Court Opinion

ID: 6243067
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:49:55.209742+00
Date Added: 2024-06-11T08:58:15.603650
License: Public Domain

Opinion by
Mr. Justice Gbeen,
After a laborious investigation of this record we find ourselves unable to agree with the learned court below. The whole subject-matter of the controversy had really been heard, considered and decided by the court of common pleas No. 2 of Philadelphia, which undoubtedly had jurisdiction to decide everything at issue, before the present petition was filed in the orphans’ court. It is fully conceded by the learned court below that so far as the alleged misappropriation of the fund by the trustees was concerned, the preceding trial in the common pleas was conclusive, but in considering the question whether the appellanbas purchaser of the bond and mortgage took a good title, the court held that the transaction must be regarded, as between the trustee who negotiated it and the present holder, as a loan to the trustee not in his official capacity but as an individual. The court further held that the trust debt,which the money was given to secure, was paid by the trustee before the assignment, and if the appellant had inquired of the mortgagee this fact would have been discovered. This fact,of the payment of the debt,had been before the common pleas several times and had been there disposed of. The same allegation was made in the original petition to the common pleas quite as fully and as positively as it is made in the present petition, but after the taking of all the testimony the parties had to offer and a full hearing had upon the merits of that petition, the court of common pleas declined to grant an issue on the question of payment, but restricted the issues granted,to the question of misappropriation, and the knoAvledge of that fact on the part of the Odd Fellows’ Building and Loan Association of Camden, the original mortgagee and lender of the money. On the trial of that case the court of common pleas in charging the jury said, referring to the application to open the judgment: “ When that application was heard all questions of whether there had been a payment of this mortgage or as to the power to *207create it, were disposed of by tbe court. There is but one single question and that is this: whether the money received upon this mortgage was misappropriated by the trustees or whether the parties who loaned it knew at the time they loaned it that it was going to be misappropriated.” If there was error on that trial the remedy was by appeal to this court, but none was ever taken. A motion for a new trial was made and depositions were again taken but the court refused the motion. When the present petition ivas exhibited to the orphans’ court a master was appointed who heard the parties and all their testimony upon all the allegations contained in the petition, including that of payment, but the master reported that the debt had not been paid and was still subsisting and belonged to the present appellant. He therefore recommended a dismissal of the petition. Now when the learned court below held that.the debt was paid before the assignment, we do not understand that they so held upon specific proof of tire fact of payment,but by way of inference from the fact that other moneys had been loaned to one of the trustees, and that upon the adjustment of accounts between the trustee and the association from which the money was borrowed, the trustee was entitled to have it adjudged that the debt was paid. We do not understand the court to say that there ever was such an adjustment,of,that in point of fact,this debt was ever paid. Now the master had all this matter before him. He had the witnesses whose testimony he heard and considered, also the books of the association and the proper officers to explain them and the entries contained therein. He made a full report upon this part of the case stating and reviewing the testimony and the questions before him. He reports that there were moneys of considerable amount loaned to George W. Appleton, one of the trustees, upon the security of this bond and mortgage but that his name only appeared upon their books as an individual; “ That these loans were subsequently reduced considerably in amount but it does not appear by the books of the association that any final settlement was ever made with George W. Appleton, by which it was agreed between the association and himself that the amount of money loaned upon said bond and mortgage of $5,000 had been fully paid;” He further found that while Appleton had repaid a considerable portion of the money borrowed, he was still in 1880 “ indebted *208in a considerable sum to the association which they pressed him to pay,” and to enforce the payment they entered up judgment on the bond at June term 1881, against both the trustees. The master further finds that there is no evidence to show that at least $1,500 of the monej^ borrowed was not paid to Ann Appleton to reimburse her for the money she had paid to remove the old incumbrance and other money to improve the other trust property; that the money was borrowed for those purposes and no complaint was made by the parties interested that it had not been paid and he concludes as a fact that it was so paid. He also finds that on Jan. 25, 1884, the appellant purchased and took an assignment of the bond and mortgage in question for $2,000, which sum it was agreed by the Odd Fellows’ Building and Loan Association and George W. Appleton “ was at that time owing the said association upon said security.” He further finds that the assignment was made with the approval of George W. Appleton without any knowledge on the part of the assignee, this appellant, that there had been any defense made to the mortgage, or that there was any claim made by any one that the securities were not valid and binding; that the check for the $2,000 was made by the assignee directly to the assignor and that no direct loan was made by the assignee to George W. Appleton, and that the appellant was a direct purchaser of the mortgage for $2,000 with the understanding that they claimed no interest beyond that amount in the bond and mortgage. The master then states three questions arising for consideration, the first one of which was, whether the estate of Ann Appleton is indebted in the principal sum of $2,000 on the bond and mortgage held by the Mutual Loan, Savings and Building Association, etc., or in other words, did that estate “ ever receive that amount of money upon loan secured by the said bond and mortgage which sum still remains unpaid.” The master then proceeds to review the proceedings and the testimony. He reports that, “ a careful reading of the testimony establishes conclusively that a partial purpose of procuring a loan upon the bond and mortgage which was given in this ease, was to return to Ann Appleton, the cestui que trust of George W. Appleton and Henry Pomerene, the sum of $1,500 which she had advanced for the purpose of paying off a mortgage of $1,500 that existed against the property No. 221 Arch street.” After *209reciting that Appleton became a subscriber to the shares of stock in the association which lent the money, and borrowed money to the extent of $10,000, he adds, “it cannot be doubted, that a portion of the loans amounting to over $4,000 were made directly upon the security of the said bond and mortgage. . . . In the succeeding years these loans were reduced, but it is not clearly shown that they were ever entirely paid off while the said bond and mortgage continued to be held by the said association as security. In 1884, a settlement having been agreed upon between George W. Appleton and the said association, the bond and mortgage were assigned to the Mutual Loan, Savings and Building Association of Haddington for the sum of $2,000. The latter thereupon became the owner of the same.” He then holds that there is nothing in the testimony which indicates that Ann Appleton did not receive the $1,500 which she bad advanced to clear off the old lien, and closes that part of the report as follows, “ we must hold that the principal sum of $2,000 is remaining due on the bond and mortgage that was assigned to the Mutual Loan, Savings and Building Association so used for the benefit of the estate of Ann Appleton, the cestui que trust of Henry Pomerene and George W. Appleton trustees.” He then considers the contention that because the bond and mortgage were signed with the individual names of the trustees without adding their official title, they must be regarded as only individual obligations; and very properly holds that this position is altogether untenable and concludes thus, “ the method of making the bond and mortgage, and the manner of executing it constitute no defense to the surety whose bond was entered, nor does it constitute any defense to the estate that enjoyed the proceeds realized upon the bond and mortgage which were given and on which a balance of $2,000 still remains unpaid.” And again, “ the purpose of the instrument having been declared, the fund having been realized therefrom and the estate having enjoyed the same, the estate has no right to require their cancellation or surrender until it has returned the money borrowed and used thereon.”
All this is absolutely correct, and the finding that the money is still due effectually disposes of all the technical contentions as to the liability of the estate to repay the money. We think the evidence fully sustains the master in his conclusions and in *210any event we think the testimony entirely fails to show a case in which a chancellor should order the cancellation and surrender of a solemnly executed mortgage and bond. The assignments of error are all sustained.
The decree of the court below is reversed and it is now ordered and decreed that the petition and all proceedings thereunder be dismissed and injunction dissolved at the cost of the petitioner.