Court Opinion

ID: 6415699
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:56:00.177338+00
Date Added: 2024-06-11T15:51:32.738868
License: Public Domain

Colt, J.
The bill is brought to set aside a mortgage deed and note, and assignment thereof to the defendant, Samuel P. Whitman, as void for fraud. It charges, in substance, that Henry Brackett, (the intestate of the defendant, Sarah S. Brackett,) to whose order the note was made payable, fraudulently obtained the same under the pretence of obtaining the money from a third party; that both note and mortgage were intrusted to him for that purpose, and nothing was ever paid to the plaintiffs; that the assignment to Samuel P. Whitman was without consideration paid either to the plaintiffs or to Brackett; and that said Whitman well knew that Brackett had never paid any consideration therefor. There are other features in the bill to which it is not necessary to allude.
The answer of Samuel P. Whitman asserts his ignorance of the purpose for which Brackett received the note and mortgage, and of all fraud on his part, denies all fraud on his own part, and says that he paid a full consideration, upon being informed *503that Brackett had this mortgage for sale, after an examination of the title and the property, from which he was induced to buy it; that the same was bought in good faith; and that, if there was fraud in the premises, he was ignorant thereof.
At the hearing before a single judge, it was found as a fact, that Brackett obtained the note and mortgage by fraud, and that while in his hands they were void. And it was held, as a matter of law, that it was incumbent on Samuel P. Whitman, as assignee of the same, to show.that he took them in good faith, for a valuable consideration, and without notice. Upon this point the main contest was had. Certain facts are reported as found by the judge, and among them the fact that the transaction between Samuel P. Whitman and the plaintiffs was a usurious loan.
The plaintiffs insisted that the facts found were equivalent to notice to the assignee of Brackett’s fraud, so that he could not be regarded as a bond fide holder for value. The judge declined so to rule, and found as a fact that Whitman did, in good faith, without notice, advance his money, and take the assignment. And this finding is not open to revision now, unless, as a matter of law, upon the facts reported, the court can see that it is erroneous, or that it was not open to the judge to come to the result reached by him, under the pleadings in the case.
We cannot see any error in the findings or rulings reported. Independently of the usurious nature of the transaction, there is nothing unusual in the facts stated, and nothing to show that the assignee had any knowledge of the fraudulent designs of any one, or that the circumstances were such as to affect him with notice. And in regard to the matter of usury, upon an examination of the facts reported, nothing appears to show that, in point of fact, Samuel P. Whitman at the time of the transaction supposed he was making a loan, or that the transaction was usurious, or different from what he alleges it to have been in his answer. Its character as a usurious loan is rather a legal consequence, growing out of the facts found and the application of the old doctrine, that, if one employed a third person to sell a note for him for less than its face, the transaction was usuri*504pus under the statute, although the purchaser supposed that he was merely pm-chasing the note in the market, and did not know that the seller was acting only as agent. Sylvester v. Swan, 5 Allen, 134. This usurious character, thus given to the transaction, carries with it the penalty which the law attaches, but nothing more. It does not serve to subject the holder of the mortgage to the greater loss which would follow if it took away his character as an innocent holder without notice.
It remains to consider whether the findings of the judge are inconsistent with the allegations in the answer. The invariable and universal rule in equity proceedings requires that the final decree of the court should be founded on some matter put in issue between the parties by the bill and answer. The parties have a right to know in advance, by the pleadings, what is to be the subject matter of inquiry, so as to be prepared with evidence to meet the issue. The substance of the plaintiffs’ objection now is, that the answer of the assignee sets out a purchase of the mortgage from Brackett, whereas the judge has found it to be a usurious loan. This objection does not appear to have been made at the hearing; but perhaps it is not to be regarded as therefore waived, It could not be regarded as waived in a case where it was not to be presumed in advance that testimony to a point not in issue would be regarded by the court in making its decree. But however this may be, we cannot see how the plaintiffs are prejudiced. The character given to the transaction by the judge, as before stated, is rather a legal inference from the facts. It is favorable, rather than otherwise, to the plaintiffs. The question might be more difficult, as it would be quite different, if the defendants were objecting that no such case is stated in the bill. No decree was ordered based upon this finding ; but the ruling was, that the plaintiffs were not entitled to a decree adjudging the mortgage void in the hands of Samuel P. Whitman.
Most of the exceptions relating to the admission and rejection of evidenci become immaterial by the finding of the judge in the plaintiffs’ favor in the matter of the fraud in the origina, transaction; and of the remaining, only two were relied on in *505argument. In reference to the refusal to admit the plaintiffs as competent witnesses under the Gen. Sts. c. 131, § 14, it is to be noted that no decree is sought against the administratrix of Brackett, who is made a defendant; that the only real parties in interest are the plaintiffs and Samuel P. Whitman; that the defendants are not joint parties; and that, as the issue was presented and tried, it was an attempt to impeach the validity of a contract, made with a person since deceased, in the form of a note payable to his order, secured by mortgage, and indorsed to Samuel P. Whitman. It is a case, therefore, where one of the parties to the contract is dead, and the other party, who is also a party to the record, by the provision of the statute is excluded. Hubbard v. Chapin, 2 Allen, 328. Smith v. Smith, 1 Allen, 231. Byrne v. McDonald, Ib. 293. Nor was the evidence offered, of other similar transactions between Brackett and William D. A. Whitman with other persons, competent, within the rule stated in Lynde v. Mc Gregor, 13 Allen, 178. It does not appear that these transactions were contemporaneous, or near the time of the principal transaction, or so related to it as to be fairly considered as parts of one scheme of fraud, or as calculated to illustrate the intent. To admit it would be to multiply collateral issues, without aiding in determining the real question.
The result is, that the plaintiffs are entitled to no decree further than was ordered by the single judge.