[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 48 As the question of fact arising between the parties was decided by the referee in favor of the plaintiff, upon a conflict of evidence, and the General Term has affirmed his decision, we are not permitted by the statute defining the *Page 51 powers of this court to review his determination in that regard. (Code Civ. Pro. § 1337; Hynes v. McDermott, 91 N.Y. 451.)
The appellant, however, claims that certain evidence given by the plaintiff, upon which the referee is presumed to have based his main findings of fact, was erroneously received and insists that the judgment against her should be reversed on this account. It is urged that the referee erred, both in admitting and in giving effect to the following testimony of the plaintiff when she was upon the stand as a witness in her own behalf:
"There was a general looking over of accounts and bills on several occasions; the first looking over was September 1, 1874, (when) $349.50 was found due my husband to be indorsed on bond and mortgage; second interview was in April, 1875, $300; third interview August, 1875, $20 and $35; September, 1876, $130.20, all due my husband from Aldermans. I recollect the transaction of April, 1874, the sum then agreed upon was $300; know George Holcomb's handwriting, signature to receipt; saw Ephraim Alderman make his mark; all these sums were to be indorsed upon the mortgage."
This testimony was given by the plaintiff in answer to a question by her counsel asking her to "state what was said and done at each of these interviews between your husband and the Aldermans, in which you did not participate." This was objected to by the defendant's attorney "the same as to the former questions; also on the further grounds that it calls for the statement, actions and declarations of third parties, and as being hearsay and in the absence of the defendant." The objection was overruled and the defendant excepted. The last question preceding was objected to as incompetent under section 829 of the Code of Civil Procedure, as well as upon other grounds.
This evidence was not the mere declaration, in his own behalf, of Holcomb, one of the mortgagors, nor the simple admission of Alderman, at the time one of the holders of the *Page 52 mortgage, but it was a business transaction between debtor and creditor, involving both acts and words. There was a general looking-over of accounts and bills and a balance was found due Mr. Holcomb, which it was agreed should be indorsed upon the mortgage. What was said during the interview, in the ordinary course of the business and as a necessary part thereof, was admissible as original evidence from its connection with the principal fact under investigation, to illustrate its character. As the acts of the parties at the time were competent, their statements made in connection with those acts, explaining the transaction, were also competent. (Greenleaf's Ev. § 108; 1 Phillips Ev. 231; Stephens Digest, 79.)
It is clear that a payment of money by the mortgagor to the mortagee could be shown, even as against a subsequent holder of the mortgage, and it is equally clear that the declaration accompanying the act of payment that it was to be applied upon the mortgage could also be shown. "When words go with an act the nature of which is the subject of inquiry, they are taken as original evidence, because what is said at the time is legitimate, if not the best evidence of what was passing in the mind of the actor." (Swift v. Mass. Mut. Life Ins., Co.63 N.Y. 186, 190.) "An agreement is an act done and thereby differs from a simple declaration. It is provable in like manner as a payment in money or property would be." (Smith v. Schanck, 18 Barb. 344, 346.)
The objection that this testimony was incompetent under section 829 of the Code does not appear to have been argued at the General Term. Disregarding the attempt to limit the evidence by excluding that part of the interview in which the witness might have participated, was the testimony competent whether she participated or not? Did she testify against a person who derived title through or under a deceased person? Did the defendant, the assignee of the mortgage, derive title from George P. Holcomb, the deceased mortgagor? What is the meaning of the phrase "a person deriving his title or interest from, through or under a deceased person" as used in the Code of Civil Procedure? (§ 829). The co-relative phrase *Page 53 in the corresponding section of the old Code was "heir at law, next of kin, assignee, legatee (or) devisee," no part of which would apply to the defendant, as she was not the heir at law, next of kin, assignee, legatee or devisee of George P. Holcomb, deceased. (Code of Procedure, § 399.) The expression "deriving his title or interest," when applied to the defendant, means the title to the bond and mortgage, because she had derived title to nothing else from any source. Did she derive her title to the bond and mortgage from George P. Holcomb, deceased?
In Pope v. Allen, (90 N.Y. 298) it was held that the owner of land derives his title thereto, within the meaning of the section in question, not only from his immediate grantor, but also through him, from remote grantors. By analogy it would follow that the assignee of a mortgage derives title thereto not only from his immediate assignor but also through him, from all former assignors. (Smith v. Cross, 90 N.Y. 549.) This does not meet the point under consideration, for assuming that the assignee of a mortgage derives title from all his predecessors in title, does he also derives title to the mortgage from the mortgagor? In other words, can any one, even the mortgagee, be said to derive title to the mortgage from the mortgagor? Assuming that a mortgage is a chose in action, giving no legal estate in land but simply a lien thereon to secure a debt, (Trustees UnionCollege v. Wheeler, 61 N.Y. 88), it cannot be created without the joint action of both the mortgagor and the mortgagee. The one must execute and deliver and the other accept before the contract is complete and the mortgage in existence. There must also be a consideration furnished by the mortgagee or in his behalf. Until the minds of the mortgagor and the mortgagee meet, there is no mortgage. The mortgagee, therefore, does not derive title to the mortgage from the mortgagor, but holds it as a party to the contract, which was incomplete until it received his assent. As one of the creators of the instrument, he becomes the original possessor. Clearly the mortgagor can have no title to the mortgage, so-called, even after it is executed and ready for delivery, because it is not yet a mortgage, except *Page 54 in form and only becomes such in reality by the action of the mortgagee. The mortgagor does not transfer the title to the mortgage, because he never had it, but he aids in making a contract which when finished by the assent of the mortgagee becomes a mortgage, the title to which can be transferred by the latter only. This case does not impress us as coming within the spirit of the section, the general object of which was to prevent the survivor of an interview from giving a version that could not be contradicted. (Morrill on Comp. Priv. of Witnesses, 8;Pinney v. Orth, 88 N.Y. 451.)
Where a husband and wife unite in giving a mortgage to two mortgagees and subsequently a payment thereon is arranged or made by the husband to one of the mortgagees, in the presence of the wife, the latter should not be prevented from testifying to what occurred, because her husband had died, when the mortgagees were still living and competent to give evidence, She would not be testifying against the successor in interest of a deceased person. If not disqualified as a witness against the mortgagees, she would not be, under the circumstances, against the assignee of the mortgage, as otherwise the mortgagees could disqualify her by their own act. We think, therefore, that the plaintiff was a competent witness in her own behalf, as against the defendant, to prove the settlement in question, even if it involved a personal communication between herself and her deceased husband.
It is contended that it should be assumed from the form of the question, which was not objected to on that ground, that the plaintiff did not participate in the interviews under consideration, but as to this we express no opinion.
There was no error in the conclusion of the referee that the mortgage was paid, although the mortgagees omitted to indorse the amounts found due to the mortgagor as payments on the mortgage, because "an agreement that a debt due or to become due shall be deemed pro tanto a payment on a debt due from the creditor operates as a satisfaction." (Davis v. Spencer, 24 N.Y. 386,391.) The omission to indorse cannot affect the rights of the plaintiff. (Bennett v. Bates, *Page 55 94 N Y 354, 362.) If the evidence was inadmissible under the pleadings, the defendant failed to object thereto upon that ground, and also failed to move to dismiss the complaint because the proof was not within the allegations thereof. Under such circumstances, as was held in Knapp v. Simon (96 N.Y. 284, 292), this court "will consider the case upon the cause of action disclosed by the evidence, and disregard any objections to the sufficiency of the pleadings which were not made in the court below." (Southwick v. First Nat. Bk., 84 N.Y. 420; Cowing v. Altman, 79 id. 167.)
We have examined the other questions to which our attention has been called by the learned counsel for the appellant, but find no error that should disturb the judgment which we think should be affirmed.
All concur.
Judgment affirmed.