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203, and extended note; extended note to North v. Belden, 35 Am. Dec. 87.

MORTGAGES-CHANGE IN FORM OF DEBT SECURED.-A mortgage secures a debt or obligation, and not the evidence of it, and no change in the form of the evidence, or in the mode or time of payment, can operate to discharge the mortgage. So long as the debt secured remains unpaid, neither the renewal or substitution of the evidence of the debt will impair the lien of the mortgage: See monographic note to Dumell v. Terstegge, 85 Am. Dec. 467-471. But renewal notes given for notes not described in a mortgage are not secured by such mortgage: Bowen v. Ratcliff, 140 Ind. 893; 49 Am. St. Rep. 203.

FALK V. WITTRAM.

[120 CALIFORNIA, 479.]

WITNESSES.-THE WIFE OF AN INSANE HUSBAND cannot testify for him, if the statute declares that a wife cannot testify for or against her husband without his consent. Being insane, he cannot grant such consent.

EVIDENCE TO SHOW THAT A DEED WAS INTENDED AS A MORTGAGE.-Where a deed purports to be absolute, a trial court is justified in requiring clear proof that it was intended as a mortgage.

Joseph M. Kinley and Murphy & Gottschalk, for the appellant.

Goodcell & Leonard, for the respondent.

480 HARRISON, J. The appellant, by his guardian, seeks in this action a judgment declaring that an instrument purporting to convey certain land to the grantor of the respondent was made by the appellant at a time when he was insane and incapable of contracting; that the instrument, although absolute in form, was in reality only a mortgage, and that the respondent took his conveyance from the grantee therein with knowledge of the appellant's insanity at the time of its execution, and that it was given only as a mortgage. The instrument in question was executed April 14, 1875, and on January 31, 1893, the guardian of the appellant was appointed by the superior court of San Francisco, and the complaint herein in behalf of the appellant was filed March 20, 1894. Issues having been joined upon the allegations of the complaint, the cause was tried by the court, by whom findings of fact were made and filed negativing the material allegations of the complaint, and judgment thereon was rendered 481 in favor of the respondent. From this

judgment and an order denying a new trial, the present appeal has been taken.

The appeal is urged here upon the ground that the findings of the court, both upon the insanity of the appellant at the date of the deed of conveyance, and the character of the instrument, are not sustained by the evidence. Each of these propositions was determined by the trial court upon a consideration of all of the evidence before it, including the inferences which it was at liberty to draw from that evidence, and the weight to be given to the testimony, as well as the credibility of the witnesses. It was shown that the appellant was engaged in business for upward of eleven years after the date of the conveyance before he was committed to an asylum; and, although it was shown that he was rash in some of his speculations, and erratic in conduct, as well as irascible in temper, it cannot be said that there was no evidence before the court in support of its finding that he was not insane at the date of the conveyance, and, upon well-established principles, its finding is conclusive here. There was no direct evidence in support of the appellant's claim that the deed was intended as a mortgage, but it was sought to establish this fact by inferences and argument to be drawn from other evidence in the case. Upon its face, the deed purported to be absolute, and the trial court was justified in requiring clear proof that it was intended as a mortgage.

As the court found that the deed from the appellant to the respondent's grantor was an absolute conveyance, and that he was in the exercise of his mental faculties at the time of its execution, its failure to find whether the respondent had notice of these facts is immaterial. If they did not exist, he could not have had notice of them, and a finding of that character would not affect the judgment.

The court properly excluded the deposition of the plaintiff's wife. "A husband cannot be examined for or against his wife without her consent; nor a wife for or against her husband without his consent; nor can either during the marriage or afterward be, without the consent of the other, examined as to any communication made by one to the other during the marriage": Code Civ. Proc., sec. 1881, subd. 1. The section makes no exception to the rule, even though the other spouse be incapable 482 of consent, and courts are not at liberty to disregard its provisions: See, also, Estate of Flint, 100 Cal. 391; Emmons v. Barton, 109 Cal. 662.

The Garcia deed could have had no effect upon the findings

of the court, and, even if its admission was unauthorized, it was harmless to the appellant.

The judgment and order are affirmed.

Garoutte, J., and Van Fleet, J., concurred.

MORTGAGE-DEED ABSOLUTE CONSTRUED AS.-A deed should not be declared a mortgage unless the evidence leaves in the mind of the trial judge a clear and satisfactory conviction that the instrument, which in form is a conveyance, was, by all the parties thereto, intended as a mortgage: Mahoney v. Bostwick, 96 Cal. 53; 31 Am. St. Rep. 175, and note as to the character of evidence required. The evidence must be clear, certain, unequivocal, and trustworthy: Perot v. Cooper, 17 Colo. 80; 31 Am. St. Rep. 258. and note; clear and convincing; Keithley v. Wood, 151 Ill. 566: 42 Am. St. Rep. 265, and note; clear, precise, and indubitable: Wallace v. Smith, 155 Pa. St. 78; 35 Am. St. Rep. 868. See State Bank v. Mathews, 45 Neb. 659; 50 Am. St. Rep. 565.

RUSS LUMBER AND MILL COMPANY V. MUSCUPIABE LAND AND WATER COMPANY.

[120 CALIFORNIA, 521.]

INDEPENDENT CONDITIONS, WHEN BECOME DEPENDENT.-If a contract contains stipulations which are not concurrent nor dependent, but one of the parties makes default in an act required to be performed by him by the conditions of his contract, all the preceding agreements of the contract remaining unperformed by him must be treated by him as concurrent, since he cannot enforce performance while himself in default.

CONSIDERATION-FAILURE OF OCCURRING AFTER THE TRANSFER OF PROMISSORY NOTES.-Where promissory notes are given in consideration of an agreement that the payee will thereafter perform certain conditions, and he is, when demanded, unable to comply, or refuses to comply, with such conditions, there is a failure of the consideration upon which the notes were executed.

NEGOTIABLE INSTRUMENTS - RESCISSION CANNOT AFFECT THE INDORSEE.-Though the maker of a negotiable promissory note becomes entitled to rescind, he cannot exercise his right to the prejudice of an indorsee who has received the notes in the usual course of business, in good faith, for value, and without notice of the facts upon which the right to rescind is founded.

NEGOTIABLE INSTRUMENTS.-An indorsee of a negotiable promissory note for value, in good faith, and before maturity, cannot be affected by a subsequent breach of the contract made by the payee and constituting the consideration of the note.

THE RESCISSION OF A CONTRACT IS NOT REQUIRED where nothing of value has been received under it and the party making it cannot perform it.

RESCISSION-OFFER TO

SURRENDER-WHEN NOT NECESSARY.-If negotiable promissory notes are given in con

sideration of an agreement to furnish water for irrigation, and such agreement is pledged as collateral security for the payment of such notes, and after their transfer the original payee is unable to perform his agreement, there is a failure of consideration, and it is not necessary for the maker of the notes to offer to release the payee from the agreement as a condition precedent to the right to rescind or to defend against the notes for failure of consideration.

CONSIDERATION.-A FAILURE of consideration, either total or partial, may be pleaded as a defense to an action upon a promissory note either wholly or in pro tanto.

CONTRACTS-WHEN MAY BE AVOIDED FOR FAILURE OF THE PROMISEE TO PERFORM AN ACT IN THE FUTURE. If the promise to do an act is accompanied with statements of existing facts showing an ability of the promisor to perform his promise, such statements are called representations, and if falsely made, are grounds for avoiding the contract, though the promise to be performed lies wholly in the future.

CONTRACTS FOUNDED ON FALSE REPRESENTATIONS.-A promise made with an intention not to perform it constitutes a fraud for which a contract may be rescinded or avoided. ONE WHO TAKES A COLLATERAL SECURITY FOR A PRE-EXISTING INDEBTEDNESS must be regarded as a holder for value.

Gardner, Harris & Rodman, and L. R. Garrett, for the appellant.

Freeman & Bates, for the respondent.

622 HAYNES, C. This appeal is from a judgment in favor of the plaintiff upon demurrer to defendant's answer. Both parties are corporations. The action is prosecuted to recover certain semi-annual installments of interest accrued upon five promissory notes executed by the defendant to the Bear Valley Irrigation Company (also a corporation), and by it indorsed to the plaintiff in September, 1893.

Said notes bear date September 29, 1891, and are payable, respectively, five, six, seven, eight, and nine years after date, each for the sum of three thousand dollars. The interest on all the notes had been paid by defendant to September 29, 1893, and this action was commenced July 24, 1895.

It is stipulated that the answer to each of the five causes of action is identical with the others, and hence only the answer to the first cause of action is printed in the transcript, but as that covers fifteen printed pages it cannot be given here in full. An outline of the defense pleaded, with perhaps some more specific notice of particular allegations as we proceed, is all that is necessary.

The answer alleges that the notes were executed in consideration of a contract entered into between it and the Bear Valley

Irrigation Company, whereby the irrigation company sold and agreed to deliver a specified quantity of water per acre to the defendant to irrigate one hundred and thirty acres of land; that said contract on the part of the irrigation company was in writing, and consisted of what is designated as "Class B, 200 ctfs. Bear Valley Irrigation Company Acre Water Right Certificate," a copy of which is set out in the answer. Each certificate required the defendant to pay one dollar and thirty-nine cents on the first day of April and the first day of October in each year, but it was agreed that this clause should not be operative until the defendant began the actual use of water, which use was to begin upon demand of the defendant.

These certificates also show upon their face that they were issued subject to certain contracts of the irrigation company to furnish water to other parties, as to some of which the quantity is specified and as to some it is not, and also subject to "Class A Certificates" issued by it, the number of which is not stated.

The sole consideration of the notes here in suit, it is alleged, was the said contract of the irrigation company evidenced by said certificates, and the consideration for said certificate was the execution of said promissory notes; that said certificate was attached 524 to said promissory notes as collateral security for the payment thereof, and remained so attached at the time of the transfer of the notes to the plaintiff, and was transferred with the notes and was afterward detached by the plaintiff. It is further alleged that defendant entered into said contract and executed said notes upon the representation of the irrigation company that it had the water so sold to defendant, and could then, or at any time thereafter, furnish the water agreed to be furnished upon demand; that it had an abundant supply of water to enable it to carry out said contract and the said preferred contracts; that it was solvent and in a prosperous condition financially, and operating its plant at a profit, and able to meet all its obligations; that defendant relied upon said representations, and upon the faith of them alone entered into said agreement and executed said promissory notes. It is then sufficiently alleged that these representations were each and all untrue, and at the time they were made, and ever since, were known by said irrigation company to be untrue; that at the time of making them it did not intend to furnish said water, and made them "with the purpose and object of defrauding this defendant out of the sum agreed to be paid in said promissory notes."

It is also alleged that at and before the transfer of said notes

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