Hall v. Erwin. the answer of payment, in general form. What he offered to prove was that the debt on which the note was founded had been paid to the creditor and payee of the note in question. Under the rule of liberal interpretation to pleadings in justices' courts, this answer would, I think, have been sufficient to authorize the admission of the evidence offered, even had an answer setting up new matter been necessary. The judgment of the county court and of the justice. must therefore be reversed. [FOURTH DEPARtment, GeneraL TERM, at Rochester, September 4, 1871. Mullin, P. J., and Johnson and Talcott, Justices.] HALL vs. ERWIN and others. The plaintiff, on being applied to by W. to purchase a bond and mortgage 2. That the plaintiff had acquired no right to, or equity in, the bond and Fraud avoids all contracts, and transfers of title, into which it enters, at the election of the party defrauded. Ex dolo malo non oritur actio is a maxim of very wide, if not universal, application. It applies even to the holder of commercial paper, and more strongly to assignees of choses in action. 60 349 22h 485 57a 643 66a 650 Hall v. Erwin. A PPEAL, by the defendant, from a judgment entered at a special term, upon a trial before a justice of this court, without a jury. The action was brought for the foreclosure of a mortgage. The complaint alleged, that on the 28th day of August, 1869, the appellant, William Erwin, executed and delivered to Jabez R. Ward his bond, dated on that day, for the payment to said Ward, in one year, of $2200 and interest thereon; that on the same day the appellant and his wife executed and delivered to said Ward, a mortgage upon a farm in Steuben county, to secure the payment of said bond; and that on the 8th day of November, 1869, Ward assigned said bond and mortgage to the plaintiff. The complaint also contained the other usual allegations, and prayer for relief, in a complaint for the foreclosure of a mortgage. The answer was in three parts: First. Denied that said bond and mortgage were ever assigned to the plaintiff, and denied that he is or ever was the owner thereof. Second. Admits that Ward made and handed to the plaintiff the assignment set out in the complaint, and alleges that said assignment was never delivered to the plaintiff, absolutely or unconditionally, but was so handed to him, only for the purpose of enabling him to negotiate in his own name, a sale of said bond and mortgage to some third person, he, the plaintiff, expressly stating that he would not purchase said bond and mortgage himself, but that he could better and more surely negotiate them in his own name, than in any other way; that Ward agreed to allow the plaintiff $125 for effecting such sale; that the plaintiff also agreed, in case he could effect such sale, that after deducting from the avails thereof said sum of $125, for his services, and the amount unpaid upon a certain judgment in favor of the plaintiff and Lewis M. Smith, against Ward, which unpaid amount was a little more than $700, he would pay the balance in cash to Ward, and not pay or Hall v. Erwin. apply it upon a note for $2500 made by Ward, and then held by the plaintiff; that he did not effect such sale, but at once assumed to own said bond and mortgage himself, and refused to satisfy said judgment, or pay Ward any money, until the latter should first pay said note; that Ward never ratified the plaintiff's claim to own said bond and mortgage; that the plaintiff never obtained said bond and mortgage otherwise than as above stated, and obtained the same fraudulently, and his claim to own them is false, fraudulent and void, by reason of the matters aforesaid. Third. Alleges that the appellant paid to Ward, November 11, 1869, the full amount owing on said bond and mortgage, and at the same time Ward executed and delivered to the appellant a satisfaction of said mortgage, and the same was duly recorded on that day; and that on that day Ward was the owner of said bond and mortgage. The plaintiff's reply denied the counter-claim, and each and every allegation tending to establish a counter-claim. The court found as facts, that all of the allegations in the complaint were true; that none of the defendants were infants or absentees, and that the amount due to the plaintiff upon the said bond and mortgage, for principal and interest, was $2412.92. And as a conclusion of law, the court decided that the plaintiff was entitled to judgment for the relief demanded in the complaint as therein claimed, with costs, and judgment was ordered accordingly. And it was further ordered that the mortgaged premises described in the complaint be sold by a referee appointed for that purpose. King & Davidson, for the appellant. I. The plaintiff received the bond and mortgage only as an express trustee, viz., to negotiate a sale of them to some third person, and the assignment was handed to him, at his request, only to enable him more easily and certainly to effect that purpose. In case he could find a purchaser, he was to be a medium for transmitting Ward's title and Hall v. Erwin. interest; but until he found such purchaser and transmitted the title to him, the bond and mortgage were as absolutely Ward's as they ever had been. Trusts may be created and proved by parol. (Hill on Trustees, 55–62. 2 Pars. on Cont. 67. 2 Wait's Law and Prae. 456, 457.) The fact that Ward was in debt to the plaintiff, did not lessen, nor qualify, the latter's obligation in the least; but he was bound to discharge his trust with the same strictness and fidelity as if Ward were not his debtor. II. The plaintiff deliberately violated his trust by treating the assignment as absolute, and assuming to own the bond and mortgage. 1. It was a part of the understanding and agreement upon which the assignment was handed to the plaintiff, that he would not himself purchase the bond and mortgage. 2. The plaintiff took this course for the express purpose of defeating the object for which this trust was reposed in him. He had asked Ward to assign to him the bond and mortgage, and let him apply them upon the $2500 note, and Ward had told him he could not do this, but asked him to buy the bond and mortgage at a discount of $100, satisfy the judgment, and let him have the balance to meet a pressing obligation elsewhere; the plaintiff then said he would not buy the bond and mortgage himself, but he thought he could induce a third party to purchase them, and he could do so better in his own name than otherwise; that if Ward would allow him $125 for his services, if successful, he would try to sell the bond and mortgage for him; and to enable him to do this in the manner he had stated, asked for and received the assignment. He and Ward had also agreed that if the bond and mortgage were so sold, the judgment should be paid out of the proceeds. Having obtained the assignment upon such representations and agreements, he sent it, on the same day, for record, assumed to own the bond and mortgage, refused to satisfy the judgment, and insisted that Ward should be content with the application of $2075 Hall v. Erwin. upon upon the $2500 note, or the judgment just entered up that note. He not only violated his trust, but he insisted that Ward should pay him, for so doing, the sum of $125; for he had previously offered to take the bond and mortgage and apply them upon the note; and he now insists that he bought the bond and mortgage of Ward for $2075, and wishes to apply that sum upon the judgment on the $2500 note. 3. The plaintiff claims to have bought the mortgage in November, 1869, but it is remarkable that he has never made any payment therefor, nor any application of the alleged purchase price, $2075, although he swears he desires to apply it upon the judgment on the $2500 note. Why has he not made such an application, or sought, in some legal way, to have it made, unless it be that he fears that, after all, his pretended claim to have bought the bond and mortgage may not be upheld by the court? 4. The plaintiff did not purchase the bond and mortgage when he received the assignment; it was handed to him about 11 A. M., November 8. After this was done, he directed judgment to be entered up upon the note. The judgment was entered up at precisely noon, November 8. The plaintiff testified in his affidavit that after the entry of that judgment he bought the bond and mortgage. The plaintiff did not see Ward after the latter handed him the assignment, in the morning of November 8, until the next day, but on that day he sent the assignment for record. By his own statements, it thus appears. that the plaintiff accepted the assignment as a trust, and afterwards violated that trust; and he now claims that such conduct shall receive the sanction of the court. III. The plaintiff obtained possession of the bond, mortgage and assignment by false and fraudulent representations, and therefore acquired no right to them. He not only violated his trust, but he intended to do so from the first. 1. He assumed to own the bond and mortgage on the same day that the assignment was handed to him, and VOL. LX. 23 |