Walker v. Paine

By the Court Pratt, J.

It seems to be conceded by the counsel for the appellant that the mortgage cannot be made to cover debts or advances that, do not come within the conditions of it; that if it appears, by the condition of the mortgage, that it was made to secure the payment of debts accruing upon written contracts or demands, it is not competent to prove by parol that it was in fact made to secure debts and. demands resting only in verbal contracts.

The first question, therefore, to be determined is, whether the condition of the mortgage of J uly 27th, 1841, provides that it shall be a security for debts accruing upon some written contract or agreement signed or indorsed by Paine, or it is general, including also debts accruing upon a verbal contract.

It seems to me that the terms of the condition are too plain to allow of the application of any rules of construction. It seems to read as plain as language can be written. It is, “ that if the said Paine shall pay the just and full sum of all moneys which he may owe to the said parties of the second part, either as maker or indorser of any note or notes, or any bills of exchange, bonds, checks, overdrafts or securities of any kind, given by or indorsed by the party of the first part, according to the conditions of any such writings obligatory executed by him, &c. But in case of the non-payment of such writings obligatory of whatever nature, according to the respective conditions thereof,” &c., concluding in the usual form. If this does not call for written instruments, I confess I do not know what language could be employed that would call for such and such only. Besides, it was not the case of a printed blank which required erasures and interlineations to express the true meaning, and which, in the hurry of preparing it, might have been left to read differently from what it was really designed to express; but the condition was mostly written, and that too by the mortgagor himself. Taking the instrument as it reads, I think it calls for written evidences of debt, and can be satisfied with no other.

In the second place, Did the proof show any such debt ? The question is not whether the circumstances were such that the existence of some such debt as is called for by the terms of the condition might be inferred, but whether there was such a preponderance of testimony establishing such debt as would authorize this court to set aside the report of the referee. Upon this point, after a careful examination of the testimony, I am unable to find any proof of such indebtedness. It is true we may conjecture that at some time there may have been a check, upon which the money had been drawn from the bank; or there may have been a bond, but there is no' legal proof of it. The books, which seem to furnish the most reliable testimony upon the subject, indicate that the money was advanced directly upon the mortgage, without any personal security. Both mortgages were made long before any money was advanced ; hence no personal security could have been given at the time of their execution. The entries in the books show that the $2500 was advanced on the 30th day of July, 1842, some twelve months after the first, and some six after the second mortgage was executed. It is true the entry is made under the head of bonds and mortgages, but as part of the business of the bank was to discount bonds and mortgages, it would, most likely, be entered under that head if no bond had accompanied the mortgage. Indeed the complaint' does not aver that any bond was in fact executed; nor was it so contended by the counsel for the plaintiff upon the argument. It was insisted that the court might infer that some written security had been given to satisfy the calls of the condition in the mortgage, but it was not insisted upon that such security was in fact a bond. It was much more strenuously maintained that there was an overdraft, within the terms of the condition. But the inferences to be drawn from the evidence, I think, are strong that the money was advanced directly upon the mortgage, upon a discount of them to that amount. I cannot see how, by any correct use of the term, either commercially or legally, it can be called an overdraft. The report of the referee therefore is clearly sustained by the evidence.

But it is insisted that the defendant, under the circumstances, should be estopped from claiming that the debt is not secured by the mortgage. It is not very obvious to me upon what ground, or upon what portion of the evidence, this assumed estoppel can be placed. If the parent bank knew nothing of the absence of the requisite written security to answer the conditions of the mortgage, until 1851, it was equally ignorant of the existence of the mortgage itself, or of the debt which it was designed to secure. The knowledge of all came to the bank at the same time, and the transfer to the plaintiff was made with a full knowledge of all the facts. There was no misrepresentation of the facts by Paine, or any course of conduct on his part which induced any action on the part of the bank which it would not otherwise have taken.

[Oswego General Term, July 7, 1857.

The counsel for the pláintiff does not contend that this is a case where a court of equity should enforce the mortgage as a lien for the security of a debt created upon the faith of it as such security, although not literally within its conditions, and therefore I assume that the point, if taken, would be untenable.

But he insists that the defendant should be estopped from denying that there was such written security as would answer the condition of the mortgage. This position cannot be sustained. Ho misrepresentation of facts has been proved, upon which the plaintiff or any person through whom he claims has been induced to act or to withhold action, to his detriment. It is true the bank relied upon the mortgage as a valid security for the $2500, not upon the assumption that there was a bond or other personal security in writing, but upon a mistaken idea of the law, in assuming that the mortgage might be made available as security for a debt not in writing as the condition thereof requires.

Judgment affirmed.

Hubbard, Pratt, Bacon and W. F. Allen, Justices.]