NICKERSON t1. DACHAX.
(Oircuie Court, D. Nebralka.
EQUITY-BONA. FIDE PuRCDABER-CONSTRUOTIVlIl NOTICE-CoNVEYANCE OJ! MORTGAGED PREMIBES.
The holder of a mortgage surrendered the same upon the receipt of a quitclaim deed of the land from the mortgagor. The mortgagor, without knowledge of the mortgagee, bad prcviousl)' deeded the same land to his daughter, who, prior to the surrender of the mortgage by the mortgagee, and ,the conveyance of the mortgaged land by her father to the mortgagee, deeded the same to a third party, in consideration of certain promissory notes of doubtful value. Held, that if the conveyance of the daughter to the third party was without consideration, it should be se,t, aside, and that the mortgage, whic,h had been canceled in ignorance of the fact that the mortgagor had parted with the title, should be enforced against the land. It was the duty of the holder of the mortgage to examine the record for conveyances by the mortgagor before'taking a quitclaim deed, and as against, a bona fide purchaser for valw, he would be without remedy; bjlt if the party claiming to be a bona flde purchaser for value is proven not to be such, he has lio equities, an!l there is nothing to prevent if. court of equity from disposing of this case upon the equities as they exist between the mortgagor and mortgagee. 2.
SAME-BONA FIDE PROOF. PURCDABER-PAYMENT BEFORE NOTICE OF EQUITIES-
A party relying upon the defense that he is a bona flde purchaser, entitled to hold notwithstanding a prior eqUity, must establish his defense by proof. It is an affirmative defense. The statement of a consideration in the deed is not sufficient, but actual payment before notice must be shown.
3. SAHE-PRESUMPT,ION AS TO VALUE OF PROMISSORY NOTES. As a general rule, the law presume that a promissory note, even if past
due, is worth its face in money; but this is only a presumption which arises,in the absence of direct proof as to value, and may be overcome by comparatively slight proof in contradiction, especially when the paper is old, dishonored, or outlawed.
In Equity. On exceptions to master's report. The principal matter in controversy in this case is as to the validity of a conveyance of certain lands from respondent Mary Meacham to respondent H. H. Blodgett, of date February 7, 1880. The title to the land was, prior to February 8, 1877, in respondents Stephen A. Meacham and Nancy, his wife, who On that day executed a mortgage thereon to A. Otis Evans, to secure the payment of $2,700, with interest and attorney's fees. The purpose of this suit is to foreclose said mortgage; and in order to make the foreclosure effectual, complainant prays the cancellation of the conveyance above referred to, and that the satisfaction of said mortgage hereinafter mentioned may be Bet aside.
On the twenty-fifth day of September, 1877, said Stephen A. Meacham, then the owner of saictla;nd, hig wife not joining, conveyed the premises to his daughter, the respondent Mary Meacham, excepting from the covenarit"of warra;n'tythe mortgage above named. On the tweifthof' October, 1878, the said A. Otis Evans,thronghhis agent, having no knowledge of the conveyance from Stephen A. Meacham to Mary Meacham, took from the said Stephen A. and Nancy, his wife; a quitclaim deed in the name of B.L. Harding for the land in question, and as the sole consideration thetefor delivered up as satisfied the aforesaid notes and mortgage for $2,700. On the seventh of February, 1880, the respondent H. H. Blodgett received a conveyance of the land in controversy from said Mary Meacham, the consideration in the deed being expressed as $4,200. This last transaction, which is the subject of the present controversy, was in this wise : Blodgett gave to said Mary Meacham promissory notes against various parties, aIllounting to $4,2UO,as ,the consideration for the whole of the land, and immediately agreed with her to l'econvey to her one·half of the land, in consideration that she should allow him to take back of the notes to be selected by him. Accordingly, after c0nveyance, Blodgett reconveyed to Mary Meacham the undivided half of the land, and selected and took haek one-half of the notes. It is charged that this trans&ctionbetween Blodgett and Mary Meacham was fraudulent, alid also that it was without consideration, the notes left 'in her hands after returning the selected one-half to him, having been, as is alleged, entirely worthless. The case has been twice before the master. In hisD.rst he found, as a fact, that the notes given by Blodgett to Mary Meacham, as a consideration forsaid1l:ind, were old notes, uncollectible arid worthless, and nearly all, if not quite all, past due; and that not a dollar has ever been colleClted thereon. The case was recommitted to the master to further investigate the question of the value of. said notes, with leave to parties to produce further proof. After taking a large amount of 'additional evidence;the master haa filed 'a second report, in which he finds 'as facts (1) that the consideration for the conveyance in controversy was grossly inadequate; (2) that he cannot find that any of the notes have been collected or paid. When the case catbe up for hearing upon exceptions to this latter report, after the oral argument,thecolut direetedcounsel to file briefs' lIpan the whole case, but to give special attention to the question.,' "'hat, ulll1c;: tho circumstance3 of this case, i3'thepresumption as
to the value of the notes: turned over by Blodgett to Mary Meaclmtn in consideration for the conveyance, in the absence of any dIrect. proof upon the subject? Elaborate briefs have accordingly been filed· ·T. L. Webster, for complainant. Walter J. Lamb, G. M. Lambertson, J. E. Philpot, J. O. Orooker, and H. H. Blodgett, pro se, for respondents. MCCRARY, C. J. If thecconveyance from Mary Meacham to H. H. Blodgett was without consideration, it should be declared void and set aside, and ,the mortgage for $2,700 should be enforced against the land, since it was. undoubtedly canceled in ignorance of the fac,t that the mortgagor had parted with the legal title lj,nd was no longer able to make a valid conveyance. It is true, as respondents' counsel have said, that it was the duty of the h,Older of the mortgage to examine the record for conveyances by the mortgagor before taking a quitclaim deed from him and canceling the mortgage; and it follows that, as against lL lxmafide purchaser of the land for. value after the cancellation 9f the mortgage, he is .without .remedy. But if Blodgett is not such a purchaser he has no equities, and there is nothing to hinder a court of equity from disposing of the case upon the equities as they exist between· mortgagor and mortgagee As between them, complainant is entitled to relief, as the cancellation of the mortgage was the result ofa mistake on the part of the mortgagee, and ofa palpable fraud on the part of the mortgagor, who of Course knew that he had conveyed the land to his daughter, lLnd .that had no power vey it a second time. Our inquiry must. therefore be confined to the question, was Blodgett a bona fide purchaser for value ?The proof this question in doubt. All that clearly is that Blodgett turned over to Mary Meacham a number of promissory notes, all .of which were past due, and some of which were certll-inly worthless. Whether any of the notes turned overby him, were of any value, is a . question which cannot be clearly settled upon' the evidence in the case; ll-nd it must, therefore, depend upon the question whether the law raises a presumption, in the.absence of proof, that the notes were of value. The respondent rests his defense upon the o.laim that he is a lxma fide purchaser the land in question without nctice of. the prior equities existing in favor of the holder of the mortgage. A party relying on the defense that he is a bonafide purchaser, entitled to h()ld notwithstanding a his defen,se by proof. It is an affirmative TheatlLt.ement of a. consideration in the deed is not sufficient, but, actual payment before notice mUlJt be almust be shown.· The facts 4Pvmg the J'ight of
leged and proved. Abb. Tr. Ev. p. 715, § 38, and cases cited. The same rule is laid down in the case of Boon v. Chiles, 10 Pet. 177. The burden being upon the respondent, Blodgett, to make out his defense by showing affirmatively that he is a bona fide purchaser for value, he claims to have discharged it by showing that he turned over the notes in question in payment for the land, and without showing affirmative1y that the notes were of value. As a general rule, the law will presume that a promissory note, even if past due, is worth its face in money j but this is only a presumption which arises in the absence of direct proof to establish the value of the paper, or ofcirCllmstances sufficient in themselves to rebut the presumption. Indeed, this presumption is much stronger where the paper is not yet due, than it is where it is overdue and dishonored; but· it prevails in either case. The question here is whether the circumstances are such as to rebut this presumption, and to throw upon respondent Blodgett the bur· den showing that the notes ware of value, or, in other words, that he , paid value for the land. There are several circumstances tending very strongly to throw suspicionupon the entire transaction, and, when they are all considered together, they are of such a character as ought, in my judgment, to OVtiroome the presumption that, the notes, or any of them, were of value. These circumstances may briefly be stated as follows: · 1. The purchase was made by Blodgett without any investigation as to the title to the land. !tis fair to presume'that if he had been paying what he regarded as a fair price, purchasing in good faith, he · would have looked into the record to ascertain the condition of the , title. 2; Equally suspicious is the fact that Mary Meacham accepted the notes, all past due aridsome i barred by the statute of limitations, the' solvency of their fuakers, and without in· , without inquiry as · vestigation oftha question whetHer they were good or not. It must be considered very remarkable indeed that a person of mature yea'lS and ordinary intelligence would', in good faith, sell and transfer a large body of valuable land for suoh a consideration; arId without knowing or inquiring whether she was receiving anything of value or not. 3. Ft'll more remarkable and suspicious is the circumstanoe that the parties agreed that after the delivery of all the notes by Blodgett to Mary Meacham, and after a conveyance from the latter to the , fonilerof allthe'lalld, and l\.s'a part of tlresltfue tra'llSactiori, Blod-
NICKERSON V. MEAOHAM.
gett should reconvey to Mary Meacham one-half of the land, and should select and take back from her one-half of the notes. It is impossible to understand why all this was done, if it was not for the very purpose of giving him the opportunity to take back all the notes that wpre of any substantial value, and leave in her hand only those that were practically worthless. 4. The court cannot overlook the fact, which appears in the testimony of Blodgett, that he is unable to give the name of a single one of the makers of the notes who is or has been, since the transaction in question, solvent in the sense of having property subject to execution. When the case was referred to the master, the court supposed that a list of the notes transferred could be readily obtained; that the names and places of residence of their makers could be furnished, either by Blodgett or Mary Meacham; and .that thereby the. complainant would be furnished with information upon which to prosecute an investigation as to the value of the notes. But it seems that after a long investigation, and the taking of testimony oovering hundreds of pages, there is even yet some doubt as to who the makers of the and as to where they are to be found.. Add to this the fact that no effort whatever has been made to collect any of the notes, and that not a dollar has been paid upon anyone..of them during a period of now nearly three years, a.nd it must be admitt'ed that all the cil'cumstances, taken together, are such as to cast great doubt upon the question of the bona fides of the transaction, and of the value of these securities. At the hearing on exception to the master's second report, the court was of the opinion that the case must tutI! upon the question, whether these facts and circumstances :were suffioientto overcome the presumption that the promissory notes were worth their face in money. That such is the general presumption, in the absence .of suspicious circumatances:and in the absence oLproof, seems to: be ad. mitted; but itisa presumption which maybe overcome by comparatively.slight proof, especially· in ia case where :the paper· is old, dishonored, aI!d soma of it barred by limitation. The law raises the presumption,of value onlyincas6s there is no which to found a contrary presumption. Ifi the ,faats,&re such as to create a strong doubt of the integrity of the.:trausaction and as to the vallW of the paper, the burden of showing that the paper ·.was 6f value will be thrown upon the party.asserting that£act. ,1lhisrule is especially applicable to the present case, where thEdaots are, or ought' to be. known to the respondent Blodgett, and there the com-
plainant, after diligent effort, seems to have been unable to ascertain them. It is certainly not too much to say upon this record, and the evidence before the court, that the evidence on the part of Blodgett in respect to the payment of the consideration stated in the deed is unsatisfactory, and that such proof was vital in order 1lo uphold the deed, surrounded as it is in other respects with suspicion. This being so, it must he held that the burden of showing that the paper was of value, and that Blodgett was a bona fide purchaser, rests upon him. Such, in substance, is the doctrine announced by the supremo conrt of the United States in two cases at least. Clements v. Moore, 6 Wall. 299; Clifton v. Sheldon, 23 How. 481. The result is that there must be decree for complainant in accord· ance with the prayer of his bill, and it is so ordered.
(Circuit CoUrt, D. Nebraska.
BILL TO VACATE Jm>GMENT.:....cIJlMITATION.
A bill in chancery brought to vacate a judgment obtained in a court of law, and to order a new trial, takes the place of the ordinary petition fllr a new trial, 'provided for by .the Code of Civil Procedure of this state, and must be brought within one year from the rendition of the judgment sought to be vacated.
In Equity. Harwood, et Ames, for plaintiff. O. B. Hewett, for defendant. DUNDY, D. J. The complainant in this case filed his bill on the sixth day of February, 1882. ,The object of the suit and the prayer of the bill is to vacate a judgment heretofore rendered in this court, on the ground of newly-discovered evidence, so that the cause may he tried again npon its merits. An inspection of the record shows that on the. twentieth day of pecember, 1879, this plaintiff commenced an aetion at law against this defendant in this coort for the purpose of recovering on certain bonds claimed to have been issued by the defendant to a.id in building a school-house for the benefit of ,the 'district. The execution' of the bonds and all liability thet'eon was denied ,by the district. A jury was duly waived, and a trial was ther.ellpon had upon the merits. of the controversy. In the trial the issues were determined in f.ayor of the defendant, and the suit was