38 Mich. 430 | Mich. | 1878
Complainant filed its bill in this case to collect certain notes which it held against Wesley Truesdail, and which it was claimed were secured by mortgage upon certain lands in St. Clair county known as the “AltaVista” farm. The principal defendant and appelant Emily L. Truesdail being dissatisfied with the decree of the court below has taken an appeal, and has here presented a number of objections to complainants obtaining the relief sought.
Wesley Truesdail being largely indebted to divers parties, upon the 2d day of March, 1857, executed a mortgage, covering certain property owned by him, but not including the Alta Vista farm, to Messrs. Sanger, Brown and Wight, trustees, and as an additional security for the same indebtedness, on the 26th day of February, 1857, a mortgage covering the Alta Vista farm was executed and delivered to these trustees. A portion of the lands described in this last mentioned mortgage were then subject to three other mortgages, one to Hamilton P. Cady for $2,000 and interest thereon; one to Elizabeth Stewart upon which there was then due about $1,000 and interest; and one to Beed Jerome for $450 and interest.
This mortgage of February 26, 1857, upon the Alta Yista farm, was not recorded until August 21st of that year.
March 12th, 1857, Wesley Truesdail caused to be recorded a mortgage to Alpheus S. Williams as trustee of Emily L. Truesdail, dated December 11th, 1856, for upwards of $6,000; also, on July 14th, 1857, a mortgage to Daniel L. Mosely for over $17,000; also, June 29th, 1857, a mortgage to Hiram A. Tucker for $10,500, all covering the Alta Yista farm property.
In 1866 Wesley and Emily L. Truesdail employed Sidney D. Miller as an attorney to clear this Alta Yista farm from certain clouds claimed to then exist against it and to vest the title in himself as trustee for these parties. And to assist in carrying out this plan, certain securities were executed by Wesley Truesdail to Miller and placed in his hands, and the Mosely, Tucker and Williams mortgages were also assigned to Miller. These assignments, it is claimed, were made to Miller to secure him for obligations that he should assume for Mr. or Mrs. Truesdail or either of them; for moneys that he ■might loan or 'procure for them and for payment of any services he might perform for them; that in accordance with this agreement Miller did from time to time endorse the paper of Wesley Truesdail; that upon the 28th day of December, 1870, he was liable as such endorser to the Detroit Savings Fund Institute to the amount of $6,182; that at the date last mentioned an arrangement was entered into by which Miller was to be relieved from his liability as an endorser, and in accordance therewith Wesley Truesdail executed a new note for the amount stated, and a written declaration of
Testimony was taken on the part of complainants, but none on the part of defendants. The bill called for an answer under oath and sworn answers were put in by defendants Miller and Emily L. Truesdail.
The testimony of Messrs. Miller and Walker, with the other facts and circumstances in the case, satisfies us that Mrs. Truesdail was cognizant of the arrangements and agreements, made between Mr. Truesdail and Mr. Miller relative to the securities given the latter, and to the arrangements with, and the declaration of trust made to, the Savings Fund Institute, and that she is bound thereby. The complainant is, therefore, if the legal successor of the Savings Fund Institute, — a point noticed hereafter, — entitled to recover the amount of the notes of Dec. 28th, 1870, January 3d and February 14th,
As to the Cady, Stewart, Jerome and Mosely mortgages, I am fully satisfied they no longer can be considered a'valid subsisting lien upon the land and should be declared satisfied and discharged.
While it is quite true that Mr. Miller’s relations with Mr. and Mrs. Truesdail were such, either as trustee or attorney, that he could not purchase or acquire interests in or against this property adverse to Mr. and Mrs. Truesdail, yet I find nothing in the record which would in any way prevent complainant from becoming so interested. It was said that as complainant acquired its rights in the first instance through Mr. Miller, it could no more purchase or hold interests adverse to the Truesdails than he could. There is, however, nothing in the written declaration of trust tending to show the relations which Miller held with these defendants, except that he held the securities mentioned as a trustee. Beyond the fact that by this declaration certain securities were made primarily liable for the indebtedness to the Institute, there was nothing contained therein which could legally or equitably prevent the latter from purchasing any other or farther claims against these parties whether secured upon the same property or not, and the oral evidence does not tend to disclose any knowledge on the part of the officers of the Institute or any fact that would lead to a different result.
Admissions as to the non-payment of these notes made by Wesley' Truesdail were proven, and it was insisted that such admissions were not admissible as against the interests of Mrs. Truesdail. In general, the negative of non-payment need not be proven. If long time has elapsed, a recognition of the debt by the debtor is generally sufficient. If the case arose under the statute of limitations it would be different, because there a new promise would be necessary, and a promise by the original debtor could not bind a party collaterally interested. But the question here is merely one of payment, and certainly the dealings between the parties showing nonpayment would be admissible; why not then their statements ?
It was farther insisted that as to the nine notes purchased by complainant, the security upon other property must first be exhausted before complainant can resort to the Alta Yista farm, for two reasons. First, that since the execution of the conveyances Mrs. Truesdail by conveyance from her husband acquired title to the equity of redemption of the Alta Yista farm, and second, that where one has a lien upon two séparate funds, and another a subsequent lien upon one of them, the former will be compelled first to exhaust the subject of his exclusive lien, and will be permitted to resort to the other only for the deficiency.
These principles qre familiar and have frequently been acted upon in this state. It should however appear that the mortgagee will not be prejudiced by the enforcement of this rule. Cooper v. Bigly, 13 Mich., 463. The object of the rule is not to take from the prior incumbrancer
The bill in this case alleges that the property described in these other securities has been sold for taxes or on foreclosure liens, or sold and conveyed by Wesley Truesdail, and the premises are now in the possession of such purchasers or their grantees. No evidence has been introduced in support of this allegation. As against Wesley Truesdail the bill was taken as confessed, and the defendant Mrs. Truesdail in her answer neither admits nor denies this allegation of the bill, leaving the complainant to make such proof as it is advised is necessary. It was not necessary for complainant to make such proof in the first instance to entitle it to resort to the security upon the Alta Yista farm. It was for the defendant who claimed protection, to set up in her answer and establish such facts as would entitle her to the protection sought. As the case stands we are of opinion that she is in no position to insist upon the rule referred to.
In the decree it is declared and adjudged that the mortgage of February 26th, 1857, is a valid subsisting lien
The decree also requires the payment of all these several amounts, aggregating over one hundred and ten thousand dollars, to be paid forthwith, and in default a sale of the premises. The practice in this State heretofore has always been to allow a reasonable time, definitely fixed in the decree, for the payment of the money. The fact that the amount due is large, or even the improbability of its payment, would seem to afford no
It but remains to briefly refer to some legal questions as to complainant’s being the legal successor of the Savings Fund Institute, and the right of the latter to discount paper.
The Savings Fund Institute had a right to loan deposits upon the public stock of the United States or of this State, upon bond and mortgage, or upon any other securities which should be deemed by the board of - directors ample. This last clause cannot, as claimed, be restricted to the same kind of security before mentioned. Under it we are of opinion the board would have power to authorize the discounting, of commercial paper.'
That the complainant corporation has been organized and doing business -as such in apparent compliance with the statutes of this State, is not denied. The claim,' among other things, is that the Savings Fund Institute could not reorganize under the act of 1871. Without attempting to present and answer the various objections urged, we deem it sufficient to say that they do not, many of them at least, properly arise in this case. There was a reorganization under the act, which if valid would' operate as a transfer of these securities, and besides there was a written assignment by the Savings Fund Institute to the complainant. Under those circumstances complainant would have a clear and undoubted right to come into court and enforce payment of these securities, and it would be no defense in such a case that the Savings Fund Institute or parties interested therein might have some rights in the premises which they did not consider of sufficient importance to come into court and ask to have protected. Such questions if existing may very properly be left for settlement when raised between complainant and the parties directly interested.
I am of opinion that the decree of the court below should be modified and corrected as indicated, and as corrected affirmed; that four months should be allowed for the payment of these claims, and in default of such payment that the premises be sold; that complainant should recover costs of the court below, with costs of this court to defendant Emily L. Truesdail.
Marston, J. Upon the petition of the defendant Emily L. Truesdail, a motion has been made for' and in her behalf that this case, heretofore heard and decided in this court upon pleadings and proofs, be opened so as to permit her to introduce evidence and make a defense which she was before unable to and prevented from making. The reasons assigned are that because of her physical and pecuniary inability she was unable to pre-' pare for her defense and take testimony in the case: for newly discovered testimony; and because she was prevented from making her defense by the' collusion and fraud of the complainant leading to the suppression of testimony.
There undoubtedly are many circumstances presented by the record in this case touching the physical disabilities and pecuniary embarrassments under which the petitioner has heretofore labored which strongly appeal to judicial discretion, and insure a patient and careful' investigation, in order that the relief prayed for may be granted, if consistent with well settled equitable and legal principles.
In ascertaining and determining whether reasonable and ordinary care, attention and diligence was exercised, the physical and pecuniary condition of the party should be considered; also the information or knowledge which she then had of the essential facts or defense, and in the light thereof, the difficulties likely to be encountered in tracing up and establishing the same by competent testimony. Fraud or collusion by others, parties to the cause, leading to the suppression of testimony is a different matter, and will be considered separately.
Owing to the importance of this cause, and for other reasons, it is deemed best to consider the evidence claimed to .have been newly discovered, as well as the time of its discovery and the knowledge which petitioner possessed relating thereto at and previous to the hearing in the principal cause, and to examine the same in detail.
I. That there are many other notes besides those mentioned in the bill of complaint, that were at the time the bill was fled and now are unpaid, and which have an equal right with those in the bill, to payment out of this property.
The notes herein referred to, those outstanding as well as those set forth in the bill and provided for in the decree, are understood to be those secured by the Sanger, Brown and Wight trust mortgage. If these notes are, as now for the first time set forth, outstanding, unpaid, and a valid claim, the holders thereof, not having been made parties, are not concluded by the proceed
This petitioner is not personally liable upon any of those notes, and she has not shown or even intimated, that she, or any property in which she has a present interest, can in any way be injuriously affected thereby. If the holders of those notes had been brought in and the amount, thereof incorporated and allowed in the decree, the petitioner could in no way be the gainer thereby, as the mortgaged property falls far short of satisfying the present decree.
As this case now stands, it would not seem at all necessary to make this petitioner a party to any proceedings which might be commenced by the present holders of these notes; their remedy would be against others, and in the result thereof this petitioner is not interested.
II. That the nine notes purchased by complainant from the Vermont and other banks and included in the decree, were void for usury.
It is proposed to establish this fact by the testimony of Wesley Truesdail, the maker of these notes and husband of petitioner.
For tho purpose of properly appreciating this defense it will be best to here incorporate that portion of Wesley Truesdail’s affidavit touching this subject. It is as follows:
“Affiant has the. means at hand of establishing and can establish by his testimony at the time by the parties, that the nine notes held by the New England banks above mentioned, and purchased by complainant were entirely void for and on account of a' portion of the consideration thereof being for usurious interest taken and received in violation of an express provision of the charter of each of said banks.
“Affiant has in his possession the original statements of account and balance sheets from which the sums were taken named in each of the notes secured or sought to be secured by the Sanger, Brown and Wight mortgage. By which statements it appears, and is the fact, that each of the said New England banks, alone herein*446 named, had in their account with affiant, charged him interest at the rate of seven per cent per annum, while as a fact the charter of each of said banks prohibited it from taking in any case or charging more than six percent per annum, and the amount of the notes running to said banks was made up in part by the addition of such sum of seven per cent, to the amount owed by affiant.”
Admitting all that is here set forth to be true, would it constitute a legal defense, and prevent complainants from recovering? To say the least it is going a great ways to ask a court of equity, acting in the exercise of a sound discretion, to open up a case for the purpose of permitting such a defense to be set up.
The present appli&ation is not based upon a strict claim of right to have the decree set aside and the case re-opened, but the application is made and the relief prayed for asked in furtherance of justice. Would it be in furtherance of justice to set aside the decree in this case so that the notes might be declared void and uncollectible because the bank took seven instead of six per cent interest in violation of their charter?
To permit the debtor to reeeiye and retain the principal, and afterwards avoid payment of the whole or any part thereof, for any such reasons, would be doing a positive injustice in the name of equity, and contrary to the whole policy of the laws of this State relating to usury.
Orr v. Lacey, 2 Doug. (Mich.) 230, went as far we think in this direction as any case that can be found, and without saying whether we would or not follow that case in a similar one, we certainly shall not extend the doctrine there held to cases not coming in their facts clearly within it.
The notes do not upon their face show that usurious interest was taken. We cannot presume a violation of law, and it was said in the case referred t.o that “ to constitute usury, it must be clearly established that there existed an intention to take usurious interest; for, if neither party intended a violation of law, and acted
There is still another answer to this branch of the case, equally applicable to other evidence claimed to be newly discovered, which may here be discussed, so that a brief reference thereto hereafter will be sufficient.
The petitioner sets forth and alleges that until long since the decree was granted and affirmed on appeal, she had no knowledge whatever by hearsay or otherwise, that her husband had the original balance sheet in his possession as stated by him, and herein already referred to, or that such things were or ever had any existence* “ That she had heard said Wesley say that the said notes were void for usury, and she so believed, but had no knowledge of how or in what manner she could establish the fact.”
Here is a clear and positive assertion of having heard that these notes were void for usury, and that she so -believed, but she asserts she had no knowledge of how or in what manner she could establish the fact.
Having heard that they were void for usury what effort did she make to establish the fact? With such knowledge, whom would a person anxious to establish such a defense, naturally call upon for proofs? Who is likely to know the facts and be able to give evidence
We need not however leave this matter in any doubt or uncertainty. The petitioner in speaking of these notes says: “ And said Wesley Truesdail has repeatedly asserted that said claim is absolutely invalid and worthless, and that he has proof of the same whenever he shall deem it necessary for his interest so to do.” Here was not only knowledge that the notes were void for usury, but of the person who had proof of that fact whenever he deemed it for his interest to produce it. Under such circumstances it would be folly to say, that a discovery of the particular items of proof, such as a balance sheet would bring this case within the rule we have referred to. It was clearly the duty of the petitioner to have placed her husband Wesley Truesdail upon the stand, and compel him to produce his proof of the fact, whether it was for his interest so to do or not. The reason set up for not placing him upon the stand we will examine hereafter.
The next two reasons, relating as they do to the Williams and Tucker mortgages, the defendant Miller’s connection therewith, and his authority to assign them to complainant, were all passed upon in the principal case and cannot be again considered.
III. That the complainant has entered into a disgraceful, collusive, fraudulent and corrupt arrangement with the husband of petitioner, Wesley Truesdail, to procure the suppression of testimony, and to prevent her from making an efficient defense in the case.
It has already been determined and decreed that complainant had a valid claim for a large amount secured by this farm. They were anxious to secure payment of this claim. The Sanger, Brown and Wight trust mortgage, given to secure notes to a very large amount, it was claimed constituted a prior lien, and the amount thereof outstanding and unpaid was supposed to be within the knowledge of Wesley Truesdail. The bank had purchased for a small sum a portion of these notes, and questions had arisen in regard to the validity of certain other, mortgages upon portions of this farm, which were claimed by petitioner. Such was the condition of things in part at least, at the time the agreement between the bank and Wesley Truesdail was entered into. The agreement made is recited and set forth in the letter of March 18th, 1876,; written by the Vice President of the complainant bank’ to Wesley Truesdail, and is in substance as follows: It recites that a stipulation had been entered into in this case pending in the circuit court by Wesley Truesdail and that he had agreed “to make a complete statement of all the money transactions between you [him] and Mrs. Truesdail, showing how much money you received from any person for her and when and from whom the same was received, and also the amount of money paid by you to her and on her account, which should be credited to you and charged to her, thus showing the true balance due her, and also what securities or property transferred to her and what was paid for the same, to the end that this bank may obtain a decree for all the sums due it in said suit. Now the bank agrees that if on the final-hearing of said cause a decree shall be rendered in favor of said bank on the obligatiohs it holds against you, and that said property referred to in the bill of complaint
The writer of the above letter in another to Wesley Truesdail dated May 10th, 1875, among other things seeking an interview with Truesdail, says: “I am thoroughly convinced if you follow out the plan I suggested you can save a large portion of the property for yourself in the end, but to do this, you and I must have a perfect understanding and plan of operations laid out.”
' A creditor -during the pendency of a suit has the privilege and right of making any agreement with one or more of the parties thereto, they may deem proper, which would not injuriously change or affect the legal or equitable rights of the others, and which would not be contrary to the laws of the land. He may purchase his peace, and he may agree as to what disposition shall be made of the judgment or property by him recovered in the case. Such agreements should however be scrutinized closely, so that they may not tend to the prejudice of the other parties defendant. Should it appear upon the face of such an agreement, or from evidence dehors the instrument, that the object sought to* be gained
This agreement must have contemplated and intended that Wesley Truesdail should, if called upon as a witness, take the stand and make a full and truthful statement under oath concerning all matters enquired about. Such an agreement while it could in no wrongful way affect or prejudice petitioner’s rights, would cut off all improper delays and defenses which otherwise might have been resorted to, and judging from the history of these transactions, as presented -by the record and on the argument, the bank was justified, if such was its object, in making this agreement. Its agreement to convey the premises to Wesley Truesdail, for a certain sum, the amount of its claim, and costs and expenses, could not deprive this petitioner of any right she otherwise would have and did have to pay the decree and thus defeat this part of the agreement, and it cannot well be said that under such an agreement Wesley Truesdail would be interested in increasing the consideration he was to pay, by endeavoring to increase the claims held by the bank.
Could or did this agreement however in any way prevent petitioner from availing herself of her right to call upon her husband as a witness in the case and examine
It is said, however, that the effect of this agreement-which he made with the bank was to and did prevent him from communicating with petitioner and informing' her fully of all facts known to him as he otherwise would have done. Such indeed may have been the effect, and even if so, as already said, she knew sufficient, which if diligently followed up, would have enabled her to have-ascertained and proven all the facts in due season. We-are not satisfied that the agreement made had even this effect. It appears clearly that for a long period the social relations which we expect to find between husband and wife did not exist between Mr. and Mrs. Truesdail. If during the pendency of this suit it was his duty, as it would clearly seem to have been, to consult with his wife, advise her as to her rights in the premises and freely and fully inform her of all facts and circumstances within his knowledge which could in any way aid her in protecting her rights, so equally was it his duty during thependency of other litigation in reference to these same-matters, and yet he seems not to have done so. This agreement made with the bank was not then in the way to prevent him, yet the details he at no time communicated to her. Judging from the past, therefore, we would not be justified in assuming that the agreement referred to in the letter of March 18th was the cause of petitioner’s not obtaining full knowledge of all facts known to her husband and using the same in her defense.
The agreement made between the bank and defendant
We have' thus in view of the importance of this case, examined each of the principal reasons urged in support of this motion. We have had the benefit of a full and exhaustive argument upon the hearing, — many reasons were then urged in connection with those already •discussed. We have earnestly endeavored to carefully consider and give due weight to all, so that the petitioner might have the relief she sought granted, if the same could consistently be done. Many things have been presented which entitle her to favorable consideration, but however favorably inclined we may be, we cannot consistently with duty re-open this, case. It may be that had all the facts now brought forward been presented in due and proper season, they would have had some influence in framing the decree. Many of the most important facts now sought to b^ brought forward must -be proven if at all, by the testimony of Wesley Truesdail. Some of them would be contradicted, as they have been upon this showing, by men of well known character and integrity, and upon such an issue there can be but little doubt as to what the result would be. We have not attempted to follow, with a view to explaining, the devious and winding ways pursued by Wesley Truesdail in the various transactions brought to a close in this
It follows that the motion must be denied, but without costs.