Strang v. Peterson

It is entirely clear that the motive impelling Mrs. Peterson to make the mortgage in suit was her belief that her son had been guilty of forgery, and would be punished criminally if she did not secure the debt. The referee has found that the son was thus guilty, and that a prosecution therefor was estopped by the giving of the mortgage. There is abundant evidence to sustain the referee’s conclusion. It is now suggested by plaintiff that the referee was in error in this finding; that he should have given faith to the testimony that Peterson was authorized to place Strang’s name on the note, in which case no crime had been committed, and the course of justice was not interfered with by giving the mortgage. But such facts would not make the mortgage valid. Eadie v. Slimmon, 26 N. Y. 9, is authority that fear'of a prosecution of a near relative is such duress that a security obtained by means thereof cannot stand. Bayley v. Williams, 4 Giff. 638, affirmed L. R. 1 H. L. 200, is to the same effect. See, also, Pol. Cont. 557. Judgment affirmed, with costs.

Barnard, P. J., concurs.

(dissenting.) This is an action to foreclose a mortgage made by Catharine Peterson to the plaintiff. Catharine Peterson answered the complaint, setting up her coverture, and the consequent invalidity of the bond and mortgage, and denied the execution of those instruments with knowledge of their character. The administrators of Seth Whitney were afterwards brought in as defendants, and they served an answer denying that they had any lien upon the mortgaged premises subsequent to the lien of the plaintiff’s mortgage, and claiming priority of lien fora mortgage which they held. In this state of the pleadings, the action went to a referee to be tried and determined; and, during the progress of the trial, Catharine Peterson and the administrators,of Whitney were permitted by the referee, against the objection and exception of the plaintiff, to amend their answers by setting up fraud and duress in the procurement of the bond and mortgage, and that they were obtained and executed under an agreement to suppress a criminal *140prosecution for forgery against the son of Catharine Peterson. The trial was then continued under the new pleadings, and the referee decided in favor of the defendants, and dismissed the plaintiff’s complaint. The allowance of the amendment to the answers by the referee upon the trial was clearly erroneous. Hew-issues were thereby introduced into the case, which entirely changed the character of the defense, and that was inadmissible upon the trial.

As our view of the case will require a reversal of the judgment, we will proceed to an examination of the merits. We will make no further examination of that error, however, as our view of the whole case is essentially different from that of the referee who rendered the judgment. The material facts are these: Herman F. Peterson, the son of Catharine F. Peterson, the mortgagor, was a butcher, and prior to March 13,1880, the date of the mortgage in question, Herman becameindebted to Benet Miller and Edward B.Brady, in considerable su ms, for cattle purchased of them, respectively, and for such indebtedness he had made his promissory notes to each of them, payable to the order of the plaintiff, Ami K. Strang, and indorsed them himself with the name of Strang, and delivered the same to Miller and Strang, respectively. Such indorsements were forgeries. When it became known that Strang denied the authenticity of the indorsements upon these notes, the holders began to demand payment or security, and used language indicative of a purpose to invoke the aid of the criminal law if some arrangement was not made for the payment of their claims. Under pressure of those circumstances, Herman endeavored to induce Strang to take an assignment of some claims of his, and assume the payment of the notes, which Strang declined to do. Then Strang, at the request of Herman, had an interview with his mother; and an arrangement was made by which she was to give Strang a mortgage upon her property, and he was to undertake the payment of the notes. In pursuance of that arrangement the mortgage in suit was executed, and delivered to Strang, and he paid the notes. Upon this subject the finding of the referee is that Strang called upon the mortgagor to learn if she would give him a mortgage on her real estate to secure him for his indorsement of the notes, and she finally consented to do so. The referee has found that the bond and mortgage were made under an agreement that their execution would prevent the prosecution of her son criminally for the forgeries of the indorsements of Strang, and that the parties interested in such notes would refrain from such prosecution, and that the only consideration to her for giving the bond and mortgage was to save her son from such prosecution.

Assuming, as we may, that the referee intended to find that the execution of the bond and mortgage was induced and obtained by threats of imprisonment of the son of the mortgagor, then she could avoid those instruments if they had been given to the creditors of her son to secure the payment of his liabilities to them. Adams v. Bank, 116 N. Y. 606, 23 N. E. Rep. 7; Eadie v. Slimmon, 26 N. Y. 9. This case, however, is not like that of Adams, and others of a kindred character; for, in all those cases where the doctrine has been applied, the threats of arrest have proceeded from the creditors, and the payments have been made or the securities executed to them. Here the case is very different. Strang had nothing at stake, and no reason to institute criminal proceedings against Herman. The spurious paper was not passed upon him, and the forgery gave him no concern. If the criminal law was to be set in motion, the creditors alone were interested in its movement. He simply agreed to assume the payment of the notes upon receiving security for the assumption of such liability. In substance and legal effect, he agreed to make a loan of money to discharge the debts evidenced by the notes, and he made the loan in reliance upon the security he.received; ana the purpose of the loan, or the use to which the money was to be appropriated, was a matter of entire indifference to him. Suppose the bond and mortgage had been made to another person. They could not be avoided because their execution *141was induced by a desire to raise money to prevent the arrest and imprisonment of the son of the mortgagor. And we suppose the same rule applies to Strang. He has been induced to make a loan in reliance upon the bond and mortgage? and the mortgagor, having thus obtained his money, should not now be permitted to repudiate the transaction. The question of priority between the two mortgages must be settled upon another trial. It must be borne in mind that this is not a case of the composition or compounding of a felony, and the decision proceeds upon no such ground, and is not in hostility to the decisions in the cases where that question has been involved. The judgment should be reversed, and a new trial granted, with costs to abide the event.