Opinion
10-22-1890
HANN v. DEKATER.
A. D. Anderson, for complainant. Charles A. Skillman, for defendant.
A. D. Anderson, for complainant. Charles A. Skillman, for defendant.
BIRD, V. C. March 28, 1872, the defendant, Ensign Dekater, gave a bond to Nelson V. Young and others for $620, and a mortgage on his real estate to secure the payment thereof. April 1, 1873, this bond and mortgage were assigned to Joseph Buckheit. December 24, 1884, Joseph Buckheit assigned them to the complainant, who was his sister-in-law. She filed her bill to foreclose this mortgage, claiming the whole amount of the principal, and several years' interest, to be due. The defendant insists, in the first place, that because of a usurious contract entered into between him and Buckheit. and the amount of money paid under such contract by him to Buckheit, the whole amount due under the statute has been paid, and that the bond and mortgage should be surrendered. He also insists that, in case he fails in the former contention, the whole amount of principal and large arrears of interest are not due, because he had made large payments thereon which have not been indorsed on the bond.
The effort to show that the agreement between Dekater and Buckheit, under which agreement, if established, Dekater was to pay a bonus of $20, and interest, at the rate of 10 per cent. on the principal sum of $620, extends to the original transaction entered into between Dekater as mortgagor and his mortgagees, and makes that transaction usurious, and so brings it within the condemnation of the statute, cannot prevail. It is well settled that in every such case where the original transaction is outside of the statute, no subsequent agreement can bring it within. Donnington v. Meeker, 11 N. J. Eq. 362; Smith v. Hollister, 14 N. J. Eq. 153; Conover v. Hobart, 24 N. J. Eq. 120; Sloan v. Sommers, 14 N. J. Law, 509; Walter v. Lind, 16 N. J. Eq. 445; Ware v. Thompson, 13 N. J. Eq. 66. Nevertheless the question remains, whether or not any payments have been actually made on account of the amount of principal or interest, or both, due upon the bond and mortgage; or, which being made, whether made as payment of interest at the rate of 10 per cent. or otherwise, the law will apply first to the payment of the interest due and then to the reduction of the principal so far as such payments will extend. This is in accord with the authorities in New Jersey. Terhune v. Taylor, 27 N. J. Eq. 80; Nightingale v. Meginnis, 34 N. J. Law, 461. Dekater alleges that there was not only such an agreement, but that he actually paid the $20 bonus, and interest at the rate of 10 per cent. every year until 1883, when he paid $356 on the principal, and interest at the rate of 10 per cent. on the balance, until 1885. The burden of establishing these payments rests with Dekater, after April 1, 1875. There are no indorsements of any kind upon the bond. Dekater under oath says that these payments were all actually made. No other witness, whose testimony is admissible as against this complainant, was produced to support him. It is true one Baird was present when Buckheit gave a receipt to Dekater for $26.40 or for $26, but this was in May, 1885, four months after the assignment of the bond and mortgage to the complainant, and after Dekater knew of such assignment. Buckheit, having parted with his interest, could not by his conduct or admissions bind his assignee. Price v. Inhabitants of Plainfield, 40 N. J. Law, 608; Beeckman v. Montgomery, 14 N. J. Eq. 106; Thompson v. Thompson, 68 Amer. Dec. 642; Royal v. Chandler, 9 Atl. Rep. 615. Besides Baird, one Stevenson is produced as a witness, who attempts to corroborate both Dekater and Baird; and, if their testimony upon this point were reliable, it would be quite conclusive as to the payments of interest at the rate of 10 percent. For Baird swears that, when he was present in May, 1885, Dekater handed him a receipt in the presence of Buckheit which Buckheit had just signed, and which he says was for between $20 and $30, and which purported upon the face of it to be for interest upon a bond and mortgage, and at the rate of 10 per cent. Dekater also so testified, declaring that the receipt expresses upon its face that it was for interest at the rate of 10 per cent. upon a bond and mortgage. Stevenson swears that, prior to this time, Dekater showed him several receipts given by Buckheit which expressed upon the face of them that they were for interest upon a mortgage at the rate of 10 per cent. He says that he told Dekater that he was very foolish to pay interest at the rate of 10 per cent., when he could get all the money he wanted for 6 per cent. When this testimony was offered, it was alleged that the receipts had been lost or destroyed, and Dekater so testified. But at the next sitting of the court, Dekater produced four receipts,—one dated April 22, 1878, for $62, which is in these words, "Received of Ensign Dekater sixty-two dollars;" another dated July 2, 1879, for $62, in these words, "Received of Ensign Dekater the amount of ($62) sixty-two dollars;" and one dated May 6, 1885, in these words, "Received of Ensign Dekater twenty-six dollars;" and another of the same date in these words, "Received of Ensign Dekater twenty-six dollars and forty cents, for value received." These receipts have the appearance of being genuine, and I believe they were signed by Buckheit; but it will be perceived that they are in flat contradiction to the sworn statements of Dekater, Baird, and Stevenson, for there is not a word in them respecting interest at the rate of 10 per cent. or any interest or any mortgage. And this attempt to convince the court of thesepayments, that writings which were supposed to be lost contained statements which it appears they did not contain, mitigates to a very great degree the force which these papers otherwise would be entitled to as strong corroborating circumstances. I say this because of the impression left upon my mind that Dekater must have employed his ingenuity with these witnesses to awaken in them the belief that he had promised to them just such receipts as they have sworn to. As the case now stands, Baird certainly never saw such a receipt as he and Dekater swears to, and I have no reason to believe that Stevenson ever did; for the two receipts for $62, if they be genuine, must have been given during the two years just before Stevenson says he saw the receipts which he says Dekater produced. In saying this I do not mean to question the integrity of either Baird or Stevenson. The fault is all with Dekater or with the imperfection of the law which allows the rights of parties to be established or overthrown by such secondary evidence. But, nevertheless, there is strong corroboration of Dekater's testimony in the first two receipts above given. I say the first two because, as above stated, there is no more reasonable or urgent rule than that the admissions of a grantor or assignor, made after he has parted with his interests, cannot bind his grantee or assignee. The corroboration in those receipts consists only in the amount of money named, it being $62, the exact interest upon $620 at the rate of 10 per cent. per annum. It is true that, at the time the first one was given, there was more than a year's interest due, the payment being made on the 11th day of April rather than the 1st; and when the second one was given, in case the first one was given for the payment of one year's interest only, there was then, by three months and two days, more than one year's interest due. But this I do not count so important, it being a very common thing for accruing interest to be paid and received long after some stipulated period of time. But although these two receipts, corresponding as they do in amount with the testimony of Dekater that he paid $62 a year interest, and therefore to be regarded as corroborating his statement as to the agreement, are entitled to no little weight, yet, when all of the circumstances of the case are considered, it seems to me that a controlling efficacy should not be given to them. I will refer to the circumstances. In about one year after the mortgage was assigned to Buckheit, Dekater transferred the title of the lot mortgage to one Moore, who two days thereafter conveyed it to Dekater's wife. For this no reason has been assigned, but subsequent transactions between Buckheit and Dekater awaken a strong conviction that it must have been to protect the lot from the lawful claims of others. The subsequent transactions to which I refer are the fact that there was but one indorsement upon the bond thereafter, and that, in 1880, Dekater confessed a judgment to Buckheit for $150, which he says he did to protect his property from the claim of a physician who had attended his wife, and the secrecy, or uncertainty at least, in which Dekater and Buckheit transacted their business and left everything in doubt and confusion. Besides these things, Dekater declares that he and Buckheit had a perfect understanding between themselves, and that Buckheit was the best friend he ever had. I cannot realize any state of mind in which a thoughtful man can be who would make such a declaration respecting his creditor many years after all dealings between them had ceased if he really believed that such creditor had more than received the amount that was due him, and still claimed more than the original indebtedness according to the bond, as Buckheit did in this case when he assigned the mortgage to the complainant in December, 1884, when he assured her that the amount due was $649.76. When this testimony of Dekater's was given, Buckheit had been dead for many years, and his estate was insolvent, so that there was no terror or intimidation of any kind that could be exercised by Buckheit to induce Dekater to say that Buckheit was the best friend he ever had.
But to proceed. The bond has the lawful interest, $43 40, indorsed thereon at the end of each year, until 1875, from which time no indorsements appear. Dekater says that whenever he paid the interest he paid the 10 per cent., and took a receipt for that amount, but that he never saw the bond and mortgage from the time they were given. It may be a slight circumstance only, but it is worthy of consideration, that for the two years when Buckheit did indorse the interest on the bond he indorsed the amount actually due. I am aware that it may be said that he would not expose himself to an illegal transaction by indorsing the 10 per cent. which Dekater said he paid him but that suggestion goes for naught, since, if Dekater ever took a receipt for the 10 per cent., as he swears he did, and as Stevenson swears he saw, Buckheit could not have had any such precaution in his mind; for had such consideration controlled him, he certainly would not have placed in the hands of Dekater such vital evidence. Again, Dekater swears he never paid this interest without taking a receipt. However, he only produces two which he says are receipts for such interest, which are copied above. The rest he says are lost or were destroyed. He thinks his wife must have destroyed them at a time when she was out of her mind, which was just before or about the time of the assignment of the mortgage to the complainant. There is but little to justify the belief that these receipts were so destroyed. The ones that he produced he says he found in a small box which had been laid aside in the garret of his house. He says there were many other old and worthless papers in the box. It does not appear how the box came to be deposited in the garret, nor at what time, nor by whom, nor how the papers contained therein got there. The inquiry naturally is, if he had been so careful as to take receipts for this interest money both before the years 1878 and 1879 and afterwards, why were not such receipts preserved, with the two above given,in the small box? There must have been five receipts taken before 1878, and four after 1879, and yet not one of these nine are produced. But further. Dekater knew of the assignment to the complainant, and, before he made the alleged payment of interest to Buckheit in 1885, he called upon the complainant and her sister, and inquired of them which of them had the mortgage, and said to them that there was back interest due, and he would pay it. It is true he says that he afterwards went and paid the interest to Buckheit, because Buckheit told him that he had assigned it to the complainant "for safekeeping." Before the bill was filed, Dekater called upon the complainant several times, but never in any wise intimated that he had been paying more than the lawful interest. I cannot, therefore, conclude that Dekater has made a case which shows that he paid more than the lawful interest prior to the time of the assignment of the mortgage to the complainant. But Dekater also alleges and swears that he paid for Buckheit $356, which was to be applied to the principal of this mortgage. Has this been satisfactorily established? He says that Buckheit wanted to become the owner of a certain lot, and prevailed upon him to raise the money to pay for such lot, the price of which was $400. To carry out this transaction effectually, Stevenson says they gave their joint note for the consideration money. He says Dekater's name was first on the note, and he was to get Buckheit to make it good. Dekater says to raise part of the money therefor, his wife and he gave a mortgage on the lot covered by the complainant's mortgage to a building and loan association for $200, and that this he paid to Stevenson, and afterwards paid $156 of his own money making, in all, $856. For this he produces a receipt dated January 1, 1883, but this is a simple receipt for so much money only. It does not say for what it was on account of. The complainant admits the payment of this money, but denies that it was on account of the mortgage.
It is worthy of note that Dekater never claimed that this $356 was paid on account of this mortgage until after this bill was filed. As stated, he knew the mortgage had been assigned to the complainant, and that he talked to her several times about it. He not only told her that there was some interest due which he would pay, but he afterwards went with the money, (how much does not appear,) and offered to pay the interest; but the complainant, not having the mortgage, sent Dekater to the person in whose custody it was, whom, however, he did not find. After this offer to pay interest, and nearly three years after the assignment to the complainant, this bill was filed; but before the filing of the bill, the bond and mortgage were in the hands of the solicitor of the complainant, who had several interviews with Dekater respecting the payment of the bond and mortgage: but in none of these interviews did Dekater claim that any unlawful interest had been paid, or that the principal money was in any wise reduced. The solicitor says that the first intimation that he ever had of either was upon reading the answer filed. I have not the slightest doubt, from his testimony, but that he understood the whole amount of principal was due, and that he gave Dekater so to understand. It is very clear that Dekater never intimated to him in any way that he had paid $356 on the mortgage. Thus it will be seen that Dekater allows this bond and mortgage, according to his own confession, to remain outstanding, bearing a falsehood upon their face; that at this late day he declares that the man who would thus have him pay his debts twice was the best friend he ever had; that he confessed a judgment to such man for $150, which was without any foundation except for the fraudulent purpose of cheating creditors; and that afterwards he raises and pays money to this man who holds his bond and mortgage to the amount of $356, without having it indorsed upon the bond; and that afterwards he knows that the bond and mortgage had been assigned, and was held by another who claimed the amount due thereon; and that her solicitor repeatedly pressed him for the payment of the principal and interest; and that at no time did he ever pretend that he had paid unlawful interest or any part of the principal. Then what was the $356 paid for? The proof shows that Dekater and Buckheit had very many business transactions, although none of them, except the one concerning this mortgage, of much importance. Buckheit was a merchant, and Dekater dealt with him. Dekater often wanted to borrow money, and says that he could borrow any amount that he wanted, and often did borrow $50 or $60 or more, Buckheit never refusing him but once, when he wanted only a small sum, which Buckheit did not happen to have at the time. In this way it is plain that Buckheit may have had, and most probably did have, a just claim against Dekater for the whole amount of the note which Dekater gave to Stevenson for the lot. Therefore, it seems to me that, since the complainant surrendered her just claims against Buckheit to the amount of $649.76, the amount which appeared to be due according to the assignment executed by Buckheit, and took this bond and mortgage in satisfaction thereof, as between her and Dekatur and his wife, who owns the equity of redemption, the equities are altogether in favor of the complainant. The complainant is entitled to a decree, with costs.