Court Opinion

ID: 3999668
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:56:51.65379+00
Date Added: 2024-06-11T07:44:31.750147
License: Public Domain

Notwithstanding the respectable authorities which seem to support the views of the majority, I am unable to concur therein.
It should be borne in mind that this is not an action at law on a negotiable instrument, but an action in equity to foreclose a mortgage, with legal relief incidental thereto. *Page 301 
While, under our practice, equitable defenses may be presented to actions at law, all the more, when the plaintiff seeks equitable relief, such defenses are to be entertained and favored.
The sections of the negotiable instruments statute quoted by the majority describe legal defenses only, and the statute does not, and was never intended to, prevent equitable defenses to actions on negotiable instruments. In fact, Rem. Comp. Stat., § 3509, relating to the discharge of one primarily liable on such an instrument, by subd. 4 provides that the person primarily liable may be discharged "by any other act which will discharge a simple contract for the payment of money." Thus the legislature, recognizing previous statutes, opened wide the door for the admission of all proper equitable defenses to actions on negotiable instruments. Among such defenses is the defense of equitable estoppel, which is applicable here.
Assuming that (equitable defenses not considered), as between the maker and the holder, respondent, after the sale of the property by her and the assumption of the mortgage debt by her grantee, was still primarily liable to the holder, or on the instrument, yet when, without her knowledge or consent, the holder of the instrument entered into a binding extension agreement with the grantee, it thereby prevented the payment or enforcement of the instrument when due by its terms, which would or might have satisfied the obligation entirely; and by that extension it permitted the grantee to use the property, cause or allow it to deteriorate and lessen in value, and in every way the extension operated against the interests of the maker of the instrument.
Thus by the acts of the holder, which placed the maker in a less favorable position, it became in equity estopped from asserting its legal claim against the *Page 302 
respondent as maker. Moreover, when the holder of the instrument dealt with respondent's grantee without her knowledge or consent, it thereby elected to treat the grantee as the person primarily liable, and is now estopped to assert that the respondent is anything more than secondarily liable, which entitles her to a discharge under subd. 6 of Rem. Comp. Stat., § 3510.
Believing that the statute does not bar equitable defenses, but on the contrary clearly recognizes them, and that such a defense was here established, I dissent.