Opinion · New York Court of Appeals
Wilcox v. . Howell
44 N.Y. 398
- Type
- Opinion
- Court
- New York Court of Appeals
- Jurisdiction
- New York
- Date
- 1871-05-01
- Topic
- general
Earl, C. The alleged fraud by the mortgagee, in obtaining the mortgage, was fully proved and does not seem to have been disputed or denied at the trial. The plaintiff, as assignee, therefore took the mortgage, subject to the defence of fraud, unless the defendant, the mortgagor, is deprived of this defence by the certificate he executed at the same time he executed the mortgage. That certificate is to the effect that the mortgage was given “ for a good and valid consideration to the full amount thereof, and that the same is subject to no offset or defence whatever.” *402 If this certificate was given by the mortgagor, without fraud, to induce the plaintiff to purchase the mortgage or to enable the mortgagee to negotiate it, and the plaintiff took the mortgage believing in, and, in good faith, relying upon the certificate, then the mortgagor would be estopped from availing himself of the defence of fraud. But there are two reasons why this certificate cannot have the effect claimed for it. 1st.
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UpLaw has not yet analyzed Wilcox v. . Howell. The absence of a flag is not a finding that it is good law.
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WILCOXv. HOWELL,44 N.Y. 398(1871)
OTIS N. WILCOX, Appellantv. JOHN B. HOWELL, impleaded with others,
Respondent.
Court of Appeals of the State of New York.
Argued January 10th
Decided May 1, 1871
Page 399
If this certificate was given by the mortgagor, without fraud, to induce the plaintiff to purchase the mortgage or to enable the mortgagee to negotiate it, and the plaintiff took the mortgage believing in, and, in good faith, relying upon the certificate, then the mortgagor would be estopped from availing himself of the defence of fraud. But there are two reasons why this certificate cannot have the effect claimed for it.
1st. The judge at Special Term found that the certificate was obtained by the mortgagee by fraud, and that it was not given to induce the plaintiff to buy the mortgage or to enable the mortgagee to negotiate it, but that it was given with the express understanding that the mortgagee should not negotiate it. The mortgage and certificate were both tainted with fraud in the hands of the mortgagee, and, not being negotiable instruments, upon what principle or theory is it that the plaintiff gets them free from this taint? How is this certificate taken out of the general rule that all instruments may be avoided for fraud? The doctrine of equitable estoppelin pais,is founded upon principles of equity and justice, and is only applied to conclude a party by his acts and admissions, intended to influence the conduct of another, when in good conscience and honest dealing he ought not to be permitted to gainsay them. (Welland Canal Co. v.Hathaway,8 Wend., 483.)
It would be carrying this doctrine to a preposterous extent to hold that a party is estopped from claiming that the very instrument claimed to estop him was obtained from him by fraud. But a further test of this claim of estoppel may be applied. This certificate was given to the mortgagee, to go with the mortgage into his hands and to be retained by him. It may then be treated as if embodied in the mortgage. Suppose it had been, would any one claim that the plaintiff, by the assignment to him, would be in any better position as to the defence of fraud than the assignor? (Mechanics' Bankv.New York and New Haven R.R.Co.,13 N.Y., 638.)
2d. But there is still another answer to this claim ofPage 403estoppel. The judge at Special Term found that the plaintiff did not rely upon the truth of the statements in the certificate, in purchasing the mortgage. There is some evidence, with circumstances and inferences from them, tending to sustain this finding, and hence it cannot be questioned here. If all other things concurred necessary to constitute the estoppel, the plaintiff could not have the benefit of it unless he believed in and relied upon the statement of facts made. It is not sufficient that he believed that, as a matter of law, the certificate would protect him, and hence that he would not have purchased the mortgage without it. He must have believed the facts stated, and in good faith have relied upon them as true, and in this reliance must have purchased. (Shapleyv.Abbott,42 N.Y., 443.)
Hence I conclude the defence of fraud, upon the facts found, was available against the plaintiff.
The court did not err in permitting proof of the value of the farm mortgaged at the time the mortgage was given. It had some bearing upon the question of fraud, and was therefore competent. If it did not have such bearing, then it was entirely harmless.
Neither was there error in excluding proof of the amount of judgments that were liens upon the farm at the time of the trial, nearly four years after the mortgage was given. Such proof could have had no bearing upon any question involved. It would have been otherwise if the proof had related to judgments upon the farm at the time the mortgage was given.
I am inclined to think that the evidence of defendant Howell, as to the prior conversation and transaction between him and Rosenthall, was competent. Rosenthall was one of the principal actors in the perpetration of the alleged fraud upon Howell, and this evidence tended to show how he came to confide in and rely upon Rosenthall, and the craft by which the latter had gained his confidence. But if the evidence was not competent, it was harmless, as its only bearing was upon the alleged fraud in the trade of the watches, as to which there was no dispute. It had no bearing, whatever, upon thePage 404question of estoppel, which was solely relied on by the plaintiff.
Durand, a witness for defendant, testified that he, on behalf of Howell, called upon Isaac Picard, the mortgagee, and asked him to take back the watches and money, and give up the bond and mortgage, and that he declined. This was some days after the mortgage had been assigned to the plaintiff. He was then asked the following question: "Did you state to him in what the fraud consisted?" Plaintiff's counsel objected to this, on the ground that the witness was not a party to the suit, and his declaration could not, therefore, affect the plaintiff; and also upon the ground that the evidence established that the mortgage was assigned on the day it was executed. The court overruled the objection, and plaintiff's counsel excepted. The witness answered that he stated to Picard, in substance, that a fraud had been practiced in the matter of the watches, and that he did not make much reply, but remained very taciturn. This evidence was doubtless incompetent, but it did not amount to much, and for the reason also stated above, it was entirely harmless.
The following is a portion of the evidence of the same witness, given immediately after the evidence above alluded to, as the same appears in the printed case: "I saw Jacob Picard about the same time, and told him a great fraud had been committed on Howell, and wanted him to undo the thing and make it right; he put a roll of bills in my pocket, and said if that was not enough he would give me more. (This is received under objection and exception.) He said you do not want anything to do with the matter; according to my recollection, it was fifty dollars; I handed the bills back to him, saying it was not my mode of doing business; he took back the bills."
Jacob Picard was not a party to the suit, and there is no aspect of the case in which this evidence was competent as evidence in chief. It does not, however, follow that we must reverse this judgment. Jacob Picard had been examined as a witness for the plaintiff, and he gave evidence in reference toPage 405the procurement of the certificate from Howell, and the assignment of the mortgage to the plaintiff, and testified in effect and substance, that the certificate was fairly and honestly obtained by him, to enable him to sell the mortgage to the plaintiff. The evidence objected to, tended to show quite an emphatic admission that the entire transaction with Howell, including the procurement of the certificate, was a fraud, and hence the evidence was proper, as contradicting the witness and affecting his credit. To have made it strictly competent, however, Picard's attention should first have been called to this conversation upon his cross-examination. But the objection to the evidence was not put upon this ground, and hence it cannot avail here. The omission to first call Picard's attention to this conversation, worked no injustice, as he was subsequently recalled and examined in reference to this conversation, and the plaintiff had the benefit of his denial and explanation of it. Hence, I conclude, but not without some hesitation, that there was no error in the reception of this evidence, for which we are called upon to grant a new trial. And I reach this conclusion the more readily, because I believe the evidence did not materially influence the result of the case, and because both law and ethics favor the judgment appealed from.
The judgment should, therefore, be affirmed, with costs.
To rebut this evidence, Howell testified that one Arndt Rosenthall acted with Jacob Picard for the mortgagee, in the negotiation relative to the giving of the bond and mortgage, and that he, on the defendant stating that the amount was larger than he had calculated, stated to him that he would keep the mortgage, and would give him all the time he wanted, if he was not prepared to pay when due; that then he, witness, and Picard, went to Delano's office; that he and his wife there signed the bond and mortgage, and Picard handed him the certificate for execution. He then said, "I took it and read it over and asked what it was for; he said it was nothing, only a mere matter of form; Delano said the same thing; it was nothing but mere form; I asked Picard again if he would not keep the mortgage if I could not pay when due; he said he would; on that I signed the paper; that is all that was said about the paper; I relied upon that; on the way from Picard's store to Delano's I had no conversation with Picard." * * * "Nothing was said about such a paper; Wilcox's name was not mentioned; I did not know him; when Picard and I first went to Delano's office, nothing was said about such a paper; nothing was said between me and Picard or any one about signing such a paper; nothing was said to me about such aPage 407paper by anybody till I saw it at Delano's office; I did not know the object of it; had never seen such a paper before; the paper was signed immediately after the bond and mortgage was signed."
Howell's wife was then examined, and corroborated her husband's testimony. Jacob Picard, on being recalled, denied that he had told Howell that the certificate was mere matter of form and did not amount to anything, or made any such statement.
I have detailed, with particularity, the preceding statement of Picard and Howell to show that the credibility of Picard had become a very important and controlling element in determining the question whether the certificate was given for the purpose of influencing the plaintiff in the purchase of the bond and mortgage; and as bearing on such credibility, Frederick J. Durand, the defendant's attorney, was called and examined as a witness for the defendant; who, in speaking in reference to a conversation with Jacob Picard, subsequent to the execution of the bond and mortgage and after his agency in relation to it had ceased, was permitted to give the following evidence against the plaintiff's exception, viz.: "I saw Jacob about the same time and told him a great fraud had been committed on Howell and wanted him to undo the thing and make it all right; he put a roll of bills in my pocket and said if it was not enough he would give me more." The plaintiff was not present, and it is clear that these declarations, made after the commission of the alleged fraud, were not admissible to prove that fact; and the counsel of the defendant does not attempt to sustain it on that ground, but claims it to be proper evidence, on the ground, as stated in his fifth point, that "the fact bears directly upon the credibility of the witness, and as such was material to the issue and properly received." It is true that it bore on the credibility of Picard. It was indeed damaging in its tendency and effect. It not only was an admission of the original fraud, but showed that he wished to influence and silence the defendant's counsel by bribery, and it doubtless injuriously affected andPage 408impaired, if it did not entirely destroy his evidence, and the findings of the learned justice show thathedid not credit or believe it. The testimony was not as to the general character of the witness, but it related to a particular transaction and a specific fact, of which the plaintiff could not be supposed to have any knowledge, and was not given to contradict any statement that had been made by the witness. It was therefore inadmissible.
Evidence was also permitted to be given, against the plaintiff's exception, of a conversation between the defendant and Rosenthall, previous to the negotiation for the bond and mortgage in question, in relation to the sale of some jewelry to Rosenthall which the defendant had obtained of one Strassburger, which was "offered to show that Rosenthall pretended to be a friend of witness and said that Strassburger had cheated him." The only effect of this testimony was to show that Rosenthall thereby obtained so far the confidence of Howell, as to influence him in giving credit to his representation in reference to the watches sold to him by the plaintiff. This was not admissible as against the plaintiff.
It may be proper to refer briefly to the decision of the learned justice.
After finding that the plaintiff made the execution of the statement or certificate, above referred to, "a condition of his purchasing the bond and mortgage, and would not have purchased or taken an assignment without it," and that it was, at the time of the assignment, delivered to him, he adds; "But the plaintiff did not rely upon the truth of the statement in said certificate, in purchasing said bond and mortgage."
I cannot reconcile these findings. The fact that he would not have made the purchase, or taken the assignment, without the certificate, shows that he relied, in consummating the transaction, on what was stated or certified therein.
The justice also has found that the plaintiff's knowledge, at the time of such purchase, that the defendant was largely in debt (having, in addition to two mortgages, one for $1,000, and the other for $5,000, on his real estate, judgments to the amount of $700 against him), and that a consideration of thePage 409said bond and mortgage was in part a sale of watches, was, in connection with the terms of the said bond and mortgage, and the fact that they were offered to him, on the day of their execution, at a discount of $900, sufficient to put him on inquiry, and make him chargeable with notice of the fraud in the transaction.
I cannot concur in this conclusion, as a legal result or consequence from the facts. There was nothing peculiar or unusual in the terms of the bond and mortgage. They were made payable three years from their date, with interest, half-yearly, and contained a clause or provision that, if the interest should remain unpaid and in arrear, for ten days, after it became due, then the principal, with all arrearages of interest, should, at the option of the mortgagee, become due and payable immediately thereafter. The other facts showed that the defendant was embarrassed in his pecuniary circumstances; that his personal credit was not good; and that he was not able to give such security as lenders of money required on loans upon bond and mortgage, and that he was willing, for the purpose of raising the money he wanted, to take the watches and obtain what cash he could on the sale of them; and they, with the additional fact that the payment of the amount secured could not be demanded, if the interest was promptly paid, within three years, afforded or gave the plaintiff at least a plausible reason or pretext for asking the deduction claimed and allowed, in taking the assignment, and the production of the defendant's certificate warranted a belief of the truth of the statements therein contained; and I see no ground for holding that the plaintiff was bound to make further inquiry necessary, or that he was properly chargeable with notice of the fraud.
My conclusion is, that the judgment must, for the reasons above stated, but especially on the ground of the erroneous admission of the evidence referred to, be reversed, and that a new trial should be granted; costs to abide the event.
For reversal, LOTT, Ch. C.; for affirmance, EARL, HUNT, GRAY, and LEONARD, CC.
Judgment affirmed, with costs.Page 410