Morris v. Morris

Campbell J.

The complainant filed his bill, as assignee from the administrators of William Morris deceased of six several notes, being part of thirteen originally given, with an accompanying mortgage, executed by the defendant to William Morris on the 15th day of August, 1843. The bill was filed to foreclose the mortgage, and alleged the whole amount of the notes in complainant’s hands to be due and impaid. The bill sets forth the death of William Morris in 1844, and the assignment from his administrators in 1848. It is in the usual form of foreclosure bills, and waives an answer under oath. The answer admits the execution of the mortgage and notes, but leaves the complainant to proof of his assignment. It *176 denies that the notes or any part of them are still due, and alleges that they have been satisfied and paid, and that the payment is endorsed on them, and that such endorsement of payment was made by William Morris in his lifetime.

Proofs were taken, showing the execution and assignment of the notes and mortgage; and upon the notes, as produced, endorsements appeared, made by William Morris, September 2d, 1844, acknowledging payments to the amount of nineteen hundred dollars. Probate proceedings were proved, showing debts in favor of complainant and others against the estate of William Morris, and that the estate was insolvent.

The evidence of Nathan Davis was also introduced, who testified as follows: “I was acquainted with William Morris (the father of said Orville C. Morris) in his lifetime. He resided in Bloomfield, Oakland county, in September, 1844.”

A note, with endorsement in the following words, was then introduced: “$300. Bloomfield, August 15, 1843. Seven years after date, for value received, I promise to pay William Morris, or order, three hundred dollars, with interest. [Signed; and signature canceled:] “Orville C. Morris.” [Endorsed:] “William Morris.” “Rec’d, 2nd September, 1844, one hundred dollars on the within note.”

The witness testified in relation thereto as follows: “ I have seen this note before. The endorsement on the back thereof is in my handwriting; the signature to this note is that of said Orville C. Morris — I saw him write it. I made the endorsement on the back of the note by the direction of William Morris, who then had the possession of the note. •This note, with others, accompanied a mortgage. The mortgage was, I think, on the undivided half of what they called the ‘farm and mill property,’ and also the ‘Blackington farm,’ and what was called the ‘old Morris’ farm.’ The amount of said mortgage was four thousand dollars. I think there were thirteen notes accompanying said mortgage; twelve notes of three hundred dollars each, and one of four hundred dollars. I endorsed on said notes the sum of two thousand *177 dollars, by the direction of William Morris — this was on several notes. William Morris directed his wife to get the bundle of notes and hand them to me, and he directed me to give up to Orville C. Morris two thousand dollars in amount of the last notes to become due. I was in a hurry, and proposed to endorse that amount on the notes, instead of stopping to compute the interest and surrender the notes. William Morris assented to this arrangement — said it would be the same thing. I then made the endorsements, as I before stated. This was on the 2d of Sej>tember, 1844.”

On his cross-examination, witness says as follows: “This' transaction took place at the house of William Morris, in Bloomfield, in this county. Mr. Morris was quite sick at this time — in the last, stages of his sickness; he died the same month, I think. There was no payment made by Orville C. Morris at that time. I don’t know of any payment ever-having been made by Orville O. Morris. I know there never was any, from the circumstance that William Morris gave his reasons why he wanted the endorsement to be made.

“At the time this property was sold by William Morris to Orville C. Morris there was no mortgage given, but Orville gave his notes for four thousand dollars, payable ahead from one to thirteen years, without interest. I think these notes were dated the same time .with the note shown me.

I was present at the time the notes without interest were given up, and notes for the same amount with interest and a mortgage were given. This mortgage is the one referred to in my direct-examination.

“Orvi^, at first, refused to sign these notes "and mortgage, because they bore interest, but William Morris told him that Mr. Romeyn had told him that it was necessary that the notes should be on interest, and that if he would sign them, that he would it make all right with him. Orville C. Morris then signed them. “At the time these notes were given, William Morris was able to be around, but he never recovered his health afterwards. I should think it was some *178 three, tour, or five months before he died that these notes were executed. I think Mr. Morris died some time in September, 1844. At the time these notes were actually signed, they were dated back to the time of the original sale of the property.

“I suppose that the Mr. Romeyn referred to, was Mr. Romeyn, a lawyer of Detroit, as I know that Mr. Romeyn was Mr. Morris’s counsel.

“ After the endorsement was made upon the notes, I think they were handed back to Mr. Morris’s wife. When I next saw these notes, they came into our hands as administrators on William Morris’s estate. I presume that the note produced was one of them, as the notes all came into the hands of the administrators. The administrators sold the notes which were unpaid, and the mortgage. I think Orville C. Morris had paid all the notes which had become due before the sale. We sold the notes toB. B. Morris. I think they were transferred to B. B. Morris on a dividend due him from the estate, and so transferred to him at their amount less the endorsements. B. B. Morris, at this time, proposed to take the notes at the full amount, irrespective of the endorsements; he said he supposed he understood about the endorsements; but the administrators objected to thus turning them out, but would turn them out at what appeared to be due on them.

“ The assets were not sufficient to pay the debts -proved against the estate. I don’t remember what proportion of the debts was paid on the dividend.”

. On his further direct-examination, witness says: “At the time these endorsements were made, I believe that, William Morris was perfectly sane, and capable of taking Tare of his business affairs. Mr, William Morris assigned as a reason -for making these endorsements that Mr. Cook said that Orville had agreed to pay more than the property was worth, and that there ought to be endorsed thereon from one to two thousand dollars; and also that Orville had originally given notes without interest, and had changed them for notes and *179 mortgage drawing interest. There was nothing said at this time about the promise that he would make it all right, but that promise was made by William Morris at the time the notes and mortgage, were signed by Orville, and in my presence.”

The case coming to a hearing on pleadings and proofs, the Court, on the 11th of April, 1857, ordered that the endorsements should be allowed, and directed • a reference, for a computation, on that basis. On the 2d of December, 1857, a decree of foreclosure and salé was made upon the report of the commissioner; and from the last mentioned decree an appeal was taken to this Court.

A preliminary point was made by the counsel for the appellee, that, inasmuch as the decretal order of April 11th settled the question of allowance of the payments, an appeal from the decree of December 2d could not bring up that question. This position is not well founded. That was an interlocutory proceeding, upon which the final ; decree was based, but which of itself granted, no relief and performed no active function. The decree of foreclosure is the only one which disposes, in any effectual manner, of the rights of the parties. The whole case is properly before us.

The complainant objects that the defense made by the proofs varies from that set up in the answer, and should not be regarded. It is urged on his behalf that the answer sets tip the specific defense of payment, and that the facts do not prove payment, and that there is no other issue in the case. Even if the answer sets up no other specific defense, the rule contended for by the complainant is not founded on the settled rules of chancery pleadings. — 1 Barb. Ch. Pr. 138; 3 Atk. 496 — 9; 1 Y. & Col. 145.

No doctrine is better settled than, that nothing stated in the bill is to be regarded as admitted unless expressly admitted. — 1 Dan. Ch. Pr. 973, 975. Where an answer is required under oath, the complainant can except for insufficiency, if the answer does not meet every material point, by admission, *180 denial, or want of knowledge. But where an answer under oath is waived, no exception can be taken for insufficiency, and complainant must be prepared to support his own case, and to meet any evidence fairly controverting it;

The allegation that his debt is all due, is essential; and any proof is fairly receivable on this issue which would be receivable under the general issue at common law. Payment of a debt not in specialty, may be thus proved. And, inasmuch as a plaintiff must always produce the security sued upon, or account for its absence, it would be a somewhat startling doctrine that he could produce a note bearing upon its face evidence of extinguishment, and call upon the opposite party to prove the apparent infirmity. The endorsements on these notes, unexplained, prove payment, and, whether explained or not, prove an extinguishment and release of liability as between the parties, unless it be shown that they were not intended so to operate. In either case, they show that the face of the notes is not an existing liability,' and must, to their extent, defeat the action. It is entirely immaterial by what name we, call them. If their legal effect is such as to reduce the debt, there is no escajm from that result, if such was the intention of the parties.

The testimony of Mr. Davis shows that William Morris had received the mortgage and notes, amounting to four thousand dollars, and bearing interest, in lieu of the same amount not on interest, and running, as these did, through thirteen years; that Orville had given them for the purchase of the mortgaged premises, and had given from one to two thousand dollars more than the premises were worth; and that, when the notes and mortgage were given for the increased amount, William Morris had promised Orville to make it right with him. The endorsements were made merely because Mr. Davis had not time to make the necessary calculations, and were made at his suggestion, instead of giving up notes to the same amount, which William Morris directed at the time, the change of arrangements being made with his assent.

*181 We can not entertain any doubt that these endorsements carried out fully the deliberate intention of the parties.

When the complainant purchased the notes and mortgage, the administrators informed him how much was due, and refused to transfer them for any greater amount than appeared due after allowing the endorsements. He now claims to recover the full original amount, on the ground that there was no consideration for the agreement between William Morris and Orville C. Morris; and that the arrangement was void •as to the creditors of the former; and that complainant, as a creditor, can attack it for fraud.

The case does not show, with certainty, the entire adequacy or inadequacy of the consideration; and if this question were material, we could not presume fraud, without more proof of it. But the complainant does not present himself before the Court in a character which allows him to raise such an issue. He claims his rights entirely by virtue of an assignment from the administrators of William Morris. W e are not aware of any principle of law which will authorize administrators to convey greater rights than their intestate possessed. They succeed to his rights, and to no more. As their assignee, the complainant takes what came into their hands as part of the estate. An act, void as against creditors, •is good between the parties, and can only be attacked by creditors by some method recognized in law. The statute very justly provides that, in case of a deficiency of assets, and in no other case, an administrator may institute proceedings to avoid such dispositions, made by the intestate, as were fraudulent against creditors.' — 2 Comp. L. §2913. He is not required to do this, unless indemnified by the creditors. He can not assign any such right. A court of equity will not countenance the assignment of a cause of action for a tort, or to set aside a conveyance, or other act, as fraudulent. — 2 Spence Eq. Jur. 868, 869 ; Prosser vs. Edmonds, 1 Y. & Col. 481; Carroll vs. Potter, Walk. Ch. 355.

The only reason why an administrator can take measures *182 to reclaim the assets is, that he represents the creditors at large, and unless the fruits of the litigation come into his hands, the creditors will not obtain an equal distribution. He is bound to make no preferences among- them. His assignee can have-no right to demand more than he has purchased. As assignee, he has not been damnified; as creditor, he has no remedy, except through the administrator, and must indemnify Mm. before he can demand his action. He has preferred to take the assignment, and he must abide by Ms election. The eqmtable purposes of the statute would not be advanced by allowing a purchaser from an estate to speculate out of frauds which do not concern him in that capacity, and to appropriate to his own use that which, if recovered, should go to all creditors alike. If, then, complainant had established beyond a doubt that the settlement between William and Orville Morris was illegal as against creditors, it would not avail Mm here.

The Court below acted properly in reducing the claim to the balance left after applying the endorsements. The decree below must be' affirmed.

Martin Ch. J. and Christiancy J. concurred. Manning J. did not sit in the case.