Court Opinion

ID: 7275891
Source: CourtListenerOpinion
Date Created: 2022-07-25 19:59:23.38523+00
Date Added: 2024-06-11T16:18:51.411723
License: Public Domain

Mr. Justice Shepard
delivered the opinion of the Court
1. In this proceeding the bar of limitation, or lapse of time, does not apply as in case of an action on the note, but to the remedy for the enforcement of an equitable right in land under the mortgage; hence the same period that would bar an ejectment is required. Peters v. Suter, 2 MacA. 516, 518; Elmendorf v. Taylor, 10 Wheat. 152, 169. However, as more than twenty years elapsed between the maturity of the note and the filing of appellant’s petition, the bar is complete unless his right of action shall have been duly kept alive. Whether this has been, so as to let in the appellant’s claim to right of participation in the proceeds of the foreclosure sale (a point of special importance to the interest of the second mortgagee), depends upon circumstances that will be considered later.
2. The note, being negotiable and in the possession of the *379appellant under an endorsement in blank, be is entitled to the benefit of the presumption that he became its holder before maturity in good faith, and without notice of anything to impeach his right as such holder. Collins v. Gilbert, 94 U. S. 753; New Orleans, etc., Co. v. Montgomery, 95 U. S. 16, 18.
But this presumption, adopted in accordance with the general policy of the law in respect of negotiable paper, is easily overthrown, and slight circumstances are often sufficient to cast upon the holder the burden of making satisfactory proof of transfer before maturity.
The fact that the note was in the actual custody and control of the endorser, Fred. W. Jones, to whom the payment of interest and part of the principal was certainly made on the day of its maturity, is amply sufficient to overcome the presumption in this case.
The substantial equities of the other parties have ripened in the lapse of time. The inaction of the appellant for so many years has reasonably operated to the prejudice of them both. Encouraged, so to speak, to suppose this second note had been discharged, one has been indulgent during the long accumulation of interest, and the other has extended new credit upon the same security. The memories of living witnesses have become impaired and some written memorials have been lost. Fred. W. Jones, the chief actor in the transaction, who might have explained everything, died five years before the appellant set up his claim. Appellant lived in the same town, was the brother of the debtor, and yet made no inquiry in respect of complainant’s debt, and claims to have been ignorant of the proceeding to foreclose, and the sale thereunder, until it had been actually made, after the usual advertisement in a newspaper. Moreover, he did not come in and ask that a resale be made with opportunity to increase the bid; but, accepting it as final, asks to share in the proceeds to the serious diminution of the just claim of the complainant. These circumstances, while not sufficient *380to defeat his claim, are yet such as to require that he shall make clear and satisfactory proof of every fact necessary to its establishment.
Assuming that he came lawfully into the possession of the note at some time, still the proof is not sufficient to satisfy us that he obtained it before its maturity. He has not explained to our satisfaction the possession of the note by Jones before and at maturity, when the maker paid the accrued interest and a part of the principal, and agreed to the increase in the rate of the interest. Jones deposited the note in the savings bank; the payment was made to him and passed to his credit on the books. George W. Cropley was not heard of in the transaction by the bank or by Richard L. Cropley.
The latter testified to making the payment and the promise of increased interest to Jones, and to an arrangement by which the note was to be discharged in certain claims that he had placed in Jones’ hands for collection. No settlement of these matters had ever been had or demanded.
During the time that Jones must have had the note in his possession he wrote to complainant that it had been paid. The only explanation that appellant gives for the possession of the note by Jones, with whom he was very intimate, is, that Jones told him “ the note would be paid, and undertook to see that it was paid.” As we have said before, the explanation is not satisfactory. There was no reason that Jones should undertake the collection. The security was ample, the note had not been dishonored, the maker was solvent, and the appellant was engaged, as he says, in a prosperous business, and therefore was under no temptation to conceal his ownership from creditors, if he had any.
The effect of his failure to show that he really obtained the note for value, before maturity, is to let in the complainant, Eyster, to the assertion, against him, of any equities *381that she could assert as against Jones, through whom he claims.
Now, it is very plain, that by inducing her to accept the $2,000 note upon the representation that it was secured by a first mortgage, Jones became estopped to deny the truth thereof; and as to his rights against her a court of equity would regard and treat him as a second mortgagee in fact. Taking after maturity, appellant, as his endorsee, can have no superior right.
This, without regard to the question of limitation, is sufficient to dispose of the appeal as to Mrs. Eyster. She is, unquestionably, entitled to the first proceeds of the sale without diminution on account of appellant’s claim.
3. In the determination of the respective claims of the appellant and the second mortgagee to the surplus that will remain after the payment of Mrs. Eyster’s note, with interest and costs, the question whether the appellant’s right has been barred by the lapse of time becomes of controlling importance.
Assuming that the note was not paid, or entitled to be considered as paid, by the arrangement between its maker and Jones, as. testified to by the former, the acknowledgment of the debt through the payment of interest up to March, 1879, is relied on as removing the bar. To have that effect, it must appear that payment was in fact made by the debtor or by his authority. The mere endorsement on the back of-the note that interest had been paid from time to time is not proof of the fact. There are four of these endorsements, as follows: “April 29, received one hundred dollars, being one year’s interest to M’ch 1st, 1876. Jan. 30, int. paid to M’ch 1st, 1877, $100. Int. paid to M’ch 1st, 1878. Int. paid to M’ch 1st, 1879.”
Appellant testified that the endorsement of payment to March 1, 1876, was in Jones’ writing, the next in his own, and the third and fourth in R. L. Cropley’s; and that the last three payments endorsed had been made to him.
*382R. L. Cropley denied positively that he had paid the said interest, or any sum, on said note since March 4, 1875, to Jones or to appellant or to any one else. He denied writing any one of the endorsements, and said they were all in the handwriting of Jones, with which he was familiar. A well known expert, also familiar with Jones’ writing, was positive in the opinion that he had written each endorsement.
The fact that these endorsements were made by Jones and at regular intervals might serve, in a very slight degree, to corroborate the statement of R. L. Cropley as to the arrangement made with Jones for the discharge of the note; but it is not necessary to consider that issue.
After a careful consideration of the evidence of all of the witnesses, in the sight of the skillful and searching examination and cross-examination to which they were in turn subjected, we cannot find that the endorsed payments were in fact made by Richard L. Cropley or by his authority, or that he has, since March 4, 1875, either acknowledged the obligation of the said note or promised to pay it. These conclusions make it unnecessary to consider other questions that were raised on the argument.
We find no error in the decree, and it must be affirmed, with costs to the appellees. It is so ordered. Affirmed.