Opinion
04-08-1901
STREETER v. SEIGMAN.
William W. Benthall and N. Henry Stevens, for complainant. Louis H. Miller, for defendant.
Suit by John J. Streeter against Isabella Seigman, executrix of the estate of William V. L. Seigman, deceased. Decree in favor of defendant
William W. Benthall and N. Henry Stevens, for complainant.
Louis H. Miller, for defendant.
GREY, V. C. (orally). This bill is filed by John J. Streeter against Isabella Seigman, executrix of the estate of William V. L. Seigman, deceased, to restrain the executrix from realizing on a judgmeut entered by her on a bond given by Mr. Streeter and his wife to Mr. Seigman, in his lifetime, by sale of the printing plant of the Vineland Independent The judgment was entered in the supreme court. Execution has been issued, and levy made upon that plant. The bond upon which the judgment was entered, though dated in 1893, appears to have been actually delivered some time in February, 1894. It contained a condition which presents one of the essential features of this cause. It is in the penal sum of $1,500, conditioned for the payment of the just sum of $750, as follows: "$375 on the first day of June, 1895, and the balance to be paid January first, 1806, with interest at 6% semiannually. It is agreed that no other real estate except the described in mortgage to be liable, or other personal property, without any fraud or other delay," etc. The contention of the complainant is that the last-quoted clause was an agreement on the part of the obligee in the bond that no other real estate, except that described in the mortgage which accompanies the bond, should be liable, and that no personal property should be liable for the payment of the debt evidenced by the bond. The complainant therefore asks that the execution of the judgment may be restrained so far as it is sought to be asserted against any other real estate than that named in the mortgage or against any personal property. The defendant answers that the clause in question was inserted in the bond without the knowledge of Mr. Seigman. There is no proof whatever of that claim; on the contrary, the only evidence submitted on the point goes to show that he did know of the insertion of the clause in the bond. The answer further insists upon the right of the defendant to levy upon the printing plant seized by the sheriff, and asserts that the bond was given in part payment for the very printing plant which is claimed to be seized under it. By way of cross bill the defendant alleges that there was a partnership between the complainant, Streeter, and one Wilcox, whereby Streeter agreed to help Wilcox to fulfill obligations assumed by him to Seigman, to the full extent of the hereinabove described property, which property the defendant insists in her cross bill is the property here in question, the printing plant. The cross bill further asserts that Wilcox agreed that he would secure Streeter for all such help, etc.; that to aid Wilcox in acquiring the plant for the use of the firm, Streeter gave to the defendant's testator—that is, to Seigman—the bond and mortgage for $750 mentioned in the bill; and that to secure him (Streeter) he received from Wilcox the bond and chattel mortgage for the same amount on the Vineland Independent plant. This chattel mortgage, the cross bill insists, was given to Streeter to secure him for the debt of Wilcox to Seigman, with respect to which it is alleged Mr. Streeter stood as surety for Wilcox, and inured to the benefit of Mr. Seigman's estate, which held the bond and mortgage given by Streeter for the Wilcox debt. The cross bill further says that subsequently, in pursuance of a contract between Mr. Wilcox and Mr. Streeter, the chattel mortgage was surrendered by Streeter, and canceled of record, without the defendant's assent The cross bill then prays that the chattel mortgage may be decreed to be held as above stated for the security of the Seigman estate, in law and in equity, and that the cancellation of that chattel mortgage through the permission of Mr. Streeter may be decreed to be void, and that the plant so mortgaged may be held to be still charged, and for a receiver and injunction in aid of the decree. That is the demand of the party to the cross bill, and to the relief there prayed the complainant, Streeter, makes reply, denying that he held the chattel mortgage as security, and claiming that the $750 bond was given to Seigman at Wilcox's request; that Wilcox gave the chattel mortgage to Streeter by way of exchange; and the cross-bill defendant, Mr. Streeter, claims that when he received the chattel mortgage from Mr. Wilcox he became the absolute owner of it, irrespective of any obligation on the bond which he gave to Seigman; and that when Wilcox had obtained Streeter to make the bond and mortgage to Seigman it was given as so much cash, and that there was no debt outstanding on which Seigman was security. The question takes two phases: First, as to whether the complainant is entitled to any relief on the original bill; and, second, whether the defendant is entitled to relief under her cross bill.
The first question must depend upon the construction of the condition of the bond on which judgment has been entered. That condition contains a curious clause, which is quite ambiguous; so much so as to justify the admission of testimony to explain it as a latent ambiguity. The words are, "It is agreed that no other real estate except the described in mortgage to be liable, or other personal property," etc. There can hardly be any doubt that the word "the" preceding the word "described" is intended to mean "that"; so that it should read, "It is agreed that no other real estate except that described in mortgage to be liable." Coming to the other words, I think there is more difficulty. "It is agreed that no other real estate except that described in mortgage to be liable," etc. Then follows this curious phrasing, "or other personal property." Thebond was given by Streeter to Seigman, and The special clause in the condition is Seigman's agreement as to the manner in which the liability on the bond should be enforced. The testimony of Mr. Berault is quite clear that Mr. Seigman knew about this clause. He says that what was intended to be done was stated to him by Streeter, and that he repeated that to Seigman, who had this clause called specially to his attention. That does not, however, relieve us of the interpretation of this phrase, because the condition stands as the contract of the parties. While testimony may be admitted in explanation where there is a latent ambiguity, yet it can do no more than explain the doubtful expressions of the instrument consistently with the relations of the parties and the other incidents of the contract No reason appears why Seigman should agree that the bond should not be enforced against the personal property of any other person than Streeter, who was the obligor. That would mean nothing, for it could not be enforced against any other personal property than Streeter's. From the testimony of Mr. Berault, who drew the bond, it must be held to mean that by accepting it Seigman agreed that the liability on the bond should not be enforced against Streeter's personal property. In the proceedings on the bond the executrix of Seigman has seized personal property of Streeter. The object of the original bill is to restrain the sale of this property under the judgment of the bond, execution, and levy, etc. The complainant is entitled to this relief. But if it be shown that Mr. Streeter did stand to Mr. Seigman in the attitude of a surety for a debt payable by Wilcox, this phrase does not apply to protect Mr. Streeter from having to answer to Seigman for any collateral security which he took from Wilcox to secure himself from the debt. To enforce the bond against such collateral is to make Wilcox's property liable, not Streeter's. The question, then, remains, what was the real relation of Mr. Streeter to Mr. Seigman? Did he give the bond to the latter as a payment of his own debt, or did he give it to pay Wilcox's debt, securing himself by taking the chattel mortgage? All the proofs show that Streeter owed nothing to Seigman, and that the bond and mortgage were given to pay Wilcox's debt, not Streeter's. The chattel mortgage was given by Wilcox to Streeter almost immediately after the delivery of the bond and mortgage by Streeter to Seigman. In the affidavit of consideration annexed to the chattel mortgage Mr. Streeter defines the whole transaction. The affidavit is in writing. It is expository of the relations of the parties, and of their agreement and intentions at a time when there was neither controversy nor litigation pending; when none of them were tempted to seek to gain advantage, or attain better position by coloring facts. The affidavit is as follows:
"State of New Jersey, County of Cumberland—ss.: John J. Streeter, the mortgagee in the foregoing mortgage named, being duly sworn, on his oath says that the true consideration of the said mortgage is as follows, viz.: Is the executing and delivery to W. V. L. Seigman, of Vineland, New Jersey, a certain bond and mortgage on certain real estate owned by deponent in the county of Cumberland, New Jersey, for the sum of seven hundred and fifty dollars, to enable the grantor hereof to purchase the printing plant and business of the said W. V. L. Seigman; and this chattel mortgage is given to secure the payment to this deponent of the said bond and mortgage of seven hundred and fifty dollars,—the terms of the payment of the bond and mortgage being made the same as this chattel mortgage. The deponent further says that there is due on the said mortgage the sum of seven hundred and fifty dollars, besides lawful interest thereon from the sixteenth day of February, 1894. John J. Streeter.
"Sworn and subscribed this sixteenth day of February, A. D. 1894, before me, at Vineland, N. J. Wheaton Berault, Master in Chancery of New Jersey."
There is Mr. Streeter's own contemporaneous declaration that he took the chattel mortgage from Wilcox to secure the payment of the bond and mortgage which he had given to Seigman, and that the terms of payment of both papers had been made the same. In the transaction Streeter owed nothing to Seigman, but Wilcox did; and when Streeter gave his own obligation to Seigman to pay Wilcox's debt, securing himself by a chattel mortgage on Wilcox's property, Seigman became in equity entitled to the benefit of the security which protected Streeter. The only consideration for the chattel mortgage to Streeter was the payment by him of Wilcox's debt to Seigman. The effect of such a chattel mortgage is in equity to pledge the property to the surety for the payment of the principal's debt to the creditor, and the pledge is not redeemed until the debt is actually paid. See collection of cases in Sheld. Subr. p. 154. Seigman has an equity to be substituted to the benefit of the collat eral which Wilcox, his debtor, has given to Streeter.
It is contended that Streeter has discharged the collateral by canceling the chattel mortgage of record. But the proof is that, without paying his own bond and mortgage in full to Seigman, Streeter accepted a conveyance from Wilcox of the property included in the chattel mortgage, and obtained a credit to the amount of the chattel mortgage upon the purchase money. The result is that Streeter now owns and retains the pledge without having paid the debt to secure which the pledge was made to him. To the extent that he received by the credit of the chattel mortgage more than he paid of the debt to Seigman, he has appropriated Wilcox's property to his own use without consideration, and has attempted to defeat the rights of Seigman to have the pledge applied to satisfy the balance due him. This is not a case where the surety has parted with the pledge to a bona fide purchaser for value, without notice of the equity outstanding in the creditor, nor is it a voluntary surrender and discbarge of the pledge to the pledgor principal. What Streeter did was to take the property to himself, without satisfying the debt to secure which it was pledged. He still retains it, and it does not lie with him to set up his cancellation of the evidence of the pledge in aid of his appropriation of the pledged property. In equity the chattel mortgage must, as to Seigman, stand unaffected by Streeter's surrender of it for his own benefit. It should be decreed to be, as against the property chattel mortgaged, held by Streeter a valid and subsisting security, which Seigman's executrix has an equitable right to have applied to satisfy the amount remaining owing upon the debt due to her testator, Mr. Seigman. I will advise a decree accordingly.