Blanchard v. Dominion National Bank

100 S.E. 463, 125 Va. 586, 1919 Va. LEXIS 47

• Court: Supreme Court of Virginia
• Decided: September 17, 1919
• Status: Published

Opinion

Burks, J.,

delivered the opinion of the court.

The object of this suit was to enjoin the sale of certain real estate under a deed of trust executed December 31, 1912, by the appellant to secure a loan made to the F. T. Blanchard Company. The deed was made to secure a debt of $9,500, evidenced by bonds of the company, endorsed by F. T. Blanchard and W. T. Neeley, and any renewal or renewals of said bonds or any part thereof. One of these bonds was for $2,000, payable at sixty days after date, and the other for $7,500, payable four months after date, each with six per cent, interest. The deed also provided that when this debt was reduced to $7,500 or less, certain designated portions of the real estate conveyed should be released. This release was made on October 13, 1913. Af-terwards the trustee, at the request of the bank, advertised the residue of the property for sale on November 24, 1914. Thereupon an injunction was obtained from the Circuit Court of Washington county to enjoin the sale. The grounds upon which the injunction was prayed for and granted were: that the debt was a debt of the company upon which Neeley was the first endorser and the appellant second endorser; that he was a mere surety for the debt; that he had taken active steps to induce the bank to collect the debt out of Neeley who was bound as first endorser, and he was then amply solvent and about to remove his effects to a distant State, but that he was unable to induce the bank to take any steps against Neeley, and, as a result of its failure to take the necessary steps, all recourse against Neeley had been lost; that he had given the bank written notice to sue Neeley, which it had not done, and that therefore the appellant was released; that the amount due on ap-pellee’s debt had not been ascertained and there should be no sale of the property until the amount of the debt had been ascertained; that the notice of the sale by the trustee was, for several reasons, insufficient; that there were outstanding assets of the company in controversy, and if the controversy were decided in favor of the company, it would have ample assets with which to pay its debts; that it would be inequitable and unjust to sell the property under the deed of trust until all remedies against the principal debtor had been exhausted; and that there was a prior deed of trust on the property, the amount of which should be ascertained before the property was sold. The bill makes no suggestion that the debt secured by the deed of trust has been paid. It admits the power and duty of W. T. Neeley, the secretary and treasurer of the company, “to handle the finances and books of the company,” and nowhere in any of the subsequent pleadings is this power denied, or is any suggestion made that the company does not owe the debts for which he issued its notes. The bill sets forth the making on April 30, 1913, of the notes of the company by Neeley, as secretary and treasurer, now held by the appel-lee, and their endorsement by Neeley as first endorser and by the appellant as second endorser, and alleges that they are subject to certain enumerated credits leaving due thereon $4,584 of principal, upon which there is interest due. The bill then admits that “the trust deed is a collateral security simply for the payment of any balance on said notes that is not liquidated by the F. T. Blanchard Company or W. T. Neeley as first endorser of said notes.”

The answer of the appellee to this bill states that the bill of complaint correctly describes the amounts of the notes making up the said $9,500; that the sum was secured by a deed of trust upon the store-house of the said F. T. Blanchard ; and that “it is further true that the amounts have been paid which are referred to in said bill of complaint, and that the balance unpaid on the said deed of trust is correctly stated.”

The answer denies that the bank was under any obligation to go out of the State into the State of Tennessee to pursue remedies against Neeley, who was a resident of Tennessee and not of the State of Virginia, and further denies that there was any uncertainty as to the amount of its debt, or of the prior deed of trust on the property. No replication was filed to this answer at the time the answer was filed. A special replication was made a part of the amended and supplemental bill hereinafter referred to. This replication will be referred to later.

At the February term, 1917, the appellant filed an amended arid supplemental bill. This bill sets out more in detail than the original bill the efforts of the appellant to get the bank to collect the notes or bonds of Neeley and its refusal to do so, and indirectly charges collusion between the bank and Neeley. It alleges, for the first time, payment of the notes secured, and produces the checks of the company, and the original bonds to show their payment, but it is significant that it does not allege that the debt secured had been paid. It further charges that the position of the endorsers had been changed since the original bonds were giyen, whereby Neeley had become the first endorser and the .appellant second endorser,. and alleged the release of the 'appellant by reason of the bank’s failure to make the money out of Neeley unless, it could -be shown that Neeley was insolvent. It also makes a special replication to-the defendant’s answer to the original bill in these words: “That all. of the averments of defendant’s answer which are not heretofore referred to in this amended and supplemental bill are here denied and issue is taken upon the same as fully and completely as if. a general-replication- had beep filed to said answer.” The prayer of this bill, among other .things,.is that the original bill be treated as a part of this amended and supplemental bill as fully as if said original bill were here copied into this bill. There is a further prayer that the defendant be required to answer each and every allegation of said amended and supplemental bill, ..and that it answer all of said allegations fully and trutt fully, but not on oath.

[1-3] The complainant does not profess to have discovered any new evidence since the filing of his original bill, and in fact assigns no reason or necessity for filing it. If the debt of the appellee had been paid, the appellant knew it as well when the original bill was filed as when he filed his amended and supplemental bill, and yet no reference is made in the original bill to any such payment. It is a significant fact that nowhere in the pleadings does .the appellant charge that the debt of the appellee has been paid. The deed which he executed secured the debt, and not merely the evidence of it. It not only secured the debt, but all renewals thereof, in whole or in part, and it remained a security for the debt until it was paid unless there was some novation of the debt, which is not claimed. The defendant, in answer to this bill, says that the notes were not paid “except those particular notes might have been paid as stated, but notes in their stead were given which is frequently the custom of the bank where notes are not paid but only renewed.” And further, “this defendant .insists that the notes now held by it are not paid and are covered by the deed of trust in question, and are a charge upon the store-house and lot.” There was a general replication to this answer. In as much as' the appellant had, in his original bill, admitted that the trust deed was a security for the'notes dated April 30, 1913, and that-the balance due thereon, was $4,584, and the' defendant, in its answer to that bill; had stated that complainant had correctly set forth the notes held' by it and the'balance due thereon; the replication made to this answer cannot have the eifect of denying this statement of the answer, which was simply a concurrence in the admissions of the bill. There is nothing'in •the answer to the amended bill which is in any wise in conflict with this statement in the answer to the original bill. . Indeed, in the latter answer it is said: ■ “This defendant now says that there is owing to it by the said complainant the sum of $4,584, which bears interest from the.day of., 19.. ; that the same is just, due and unpaid, and that it is secured by the said deed of trust involved in this suit.” In view of the fact that the appellant makes no charge in either of his bills that the original debt has been paid, but simply that the original notesi have been discharged, the statement of the answer to the amended bill that the notes now held by the bank were renewals of the original notes cannot be taken as an affirmative allegation which the defendant was bound to prove. The deed secured the original debt, and was a continuing security for the debt and every part thereof until it was paid. If the appellant relied upon its payment, it was incumbent upon him to allege and prove such payment, as that is an affirmative defense. But, as already pointed out, the appellant does not anywhere in his pleadings allege the payment of the debt, but, on the contrary, admits in his original bill that the notes dated April 30, 1913, are a part of the debt secured by the deed of trust, and correctly states the balance due thereon. Furthermore, the amended bill prays specifically that the original bill be treated as a part thereof as fully as if it were copied into the amended bill. Under these circumstances, the production of the original bonds secured and of checks for the amount thereof, stamped paid, dated about the time said bonds fall due, is entirely consistent with the claim of the appellee and the admissions of the appellant that the notes dated April 30, 1913, which are the notes now held by the appellee, are a part of the debt secured by the deed of trust, and no further evidence was needed to show that said notes were renewals of the original bonds secured. An allegation that the original debt had been paid was as necessary as the proof thereof, but there was no such allegation, and even if there had been, the proof offered was insufficient, in view of the appellant’s admission in his pleadings. Sundry payments were made to the appellee on the notes dated April 30, 1913, by the F. T. Blanchard Company after that date. There was no oral testimony in the case, and the endorsement of credits on the notes does not show by whom the payments were made, but they do show in each instance what per cent of the principal of the note was paid each time. The aggregate of these is fifty-two per cent, which is exactly the amount which the pleadings show was paid from the assets of the F. T. Blanchard Company.

The other questions involved in this cause were abandoned, as will appear from the following statement in the reply brief for the appellant: “It is contended on the part of the appellant that the notes secured in the deed of trust of date December 21, 1912, are paid, and the appeliees contend that they are not paid, and the only question to be decided is whether they are or are not paid.” The real controversy in the case is whether the debt secured has been paid. We are of opinion that such payment has not been shown.

[4] As to the effect of calling for answers to specific interrogatories or allegations, and then waiving oath thereto, see Johnson v. Mundy, 123 Va. 730, 97 S. E. 564. If it is desired to waive an answer under oath, we would suggest that, instead of the form in common use, the bill should simply pray that the desired parties “be made defendants to this bill, and, waiving an answer under oath, that, etc.”

[5] Objection is made to the decree appealed from on the ground that it is uncertain because it fails to state from what time the amounts due the bank should bear interest. The decree did not finally dispose of the case, but referred it to a commissioner to take certain accounts which would of necessity disclose, not only the amount of the bank’s claim, but the time from which it bore interest. This decree properly ordered, accounts of liens and their priority before directing a sale under the trust deed.

The other assignments of error have been sufficiently disposed of in what has already been said. We find no error in the decree of the circuit court, and its decree will, therefore, be affirmed.

Affirmed.