text:
    Dingman et al. versus Amsink et al.

    1. In a suit on negotiable paper, after the defendant has proved that it was obtained from him and put into circulation by fraud, he may call upon the plaintiff under notice to show that he-is a bona fide holder for value.
    2. The want of consideration between the original parties is not sufficient for that purpose.
    3. The failure of the consideration will not affect the negotiability of a note.
    4. The plaintiff sold goods to defendant under a contract that if unsatisfactory they were to be returned; defendant gave a note for the whole amount; he returned some goods. In a suit on the note by an endorsee, this would not be a defence after notice ; the presumption was that the note being in commercial form was intended for circulation, and the defendant relied on his contract for security against defect in the goods.
    5. One of joint debtors died pending a suit in which both were served ; on motion of plaintiff the administrators were substituted and the suit proceeded to trial and judgment against the administrators and surviving defendant jointly. Reid to be correct, under the Act of March 22d 1861.
    6. The execution against decedent’s estate, as to the goods in the hands of the administrator or to charge his real estate, would be subject to the provisions of the 33d and 34th sections of Act of February 24th 1834.
    7. Albrecht v. Strimpler, 7 Barr 476, remarked on.
    November 12th 1874.
    Before Agnew, C. J., Sharswood, Mercur and Gordon, JJ.
    Error to the Court of Common Pleas of Qrawford county: Of October and November Term 1874.
    This was an action of assumpsit, brought March 27th 1873, by L. E. Amsink & Co. against I). C. Clark and J. H. Dingman, partners as Clark & Dingman.
    The cause of the action was two promissory _ notes, copies of which were filed, as follows:—

      “ [$352.] • Titusville, Pa., Oct. 30th 1872.
    Pour months after date, for value received, we promise to pay to the order of Messrs. Thos. J. Raynor & Co., three hundred and fifty-two dollars, at the Producers’ and-Manufacturers’ Bank, with exchange. Clark & Dingman.”
    Endorsed: “ Thos. J. Raynor & Co.
    L. E.yAMSiNic&yCo.
    For A collection A ”
    “$502. Titusville, Pa., Nov. 15th 1872.
    Four months after date, for value received, we promise to pay to the order of Messrs. Thos. J. Baynor & Co. five hundred and two dollars, at the Producers’ and Manufacturers’ Bank.
    Clark & Dingman.”
    Endorsed: “Thos. J. Baynor & Co.
    L. E.yAMSINK &yCo.
    For A collection A ”
    The latter endorsement on each note was cancelled by ink lines.
    The defendants filed an affidavit of defence; to wit:—
    “ The notes in suit were given by defendants to Thomas J. Bay-nor & Co. for goods purchased by defendants of them, and defendants allege that the plaintiffs only hold said notes for collection for said Baynor & Co., and are not bond fide purchasers thereof, for value, without notice of any set-off against the same. When said goods were purchased by defendants, said Baynor & Co. expressly agreed with them, as a condition of said purchase, that if defendants did not find said goods (being cigars) satisfactory in all respects, they, the said defendants, were to have the privilege of returning them, or any part of them not found satisfactory in quality ; and on receipt of said goods, defendants returned of the same, to said B,aynor & Co., cigars amounting, at cost price, to the sum of $317. And further, that said bill of cigars so purchased was short in quantity, when shipped and received, to the amount of twelve dollars and fifty cents, making a total of credit or set-off defendants are entitled to from the fkce of plaintiffs’ claim of $329.50, and they hereby tender a judgment for the balance of plaintiffs’ claim as filed.”
    On the 31st of December, on motion of plaintiffs, the death of D. C. Clark, one of the defendants, was suggested, and Almira D. Clark and O. M. Hayes, his administrators, substituted.
    The ease was tried February 6th 1874, before Lowrie, P. J.
    The plaintiffs gave in evidence the promissory notes and rested.
    The defendants then made the following offers, both of which were rejected and several bills of exception sealed.
    1. To prove failure of consideration as between the original parties to the notes, of which failure the plaintiffs have notice by the affidavit of defence filed in the cause, as well as of the allegation therein, that the plaintiffs hold the notes for the benefit of the payees.
    2. The erased endorsements as evidence that the plaintiffs do not hold the notes as owners.
    The verdict was for the plaintiffs for $896,09.
    The defendants took a writ of error. '
    They assigned for error :—
    1, 2. The rejection of their offers of evidence.
    3. Allowing plaintiffs’ motion to substitute the administrators of the deceased defendant as co-defendants with the surviving partner.
    4. Entering judgment generally against the surviving defendant and the administrators of the deceased defendant.

      B. J. Reid (with .whom was J. A. Neill), for plaintiffs in error.
    —The notice to a holder of negotiable paper to prove that he is a boná fide holder for value is met by a substantial compliance; there is no technical form: Albietz v. Mellon, 1 Wright 367; Phelan v. Moss, 17 P. F. Smith 66 ; Dickson v. Primrose, 2 Miles 366; Striking off an endorsement by the endorsers means a re-assignment of their interest; and in this case was evidence that the endorsees held it for some special purpose: Dugan v. United States, 3 Wheaton 183 ; Pickel v. Curtis, 1 Sumner 478; Lonsdale v. Brown, 3 W. C. C. 404. As to the joinder of the administrators, &c., of the deceased defendant with the surviving defendant they cited Insurance Co. v. Spang, 5 Barr 113; Hoskinson v. Eliot, 12 P. F. Smith 393; Meese v. Levis, 1 Harris 386; Maher v. Ashmead, 6 Casey 344.

      R. Sherman, for defendants in error.
    The affidavit of defence was not notice to plaintiffs to prove they were boná fide holders for value : Beltzhoover v. Blackstock, 3 Watts 20 ; Knight v. Pugh, 4 W. & S. 445.
    By Act of February 24th 1834, sect. 26, Pamph. L. 77, 1 Br. Purd. 424, pl. 94, executors and administrators have power to prosecute and defend actions. By Act of March 22d 1861, sect. 1, Pamph. L. 1861, Br. Purd. 29, pi. 12, when in an action against joint debtors, &c., one has died pending the suit, it shall proceed to judgment and execution against the estate as if it had commenced against the decedent alone.
    May 10th 1875.
   Mr. Justice Gordon

delivered the opinion of the court,

The view we take of this case renders it unnecessary for us to decide what the effect of the affidavit of defence would be, as notice to put the holder of the note upon proof of consideration, supposing it to set forth that which would be sufficient for that purpose. After the defendant has proved that the note or bill was improperly obtained from him and put in circulation by fraud, he may call upon the holder, plaintiff, under notice, to show that he is a bond; fide holder for value. But the mere absence or failure of consideration between the original parties, is not sufficient for that purpose : Albrecht v. Strimpler, 7 Barr 476. The defendants’ affidavit set forth that the note in controversy was given by them for goods purchased of Raynor & Co., under an agreement made at the time, that if the goods were not satisfactory, they wrere to have the privilege of returning the whole or any part of them. That not proving satisfactory they did return part of them, and that said goods were short in quantity. Here; at best, is but a partial failure of consideration and the breach of a contract, neither of which, in the least, affected the negotiability of the note. The presumption is, that, as the paper was in the ordinary commercial form, it was intended for negotiation, and that the maker relied upon his contract to secure himself against any defect in .the goods; obviously, therefore, the defendant did not bring himself within the rule, as stated in Albrecht v. Strimpler, and hence has not a meritorious defence.

Some question has been raised with reference to the incongruity of the judgment in this case, it having been rendered against Ding-man and the administrators of D. O. Clark, deceased. The suit was commenced and the summons served during Clark’s life. On the 13th of December 1873, the death of Clark was suggested and his administrators substituted. Previously to the Act of March 22d 1861, if we assume the correctness of the doctrine announced in Miller v. Reed, 3 Casey 248, the estate of Clark, in consequence of his decease during the pendency of the joint action, would have been released from all obligation on the joint note. The act above mentioned was passed to meet and remedy cases of this kind. It reads thus : “ That in no case now pending, or that may hereafter be brought, on any joint contract, note, debt or obligation, whether the same has been or may be commenced'by summons, scire facias, or otherwise, shall the courts of this Commonwealth entertain any plea or defence upon the part of any heir, or heirs, executor or executors, administrator or administrators, that one or more of said joint obligors, contractors, debtors or promissors, has deceased, since the commencement of or pending suit; but the same shall be proceeded in to judgment and execution- against the estate of such decedent, as though the said suit or suits had been commenced against the decedent alone.”

Now the rule as stated in the case of Miller v. Reed, citing the language of Judge Sergeant, in the case of Walter v. Ginrich, 2 Watts 204, is this: “ The holder of a joint and several bond may elect to bring a^separate action against each obligor or a joint action against all. If he proceeds by separate actions, the executor of a deceased defendant, as well as the survivor, continues liable. But if he joins all the parties, and one of them dies, pending the suit, the remedy against the assets of the deceased is terminated, and the survivor alone is responsible.”

Now we might, without doing any very great violence to the act, limit its operation to the curing of the defect, in the old law, as pointed out by the above case. In that event its effect would be to prevent a plea in abatement upon a suit, brought against the executor or administrator after the death of a joint obligor,. wbo bad been sued, during bis lifetime, with bis coobligor.

This, however, would be, as we conceive, an unnecessary distortion of tbe act, for tbe mere purpose of saving a technicality that subserves no good purpose. As this case now stands, we have judgment, as well against tbe administrators of tbe decedent, as against tbe living obligor, and thus tbe expenses and costs of a second suit are saved. Again, tbe incongruity of such a judgment is but imaginary. There is certainly no difficulty in enforcing it.- Had tbe death occurred immediately after judgment, its position with reference to collection would have been precisely what it is now, and yet we apprehend no lawyer would feel much embarrassment over a case of that kind. So in tbe revival of tbe liens of judgments and the foreclosure of mortgages, we find no practical difficulty in collecting judgments obtained generally against living persons and tbe estates of decedents. Tbe tendency of our laws has been, to avoid, as far as possible, tbe multiplicity and circuity of actions, and to abolish such technicalities as stand in tbe way of prompt justice.

We may here observe, that, tbe joint execution, as against tbe estate of decedent, should be levied on tbe goods of such estate, found in tbe hands of tbe executor or administrator, subj eet to tbe provisions of the Act of 1834; or if it is desired to charge tbe real estate, in tbe possession of the widow and heirs, tbe process directed by tbe 34th section of said act may be pursued. If any serious difficulty should be found to occur from tbe ordinary forms of tbe writs now in use, this court can, under tbe 3d section of tbe Act of June 1836, provide such new or modified forms as may be required to meet the exigency.

We think, however, this will not be found to be necessary.

Judgment affirmed.


source: Caselaw Access Project

author: Mr. Justice Sharswood

license: Public Domain

text:
    Moorehead et al. versus Gilmore.
    1. Adams, a partner of Mooreliead &.Co., drew a note in favor "Whitten & Co., of whom also he was a member, and, after it was endorsed by the payees, endorsed the name of Mooreliead & Go.; the note was sold to the plaintiff by a known bill-broker: Held, that these circumstances were not notice to the plaintiff that the endorsement was without authority.
    2. If the note had been offered by Whitten & Co. that would have been notice that Mooreliead & Co. were merely accommodation endorsers and sufficient to put the plaintiffs upon inquiry.
    3. The broker was the agent of Whitten & Co. to sell, and not of the plaintiff to buy; plaintiff was not bound to inquire by whom he was employed, nor would the broker, if asked, be bound to inform him.
    4. Each partner has the same right to raise money for the use of the firm by endorsement of negotiable paper as to do so by means of paper already issued.

      5. The public is not affected by the private restriction on the power of each partner.
    6. On the face of the note, it had come to Moorehead & Co., by endorsement of Whitten & Co.; that it was originally given by Adams for his individual debt was immaterial. The presumption was that the endorsement of Moorehead & Co. was in the usual course of business.
    7. Nothing but clear evidence of knowledge or notice, fraud or mala lides can impeach the primü, facie title of the holder of negotiable paper taken before maturity.
    8. Miller v. Consolidation Bank, 12 Wright 514, approved.
    November 3d 1874.
    Before Agnew, C. J., Sharswood, Williams, Mercur and Gordon, JJ.
    Error to the District Court of Allegheny county: No. 117, to October and November Term 1874.
    This was an action of assumpsit, brought January 13th 1873, by D. & H. Gilmore against James K. Moorehead, Maxwell K. Moore-head and John L. Boyd, impleaded with Calvin Adams, late partners as Moorehead, Adams & Co.
    The suit was brought on a note, of which the following is a copy:—
    “$2500. Pittsburg, August 23d 1872.
    Four months after date, I promise to pay to the order of Whit-ten & Co., twenty-five hundred dollars, without defalcation, for value received. Calvin Adams.
    Endorsed, Whitten & Co.
    Moorehead, Adams & Co.”
    The defence was that the note had been drawn and fraudulently endorsed with the firm name, by Adams, and the proceeds appropriated to his own use, without the knowledge of his partners.
    The case was tried, February 16th 1874, before White, J.
    When the case was called, by agreement judgment was entered against Adams, who made no defence, and the jury was sworn as to the other defendants.
    The plaintiff gave the note in evidence and rested.
    The defendants gave in evidence articles of partnership, dated November 27th 1869, between J. K. Moorehead, Calvin Adams and M. K. Moorehead, in the business of the “ Pittsburg Novelty Works,” the interests of the partners being in unequal shares as specified in the articles.
    By the articles, Adams was to have control of the manufacturing part of the business, the employment of hands, &c. J. K. Moorehead to have control of the commercial and financial part of the business, and power “ to use the name of the firm in the legitimate business thereof, and not otherwise,” the name of the firm “ not to be used for endorsements by either party at any time or under any circumstances,” “no money to be drawn out by either of the partners beyond his portion of the profits really earned.” By a supplement appended to these articles and signed by all the parties, dated March 3d 1870, John L. Boyd was admitted a partner into the concern. He was to act as cashier and business manager, under the direction of J. K. Moorehead, and to have a salary of $2000 per annum; and by the supplementary articles Adams was to have a salary of $1000 in addition to his dividend from the profits.
    The defendants gave evidence also, that the signature “ Calvin Adams,” and the endorsement “ Moorehead, Adams & Co.,” were in the handwriting of Adams; that the firm of Whitten & Co. was composed of R. Q. Whitten and Adams; that their business was manufacturing and selling vinegar; that the business of the defendants did not require the use of vinegar; that they never had any dealings with the firm of Whitten & Co.; the proceeds of the note in suit never went to the defendants, nor did they receive any benefit from it; and that they knew nothing of its existence until they received notice of its protest. They further gave evidence that the note was made at the place of business of Whitten & Co., and the endorsement “ Whitten & Co.,” was written by R. Q. Whitten.
    After the note was made and endorsed, it was placed in the hands of John T. Patterson, a note-broker, to negotiate for Whit-ten & Co.; he took the note to the plaintiff, who bought it from him at a discount of one per cent, per month. At the time the plaintiffs purchased the note he made no inquiries about it. Patterson handed it to him and told him it was good. The plaintiff had on several occasions previously bought notes from Patterson in a similar manner. Neither on this or any other occasion did the plaintiff inquire or Patterson tell him who had put the note into his hands for sale.
    The plaintiff submitted the following points:—
    2. The form of the note was not notice to the plaintiff that the name of the defendants was not endorsed in the regular course of business, and if the plaintiff before maturity became its bond fide owner for value he was entitled to recover.
    3. There was no evidence from which the jury could infer that Patterson was the agent of the plaintiff in the purchase of the note.
    These points were affirmed.
    The defendants’ points were:—
    1. Under the whole evidence the plaintiff was not entitled to a verdict against them.
    This point was refused.
    2» The endorsement of a partner of his separate accommodation-note with the name of the firm is sufficient indication of the nature of the transaction to put the party who discounts the note on inquiry as to the authority of the partner to use the firm’s name for the occasion unless there be circumstances from which this authority can be implied.
    The court answered:—
    “ This is true if the party at the time he discounts the paper has actual knowledge that it is for the accommodation of the individual partner who has endorsed it in the firm name; but the paper itself is not evidence of the fact.”
    3. If the jury find from the evidence that the signature, “ Calvin Adams,” and the endorsement, “Moorehead, Adams & Co.,” are in the handwriting of Adams, the character of the paper was sufficient to put the plaintiff upon inquiry as to the authority of Adams so to endorse the firm names, and if this endorsement was the unauthorized act of Adams for his own accommodation, without the consent, knowledge or ratification of his partners and in fraud of the firm, and no part of the proceeds of the note was received by the firm, the plaintiff cannot recover against the firm.
    4. A bill-broker selling a promissory note is the agent of both vendor and purchaser, if the latter knows that in the transaction he is acting in the capacity of a bill-broker; and if Whitten delivered the note to Patterson, a bill-broker, for sale, Patterson was visited with notice that the endorsement of Moorehead; Adams & Co., was an accommodation endorsement, and the plaintiff, through Patterson, was visited with like notice and was bound to make inquiry for the authority for the endorsement, if the jury find that at the time of the purchase plaintiff knew Patterson was acting as a bill-broker.
    5. If the jury find that the signature “ Calvin Adams,” and endorsement “Moorehead, Adams & Co.,” are in the handwriting of Adams, and the endorsement was without authority and in fraud of his partners and without their knowledge or ratification, and the note was placed by Whitten in the hands of Patterson, a bill-broker, for sale, and the plaintiff purchased the note from Patterson, and then knew that he was acting in the transaction as a bill-broker to sell the note, plaintiff was bound to make inquiry into the facts and the authority of Adams to endorse the name of Moorehead, Adams & Co.; not having done so he is not entitled to recover against the firm.
    6. If the plaintiffs can recover at all against the firm, he can recover only the amount paid by plaintiff for the note with interest.
    These points were refused.
    Judge White delivered an elaborate charge, and in conclusion said to the jury:—
    “ If I am correct in my views of the law in the case, there is no question of fact to be submitted to the jury. You are therefore instructed to find for the plaintiff the amount of the note, with interest from maturity and costs of protest.
    The verdict was for the plaintiff for $2674.14.

      The defendants took a writ of error and assigned eleven errors; they all related to the answers to the points, and the charge of the court.

      R. B. Carnahan and Black (with whom were M. W. Ac'heson and J. II. Hampton), for plaintiffs in error,
    cited Cooper v. McClurkan, 10 Harris 80; Ihmsen v. Negley, 1 Casey 297; Tanner v. Hall, 1 Barr 417 ; Ex parte Bonbonus, 8 Vesey 542 ; 1 Parsons on Bills 259, 260.

      D. T. Watson, 1. F. Slagle and T. M. Marshall (with whom were Buff ‡ Aughinbaugh), for defendant in error.
    — As to power of a partner to make and endorse notes, cited Byles on Bills 31, 32. As to restrictions on the power of partners: Hoskinson v. Eliot, 12 P. F. Smith 400. They cited also Ihmsen v. Negley, 1 Casey 297 ; Tanner v. Hall, 1 Barr 417 ; Haldeman v. Bank, 4 Casey 440 ; Hogg v. Orgill, 10 Id. 344 ; Miller v. Consolidation Bank, 12 Wright 514; Sedgwick v. Lewis, 20 P. F. Smith 217 ; Phelan v. Moss, 17 Id 59; Parker v. Burgess, 5 R. I. 277, as to notice of fraud to a purchaser of a negotiable note.
    January 4th 1875.
   Mr. Justice Sharswood

delivered the opinion of the Supreme Court,

Eleven errors are assigned, but they are all resolvable into one question. Was there anything upon the face of the note in suit, or the. circumstances under which it was discounted, to give notice to the plaintiff below that the endorsement of the firm name of Moorehead, Adams & Co. was without authority ? It is not disputed that if it had been offered by Whitten & Co., that circumstance of itself would have been notice that Moorehead, Adams & Co., were merely accommodation endorsers and sufficient to have put the plaintiff upon inquiry. Hence an attempt was made to fix upon Patterson, the bill-broker from whom the plaintiff received it, the character of his agent, and that he was to be' affected with whatever knowledge the agent possessed. But this position cannot be sustained and was but faintly urged in the argument. Patterson was clearly the agent of Whitten & Co. to sell, not of Gilmore to buy. Though Gilmore knew he was a broker he was not bound to ask by whom he was employed, nor if he had would Patterson have been hound to inform him. Bill-brokers are a very important class of persons in commerce, and their usefulness and business would be entirely destroyed if it were to be held that persons purchasing negotiable paper from them are affected with whatever knowledge they may have of the character of the paper which they offer in the market for discount. It comes back then to the simple question, was there anything upon the face of the paper as offered to put the plaintiff upon inquiry. It is admitted that the circumstance of the endorsement being in the handwriting of Adams, the maker of the note, of itself is nothing: Miller v. The Consolidation Bank, 12 Wright 514. It has been earnestly-contended, however, that this case is to be distinguished from that as well as Ihmsen v. Negley, 1 Casey 297; Haldeman v. Bank of Middletown, 4 Id. 440, and Sedgwick v. Lewis, 20 P. F. Smith 217 in this — that the note in suit was on its face a note given for the private debt of Adams, and the endorsement in his handwriting was primá facie the unauthorized use of the firm name by him to guarantee his private debt. In those cases it did not appear on the face of the note to have been given for the individual debt of one of the partners. The firm appeared as the principal debtors —the makers of the note — and therefore it was given for a firm debt. But is not this to set up a distinction without a difference ? Each partner in a commercial firm has as much right to raise money for the use of the firm by the endorsement of negotiable paper as to do so by means of paper originally issued. This is the precise point ruled in Miller v. The Consolidation Bank. There a person who was a member of two firms, drew a note in the name of the one firm and endorsed it in the name of the other. It was known to the bank who discounted the note, that the handwriting of both signatures was the same. The note was by Miller & Persch to their own order — endorsed Miller & Persch and Persch & Steel — and they were all in the handwriting of Persch. Says the present Chief Justice: “ Having in each the power of a partner presumptively as to the public and acting in that apparent right, it is no ground of suspicion that his endorsement of the name of one firm is in bad faith to the other as makers of the note.” The public are not affected with the private restrictions upon the power of each partner. The stress of the argument on the part of the plaintiff in error has been that an endorsement of negotiable paper is nothing more than a guarantee that it will be paid at maturity. It is true that it is a conditional engagement that if the proper steps be taken to fix upon him the liability the endorser will pay. But it is something more. It is an assignment or sale, or rather the evidence of it. So it is described in pleading. Hence, looking at the face of this note, it was paper which had come to the hands of Moorehead, Adams & Co., by endorsement or assignment of Whitten & Co. That it was originally given by Calvin Adams to Whitten & Co. for his individual debt was an immaterial circumstance. Moorehead, Adams & Co. received it with the endorsement of Whitten & Co., endorsed it in blank, that is, assigned it to the bearer, and the presumption certainly is that this was in the ordinary course of business. For all that Gilmore knew to the contrary it might have gone through twenty hands of persons who did not choose to endorse it. Now the fact that the law attaches to this endorsement a contingent responsibility does not change its character. The note did not show on its face to a stranger — a mere guarantee by Moorehead, Adams & Co. of the individual debt of Calvin Adams — but a negotiation by them in the usual form of business of a note held by them by assignment or endorsement from Whitten & Co., or some intermediate holder. The latest decisions both in England and this country have set strongly in favor of the principle that nothing but clear evidence of knowledge or notice, fraud or mala fides, can impeach the primá facie title of a holder of negotiable paper taken before maturity: Goodman v. Harvey, 4 Adol. & Ellis 870; Goodman v. Simonds, 20 How. 348 ; Phelan v. Moss, 17 P. F. Smith 59. It is of the utmost importance to the commerce of the country that it should be sternly adhered to, hoAvever hard may be its operation in particular cases.

Judgment affirmed. ,


author: Mr. Justice Mercur

text:
    Vansyckel versus Stewart.
    1. A special verdict requires the jury to find all the material facts from which the law is to arise, including both disputed and undisputed facts.
    2. AVhatever is not found in a special verdict is to be considered as not existing ; it cannot be aided by intendment or by extrinsic facts appearing on the record — it must be self-sustaining.
    3. An award under the Act of Api’il 6th 1870 (Legal Arbitration), must have all the requisites of a special verdict.
    November 13th 1874.
    Before Agnew, C. J., Sharsavood, Mercur and Gordon, JJ.
    Error to the Court of Common Pleas of Orawford county: Of October and November Term 1874, No. 71.
    This was an action of replevin to April Term 1871 of the court below, brought by Samuel Yansyckel against George S. Stewart and Milton Stewart, for three hundred barrels of oil. The declaration Avas in the usual form. The defendants averred the taking for rent due by the plaintiff and in arrear under a demise from them to the plaintiff at a Aveekly rent in oil, as set out in the avowry, amounting in the whole, at the time of the distress, to $2188.29. To the avowry the plaintiff pleaded several pleas not necessary to specify.
    The defendants, on the 18th of September 1871, entered a rule to arbitrate the case, and the parties agreed that Benjamin Grant, Esq., should be “legal arbitrator,” under the Act of April 6th 1870, Pamph. L. 948,1 Br. Purd. 80, pi. 20, &c., applying to the counties of Erie, Elk, Orawford and Lawrence only.
    Under this act, after the entry of a rule to arbitrate by one party, the other may elect to have a “ legal arbitrator; ” in such case “there shall be but one arbitrator, who shall have been duly admitted to practice law in the courts in the county in which the suit is pending.” The case is to be conducted before the arbitrator much as in trials “before courts and juries,” and at the conclusion the arbitrator is to find and report the facts of the case in the form of a special verdict, upon which award judgment shall be entered nisi, to become absolute if no exceptions * * * or motion to set aside be made in twenty days,” &c.
    The arbitrator awarded as follows:—
    “ The defendants issued a landlord’s warrant for the sum of $2188.29, rent alleged to be in arrears, on the 3d day of February 1871. On the 7th day of February 1871 the plaintiff replevied the goods levied upon under the warrant, being three hundred barrels of refined oil, and filed his declaration, alleging the unlawful taking and detention. The defendants avowed the taking of plaintiff’s goods in the usual form, and'claim rent due on a lease, dated April 11th 1870, reserving rent as there stated.
    “ The plaintiff pleaded (the pleas were set out in the award).
    “Under all the evidence and the law in this case,.the defendants are entitled to recover from the plaintiff an award for the rent' due and in arrear thereon from the plaintiff, by virtue and in pursuance of the lease of April 11th 1870, with interest thereon from that date to the filing of this award, with double costs of suit, in accordance with the Acts of Assembly in such case made and provided, &c. Which said award so made, adjudged and decreed, is ordered to be and remain for the use of George S. Stewart and Milton .Stewart, defendants.
    “And the said arbitrator hereby awards to the defendants, Stewart and Stewart, for their debt, the sum of $2188.29, with interest thereon from the 4th day of February 1871, and costs as aforesaid, amounting to $2548.99.
    “Award $2548.99. Interest to November 4th 1873.”
    The plaintiff took a number of exceptions to the award. One was:—
    “ The arbitrator did not report and file the facts of the case in the form of a special verdict, as required by statute.”
    The court overruled all the exceptions and entered judgment on the award.
    The plaintiff took a writ of error, and, amongst others, assigned for error the overruling of the above exception and entering judgment on the award.

      IT. O. Johns and W. R. Bole, for plaintiffs in error.
    A special verdict must find all the facts and refer the law arising from them to the court: 2 Tidd’s Pr. 806, 807; 1 Troubat & H. Pr. 583, 584; Stephen on Pleading 112 ; Wallingford v. Dunlap, 2 Harris 31; Kinsley v. Coyle, 8 P. F. Smith 461.

      R. Sherman, for defendants in error,
    cited Fenn v. Blanchard, 2 Yeates 543.

      January 4th 1875.
   Mr. Justice Mercur

delivered the opinion of the Supreme Court

This case arises under what the Act of 6th April 1870 declares shall be called a “legal arbitration:” Purd. Dig. 80, pl. 20. The provisions of the act apply to the counties of Crawford, Erie, Elk and Lawrence only. When a party elects to proceed under the act, it declares “ there shall be but one arbitrator, who shall have been duly admitted to practice law in the courts of record in the county in which the suit is pending.” It thus permits this judicial position to be filled only by one who is learned in the law. All others are excluded therefrom. The manifest design of the statute is to secure an arbitrator in all respects qualified to perform the duties assigned to him, according to the rules and forms of law. Hence, the 5th section of the act inter alia proceeds to declare, “ the hearing or trial before the arbitrator shall be proceeded in in the same manner and governed by the same rules as trials before courts and juries, so far as the same maybe appointed” (applicable). At the conclusion of the trial it is made his duty “ to find and report the facts of the case in the form of a special verdict, together with the exceptions taken during the trial to the admission or rejection of evidence, the points of law made by the parties, and his decisions or ruling thereon, and his award or finding in the case.” The act further provides, that exceptions may be filed to the arbitrator’s decisions of law; and the award may be set aside for causes therein stated. On exceptions filed, “the same shall be in the nature of a writ of error to the Common Pleas or court in which the case is pending.” All his rulings and findings may then be reviewed by the court. To enable this to be done intelligently, the act requires the facts tobe reported “in the form of a special verdict.”

A special verdict requires the jury to find all the material facts, in the case from which the law is to arise: Morse v. Chase & Co., 4 Watts 456; Wallingford v. Dunlap, 2 Harris 31. It concludes conditionally, as the court may declare the law to be on these facts. It must include both disputed and undisputed facts. The court will not infer a fact not found by the jury. It must declare the law on these facts alone. Whatever is not there found must he considered as not existing; Wallingford v. Dunlap, supra ; Thayer v. Society of United Brethren, 8 Harris 60 ; Berks County v. Jones, 9 Harris 413. As all the essential facts must be found in the verdict, it follows that it cannot be aided by intendment or by extrinsic facts appearing upon the record : Loew v. Stocker, 11 P. F. Smith 347, and cases there cited.

The statute does not declare that any issue shall be formed before this legal arbitration may be had. The defendant may enter a rule to arbitrate, under the compulsory arbitration law, before the declaration is filed, and the plaintiff may before plea is put in. The party who enters the rule to arbitrate does not know that it will result in a “ legal arbitration.” He therefore initiates his proceeding under the general law, as he has an undoubted right to do.

Whether or not, other portions of the record show the facts, is irrelevant. The special verdict must find and state the facts. A party shall not be compelled to search the papers on file for either facts or allegations not found in the report. The special verdict must be self-sustaining or fall. An examination of the award in this case shows it 'to be very defective. The date of the lease may be said to have been found, although not with commendable precision ; but there is no finding as to when the term commenced, nor when it was to end; nor what property was leased, nor at what rental; nor when or how it was to be paid.

It finds and declares under all the evidence and the law in the case, the defendants are entitled to recover from the plaintiff an award for the rent due and in arrear, and then names the sum. What that evidence is, of which these conclusions of law are predicated, the report fails to disclose. It would be folly for the court to attempt to review the conclusions of law without a knowledge of the substantial facts on which they rest. So far as the facts are shown by this “ special verdict,” the award might as well have been for §100 as for §2100 and upwards, or for any intermediate sum. The court would have been as unable to say then, as they are now, whether the facts sustained the conclusions of law.” This power of review, given to the court, is not a mere matter of form, but is one of substance. It was to secure a correct application of law to the facts in the case. A party, who' by the operation of this statute, is deprived of his right of trial by jury may insist upon a substantial observance of all its requirements.

This report then, was not only defective in form but also in substance, and we think the learned judge erred in not setting it aside. The third assignment is sustained. This view of the case makes it unnecessary to consider the other assignments.

Judgment reversed, report and award set aside, and a procedendo awarded.


author: Chief Justice Agnew

text:
    Smith et al. versus Vasbinder.
    1. As a general rule, after a warrant has been executed and the survey returned into the Land Office, a re-survey on the same warrant cannot be made without a fresh order; as to that warrant the deputy-surveyor is functus officio.

      2. A patent is not operative against rights of a third person existing before it was issued.
    3. One purchasing after the issuing of the patent, whose whole claim originates after its date, cannot search into the imperfections oí the previous title of the patentee.

      4. Such patent may be impeached if tainted by fraud, procured by imposition or in entire excess of the proceedings on which it is founded.
    5. The return of a survey of a wai'rant in 1793, was made in 1794; there was no record in the Land Office of its acceptance. In 1837 Vasbinder made a settlement on the survey and marked his boundaries; in 1855 Glover, then owner of the original warrant, located it, including 26 acres, not within Vasbinder’s boundaries, and obtained a patent. In 1867 Vasbinder took out a warrant for the land he claimed by settlement, included in his survey the 26 acres, and in 1873 obtained a patent for the whole. Held, that Glover had title to the 26 acres.
    6. Balliot v. Bauman, 5 W. & S. 155, affirmed.
    November 18th 1874.
    Before Agnew, C. J., Shaeswood and Meroue, JJ. Goedon, J., did not sit, having been of counsel in the ease.
    Error to the Court of Common Pleas of Jefferson county: Of October and November Term 1874, No. 127.
    Alexander Smith and others brought an action of ejectment on the 30th of November 1870, against Andrew Vasbinder, for 518 acres of land in Warsaw township.
    The case was tried, May 21st 1873, before Trunkey, P. J., of the Twenty-eighth district.
    The facts in the case are as follows:—
    On the 24th of December 1873, warrant No. 4546 for 1100 acres “ in district No. 6 in the late purchase on the east side of the Allegheny river,” issued to John Nicholson. On this warrant Ennion Williams, deputy-surveyor, on the 1st of April 1874, surveyed 1100 acres with allowance of six per cent. This survey was returned into the Land Office by Williams on the 2d of August 1794. The records' of the surveyor-general’s office show no further action on this survey.
    In 1837 and 1838 the defendant made a settlement on the same survey, and marked his boundaries, excluding a portion of it containing about 26 acres. On the 17th of August 1855, Seth Clover became the owner of the Nicholson warrant No. 4546, and on the 24th of September had it located on the land in dispute, duly returned and accepted. A patent for the land was issued to Clover, December 28th 1855. On the 27th of September 1867, the defendant took out a warrant for the land he claimed by settlement right, and included in the survey under the warrant, made January 18th and 19th 1870, by James Caldwell, the 26 acres which he had excluded when he marked the boundaries of his settlement.
    On the 13th of February 1868, the plaintiffs became the owners of Clover’s title. On the 22d of April 1873, a patent issued to the defendant for the land set out in his survey, including the 26 acres. The only question considered in the Supreme Court was as to the title to these 26 acres.
    The defendant’s fourth point was :—
    The Nicholson warrant was filled by the survey made thereon in 1794, and the subsequent survey and patent to Seth Clover conveys no title to him or his vendees, and hereon plaintiffs cannot recover.
    To this the court answered:—
    “ This point, if affirmed, is conclusive against the plaintiffs’ right to recover, and is reserved. You will determine upon the facts under the instructions given, and if you find for the plaintiffs, your verdict will be subject to the opinion of the court as to their right to recover upon the point reserved.”
    The jury found for the plaintiffs “for the land included by defendant in the official survey made by J. Caldwell January 18th and 19th 1870, which was outside of the original line which was marked by defendant, being about 26 acres on the north-west corner, as shown by plot filed, and for the defendant all the land included in said official survey except 26 acres, subject to the opinion of the court as to plaintiffs’ right to recover upon the point reserved.”
    The court afterwards entered judgment on the reserved point for the defendant, non obstante veredicto.

    The plaintiffs took a writ of error and assigned for error, entering judgment for defendant on the reserved point.

      G. A. Jenlcs, for plaintiffs in error.
    Although the power of a deputy-surveyor is exhausted by the return of a survey, the surveyor-general may either accept or reject it: Oyster v. Bellas, 2 Watts 397. If the surveyor-general, without formal action on the original return, accepted another survey and a patent was issued, this amounted to a rejection of the first survey: Light v. Woodside, 10 S. & R. 23. The defendant’s claim arose after the issuing of the patent to Clover, and he cannot take advantage of imperfections in Clover’s title previous to his survey: Balliott v. Bauman, 5 W. & S. 150; those were between the Commonwealth and the patentee; a third person had nothing to do with it: Delaware & Hudson Land Company v. Dimock, 11 Wright 393.

      A. L. Gordon (with whom were A. O. White and W. L. Corbett), for defendant in error.
    After a survey has been returned, a second survey is void: Deal v. McCormick, 3 S. & R. 346; Hughes v. Stevens, 7 Wright 197.
    January 4th 1875.
   Chief Justice Agnew

delivered the opinion of the court,

The finding of the jury under the instructions given by the court establishes the fact that at the time of the survey and patent to Seth Clover, the defendant (Andrew Vasbinder)'had no title to the 26 acres found for the plaintiff. This portion lay outside of the boundaries marked by the defendant as the limit of his settlement and improvement. The John Nicholson warrant No. 4546 was filled by survey in 1794, and returned into the Land Office. Whether this survey rvas accepted or not, is uncertain. The question reserved was whether the subsequent survey for Seth Clover, the alleged owner of this same warrant in 1855, and patent to him in the same year, gave Clover any title. The court thought they did not, and gave judgment for the defendant for the 26 acres, non obstante veredicto. In this we think there was error. The general rule undoubtedly is, that after a warrant has been executed, and the survey thereon returned into the Land Office, a re-survey cannot be made on the same warrant without a fresh order for this purpose. The authority of the deputy-surveyor is functus officio when he has returned the survey. Hence a re-survey on the same warrant, after a return of a survey, is held to be void against an intervening claimant of land not within the original survey: Drinker v. Holliday, 2 Yeates 89; Deal v. McCormick, 3 S. & R. 343; Oyster v. Bellas, 2 Watts 397; Cassidy v. Conway, 1 Casey 240. This was not the real question in the reserved point before us. Here the finding of the jury having established that there was no intervening title, legal or equitable, when the re-survey was made for Seth Clover, and the patent granted to him, the only question was whether the patent was good against the subsequent claim of title by the defendant. That it was, is clear according to authority as well as principle. Without pretending to collect and state all the decided cases, it will be found that the-following recognise or incidentally refer to the exception as to the effect of a patent irregularly issued as against claimants subsequent to its date: Nicholas v. Holliday, 2 Smith’s Laws 155-7 ; Trubett v. Nichols & Vance, Id. 158; Attorney-General v. Grantees, under Act of 1792, 4 Dallas 244; James v. Betz, 2 Binn. 12; Bixler v. Baker, 4 Id. 218, 219; Penrose v. Griffith, Id. 231; Downing v. Gallagher, 2 S. & R. 455; Brown v. Galloway, Peters’ C. C. R. 296-7; Whitmire v. Napier, 4 S. & R. 290; Diggs v. Downing, Id. 348. The following cases are directly on the point or affirmatory of it: Light v. Woodside, 10 S. & R. 23; Balliot v. Bauman, 5 W. & S. 155; Delaware & Hudson Canal Company v. Dimock, 11 Wright 397. In Balliot v. Bauman, Justice Sergeant states the law as to patents succinctly and clearly. “A patent is not operative against the rights of a third person existing before the issuing of the patent. He may show that his right is better than that of him who obtained the patent, and for that purpose may inquire into the prior title of the patentee, whether by warrant, survey, settlement or otherwise, and show that his equitable title is better. But one who purchases after the issuing of the patent, and whose whole claim originates subsequently to its date, is not at liberty to search into the imperfections in the previous title of the patentee. If there was any such which the Commonwealth has chosen to overlook, a third person has nothing to do with it. The patent conveys the full legal title of the state, and is as to her, a merger of the previous proceeding and a waiver of informalities; it is, moreover, full and express notice to every person whatever, that the land has been granted away and is not vacant.” The generality of this language was not intended, however, to be extended beyond the subject under consideration by Justice Sergeant. Hence a patent tainted with fraud or procured by imposition, or in entire excess of the proceedings on which it is founded, may be impeached: Burd et al. v. Seabold, 6 S. & R. 140; Attorney-General v. Grantees, 4 Dallas 244; Bixler v. Baker, 4 Binn. 213; Delaware & Hudson Canal Company v. Dimock, 11 Wright 393, That the Commonwealth''herself ‘may inquire into a patent surreptitiously obtained, by scire facias against the patentee, and set aside for fraud, was decided in Philadelphia a few years since in an unreported case. Seth Clover’s patent having been issued upon warrant No. 4546, before any title had accrued to the defendant, judgment on the reserved point ought to have been entered for the plaintiffs for the 26 acres found for them. Therefore the judgment is reversed, and judgment is now entered for the plaintiffs on the verdict with costs, and the record is ordered to be remitted for execution.


author: Per Curiam.

text:
    Sweeney versus Thickstun et al.

    1. A note payable to order with interest, with an addition “ in case of non-payment at maturity, five per cent, collection fees to be added with warrant of attorney to enter judgment for amount of the note and the five per cent., with costs of suit, release of errors, without stay of execution, waiving exemption, inquisition and condemnation, and to sell on fi. fa.” Held, not negotiable, by reason of the warrant of attorney contained in it.
    2. Overton v. Tyler, 3 Barr 346, adopted. Zimmerman v. Anderson, 17 P. P. Smith 421, remarked on.
    November 14th 1874.
    Before Agnew, C. J., Sharswood, Mercur and Gordon, JJ.
    Error to the Court of Common Pleas of Crawford county: Of October Term 1874, No. 149.
    On the 11th of June 1872, a judgment was entered in the Court of Common Pleas of Crawford county in favor of R. E. Wilson to the use of William Sweeney against Israel Thickstun for $630, by virtue of the following note and warrant of attorney:—
    “ $600. Cussewago, Pa., June 10th 1871.
    “ One year after date, for value received, we promise to pay to R. E. Wilson or order, six hundred dollars at six per cent, interest. And in case of default of payment at maturity, an additional five per cent, for collection of the same. And we empower any attorney of record in this Commonwealth, or elsewhere, to appear for us and confess judgment against us for the same, together with said five per cent, attorney’s fees, with costs of suit, release of errors, and without stay of execution; and for value received we do waive the right and benefit of any law of this or any state, exempting property, real or personal, from sale, and if levy is made on land we do also waive the right of inquisition, and consent to the condemnation thereof, with full liberty to sell the same on fi. fa., with release of errors thereon.
    Israel Thickstun,
    L. R. Hotchkiss.”
    Endorsed, “R. F. Wilson,
    R. L. Stebbins.”
    The judgment was opened, the defendant let into a defence and an issue framed, in the form, “ William Sweeney v. Israel Thickstun and L. R. Hotchkiss;” the declaration was in the name “ William Sweeney, endorsee of R. E. Wilson,” &c.
    The case was tried November 19th 1873 before Lowrie, P. J., who charged:—
    That the instrument on which judgment was entered was in form of an ordinary promissory note payable to R. E. Wilson, and endorsed by him, and was transferred by him to Sweeney for valuable consideration before it became due. But there is added to the note, before the signatures of the makers, an agreement that five per cent, be added for collection in case of default of payment at maturity, and also a warrant of attorney to confess judgment on the note with said five per cent., and judgment was so entered, without allowing thejthree days of grace, and w7as afterwards opened by the court to let in this defence. And the case of the plaintiff having been presented as above, the defendants, in answer thereto, gave evidence, after objection by the plaintiff, to show that the note was .given for a patent right with warranty of its goodness, and an agreement to return the note if the said patent right should not he found good; that it was not at all equal to the warranty, and also that the note was obtained by fraud from the said Hotchkiss, in this, that by a secret agreement between the said Wilson and the defendant, Thickstun, unknown to his co-defendant, the said Thickstun was to be credited with the full payment of his half of the pretended purchase-money in consideration of. his aid in getting the said Hotchkiss to join him in the purchase of the patent right, and giving the note therefor, and immediately afterwards the said credit was entered on the said note as a payment by Thickstun. Defendants also filed a reconveyance of patent.
    The court directed the jury to find for the defendants, if they -believe the evidence so given by them, reserving, with the consent of the parties, the question whether the facts, if so, constituted a legal and sufficient defence to the said note, as against Sweeney, and if they do, then the judgment entered on the warrant of attorney is to be set aside and judgment' entered in favor of the defendants, and if they do not, then judgment is to be entered or confirmed in favor of the plaintiff, non obstante veredicto.

    The verdict was accordingly for the defendants, subject to the opinion of the court on the reserved question. Judge Lowrie after-wards delivered this opinion on the reserved point:—
    “ Some doubts were expressed at the trial whether a point could properly be reserved in the above form with the consent of the parties, the plaintiff’s case being admitted and the judgment being dependent on the sufficiency of the defendants’ case, and I suppose this is allowable.

      “ Commonly there can be no judgment in favor of the plaintiff, after a verdict for the defendants, with a reserved point, on the sufficiency of the facts found as a defence, because commonly that would leave the plaintiff’s facts not found; but no such reason exists in this case. And I suppose there may be eases where the plaintiff’s case is admitted by pleadings, and the defence set up by the defendants is found by verdict in their favor. Where the question of the sufficiency of the defence may be raised by a reserved point and then decided in favor of the plaintiff, and judgment in his favor according to the declaration, a plea in confession and avoidance, even when found in favor of the defendants, does not prevent the plaintiff from having judgment in his favor, unless the plea is a sufficient answer. In our short pleadings a reserved point may stand in place of such a plea set out at length. If pleaded at length a demurrer would test its validity and bring its proper judgment, and a reserved point may do the same.

      “ It seems to me that we cannot call this defence insufficient without disregarding Overton v. Tyler, 3 Barr 346. Besides the consideration expressed in this case, I cannot avoid thinking that an endorsee of such a paper would be required to exercise a different degree of diligence against the maker of such a note, from what is demanded in the case of negotiable instruments, in order to hold the endorsee, and if this is true 'the instrument is not negotiable. We decide the reserved point in favor of the defendants.”
    The original judgment for the plaintiff was set aside, and judgment entered for the defendants.
    The plaintiff took a wont of error and assigned for error, setting aside the original judgment and entering judgment for the defendants.

      J. J. Henderson and J. B. Brawley, for plaintiff in error.—
    The purpose of a negotiable note is that it may represent money and do the work of money in business: 2 Parsons on Bills 20, 138, 146; 1 Parsons on Contracts 240 ; Stat. 3 & 4 Anne c. 9; Roberts’ Dig. 385. It is by force of the word “ order” that the payee has authority to assign by endorsement: Gerard v. La Coste, 1 Dallas 194. The negotiability of a note is not destroyed because of a collateral agreement made part of it: Hodges v. Shuler, 22 New York 114; Zimmerman v. Anderson, 17 P. F. Smith 421; Osborn v. Hanley, 19 Ohio 130.

      W. R. Bole and B. McGoy, for defendants in error,
    cited Overton v. Tyler, 3 Barr 346; Sibree v. Tripp, 15 M. & W. 23; negotiable notes are not dependent upon Acts of Assembly, but are governed by commercial law: Hughes v. Large, 2 Barr 103: Brickland v. Brown, 5 Hill 635. Days of grace are a matter of right: Thomas v. Shoemaker, 6 W. & S. 199. A guaranty written on a negotiable note is not negotiable: McDoal v. Yeomans, 8 Watts 361; Snevily v. Ekel, 1 W. & S. 203.
    November 21st 1874,
   Judgment was entered in the Supreme Court,

Per Curiam.

This case does not differ in the least degree from that of Overton v. Tyler etal., 3 Barr 346; in which it was held that such a judgment note was not a negotiable instrument under the law merchant. Indeed the note in this instance has some provisions in it not in that in Overton v. Tyler. The reference made by Read, J., in Zimmerman v. Anderson, 17 P. F. Smith 421, to the case of Osborn v. Hanley, 19 Ohio 130, was arguendo and only to show how far the rule as to non-negotiable paper had been relaxed in other states. But he clearly did not intend to admit its authority, for he proceeded to distinguish the case before him from our own case of Overton v. Tyler, without questioning the authority of the latter. The note in this case was not negotiable by reason of the warrant of attorney contained in it.

Judgment affirmed.


text:
    Payne’s Adm’r versus Patterson’s Adm’rs.
    1. Payne’s land was sold by the sheriff to McClane, and deed delivered; afterwards, at Payne’s request, Patterson, by parol, agreed to buy the land for Payne from McClane, to convey it to Payne upon his paying the purchase-money and interest, or if the land were sold for more than the purchase-money and interest, to pay Payne the overplus. Patterson sold the land for more than the purchase-money and interest. In an action by Payne to recover the “ overplus,” held, that there was no resulting trust nor a trust ex maleficio for Payne, and he could not recover the “ overplus,”
    2. The transaction was not a mortgage, Payne having no interest in the land to mortgage, at the time of the agreement, and when McClane conveyed to Patterson.

      3. The agreement being by parol, the Statute of Frauds prevented any interest in the land passing to Payne.
    4. The defeasance is essential to a mortgage, whether by writing in the mortgage or separate from it, or it be established by parol
    5. Without a valid agreement binding the grantee to reconvey or yield up to the grantor when the condition shall have been performed, it is not a mortgage.
    6. Houser v. Lamont, 5 P. F. Smith 311, Maffitt v. Rynd, 19 P. F.'Smith 380, distinguished. Penna. Life Ins. Co. v. Austin, 6 Wright 257, adopted.
    October 15th 1875
    Before A&NEW, C. J., Sharsayood and Mbrcur, JJ.
    Error to the Court of Common. Pleas oí .Allegheny county: Of October and November Term 1874, No. 204.
    This was an action of assumpsit, brought October 6th 1866, by Alexander Payne against Alexander Patterson et al., administrators, &e., of Abram Patterson, deceased. The plaintiff having died pending the action, his death was suggested of record, and Sarah Payne, his administratrix, substituted as plaintiff.
    The cause of action, as alleged by the plaintiff, arose under the following undisputed facts, given in evidence on the trial, December 16th 1878 .—
    Payne was the owner of a farm which was sold at sheriff’s sale to Samuel McClane, but not conveyed to him for some weeks. After the sheriff’s sale, Payne and a friend Avent to Abram Patterson to induce him to purchase the property from McClane; Patterson agreed to take the farm and have it conveyed to himself; “and all he wanted was for Payne to pay him back-the money at any time he could, with interest; he also told Payne if he could sell the farm at any time, to sell it, and all he wanted was his money and interest, Payne was to remain on the farm. This arrangement was consummated.” The arrangement was that McClane Avould make a deed to Patterson, and that Patterson would advance the money to pay the judgment under Avhich' the farm was sold and costs, and Payne would pay Patterson as' rapidly as possible the money advanced, with interest, till the whole should be paid: the amount Avas about $1900. It Avas suggested by Payne’s friend that the agreement should be put into Avriting, but Payne said there was no call for writings — he and Patterson Avere Avell acquainted.
    On the 10th of September 1862 McClane conveyed to Patterson, and on the 30th of July 1864 Patterson sold and conveyed the farm to Conrad Ebberhardt for $3500.
    There was evidence that Payne had paid Patterson interest— that he had requested' Payne to pay what interest Avas still due, and that after the arrangement Patterson had recognised it in the terms as' above stated, and had said that “ he wanted as much to come out for Payne as possible.” Payne continued in possession until the sale to Ebberhardt.

      The court (Stowe, J.) charged, that if the jury believed the arrangement as above stated was made; that in pursuance of it the title was made by McClane to Patterson ; that Payne remained on the farm and paid interest on the purchase-money, &e., the plain tiff was entitled to recover the difference between the amount of the purchase and such interest as was unpaid and $3500, the amount for which Patterson sold to Ebberhardt, with interest from the time of that sale; subject to the opinion of the court on the above stated facts.
    The jury found for the plaintiff for $2347.50, subject to the opinion of the court on the question reserved. The court after-wards entered judgment on the reserved question for the defendants, non obstante veredicto.

    The plaintiff took a writ of error, assigning for error, the entering judgment for defendants.

      J. Grlenn (with whom was S. A. Me Clung), for plaintiff in error.
    Patterson’s advance of money on the security of an absolute conveyance was a mortgage: Harper’s Appeal, 14 P. F. Smith 315; Houser v. Lamont, 5 Id. 311; Maffitt v. Rynd, 19 Id. 380 ; Sweetzer’s Appeal, 21 Id. 264; Danzeisen’s Appeal, 23 Id. 65; Haines v. Thomson, 20 Id. 434; McGinity v. McGinity, 13 Id. 38.

      J. M. Stoner (with whom was J. F. Fdmundson), for defendants in error.
    Equity will not decree a purchaser to be a trustee when there is nothing more than the breach of a parol agreement, fraud to make one a trustee ex maleficio, must be fraud in the original contract: Jackman v. Ringland, 4 W. & S. 150 ; Barnet v. Dougherty, 8 Casey 372; Kellum v. Smith, 9 Id. 158 ; De France v. De France, 10 Id. 385; Sample v. Coulson, 9 W. & S. 66; Brawdy v. Brawdy, 7 Barr 157; Poorman v. Kilgore, 2 Casey 365; McBarron v. Glass, 6 Id. 135; Hogg v. Wilkins, 1 Grant 71; Kisler v. Kisler, 2 Watts 323; Sidle v. Walters, 5 Id. 391; Robertson v. Robertson, 9 Id. 32; Haines v. O’Conner, 10 Id. 320; Fox v. Heffner, 1 W. & S. 376; Pearsoll v. Chapin, 8 Wright 11; Bennett v. Pullmer, 13 Id. 155 ; Todd v. Campbell, 8 Casey 250; Nixon’s Appeal, 13 P. F. Smith 282; Church v. Ruland, 14 Id. 441; McGinity v. McGinity, 13 Id. 38; Williárd v. Williard, 6 Id. 125; Harris v. Harris, 20 Id, 171; Seylar v. Carson, 19 Id. 88; Beck v. Parker, 15 Id. 262; O’Hara v. Dilworth, 22 Id. 397; Kistler’s Appeal, 23 Id. 393. Upon the point that the transaction was not a mortgage, they cited also Pennsylvania Life Insurance Company v. Austin, 6 Wright 257.
    November 16th 1874.
   Mr. Justice Mercur

delivered the opinion of the court,

This is an action of assumpsit to recover a portion of the money received by the defendant’s intestate, on a sale of real estate. The right to recover must rest on establishing that he held the land either as a trustee or as a mortgagee.

There is no allegation that McOlane purchased at sheriff’s sale under any arrangement with the plaintiff’s intestate. There was no understanding between them that Payne should have any interest in the land or any share of the proceeds of a subsequent sale. Payne paid no part of the purchase-money. Hence there was no resulting trust; nor was there a trust ex maleficio. McOlane then took and held the title unclogged with any equities in favor of Payne. McOlane had an undoubted title. Payne had no pretended title. Such were the relative positions of those parties when the agreement was entered into between them and Patterson.

It is claimed by the plaintiff that this agreement as found by the jury establishes a valid mortgage in favor of Payne. It is admitted that Patterson did not enter into the agreement with any intent to cheat or defraud him. The plaintiff rests her right on the ground of contract. She contends that inasmuch as Patterson accepted the conveyance from McOlane under the parol agreement proved, it establishes a mortgage, in favor of Payne. A mortgage on what ? It could be on his interest in the land only. We have already shown that he had no interest whatever in the land. He had no estate therein which could be bound by a mortgage, or to which a mortgage could attach. It is claimed, however, that this agreement between the three parties passed to him an interest in the land. We answer, that was a mere parol agreement as to him, and the defendant interposes the Statute of Frauds. It is unlike the case of Houser v. Lamont, 5 P. F. Smith 311, where the only party who could plead the statute waived it, and came into court to establish the parol contract.

It will be observed that .there was no agreement to reconvey to McOlane. It was that if Payne paid the amount of the purchase-money and interest, Patterson should convey to him. It was not conditional between the grantor and grantee. Under no circumstances was it to revert to the grantor. It was not conditional with the only person who had any interest to convey. It was not a mortgage as to McOlane, and could not be as to Payne, to whom no return could be made. A mortgage is a defeasible deed. The defeasance is essential to the creation of every mortgage, whether it be evidenced by writing in or separate from the mortgage, or whether it be established by parol, it must nevertheless exist. The conditional right of restoration in the mortgagor must have been created. Without a valid agreement which binds the grantee to reconvey or yield up to the grantor when the conditions shall have been performed, it lacks the elements essentially necessary to make It a mortgage. This is fatal to the plaintiff's case : Pennsylvania Life Insurance Company v. Austin, 6 Wright 257.

The case of Maffitt’s Adm'rs v. Rynd et al., 19 P. F. Smith 380, is not in conflict with this view. The foundation of the right of action in that case rested on a written agreement by which the money was raised for the purchase of the land in question for the use of Lamb. It expressly provided that on the payment of the advances and the other indebtedness from Lamb to them, they would convey to Lamb’s wife. Maffitt and Old took a conveyance of the land with a full knowledge of this agreement and under a promise to carry it out in good fhith.

Hence we conclude the learned judge was clearly correct in entering judgment non obstante veredicto upon the question reserved. Judgment affirmed.


author: Mr. Justice Gordon

text:
    Stephens et al. versus Black et al.

    1. H. in February 1856, sold land by articles to J., who took possession, the purchase-money being unpaid; judgment was entered against H. in September 1856 ; in 1857 H. sold to R. The land was sold under the judgment to C. in 1860 ; he was put into possession ; in 1862 R. conveyed to C. In 1863 C. sold by articles to K., who paid part of the purchase-money and went into possession under the articles ; in 1865 K. sold to S. and gave him possession; S. became the owner of the title of J. from H. In ejectment by C. against S. to enforce the payment of the purchase-money under C.’s contract with K. : Held, that S. having obtained possession through that contract, could not set up a title in himself without restoring possession to C.
    2. A vendee under articles may set up an outstanding title not in himself, but when he buys such title, he is trustee of his vendor, and is entitled only to what he paid to perfect the title.
    November 16th 1874.
    Before Agnew, O. [J., Sharswood, Mercur and Gordon, JJ.
    Error to the Court of Common Pleas of Greene county : Of October and November Term 1874, No 59.
    This was an action of ejectment brought September 6th 1870 by Charles A. Black and Norman Worley against Washington Stephens and Jehu Martin, tenant of Stephens, to enforce the payment of the balance of the purchase-money for a tract of land sold under articles of agreement, dated February 17th 1863, between the plaintiffs and David Keys. The title to the land had been originally in John Rogers.
    The case was tried February 13th 1874, before Wilson, P. J.
    The plaintiff gave in evidence deed dated May 3d 1855, from John Rogers to Hiram J. Rogers; recorded December 3d 1857. Judgment E. Chalfant against Hiram J. Rogers for $400, entered September 22d 1856; deed Hiram J. Rogers to Joseph Rogers, dated July 27th 1857. Sale under a vend. ex. on the judgment against Hiram J. Rogers to O. A. Black (plaintiff) and David A. Worley and sheriff’s deed acknowledged June 3d 1860; deed April 28th 1862, Joseph Rogers to C. A. Black and David A. Worley ; deed May 28th 1862, David A. Worley for his interest to Norman Worley (plaintiff); articles of agreement, February 7th 1863, between plaintiffs and- David Keys, for the same'tract of land for the consideration of $800, possession to be given on the 1st day of April then next, when $400 were to be paid and $100 annually thereafter with interest until the whole should be paid; Endorsed on the article was a receipt by plaintiffs dated March 27th 1863 for $355 from Mrs. Martha Keys.
    The plaintiffs then offered in evidence the article of agreement, hereafter stated, between Martha Keys and Washington Stephens, to be followed by proof that the plaintiffs were in exclusive possession of the land when they sold to Keys ; that he took possession under the contract, held it till his death ; that his widow, Martha Keys, remained in possession till she sold to Washington Stephens, who got possession from her under his purchase; to be followed by proof that she paid what money was paid on the article between the plaintiffs and Keys.
    Defendant objected that the evidence was irrelevant, having no tendency to show any better title in the plaintiffs than they have already shown, nor to strengthen their right to recover purchase-money, if any such they have.
    The evidence was admitted and a bill of exceptions sealed.
    The plaintiffs then gave in evidence the article of agreement dated October 3d 1865, between “ Martha Keys, wife and widow of David Keys,” and Washington Stephens, for the sale of the same tract, for $300, to be paid on the 1st of November 1865; Stephens agreeing not to pay to plaintiffs “ any money on contract between David Keys and said Black and Worley in any cases whatever.” There were $30 paid on this article, October 23d 1867. _ . . • .
    _ . . . N. Worley testified that the plaintiffs were in possession by their tenants, at the date of their article with Keys, who took possession under the article: his wife remained in possession after his death and delivered possession to Stephens under their article; the credit of $355 on plaintiff’s article was Mrs. Keys’ money; when it was paid, Keys directed the deed to be made to his wife ; plaintiffs obtained possession after the sheriff’s sale by a proceeding under the Landlord and Tenant Act. .
    There was other evidence that the $355. were Mrs. Keys’ money, and that at the time it was paid Keys directed the deed to-be made to his wife.
    The plaintiff Black also testified, that the plaintiffs had no knowledge of a sale of the land by II. J. Rogers to John Rogers, by article of agreement at the time of the sheriff’s sale.

      The plaintiffs having rested, the defendants offered in evidence article of agreement dated February 28th 1856 between Hiram J. Rogers and Washington Stephens, as agent of John Rogers, for the saleof the same land to John Rogers, to befollowedby evidence that John Rogers ratified the agreement by taking possession of the land,and otherwise; the death of John Rogers intestate, the sale of the land by his administrators to B. Stephens and by him to the defendant Washington Stephens for $200, the payment of this purchase-money, and that the plaintiffs and those under whom they claim had notice of the sale of H. J. Rogers to John Rogers ; “ this for the purpose of showing that the plaintiffs are not entitled to recover on the agreement between the plaintiffs and Keys, but only, if at all, on the agreement between Hiram J. Rogers and John Rogers.”
    Plaintiffs objected on the ground that the defendants in the above offer claimed the possession of the land under title hostile to that of plaintiff, and not under the sale to Keys, and as it has been proved that the defendants took possession under Martha Keys, plaintiff’s vendee, and the offer did not deny that allegation, the evidence is incompetent.
    The defendants renewed the offer, for the further purpose of showing such a default in the vendor’s title as entitled them to an abatement in the purchase-money, on the agreement between Black and Worley and David Keys, to the extent of the unpaid purchase-money upon the agreement between said Hiram J. Rogers and John Rogers.
    Plaintiffs objected to the offer, so far as it would entitle the defendants to an abatement or credit on the purchase-money claimed in this suit on the article between H. J. Rogers and John Rogers.
    Both offers were rejected and several bills of exceptions were sealed.
    The defendants’ grounds of defence were: that plaintiffs could not recover on their agreement with David Keys; or if they could, the recovery would be subject to the unpaid purchase-money on the agreement between H. J. Rogers and John Rogers.
    The verdict was for the plaintiffs “ for the premises described in the writ, to be released on the payment by defendants of the sum of $738.25, as follows, viz.: one-half on 'the 1st day of April 1874, and one-half on the 1st day of October 1874, with interest from this date.”
    The defendants took a writ of error; their assignments of error were:—
    1. Admitting the plaintiffs’ evidence, which was objected to.
    2-3. Rejecting the defendants’ offers of evidence.

      A. A. Purman, for plaintiffs in error.
    Under the agreement between plaintiffs and Keys, he had a right to demand a title free from encumbrances and defects : Erwin v. Myers, 10 Wright 105; and having removed them he had the right to abate the purchase-money to plaintiffs to the extent of the encumbrances : Dalzell v. Crawford, 1 Pars. Rep. 45; Rawle on Covenants for Title 562, notes 3, 4, 612, notes 1, 2, 3; Sugden on Vendors 337, note b ; 2 Story’s Eq. Jur., §§ 749, 777 (note 3), 778; Brightly’s Eq., § 217, note 1; Stoddardt v. Smith, 5 Binn. 355; Grans v. Renshaw, 2 Barr 34. He was entitled to a title indubitable and not exposed to litigation: Swayne v. Lyon, 17 P. F. Smith 436; Freetly v. Barnhart, 1 Id. 279.
    A purchaser may detain purchase-money to remove defects and discharge encumbrances : Barnett v. Wheeler, 7 M. & W. 364; 2 Sugden on Vendors 24. A vendee in possession under articles may require his vendor to remove encumbrances and defects when he is seeking to enforce the contract: Fulweiler v. Baugher, 15 S. & R. 54; Poke v. Kelly, 13 Id. 165; Lighty v. Shorb, 3 Penna. R. 447; Seitzinger v. Weaver, 1 Rawle 377.

      Wyly Buchanan, for defendants in error.
    The defendants were in possession of plaintiffs’ land; plaintiffs could not recover unless upon showing some privity between defendants and themselves : Jackson v. McGinness, 2 Harris 331. In an action by vendor against vendee,'the vendee in possession under the article cannot repudiate it and show a -hostile, title in himself derived from a third person : Congregation v. Miles, 4 Watts 146 ; Hersey v. Turbert, 3 Casey 418 ; Smith v. Webster, 2 Watts 478; Jackson v. McGinness, 2 Harris 331.
    January 4th 1875.
   Mr. Justice Gordon

delivered the opinion of the court,

This was an action of ejectment, brought to enforce the payment of purchase-money, alleged to be due upon articles of agreement between Black and Worley, the plaintiffs, and David Keys (under whom the defendants obtained possession), dated February 17th 1863. The plaintiffs exhibited the following brief of title, viz.: Deed from John Rogers to Hiram Rogers, May 3d 1855. Judgment, Elijah Chalfant v. Hiram Rogers. September 22d 1856; fi. fa. and vend, ex., in regular order, and a sale of the property to Black and Worley, to whom the sheriff executed a deed dated June 3d 1860; also, a deed from Hiram Rogers to Joseph Rogers, bearing date July 27th 1857. Deed, Joseph Rogers to Black and Worley, April 28th 1862. Articles of agreement, Black and Worley and David Keys, in which the plaintiffs agree to convey the land in controversy to Keys upon the payment of eight hundred dollars. Upon these articles, Martha Keys, wife of David, to whom, by a pai’ol agreement, the deed was to be made upon payment of the purchase-money, paid $355. David Keys, deceased, and bis wife retained the possession of the land until she transferred it, by agreement dated October 23d 1865, to Washington Stephens, the defendant.

Stephens produces, by way of defence, articles of agreement between Hiram Rogers and John Rogers, dated October 11th 1855, wherein Hiram agrees to sell the land to John for the sum of $110.

These articles were conveyed through Barzilla Stephens to the defendant. It will be observed that, primá; facie, this exhibits a defect in the plaintiff’s title. Eor, as this equitable title was outstanding in John Rogers, at the time of the entry of Chalfant’s judgment upon which Hiram’s interest in the land was sold, it is clear the sheriff’s vendees took only what Hiram held; that is, the legal title encumbered by the outstanding equity. Now the defendant, Stephens, having thus purchased this encumbrance on his vendor’s title, might have used it for the purpose of offsetting the amount he paid therefor against the purchase-money due them, just as he might have done had he paid a judgment or mortgage-lien upon the land; but he could use it for no other purpose. Instead of this, however, he sets up this equity, first, for the purpose of showing that the plaintiffs were not entitled to recover on •the Keys articles at all; secondly, for the purpose of offsetting the amount of the purchase-money mentioned in the articles between Hiram and John Rogers ($110) against the amount due the plaintiffs on the Keys articles. Both these propositions were properly rejected. Having obtained the possession of the land from the plaintiffs by the acknowledgment of their right through the Keys agreement, he cannot defeat this right by setting up an- adverse title in himself. Before he can be permitted to use such title against his vendors, he must turn out and restore to them their possession: 3 Casey 424. A vendee under articles of agreement may set up an outstanding title not in himself; for he is not compelled to accept from his vendor an imperfect title, neither can he be compelled to relinquish his possession until his vendor has made him whole as to purchase-money which he has paid, and improvements which he has put upon the property: Erwin v. Myers, 10 Wright 96; Gans v. Renshaw, 2 Barr 35. Such, however, is not the case where he cures the defect by buying in the outstanding title. In that case he becomes the trustee of his vendor, and after having received what he paid out to perfect the title, in which both are equally interested, he is entitled to nothing more.

The second proposition contains the solecism of the defendant’s undertaking to set-off that which, under any circumstances, belonged to the plaintiff. Leaving the Keys contract out of the question,- we have the plaintiffs, by virtue of the sheriff’s sale, representing Hiram Rogers in the articles with John. So the defendant represents John by virtue of the transfer of John’s interest in those articles to him, and as by that agreement John was to pay Hiram the sum of $110, we cannot comprehend upon what theory the defendant seeks to shift these positions and to claim this money for himself.

As we have before observed, what the defendant was entitled to was the amount he paid to raise the outstanding encumbrance on the plaintiff’s title. It might have been less or more than the amount of purchase-money named in the Rogers articles, but whatever it was he might have used it as a set-off to the plaintiff’s claim. As, however, he did not ask for this, and as there was no error in the court’s refusal of that for which he did ask, therefore, the judgment is affirmed.

Mr. Justice Mercur, dissented.