Court Opinion

ID: 6903417
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:57:19.796927+00
Date Added: 2024-06-11T16:06:14.985292
License: Public Domain

Argued September 3, decided September 16, rebearing denied October 14, 1913.
On the Merits.
(135 Pac. 1180.)
Department 2. . Statement by Mr. Justice Eakin.
The plaintiff brings this suit to cancel a mortgage signed by her on the ground that her signature to it was procured by fraud. Plaintiff and defendant Spencer S. Hunt are husband and wife. The husband was employed as a salesman by defendant F. W. Spencer, a hardware merchant in Salem, from November 1, 1910, until November 14,1911, during which time Hunt was systematically embezzling money and taking goods from defendant Spencer. On November 14, 1911, he *182was detected in converting a part of the ^proceeds of a sale of goods and by the direction of Spencer was taken into custody therefor by the sheriff. Hunt thereupon confessed his peculations and that he had done wrong and sent for Spencer and asked that he be permitted to repay the money he had taken. He did repay $1,700 and offered to give a mortgage upon his residence property for an additional amount of $1,700, which Spencer agreed to accept in full for the amount taken. On November 14, 1911, Hunt made a note for that amount and a mortgage upon his said residence in favor of Spencer to secure the payment of the same in favor of Spencer, and his wife signed and acknowledged it with him, which is the mortgage complained of in this suit. The plaintiff alleges that the property mortgaged was the homestead of the plaintiff and her husband and was then and ever since occupied by her as her homestead; that on January 15, 1912, the defendant Hunt conveyed the said property to the plaintiff. She further alleges that at the time she signed the mortgage she did not know of the trouble in which her husband was involved, but that he told her the mortgage was to secure a loan of $1,700 to put into a business he was starting, and that she did not know differently until some time in December. The case was tried and the court made findings in favor of the defendant Spencer, and dismissed the suit. Plaintiff appeals. Aetirmed.
For appellant there was a brief over the names of Mr. Myron E. Pogue and Mr. Woodson T. Slater, with an oral argument by Mr. Slater.
For respondents there was a brief over the name of Carson & Brown, with oral arguments by Mr. John A. Carson and Mr. Thomas Brown.
Mr. Justice Eakin
delivered the opinion of the court.
1, 2. It is clear that Spencer S. Hunt did commit the embezzlements charged against him by Spencer, the amount of which is uncertain; but, in the effort to arrive at the actual amount converted, Hunt finally agreed that the amount might be fixed at $3,400, and he would pay that amount. Spencer’s desire .to prosecute him criminally was no bar to his recovery of this property or of its value. Therefore he had a right to the $1,700 paid and to the note and mortgage for the balance: Moog v. Strang, 69 Ala. 98. This is not seriously controverted. The plaintiff insists that Spencer obtained the money and mortgage by duress and as a consideration for Hunt’s release from the-charge, but such a conclusion cannot be reasonably drawn from the evidence in the case. There was no coercion, threats or vindictiveness on the part of Spencer, nor promise, agreement or understanding made that Hunt would not be prosecuted. The proposition of repayment came from Hunt, and Spencer had a right to accept it, if it was not offered and accepted under any agreement to dismiss the criminal charge. Nor was the plaintiff induced to sign the mortgage by reason of threats or duress against her husband. In fact, she says she knew nothing of the charge against him. Therefore the settlement with Hunt was legitimate and proper.
3, 4. The only question is as to the alleged fraud upon plaintiff. A homestead right may be waived by the wife by joining in a mortgage with her husband, who in this case was the owner of the fee in the property. This plaintiff did, but alleges it- was obtained by means of a fraudulent statement made to her by her husband, namely, that it was to secure a loan of money. The giving of the mortgage was suggested by Hunt, *184and plaintiff seems to concede that unless Spencer participated in the fraud or misrepresentation, or that the mortgage was without consideration, plaintiff cannot avoid the mortgage now. It is said in Moore v. Fuller, 6 Or. 272 (25 Am. Rep. 524): “That if a married woman, * * without duress or misrepresentation as to the nature of the instrument, joins with her husband in the deed and suffers the deed to be delivered, she cannot avoid it on account of fraud and misrepresentation, without showing that the grantee knew of or participated in the fraud”: See, also, Shell v. Holston Nat. Building & Loan Assn. (Tenn. Ch. App.), 52 S. W. 909; Riggan v. Sledge, 116 N. C. 87 (20 S. E. 1016).
It is not denied that the execution of the mortgage by the plaintiff was procured through fraudulent representations of her husband; and, the property mortgaged being their homestead, the mortgage was void except as against a purchaser in good faith, for a valuable consideration, and without notice of the fraud. It is not claimed that Spencer actually knew of the fraudulent representations of Hunt to plaintiff, but she contends that as the mortgage recites that “for and in consideration of the sum'of $1,700, to them in hand paid, the receipt whereof is hereby acknowledged,” and that Spencer was a party to that recital, or caused it to be made, she was justified in considering the mortgage as given for a loan of money. That is the usual form given in mortgages; also it is the form of the ordinary printed blank mortgage and might well be considered as referring to Spencer’s money which Hunt had received. She contends, however, that it was drawn by Carson, Mr. Spencer’s attorney, and that therefore Spencer was charged with knowledge of the recital: but it appears that Hunt proceeded to have the mortgage drawn, and, failing *185to find other attorneys whom he called upon, he went to Carson, who acted for him and not for Spencer in drawing it. It does not appear that Spencer knew of or directed the particular recital, and we think he was not a party to Hunt’s statements or representations to plaintiff hy reason of such recital.
5, 6. Then, was plaintiff a purchaser for value? He took the mortgage as security for an antecedent debt. But did he part with anything of value for the mortgage? There is no doubt that a prior debt is a sufficient consideration to sustain a contract or mortgage: Moore v. Fuller, 6 Or. 272 (25 Am. Rep. 524); Greig v. Mueller, 66 Or. 27 (133 Pac. 94). But, as against an equity or a fraud, in Gest v. Packwood (C. C.), 34 Fed. 368, District of Oregon, Deady, Judge, it is said:
“Where a conveyance is made or a security taken, the consideration of which is an antecedent debt, the grantee or person taking the security is not regarded as a purchaser for a valuable consideration. He has not parted with anything of value. ’ ’
The same is held in People’s Sav. Bank v. Bates, 120 U. S. 556 (30 L. Ed. 754, 7 Sup. Ct. Rep. 679) ; 3 Story, Eq. Juris. 364, 389. Those cases, however, were decided on the theory that the mortgagee did not change his condition; he did not part with anything of value. But the rule seems to be otherwise where the purchaser or encumbrancer canceled or surrendered the debt on the ground that he is placed in a worse position thereby.
Pomeroy’s Equity Jurisprudence, section 749, says:
“Whether the complete satisfaction or discharge or the definite forbearance of an antecedent debt, without the surrender or cancellation of any written security by the creditor, will be a valuable consideration is a question to which the courts of different states have *186given conflicting answers; but tbe affirmative seems to be supported by the numerical weight of authority.”
In a note to Western Grocer Co. v. Alleman (81 Kan. 543 (106 Pac. 460, 135 Am. St. Rep. 398), in 27 L. R. A. (N. S.) 620, after citing many authorities to the rule as stated, the writer says:
“The reason for this holding is said to be that the purchaser by his purchase is placed in no worse condition than he was in before, as he has parted with nothing of value. But, even in jurisdictions adhering to this doctrine, it is also held that, if for any reason the purchaser is placed in a worse condition than he was in before, he is entitled to the protection of the recording acts. Thus * * if he has extended the time of payment of the indebtedness” — citing cases to that effect from Alabama, Indiana, Iowa, Mississippi, New York and Ohio.
Jones, Mortgages, section 461, in considering the effect of registration acts, says: “The giving of further time for the payment of an existing debt, by a valid agreement, for any period however short, though it be for a day only, is a valuable consideration. ’ ’
In O’Brien v. Fleckenstein, 180 N. Y. 350 (73 N. E. 30, 105 Am. St. Rep. 768), the opinion says: “It is safe enough to say that the general trend of the cases and the consensus of opinion supports the rule or principle above stated.”
Although the cases are not in harmony upon this question, especially the earlier cases, we are convinced that a pre-existing debt is sufficient to constitute a mortgagee a purchaser for a valuable consideration in such a case as this, if it has a new element of consideration imported into the transaction.
In this case the time of payment of the debt was extended for six years and was sufficient with the other circumstances of the case to give defendant Spencer *187the status of a, bona fide purchaser for value, and without notice of a fraud as against the mortgagor, and results in the affirmance of the decree.
Affirmed.
Mr. Chief Justice McBride and Mr. Justice Bean concur.
Mr. Justice McNary taking no part in the consideration of the case.