with interest should be deducted from the note.
Fourth. The question as to what should be done with the value of the improvements is one more difficult for me satisfactorily to determine, especially as our legislature seems inclined to sever, so to sjDealc, the improvements from the land and make them the legitimate subject of sale and transfer. But as the contracts of married women are as a rule enforced on only equitable grounds, I think these also should be deducted. It will not be contended that there is any equity in compelling the plaintiff to pay the defendant Iloselton, for improvements from which she never has and never can derive one particle of benefit, and in the ownership and possession of which he has in no sense been injured. The improvements amount to $265.00, which amount would be deducted from the note.
Fifth. The personal property which the defendant Iloselton, transferred and delivered to the plaintiff and which she lost or disposed of she should pay for; this amounts in the aggregate to $477.00 with interest from the date of the note, which amount is a valid and subsisting lien on the premises described in the trust deed and upon the payment of said last mentioned sum together with the costs of this action, the plaintiff is entitled to have said note surrendered up and the mortgage and trust deed canceled.
Exceptions to the report of the referee were filed, and being sustained, judgment was rendered dismissing the petition, to reverse which the cause was brought here by petition in error.
Tuttle & Harwood, and Groff & Ames (with whom was also E. E. Brown), for plaintiff in error.
I. A trust deed given as security for a debt, and for no other purpose, merely performs the office of a mortgage, and is in legal and equitable effect nothing else than a mortgage. 4 Kent., 160, 193. Powell on Mortqac/es, 9. 1 Hilliard on Mortqaaes, 40. Woodruff v. Boll, 19 Ohio, 212.
And an assignee of a mortgage takes subject to all equities existing against it at the time of assignment. Bailey v. Smith, 14 Ohio, 396. Walker v. Dement, 42 HI., 272. Johnson v. Oarpenter, 7 Minn., 176.
II. Has our statute changed the common law rule? Has it taken away the shield which the common law gave to a married woman, and does it make her liable at law for her contracts, general in their character, and which in no way refer to her separate property? We think not. The furthest that any of the decisions go is to hold that she may create a lien that may be satisfied out of her separate property by proceedings in equity. Phillips v. Gra/oes, 20 Ohio State, 371. Worthington v. Young, 6 Ohio, 335. •
The disability of a married woman to contract is removed by the statute only in those cases where she contracts in reference to her real and personal property. The giving of a negotiable promissory note is not a contract of this character. Yale v. Dederer, 18 New York, 265. Id., 22 New York, 450. Corn Exchange v. Babcock, 42 New York, 450.
Lamb & Billingsley, for defendants Monell & Lashley, in contending that the referee erred in his first conclusion of law,
cited Chapman v. Foster, 6 Allen, 136. Estabrook v. Earle, 97 Mass., 302. Peering v. Boyle, 8 Kan., 525. Wicks v. Mitchell, 9 Id., 80. Whitesides v. Cannon, 23 Mo., 457. Baker v. Gregory, 28 ' Ala., 544. Sheldon v. Clancy, 42 IIow. Pr., 186.
"Where the note is the principal and the mortgage the incident, if the deed of trust be regarded .only as a mortgage, the note and deed of trust would not be open to equities in the hands of third parties when taken before due for value without notice. Carpenter v. Pongan, 16 Wallace, 371. Foster v. Otis, 3 Chandler, 83. Bloomer v. Henderson, 8 Mich., 395. Potts v. Blackwell, 5 Jones Eg., 58. Pie?'ce v. Fanmce, 47 Me., 507.

Opinion:
Maxwell, J.
At common law the husband and wife are treated as one person, that is, the legal existence of the wife is suspended during marriage, and she becomes incapable of making a valid contract to bind either herself or her estate. Equity, however, following the rules of the civil law, treats the husband and wife as distinct persons, capable of having separate estates, debts and interests, and regards a married woman as to her separate property as a feme sole. And the fact that the debt has been contracted during coverture, either as principal or as surety for herself or husband, or jointly with him, seems ordinarily to be held prima facie evidence of intention to charge her separate estate, without any proof of a positive agreement or intention to do so. Balpin v. Clarke, 17 Ves., 365. Story's Eg., 1400. Murry v. Beebe, 4 Sim., 82. Owens v. Dickerson, 1 Craig & Ph., 48. North v. Turrill, 2 P. Wm., 144.
Our statute provides that "a married woman, while the marriage relation subsists, may bargain, sell and convey, her real and personal property, and enter into any con tract witli reference to the same, in the same manner, to the same extent, and with like effect as a married man may in relation to his real and personal property. A married woman may carry on any trade or business and perform any labor or services on her sole and separate account, and the earnings of any married woman from her trade, business, labor, or services, shall be her sole and separate property, and may be used and invested by her in her name." In the case of Yale v.Dederer, 22 New York, 150,where a wife signed a note with her husband as surety, she having a separate estate, the court held that unless the consideration of the contract was one going to the direct benefit of the estate, the intention to charge the separate estate must be stated in and be a part of the contract. And the court refused to permit parol proof to establish that intention. That decision, in our opinion, cannot be sustained on either principle or authority.
In Ballin v. Dillaye, 37 New York, 35, the defendant, a married woman having separate property, in 1860, under a special agreement purchased certain premises at a mortgage sale; and among other things she agreed to assume a certain mortgage on the premises, and to secure such payment by a new mortgage executed by herself. She received a conveyance of the property and executed a new mortgage omitting two lots, to which she had received an unincumbered title. The mortgage was foreclosed in 1861, and on the sale there was a deficiency of about $600 which the plaintiff sought to make a charge against her other separate property.
The court held: "I have no doubt therefore, in the case at bar, the obligation which the defendant took upon herself, by the execution of the bond, was for the benefit of her separate estate, which is therefore chargeable in equity with the payment of the deficiency in question."
The law permits a married woman to control her own property as she sees fit. She may sell, give away, or mortgage it; permits lier to carry on business on her own account, and to receive the earnings, and she is bound like a feme sole by all contracts made by her in relation to her separate business or property. These rights imply the power to contract debts, and to enter into obligations for their payment out of her separate property. The statute by removing her disabilites requires her by implication to subject her property to the payment of her debts, and by incurring an indebtedness she is' presumed to intend that it shall be so paid. We have no doubt the note in this case is valid. See Deering v. Boyle, 8 Kan., 525. Todd v. Lee, 15 Wis., 365.
The referee finds that Monell and Lashley purchased the note and mortgage before maturity and without notice.
In Bailey v. Smith, 14 Ohio State, 413, the court held that "mortgages were mere dioses in action, whether standing alone or taken to secure negotiable or nonnegotiable paper; that they are only available for what is honestly due from the mortgagor to the mortgagee." And the courts of Illinois hold substantially the same doctrine.
In Harkrader v. Lieby, 4 Ohio State, 603, the court held, "it is incorrect to say that a mortgage does no more than create a lien on the property. It operates as a conveyance of the estate by way of pledge or security for the debt, and gives the mortgagee the benefit of all the doctrines applicable to bona fide purchasers." This is holding in effect that the mortgagee has an estate in the mo'rtgaged premises during the continuance of the mortgage.
The ancient equity practice, and which continued in England until about the year 1845, was to-file a bill for strict foreclosure, whereby a decree was obtained for the payment of the mortgage debt within a short period, to be fixed by the court, in default whereof the mortgagor and all persons claiming under him were barred and foreclosed of all right and equity of redemption, and the estate became the property of the mortgagee in. the character of purchaser. And the court, except in special cases, refused to decree a compulsory sale against the will of the mortgagor, but courts of equity were in the habit of enlarging the time to redeem, according to the equity arising from circumstances. 2 Van Santvoord's Eq., 70. 4 Kent's Coms., 181. Story's Eq., Sec. 1026. And this practice seems to have prevailed in the New England states. 4 Kent's Coms., 181. See also, Higgins v. West, 5 Ohio, 555. And as between the mortgagor and mortgagee, and those claiming under them, after condition broken, the estate became absolute in the mortgagee, subject however to be redeemed at any time before foreclosure. A non-negotiable bond in many cases appears to have accompanied the mortgage, but as a suit on the bond for the deficiency opened the decree, and permitted the mortgagor to redeem, there seems to have been but little inducement to bring such an action. Dashwood v. Blythway, 1 Eq. Cases, 317. Perry v. Barker, 13 Ves., 198. Lovell v. Leland, 13 Vt., 581. Rev. Stat. Mass., 1835. Contra, Lansing v. Goelet, 9 Cow., 346.
In Howard v. Harris, 1 Vern., 190, the mortgage contained a covenant to pay ¿61000 on the-day of -, 1686, and £60 per annum interest, in the meantime, by half-yearly payments from the date of the mortgage. It was afterwards held that the omission of the covenant wras immaterial. 1 P. Wms., 271. 3 Id., 358. 2 Atk., 496.
Promissory notes payable to bearer or order were made negotiable by statute in the year 1704, (3 & 4 Anne., Ch. 9,) but do not appear to have been used to any extent in connection with mortgages until the present century.
In states like Ohio, where it is held that after condition broken the legal estate is vested in the mortgagee, a mortgage may perhaps be properly regarded as a chose in action, and available only for what is honestly due from the mortgagor to the mortgagee. Bailey v. Smith, 14 Ohio State, 413. Allen v. Everly, 24 Ohio State, 97. Fische v. Kramer's Lessee, 16 Ohio, 126. Maynard v. Hunt, 5 Pick., 243. Winslow v. Merchant's Ins. Co., 4 Met., 306. Frothingham v. McKusick, 24 Me., 403.
But in this state the mortgagee is not seized of the freehold, either at law or in equity, even after condition broken. The mortgagor retains the legal title, and is entitled to the possession, which he may retain until the sale is confirmed. The mortgage is a mere incident to the debt and passes with it, and nothing whatever passes by an assignment of the mortgage, without the note or debt. If a note is negotiable, as in this instance, and transferred before maturity for a valuable consideration, without notice of any defense, the assignee takes it, and the security, free from equities between the original parties. Kyger v. Riley, 2 Neb., 28. Carpenter v. Longan, 16 Wall., 371. Pierce v. Faunce, 47 Me., 507. Potts v. Blackwell, 4 Jones Eg., 58. Fisher v. Otis, 3 Chandler, 83. Reeves v. Sculley, Walk. Ch., 248.
The case of Mathews v. Wallwyn, 4 Ves., 118, has no application to this case; had the note been non-negotiabie or overdue at the time of the transfer, it would have been subject to equities between the original parties.
The fact that the mortgage in this instance is in the form of a deed of trust, does not change its character from a mere security for the payment of money, nor does it convey the legal title, nor do the restrictions therein contained prevent the plaintiff from availing herself of the safeguards thrown around the debtor to prevent a sacrifice of her property. The judgment of the court below as to Monell and Lashley is affirmed. It is apparent from the finding of the referee that the defendant Hoselton took advantage of the plaintiff's ignorance in obtaining the note and mortgage, (if he is not guilty of actual fraud,) but no relief can be afforded the plaintiff in this form of action. The petition against Hoselton is therefore dismissed without prejudice.
Judgment accordingly.
Gantt, J., dissented.