Court Opinion

ID: 6600053
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:06:52.155232+00
Date Added: 2024-06-11T15:57:59.068208
License: Public Domain

PaiNE, J.
This being an action to foreclose a mortgage, and having been tried with a jury, the respondent’s counsel claims for their' verdict the conclusive effect given by chapter 79, Laws of 1867. That act prohibits courts from trying an action to foreclose a mortgage in which there are issues of fact, without the intervention of a jury, except upon the written stipulation of the parties; and gives to the verdict the same force and effect as in actions at common law. It professes to divest the courts of all jurisdiction to try any action for foreclosure, except as therein provided. If the act is valid, of course the verdict is to have the same effect as in an action at law, otherwise not.
I think the act invalid, and my reasons are briefly as follows: The power to decide questions of fact, in equity cases, belonged to the chancellor, just as much as the power to decide questions of law. It was an inherent part, and one of the constituent elements, of equitable jurisdiction. If, therefore, it shall appear that, by the constitution, the equitable jurisdiction existing in this state is vested in the courts, I think it will necessarily follow, that it would not be competent for the legislature to divest them of any part of it, and confer it upon juries. If they can do so as to a part, I do not see why they may not as to the whole. If they can say that in an equity case no court shall render any judgment except upon the verdict of a jury on questions of fact, I can see no reason why they may not say that the jury shall also be allowed to decide the questions of law.
But the constitution, in section 2, article 7, provides that “ the judicial power of this state, both as to matters of law and equity, shall be vested in a supreme court, circuit courts, courts of probate and justices of the peace. The legislature may *349also vest such jurisdiction as shall be deemed necessary, in municipal courts, and shall bave power to establish inferior courts in the several counties, with limited civil and criminal jurisdiction.”
In order to determine the meaning of the phrase “judicial power as to matters of law and equity,” it is only necessary to recur to the system of jurisprudence established in this country and derived from England, in which the courts had certain well-defined powers in those two classes of actions. In actions at law they had the power of determining questions of law, and were required to submit questions of fact to a jury. When the constitution, therefore, vested in certain courts judicial power in matters at law, this would be construed as vesting such power as the courts, under the English and American system of jurisprudence, had always exercised in that class of actions. It would not import that they were to decide questions of fact, because such was not the judicial power in such actions. • And the constitution does not attempt to define judicial power in these matters, but speaks of it as a thing existing and understood. But, to remove all doubt, in actions at law the right of a trial by jury is expressly preserved by another provision.
But, as already stated, the power of a court of chancery to determine questions of fact, as well as of law, was equally well established and understood. And when the constitution vested in certain courts judicial power as to matters in equity, it clothed them with this power, as one of the established elements of judicial power in equity, so that the legislature cannot withdraw it and confer it upon juries.
I do not think the provision of section 8, article 7, relied on by the respondent’s counsel, has any bearing on the question. That is as follows: “The circuit court shall have original jurisdiction in all matters, civil and criminal, within this state, not excepted in this constitution, and not hereafter prohibited *350ly law, and appellate jurisdiction from all inferior courts and tribunals and a supervisory control over tbe same.”
It is claimed that this contains a clear implication that the legislature may prohibit to the circuit courts such original jurisdiction as it sees fit. But it is obvious that there is no design hidden under this implication to authorize the legislature to disturb the constituent elements of the judicial power, as between the court and the jury; and, while leaving the court jurisdiction of the case, to withdraw its judicial power from it and vest it in the jury. This would be readily conceded, if, under the pretended authority of this section, the legislature should enact that all questions of law should be decided by the jury. But such an act would clearly be valid, if it was the design of this section to give the legislature an unrestricted discretion over this whole matter, as is claimed.
The plain object of this provision was to enable the legislature to distribute the jurisdiction in both matters at law and in equity, as between the circuit courts and the other courts in the state, giving to the circuit courts such original jurisdiction and such appellate jurisdiction as it might see fit. But the jurisdiction there intended was jurisdiction of the suit.
It may well be that the legislature may deprive the circuit courts of original jurisdiction in actions for the foreclosure of mortgages. It is unnecessary to determine whether it could or not. But it is quite certain that this clause contains no authority for it, while leaving those courts jurisdiction of this class of actions, to attempt to withdraw from them an acknowledged part of the judicial power and vest it in the jury.
Under the old equity system, the chancellor might at any time refer questions of fact to a jury, but it was merely to inform his conscience. He might, if he saw fit, disregard their verdict, and take it upon himself to dispose of the questions of fact absolutely, as he could have done in the first instance. And I think the verdict here is entitled to no greater force and *351effect than it would have had in an equity case independently of this act of 1867.
The whole question was determined by this court in the case of Freeman v. McCollum and others, 20 Wis. 360, where, notwithstanding an express provision in the act of 1864-, requiring the courts to submit issues of fact in these cases to a jury, the court decided that the circuit court was not bound to submit such issues to a jury unless it saw fit.
The parol evidence in regard to the intention of the company in adopting the form it did, of transferring these securities, was inadmissible. This court has decided in Crosby v. Roub, 16 Wis. 616, that such a form of transfer is a sufficient indorsement to pass the legal title within the law merchant, and consequently to cut off the equities between the original parties. So long as that decision is adhered to, it will be incompetent to prove by parol that the company, in making such a transfer, intended it to have a different effect. It might just as well be proved by parol that in making an ordinary indorsement the party intended it to have a different effect from that which the law attaches to it.
It may, however, be worthy of remark, that the evidence offered on this point shows a somewhat singular confusion of intentions on the part of the company. It did not intend to sell the notes and mortgages “ in the market as commercial paper for the purpose of raising money,” but it did intend to .transfer them as collateral to its own negotiable bonds for the purpose of raising money in the market. It intended to keep the farmers from liability to prosecution on the notes, but at the same time it intended “to transfer to the holder all the rights which the company had in the notes and mortgages, in case the company failed to pay its bonds.” A singular device to accomplish the purpose of transferring, and at the same* time not transferring securities in the money market. I he whole pretense that there was any design to divest these trans*352fers of any of the ordinary incidents of the transfer of negotiable paper, seems utterly improbable. Instead of weakening the character of their securities, as such a form of transfer must inevitably have done, they desired to strengthen them. For this purpose, they attached the notes and mortgages to their own bond, that the purchaser might have a double security, and that they might go into the money markets of the world and negotiate them on the most favorable terms. They were procured for the express purpose of being negotiated to raise money. And so careful were they not to impair the value of the securities for sale, that when they agreed to save the mortgagor harmless from the interest, in consideration of an assignment of the dividends upon the stock, they expressly provided that this agreement should be no defense on the part of the mortgagors against the payment of such interest, if the notes and mortgages should be in the hands of third parties as securities or otherwise. Such was the agreement in this case, as appears by the defendant’s own testimony. And yet, in the face of all these glaring considerations to the contrary, it is attempted to show, by parol evidence of the opinions of some of the officers of the company, that this form of transfer was devised for the purpose of burdening these securities with all the equities between the original parties, into whosesoever hands they might go. If parol evidence were admissible at all, I should desire to hear the understanding of both parties to the transfer. And it would take something stronger than the confused and conflicting intentions disclosed by the evidence in this case to convince me that even the company had any such design.
The parol evidence that it was a part of the agreement upon which the mortgage was delivered, that the road should be ^constructed on the route which had then been selected, was also inadmissible. It was not competent to thus attach conditions to written instruments. Harvey v. Lafflin, 2 Carter (Ind.) *353477; Railsback v. Turnpike Co., id. 656; Jones et al. v. Turnpike Co., 7 Ind. 547; Wight v. Shelby R. R. Co., 16 B. Mon. 4; Martin v. R. R. Co., 8 Florida, 370; R. R. Co. v. Bailey, 24 Vt. 465.
These cases show that parol evidence may be given to show fraud. But there is nothing in the evidence here offered tending to show any fraud whatever in the procurement of the mortgage and note of the defendant. Clinton, the agent of the company, who procured the note and mortgage, promised, as the testimony states, that the road would be constructed on the route which had already been selected. Subsequently the defendant states the conversation as follows: “ He said, ‘ You know it was established, and it never will be changed, and if you give your mortgage it will be built; ’ and I said, ‘ Very well; if it is a promise on the part of the company, I shall give my mortgage.’ He said it would be done, there was no question about the faith of the company.”
This, on its face, is nothing more than a strong expression of opinion on the part of Clinton that the company would build the road on that route. There is nothing to show that he did not make the statement in the utmost good faith. There is nothing to show any fraudulent design on the part of the company in establishing or changing its route. The only fraud claimed is its not complying with this alleged parol agreement to build the road upon that route. This is not such a fraud as will let in parol evidence to contradict a written contract. If it was, then such evidence could be admitted in every such case. It is similar in principle to ihe question decided in Rasdall's Adm'r v. Rasdall, 9 Wis. 379, where it was held that the mere refusal to execute a parol agreement to hold land in trust was not such a fraud as would let in parol evidence to show an absolute deed to have been given in trust.
I think, therefore, the evidence fails to show any legal defense to this action, if it had been brought by the company. And *354tbe motion of tbe plaintiff for judgment ought to have been granted.
By the Comet. — The judgment is reversed, and the cause remanded with directions to enter judgment for the plaintiff in accordance with the prayer of the complaint.