
    FOOTE v. BEECHER.
    
      N. Y. Court of Appeals ;
    
    September, 1879.
    Action.—Exceptions to Evidence.—Conclusive Evidence.—New Tbial.
    On the question whether a mortgage on land is unpaid, the declarations of a former holder of the land, made while he was in possession, are not competent against a third person, the present owner, merely because made by one in possession; and the fact that he is since deceased does not render them competent.
    
    There is no distinction between actions of a legal, and those of an equitable nature, in respect to the availability of exceptions, taken upon the trial, to the admission of incompetent evidence.
    In actions of an equitable as well as in those of a legal nature, a party has a right, upon the trial of the issues, whether by a jury, the court, or a referee, to the exclusion of illegal evidence.
    An error in receiving incompetent evidence, if properly excepted to, can only be disregarded when it can be seen that it did no harm.
    ■ If the evidence to the same point, independent of the incompetent evidence, is not conclusive, a new trial should be awarded.
    
    Appeal by plaintiff from a judgment of the general term of the supreme court, in the third judicial department, affirming a judgment entered on the report of a referee.
    This action was brought by Duane D. Foote against Hamilton Beecher, to stay the foreclosure of a mortgage held by the defendant, to secure the purchase price of the premises therein described, praying for an accounting, an injunction, and a judgment that said mortage be declared paid, satisfied and canceled.
    On November 19, 1866, the defendant sold certain premises in Canastota, Madison county, N. Y., to John H. Roberts and Hobart J. Stebbins for $5,000. A mortgage for $4,000 was given back, payable in four equal annual installments, on November 19 of each year.
    Before the first installment became due, Stebbins sold to Roberts his interest in the premises.
    The plaintiff claimed that when the first installment became due Roberts paid to the defendant, part in cash and part in a check, $1,000, to apply on the mortgage, and $280 for interest, and for which the defendant gave a receipt as follows: “Paid H. Beecher $1,280.00 on store, November 19, 1867, received to apply on mortgage. H. Beecher.” That at the same time defendant indorsed on the mortgage, “ Received on the within mortgage $1,000 of principal, and $280 of interest; it being what was due up to November 19, 1867.” That a few days thereafter, and on November 25, Roberts asked the defendant to help him, and made his promissory note for $1,000, to the order of the defendant, payable January 28, 1868, and which the defendant indorsed, and it was discounted by a bank for Roberts. That the note was renewed from time to time, until October 14, 1868, when $100 was paid on it by Roberts, and the note was again renewed for $900, but Roberts having failed before it became due, it was paid by the defendant.
    The defendant claimed, on the other hand, that on or about November 25, 1867, Roberts paid the defendant $280, the interest then due on the mortgage, and gave the aforesaid note for the first installment.
    Roberts soon after gave a second mortgage on the same premises, which, on January 8,1869, was assigned to Duncan McDougall and Francis Doolittle, who afterwards foreclosed it, and the premises were sold, subject to the mortgage to the defendant. At that sale the premises were bought by N. B. Foote & Co., and were afterwards conveyed to the plaintiff, subject to the same mortgage.
    Roberts afterward died; and in April, 1872, after his death, the defendant commenced a statutory foreclosure of his mortgage, claiming that there was then due thereon $1,096.25. Before the time for sale under this foreclosure, this action was commenced, and an injunction issued, restraining defendant from selling thereunder.
    If the $1,000 claimed to have been paid by Roberts on the first installment was allowed, then nothing was due on the mortgage. This was the plaintiff’s claim. The case was sent to a referee, and on the trial Duncan McDougall, one of the former owners of the second mortgage, was permitted to testify, under the plaintiff’s objection, as follows: “While Roberts was in possession, in December, 1868, I saw Roberts in -New York ; I asked him about the situation of the property then ; he said Beecher had a mortgage on it; stood for $3,000. He said he had given him a note of $1,000, that was indorsed on the mortgage, and that Beecher had taken up the note, and he had not paid the note.”
    The referee decided in favor of the defendant, and on his report judgment was entered.
    
      The supreme court affirmed this judgment.
    The opinion delivered at the general term is as follows : 
    
    Bockes.—The evidence of McDougall, as to what Roberts said to him, to wit: That he, Roberts, gave Beecher his note for $1,000, which was indorsed on the mortgage, and which note the latter took up and paid, was improperly received against the plaintiff’s objection. This statement of Roberts, given by McDougall, was mere hearsay. Its admission is sought to be justified on the ground that Roberts was, at the time he made the statement, in possession of the mortgaged premises. The declaration or statement of a person, other than a party to the action, is sometimes admissible for the purpose of characterizing his possession of real property, when the title is in dispute. But no basis for the admission of such evidence existed in this case. The issue here was on the question of a debt, simply. The statement of a third person, not a party to the action, bearing on the question of payment of the mortgage debt, was manifestly inadmissible. The case which comes nearest to this, favorable to the admission of the evidence, is Burlingame v. Robins (2 Barb. 327). But under the rule there intimated it should have been rejected.
    The question then is, whether there is sufficient evidence, irrespective of that which should have been excluded, satisfactory and conclusive in character, to sustain the finding of the referee, that the mortgage debt was not paid. The rules of evidence have been rigorously adhered to hitherto in actions at law. So it has been repeatedly decided that when illegal evidence is admitted, bearing at all on the result, the error is fatal (Worrall v. Parmelee, 1 N. T. 519 ; Baird v. Gilbert, 47 Id. 186 ; Starbird r>. Barons, 43 Id. 200; Hawley v. Halter, 9 Hun, 134; Brague v. Lord, 2 Abb. New Cas. 1; Williams «. Pitch, 18 N. T._ 546). In the last case cited, Judge Comstock said that although there was evidence after rejecting that which was objectionable, sufficient to sustain the conclusion of the referee, this would not cure the error in its admission; that the party was entitled to the referee’s judgment upon testimony which was competent. But a more lenient rule has been adopted in equity actions. In this class of actions it is uniformly held that if evidence be improperly admitted bearing on a fact, abundantly made out by other and competent proof, a new trial will not be granted for such error (Bennett ». Austin, 5 Hun, 
      538; Platt v. Platt, 2 H. Y. Svpm. Gt. [T. & C7.J 25, 26 ; Church v. Kidd, 3 Hun, 254, 267; Forrest v. Forrest, 25 N. Y. 501, 510 ; Clapp v. Fullerton, 34 Id. 190 ; Patterson v. Copeland, 52 How. Pr. 460). After carefully examining all the evidence in this case, I confess myself entirely satisfied with the conclusion of the referee that the mortgage debt was not paid, and I reach this conclusion without considering the evidence above declared to be inadmissible. Let that evidence be wholly expunged, and sufficient remains of an unexceptionable character to sustain the referee’s conclusion. I am quite satisfied that the Roberts note went to make up the sum indorsed, as of November 19, 1867. This note was not paid by Roberts, and therefore did not operate as payment upon the mortgage. The giving of a note by a debtor to his creditor is not payment (Hill v. Beebe, 13 N. Y. 566, 567; Id. 167; Bradford •». Fox, 38 Id. 287 ; Cole v. Sacket, 1 Hill, 516 ; Way dell v. Luer, 5 Id. 448). All parties interested seem to have understood that the installment of November 19, 1867, remained unpaid. Payments were made upon the mortgage under such understanding, and the premises were sold, and the transferee held them under such understanding. The receipts given to evidence the payment of the installment and interest due November 19, 1867, were subject to explanation by oral proof (Bradford n. Fox, 38 N. Y. 289). I am entirely satisfied that justice has been done in this case by the judgment appealed from.
    Judgment affirmed, with costs.
    Learned, P. J., and Boardman, J., concurred.
    From the judgment entered thereon the plaintiff appealed to the court of appeals.
    
      Johnson & Prescott, for plaintiff, appellant.
    The testimony of McDougall as to conversation with Roberts was error. A bona fide purchaser, in good faith, for a valuable consideration, and without notice, is entitled to the protection of the law (Story Eq. §§ 1225, 1228, 1232, and cases cited; 4 Kent Com. 152 et seq. ; 15 Ves. 329 ; 2 Mad. Ch. Pr. 128; Dart on Ven. & Pur. 118, 119 ; Bayley v. Greenleaf, 7 Wheat. 46 ; Willard on Real Est. 115; Burlingame v. Robins, 21 Barb. 327). It was mere hearsay and inadmissible. It was not claimed to have been made in presence of any party to this action, and allowable as such (Wilson v. Boerem, 15 Johns. 289). But if so it was incompetent (Penfield v. Carpenter, 13 Johns. 350 ; Irvine v. Cook, 15 Id. 239; People v. Parish, 4 Den. 153 ; Jones v. Hurlbut, 39 Barb. 403 ; Phillips v. Thompson, 1 Johns. Ch. 131; Harris v. Ely, 1 Selden Notes, 35). The death of Roberts did not make them competent. When made he was not claimed to be in extremis; this is the only ground for allowance (Gray v. Goodrich, 7 Johns. 95). If made while in extremis they would not, on all established rules, have been admissible (Wilson v. Boerem, 15 Johns. 286; Kent v. Walton, 7 Wend. 256). The statements were not claimed to have been given as at variance with his interest. On the contrary, they were solely in his own interest, and to assist his creditor, in whose interest they were offered ; therefore improper (Waring v. Warren, 1 Johns. 340 ; White v. Chouteau, 10 Barb. 202; People v. Blakeley, 4 Park. Cr. 185; Burlingame v. Robbins, 21 Barb. 327). The statements were intended to, and did partly destroy or effect plaintiff’s title, and so were incompetent (Id., and Carter v. Buchanan, 9 Ga. 539). Improper testimony having been received, bearing upon the result, a new trial should be had. The evidence given was mere hearsay, and inadmissible (Paige v. Cogwin, 7 Hill, 361; Beach v. Wise, 1 Id. 612 ; cases hereinbefore cited). Where the error is in the admission of illegal evidence, which bears in the least degree on the question in issue, it cannot be disregarded (Worrall v. Parmelee, 1 N. Y. 519 ; Williams v. Fitch, 18 Id. 546; Baird v. Grillett, 47 Id. 186; People v. Wiley, 3 Hill, 194, 214 ; Marquand v. Webb, 16 Johns. 90 ; Osgood v. President, &c., 3 Cow. 612 ; Hawley v. Hatter, 9 Hun, 134). If the error is in rejection of evidence, it cannot be disregarded on the ground that it did not necessarily affect the result, but only on the ground it could not (Starbird v. Barrons, 43 N. Y. 200 ; Forrest v. Forrest, 25 Id. 510; Clapp v. Fullerton, 34 Id. 195 ; Platt v. Platt, 2 N. Y. Supm. Ct. [T. & C.] 26; Patterson v. Copeland, 52 How. Pr. 461; Church v. Kidd, 3 Hun, 254, 267; Williams v. Fitch, 18 N. Y. 546, 552).
    
      Barlow & Son, for defendant, respondent.
    The receipt may be explained by parol (Howard v. Norton, 65 Barb. 161; Foster v. Newburg, 58 N. Y. 481). Where a note, bill or check of a third person is taken to apply on a debt, the presumption is that -it is additional security, and not payment, and the onus of proving it a payment rests upon the debtor (Darnell v. Morehouse, 36 How. Pr. 511; Noel v. Murray, 36 N. Y. 167; Hill v. Bebee, Id. 556). That the giving of a note by the debtor to his creditor is no payment is well settled (Noel v. Murray, 13 N. Y. 167; Cole v. Sackett, 1 Hill, 516 ; Waydell v. Luer, 5 Id. 448; Ellwood v. Diefendorf, 5 Barb. 398 ; Bradford v. Fox, 38 N. Y. 289 ; Gribson v. Toby, 53 Barb. 191). The evidence of D. McDougall was entirely competent. The interest Roberts had in said real estate was whatever there was above the incumbrances; and his declarations thus made were competent evidence to show his interest in the real estate, not only against him, but against all claiming under him (Padgett v. Lawrence, 10 Paige, 170 ; Jackson v. Vredenburgh, 1 Johns. 159; Jackson v. Baird, 4 Id. 230 ; Pitts v. Wilder, 1 N. Y. 525 ; Burlingame v. Robins, 21 Barb. 327; Sheldon v. Van Slyke, 16 Id. 26 ; Jackson v. Cole, 4 Cow. 587; Vrooman v. King, 36 N. Y. 478, 482). The judgment will not be reversed where all the evidence comes up before the court, and they see that justice has been done in the case, even if there have been errors which could not have changed the result (Cary v. Sprague, 12 Wend. 41; Smith v. Kerr, 1 Barb. 155 ; Gardiner v. Tubbs, 21 Wend. 169 ; Stiles v. Tilford, 10 Id. 338-340 ; Burt v. Smith, 5 Barb. 283 ; Supervisors of Chenango v. Birdsall, 4 Wend. 453, 458).
    
      
       Compare, besides cases cited in brief, Keator v. Dimmick, 46 Barb. 158; Reed v. Reed, 12 Penn. St. 117; Varick v. Briggs, 6 Paige, 323; 22 Wend. 543; Corbin v. Jackson, 14 Wend. 619; Moore v. Hamilton, 44 N. Y. 666; Pitts v. Wilder, 1 Id. 527; Gibney v. Marchay, 34 Id. 304; Abeel v. Van Gelder, 36 Id. 513.
    
    
      
       See also Brague v. Lord, 2 Abb. New Cas. 2.
      
    
    
      
       Mem. S. C. 12 Hun, 374.
    
   Church, Ch. J.

We concur with the general term that the declarations of Roberts were inadmissible, and that the referee erred in receiving the evidence of such admission.

But we are unable to concur in the affirmance of the judgment notwithstanding such error.

There is no distinction between actions of legal and those of an equitable nature, in respect to the availability of exceptions taken upon the trial upon the admission of incompetent evidence, and no reason is perceived for such a distinction. Improper evidence may influence a court or referee as well as a jury. The party has a right to an adjudication upon legal evidence. In the language of Comstock, J., in Williams v. Smith, 18 N. Y. 546, “the defendant was entitled to the referee’s judgment upon the testimony which was competent.” I am not aware that any different rule has prevailed, or that it has been in any respect modified. It has been uniformly adhered to by this court in all actions, whether of a legal or equitable character. In the case of Forrest v. Forrest, 25 N. Y. 50, there was a feigned issue, and the court held that the trial was to be reviewed on the principles on which a court of equity examined the trial of a feigned issue awarded for the information of its own conscience, and not as upon a strict bill of exceptions. Clapp v. Fullerton, 34 N. Y. 190, was an appeal from a surrogate’s decree upon the probate of a will. In such cases the hearing is de novo in the appellate court, and they may be determined upon the competent evidence appearing, disregarding such as is incompetent.

Neither of these decisions is applicable to this case. It is impossible to say how influential the incompetent evidence was upon the mind of the referee. The question at issue was, whether a certain bond and mortgage had been paid in full, and this depended upon whether a note had been given for an indorsement of $1,000, which had not been paid. The declarations of Roberts while owning the property, and who gave the note, were direct and forcible to the point, that such a note had been given, and if competent and detailed by a reliable witness, would be quite decisive. These declarations were mere hearsay, and were also, I think incompetent under the Code, Roberts being dead.

An error in receiving incompetent evidence, if properly excepted to, can only be disregarded when it can be seen that it did no harm. If the evidence was slight or irrelevant, or without it the fact was conclusively established by other evidence, it may be disregarded, because it could not have injured the other party.

It is not denied that this evidence was material, and it cannot be affirmed that without it the evidence was conclusive in favor of the defendant’s position. Evidence, to be conclusive, must be such as to be capable of blit one construction, and incapable of being answered. I am inclined to concur with the general term, that without this evidence the referee would have been warranted in finding the giving of the note for the payment of $1,000, but this evidence is not conclusive. It depends upon the credibility of witnesses, upon inferences to be drawn from circumstances, and we cannot say that a new trial may not throw additional light upon the case.

Upon looking at all the circumstances, the probability is in favor of the defendant’s contention, and it may be that a new trial will produce the same result, with an accumulation of costs against the appellant, but the error cannot be overlooked without establishing a mischievous precedent.

The judgment must be reversed, and a new trial granted, with costs to abide event.

The judges all concurred, except Andrews, J., absent.  