LITTLE v. RAWSON

LITTLE v. RAWSON. N. Y. Supreme Court, First Department; Special Term, December, 1879. Again, Special Term and Chambers, January, 1880. Husband and Wife.—Bills, Notes and Checks.—Lis Pendens. A married woman made a promissory note payable to the order of her husband sixty days after date, for value received, which contained a condition that if within that time she executed a mortgage to his indorsees, the plaintiffs, on her real estate, for the amount of the note, it should be surrendered to her, and also expressed that she made the note a lien upon her individual estate.—Held, that it was in substance the note of both husband and wife, given to the plaintiffs for value, on which he was liable generally, and she because she had charged her separate estate. I. Special Term, December, 1879. Trial by the court, on stipulated facts. This was an action by Joseph J. Little and W. Jennings Remorest, indorsees, against Emma Rawson, the maker, and A. L. Rawson, her husband, payee and indorser, of the following promissory note, viz.: “ New York, October 8, 1878. “ Sixty days after date, I promise to pay to A. L. Rawson or order one thousand dollars for value received. It is conditioned, however, that if within the sixty days I execute to J. J. Little & Co. a mortgage upon my house and lot No. 34 Bond St., N. Y., for a like amount of this note, then this note is to be surrendered to me. Said house has now only one mortgage upon it of five thousand dollars, and some unpaid taxes. I make this note a lien upon my individual estate. “ $1,000. Emma Raws ok.” All the allegations of the complaint (which was in the ordinary form, except the insertion of an allegation that the mortgage had never been executed) were admitted ; and the only defense interposed by the defendants was coverture when the note was made, and knowledge of the same by the plaintiffs. Roger H. Lyon, for plaintiffs. maker of the note, though a married woman, expressly charged her separate estate with the payment thereof (Yale v. Dederer, 18 N. Y. 265; 22 Id. 459; 68 Id. 329; Corn Exchange Ins. Co. v. Babcock, 42 Id. 614; Maxon v. Scott, 55 Id. 247; Manhattan B. & M. Co. v. Thompson, 58 Id. 82; Essenlord v. Snyder, 71 Id. 45; Nash v. Mitchell, Id. 203; Third National Bank v. Blake, 73 Id. 260; Woolsey v. Brown, 74 Id. 82). The word “lien” is synonymous with “charge” (Webster Dict.; McVey v. Cantrell, 70 N. Y. 297; Rohrbach v. Germania Fire Ins. Co., 62 Id. 48, 52; Taddenken v. Cantrell, 69 Id. 597), In Second National Bank of Watkins v. Miller (63 Id. 639), the court held that a note made to order of husband and indorsed by him was presumptively a nullity, because there was no express charge against her separate estate. Had there been such a charge the note would .have been valid (Sheldon v. Clairey, 61 Barb. 475; Wright v. Wright, 54 N. Y. 427; Bliss Code, 258). Deed between husband and wife will be enforced in equity (Hunt v. Johnson, 44 N. Y. 27). The allegations of the complaint were sufficient and proper in form against the maker of the note as a feme sole, coverture being matter of defense to be pleaded (Smith v. Dunning, 61 N. Y. 249). The case of Kelso v. Tabor (52 Barb. 125) has been overruled. That of Loomis v. Ruck (56 N. Y. 462) has no application here. It is not necessary to resort to a court of equity to enforce defendant’s liability because she has contracted in such form as to make it binding upon her separate estate (Carpenter v. O’Dougherty, 50 N. Y. 660; Maxon v. Scott, 55 Id. . 247, and cases supra). Defendants never having made the mortgage, are estopped from denying the negotiability of the note. The privilege has been waived and abandoned, and cannot be interposed as a barrier to recovery because it once existed. They have elected, to so consider it and that is irrevocable (Dinsmore v. Duncan, 57 N. Y. 580; Bodine v. Killeen, 53 Id. 93; Sherman v. Elder, 24 Id. 381). The time to execute the mortgage was within sixty days from date ; the time of maturity was sixty-three days from date ; it could then have been negotiated before maturity. The terms of the instrument did not modify that part which contains a promise to pay absolutely to the order of the payee a sum certain on the day specified (Smith v. Holland, 61 N. Y. 635; Arnold v. R. R. Co., 5 Duer, 211; Hodges v. Schuler, 22 N. Y. 114; Dinsmore v. Duncan, 57 Id. 573; Frank v. Wessels, 64 Id. 155; Skillen v. Richmond, 48 Barb. 428; Benedict v. Cowden, 49 N. Y. 396; Baker v. Seaman, 61 N. Y. 648; Attorney-General v. Continental Life Ins. Co. 71 Id. 325; 1 Pars. Bills and Notes, 26; Bruce v. Carter, 72 N. Y. 616; Merchants’ Bank of Canada v. Griswold, 72 Id. 472). The parties to this instrument by their acts and admissions have given it a negotiable character, with all the incidents of negotiable paper (Evertson v. National Bank of New York, 66 N. Y. 14). If it is non-negotiable, the defendants are still liable, the wife as maker, and the husband as guarantor or maker (Richards v. Warring, 4 Abb. Ct. App. Dec. 47; Seymour v. Van Slyke, 8 Wend. 403, 421, and cases cited; Dean v. Hall, 17 Id. 214; Josselyn v. Ames, 3 Mass. 274; Hunt v. Adams, 5 Id. 358; Herrick v. Carman, 12 Johns. 159; Seabury v. Hungerford, 2 Hill, 80; Hall v. Newcomb, 3 Id. 233 ; Griswold v. Slocum, 10 Barb. 402; Crowell v. Hewitt, 40 N. Y. 491; Gilbert v. Sharp, 2 Lans. 412; Phelps v. Vischer, 50 N. Y. 69; Thomas v. Murray, 32 N. Y. 609). If the instrument be considered as a contract, and the indorsement of the husband thereon merely an assignment of the same, then the wife is liable (Second National Bank of Watkins v. Miller, 63 N. Y. 639). Hermon H. Shook, for defendant. The plaintiffs are not indorsees, the instrument sued on not being a negotiable promissory note. (Cook v. Satterlee, 6 Cow. 108; Skillen v. Richmond, 48 Barb. 428; Sackett v. Palmer, 25 Id. 179; James v. Hagar, 1 Daly, 517; 1 Parsons on Contr. 4 ed. 209, 210, and cases there cited; Chitty on Bills, 55; Stevens v. Blunt, 7 Mass. 240). Negotiability is not saved by the words to “ pay to A. L. Rawson or order” (Austin v. Burns, 16 Barb. 643). Nor can it become negotiable by the failure to execute the mortgage mentioned therein (Seacord v. Burling, 5 Den. 444; Richardson v. Martyn, 30 Eng. L. & Eg. 365; Kelley v. Hemingway, 13 Ill. 604). The title to this instrument could pass to plaintiffs from the husband without his indorsement, by mere delivery, but the only legal effect of such a transfer would vest in them the interest which he had before the transfer (Loftus v. Clark, 1 Hilt. 310). They would then hold only as assignees, subject to all defenses by the wife against the husband (James v. Hagan, 7 Daly, 517, Franklin Bank v. Raymond, 3 Wend. 69). The instrument being a contract between a husband and wife directly, is void at common law (Cropsey v. McKinney, 3 Barb. 47; Martin v. Martin, 1 Greenl. 394; White v. Wager, 32 Barb. 250; Jackson v. Parks, 10 Cush. 550; Sweat v. Hall, 8 Vt. 187; Curtis v. Brooks, 37 Barb. 476). Without the intervention of a third party they cannot contract together, being but one person in the view of the law (1 Pars. on Contr. 4 ed. 299, 300; Coke on Lit. 112, a; Reeve Dom. Rel. 89, 90; Marshall v. Rutter, 8 T. R. 545 Carter v. Carter, 14 Sm. & M. 59; Martin v. Martin, 1 Greenl. 394). This common law rule has not been changed by statutes or the Code. The note is, prima facie, a nullity, because made payable to her husband, and it does not appear that it was in her separate business, or for the benefit of her separate estate (Second National Bank of Watkins v. Miller, 63 N. Y. 639). It is not validated by the fact that it is expressly made a lien upon her separate estate (Kelso v. Tabor, 52 Barb. 125). The law will, not presume that it was made for the benefit of her separate estate (Nash v. Mitchell, 71 N. Y. 199). A promissory note made by a married woman does not import a consideration, and is not per se negotiable. A consideration must be shown (Scudder v. Gori, 18 Abb. Pr. 223; 28 How. Pr. 155). The plaintiffs had knowledge o£ all its infirmities, of all the circumstances affecting its validity, and therefore did not acquire a valid title (Comstock v. Hier, 73 N. Y. 273). A contract between husband and wife directly is void at law. and can be upheld only in equity in certain cases (Winans v. Peebles, 32 N. Y. 423; Ballin v. Dillaye, 37 Id. 35; Hunt v. Johnson, 44 Id. 27; White v. Wager, supra; Meeker v. Wright, 11 Hun, 533 ; Van Order v. Van Order, 8 Id. 315). A wife cannot make an executory contract (9 N. Y. 205; 18 Id. 265; 15 Barb. 28; 12 How. Pr. 17). Same effect as to other contracts (4 Duer, 96; 16 How. Pr. 93; Id. 158). The words ‘‘value received” are merely formal, and even if this instrument was in form a negotiable instrument, being by a married woman, it does not import a consideration (Scudder v. Gori, supra; 3 Robt. 661; 28 How. Pr. 155). Rev’g 4 Hun, 692. Rev’d in 7 All. N. S. 299; 76 N. Y. 262. [MAJORITY — Barrett, J.] Barrett, J. I still think the case within the principle laid down in National Bank of Watkins v. Miller (63 N. Y. 639). But apart from that, it is apparent that the contract was with the husband only in form. It was really intended for the benefit of the plaintiffs, as is ■evidenced by the very condition embodied in the instrument. Further, it was in no sense wanting in ■consideration. “Value received” is specified, and it is admitted that the indorsement to plaintiff was also “for value.” As to the husband, treating it as a non-negotiable note, he is still liable under Cromwell v. Hewitt (40 N. Y. 491), and Richards v. Warring (4 Abb. Ct. App. Dec. 47). He may, under these cases, be treated as one of the makers of the note. This corresponds with the real facts, and thus the contract is, in substance, the note of both husband and wife given to the plaintiffs for value, on which he is liable generally, and she, because she has charged her separate estate. Judgment for the plaintiff against both defendants. Ho appeal was prosecuted; Special Term and Chambers, Januarry, 1880. Motion to cancel a Us pendens. A few days after entry of judgment on the above decision the defendants, on an affidavit showing that they had just discovered that a lis pendens had been improperly filed in the action, obtained an order to show cause why it should not be removed. Upon the hearing of the motion the plaintiffs showed, by affidavit, that between the time of.the filing of the above decision and the entry of judgment, the defendant, Mrs. Rawson, had executed a mortgage for $6,000 upon the property mentioned in the note; that if the Us pendens was vacated it would render their judgment valueless, and that an appeal from that judgment was pending. The Us pendens was as follows: [ Title of the cause.] “ Notice is hereby given, that an action has been commenced in this court upon a complaint of the above-named plaintiffs, being co-partners in said city, under the firm name of J. J. Little & Co., at the times herein mentioned, upon a certain promissory note made by the said defendant, Emma Rawson, in letters and figures as follows, that is to say: {Sere follows a copy of the note as above in the text.] “ Said note having been indorsed by said defendant, A. L. Raw-son, and delivered so indorsed by him upon the making thereof and before maturity to the plaintiffs, the present holders, for value, and duly protested at its maturity for non-payment on presentation for payment at such maturity, and the same remaining wholly unpaid and unsatisfied, the mortgage therein mentioned never having been executed. “In which action the plaintiffs demand judgment thereupon for the sum of $1,000 and interest thereon from December 10, 1878, and $1.35 costs of said protest, with costs of said action. “Whereby the following real property is intended to be affected; the same being the property mentioned and referred to in said note, and bounded and described as follows, that is to say:” [Here followed the description of the property as in a deed.] • Herman H. Shoolc, for defendants and motion. Eager H. Lyon, for plaintiffs opposed.—By the terms of the note in question the defendant, Emma Rawson, has created an equitable lien or charge on her separate property, to wit, the property therein mentioned and covered by the Us pendens, sufficient to sustain a notice of lis pendens in this action. Sanders v. Warner, 3 W. E. Weelcly Big. 507; Scudder v. Van Amburgli, 4 Bdw. Gh. 891; Murray u. Lylburn, 2 Johns. Gh. 441; Thoms v. Southard, 2 Dana, 480; Diamond v. Lawrence Co., 87 Penn. 858; Jeffres v. Cochrane, 48 JY. Y. 671. The case of Holbrook v. Zinc Co., 57 JY. Y. 627, being with reference to stock negotiable, is to be distinguished from the present case. See review of authorities in that case. This case being concerning achose in action containing a special reference to the real estate, as well as having its clause charging such estate with its payment, brings it within the rule of Chancellor Kent in case of Murray v. Lylburn, supra, and other cases where lis pendens is allowed. Mills v. Bliss, 55 JY. Y. 139, and cases cited; Willard Bg. 252, and cases cited. The form of the prayer in the complaint is immaterial; execution would have to issue on the judgment in either case. Geery ». Geery, 63 B. Y. 252. Plaintiff’s right to file the Us pendens was absolute. Mills v. Bliss, supra; Code of Pro. § 132, and Bliss Botes, 1,031. This right becomes the more important in this case because the maxim pendente lite nihil moveatur prevails to the extent that whoever purchases or acquires title in property pendente lite takes it subject to any decree or judgment which may be entered in respect to it. Bliss Code, 1,031, § 132, and cases cited. Zeiter v. Bowman, 6 Barb. 133, and cases. Story Eg. 10 ed. §§ 405, 406, notes 1, 6, p. 391, 396 and cases, § 908; Sander v. Warner, supra. It is when the action is settled, discontinued, or abated, and on good cause shown, that the court will order the notice canceled. Bliss Code, p. 1,031, § 132; Mills v. Bliss, supra. Van Vorst, J., denied the motion with costs. See further section 1674 of the Code of Civil Procedure.