38 Mich. 513 | Mich. | 1878
May 16,1874, the defendants Stewart and wife joined in a promissory note to complainant for $3000, payable three months after date with semi-annual interest at ten per cent. They also made their mortgage of even date, but acknowledged May 20th, to secure the same debt. It was given on the northwest quarter of the northeast quarter and the north half of the southwest quarter of the northeast quarter of section sixteen, of township five south of range nineteen west.
The debt seems to have been the unpaid remainder of an original debt of $5000 which had been incurred by Stewart and Theodore and Franklin Pew, in certain business transactions not much explained. At the time of this mortgage from Stewart to Higman, the Pews held the legal title to a mill property at the mouth of the Paw Paw and St. Joseph rivers which some time previously appears to have been regarded as quite valuable. They had become embarrassed; the property was considerably encumbered and had very much depreciated in value. Exactly what land the property includes is not certainly described in the record, but it probably embraces University lots 18, 19, 28, and a portion of lot 27.
Through its endowment fund committee the Albion College held a mortgage given by the Pews December 6, 1871, on lots 18, 28, and part of lot 27 for about $3000, and the representatives of the estate of one Becker held another on the same parcels given by the Pews Oct. 15, 1873, and calling for between $2000 and $3000.
Besides these encumbrances by mortgage there was a levy. May 18, 1874, the sheriff had levied an execution in favor of one Swinson, against the Pews, on the parcels covered by these two mortgages, and also on lots 19, 3, 11 and 12. At this stage Stewart obtained a lien. May 21st, 1874, and the next day after Stewart’s aeknowledg
October 10, 1874, sale was made on the Swinson execution, and the whole premises covered by his levy were struck off to him in parcels, for the aggregate sum of $1048.82, and the sheriff delivered to him the necessary certificates. As the levy under which this sale was made was prior to the mortgage given to Stewart, the right acquired by the purchase under it was superior; but it was subject to the earlier mortgages to the College and Becker estate, as to lots 18, 28 and part of 27 which all covered.
September 8, 1875, and when the time for redeeming on the part of the Pews had still a month left, Stewart assigned to complainant the note and mortgage which the Pews had given for $4100.
This assignment was in form absolute, but a paper was made simultaneously from complainant to Stewart which declared that the note and mortgage were assigned as collateral security only for notes which complainant held against Stewart, and further, that the transfer was subject to the understanding that the difference between .the cost of the property to complainant if it were bought by him and the amount realized if sold, should be applied towards liquidating Stewart’s indebtedness to him.
September 9, 1875, the next day after the date of this transaction, complainant received an assignment of the certificate of sale under the Swinson levy. He paid $630 to obtain it. The Pews failed to redeem, and January 12, 1876, the sheriff conveyed to him and immediately, ■or very soon afterwards, he assumed possession under this title. After he had received this conveyance and
. Meanwhile proceedings in chancery had been going on to foreclose the Albion College and Becker estate mortgages, and sales were at length advertised under decrees, for September 11, 1876. On the occurrence of the sales complainant became purchaser at both and received conveyances accordingly. The wholesale price is stated to have been $5643.83.
These purchases by complainant appear in the evidence as settled by the judge and they are therefore noticed in this connection. They occurred, however, long after the commencement of this suit, and their admission in the case is not explained.
A few weeks after the sheriff’s deed and the taking of possession under it, namely, in March, 1876, the' complainant filed this bill to foreclose the mortgage for $3,000 Stewart and wife gave him on the farm. It was taken as confessed by Jones and Wellington Stewart. Charles Stewart and his wife answered separately. Both admitted the note and mortgage and denied that anything was due. She alleged that the transaction was m the exclusive interest of her husband and on information and belief charged that the whole demand had been paid.
Many questions of intricacy are obviously suggested by the case which do not arise at all under the proceedings. It is hence not very surprising that the discussion has dwelt on topics not embraced by the pleadings. The suit can only be defended on the ground set up in the answer (Van Dyke et al. v. Davis et al., 2 Mich., 144), and the ground alleged there is single and distinct. It makes no claim that complainant’s situation as mortgagee of the mortgage from the Pews to Stewart imposed any duty on him to abstain from buying for himself the prior right arising from the execution sale, and to hold and use it, after having bought it, in subservience to Stewart’s interest.
The Pews are not parties, and are not shown to be irresponsible. For all that appears they may be abundantly able to meet every claim Stewart has ever had against them. Their mortgage to him was given to secure eleven hundred dollars of indebtedness beyond the sum for which he had given the mortgage in suit to complainant, and his assignment by way of mortgage to complainant of the Pew mortgage, was not only to secure the debt of $3000 represented by the mortgage in suit, but a further indebtedness likewise of several hundred .dollars. We are not informed what has become of this extra indebtedness from the Pews to Stewart nor that from Stewart to complainant. Neither do we know anything concerning the application of the value of the lots included in the execution sale and not embraced in the other papers. There are many things pertaining to the series of transactions of which the mortgage in suit is one which cannot be. unravelled in this litigation, and we need allude to them no further.
The exact ground of defense asserted in the answer
Unless this position is sound in theory and well grounded in fact the decree below cannot be disturbed.
It is not very important now that the object of the assignment of the mill property mortgage is represented incorrectly as the securing nothing else than the debt in suit, and it is not needful to question the validity of the final consequence claimed to follow the asserted facts. The more important consideration is whether the facts prove that complainant duly contracted to pay the mill property mortgage in question either as his own debt or as the debt of the Pews.
The only evidence not documentary adduced at the instance of the defense was given by complainant.
He was called by Stewart and examined at length. The defendants did not testify. Neither did they call or procure the evidence of either of the Pews. The case was left with such statements and explanations as were called out from complainant, and it is a reasonable inference that the defense could not be improved by the oaths of the others. Wallace v. Harris, 32 Mich., 380, 394; Whitney v. Bayley, 4 Allen, 173; McDonough v. O’Niel, 113 Mass., 92; 1 Starkie’s Ev., 762.
His evidence showed that prior to his getting title under the execution sale and whilst the Pews were still in possession and holding the equity of redemption he had some talk with them about deeding to enable him to make a conversion of the property and that he subsequently found opportunity to sell in case immediate possession could be obtained, and so informed Stewart
His evidence further showed that these efforts to get a deed from tbe Pews were in October, 1875, and that be never bad any later or other talk with Stewart about getting one, and there is no evidence of any negotiation between tbe Pews and complainant or between Stewart and complainant for any deed except tbe quit claim sought for in October, or any evidence that complainant expected or desired one.
Tbe deed tbe sheriff gave complainant January 12, 1876, and under which be took full possession is in no manner impugned. It must be regarded as a valid and complete conveyance and hence as cutting off all right, title and interest of tbe Pews and vesting tbe equity of redemption • perfectly in complainant. He was in full possession and they bad no right, not even a possessory one, left to serve tbe purpose of a colorable conveyance or afford tbe semblance of a consideration to support a grantee’s promise. In this state of things one of tbe Pews passed into complainant’s bands tbe formal grant in question. It occurred nearly two weeks after complainant’s acquisition of title and possession and tbe utter extinguishment of all right and interest in tbe Pews. Tbe evidence of complainant explains tbe transaction. He was engaged in business at tbe bank and was busy. One of tbe Pews entered and addressing him observed “Here is tbe deed to tbe mill property,” and at tbe same time banded to him tbe deed in question; that be was busy, and took it, and said nothing; that be did not read it or notice tbe clause relating to payment of tbe incumbrances; that be did not ask for it or pay anything for it, or put it on record. There is no evidence whatever that be regarded it as a conveyance or ever made use of it - as an instrument of any value or effect. So far as appears tbe preparation, execution and banding over of tbe paper were acts purely
The Swinson levy and sale no longer constituted a mere lien to be satisfied or discharged. The proceedings had ripened into a perfect title which complainant owned, and so far as the defense in this cause is concerned, had cut off the lien of the mortgage to Stewart.
• Still according to the clause designed to bind complainant, he was to be bound, and according to the theory of the defense made himself bound to the Pews to pay as consideration for this nominal grant, not only the two early mortgages amounting to between $5000 and $6000, but also in some way to “pay and discharge” as though it were an incumbrance of a little over $1000, his own complete title under the execution, and likewise to “ pay and discharge” the mortgage of $4100 which was no longer an incumbrance on the property.
In short, if we set aside a most important fact and consider the right under the execution as only a lien for the amount of the sale, in order to avoid the absurdity of an agreement to “pay and- discharge” an absolute title owned by the promisor, the position at last is that complainant promised to sink over $5000 for nothing.
Passing from this long statement of facts we may first inquire whether the doctrine which makes a grantee responsible to a mortgagee in consequence of a provision in the grant that the grantee assumes the payment of the mortgage debt, is applicable to the claim made by the defendant Stewart. The doctrine -has been maintained in two forms. The first, where a special agreement has been made between the seller of the equity of redemption and the purchaser that the mortgage debt shall be considered purchase money, but be left in the hands of the purchaser for the use of the mortgagees : and this, it has been said, affords a valid basis for a direct claim by the mortgagee against the purchaser thus holding the mortgage debt for his use.
This view, however, has been expressly overruled by courts of high authority, and upon the ground of want of privity on the part of the mortgagee. Mellen, Adm’x. v. Whipple, 1 Gray, 317; Pettee v. Peppard, 120 Mass., 522; Kearney v. Tanner, 17 S. & R., 94, 97; Daniel v. Leitch, 13 Gratt., 195.
Granting that the doctrine is sound, yet it appears .clear that the facts do not make out a case to meet it. Girard Life Insurance, Annuity and Trust Co. v. Stewart, 86 Penn. St., 89. It was incumbent on Stewart to prove at least that it was understood. between complainant and the Pews that there was purchase money to be left. Instead of that, however, the evidence shows that it was not so understood, and moreover that there was none in fact.
The second form accorded to the doctrine is that the-grantee upon consideration agrees with the grantor to pay his debt, whereby as between them the grantee becomes principal debtor and the grantor his surety; and in accordance with the principle which in equity entitles the chief creditor to receive the benefit of a security held by a surety, the mortgagee creditor is entitled to the benefit of the agreement made by the purchaser of the equity of redemption. Halsey v. Reed, 9 Paige, 446; Blyer v. Monholland, 2 Sandf. Ch., 478; King v. Whitely, 10 Paige, 465; Marsh v. Pike, id., 595; Garnsey v. Rogers, supra; Curtis v. Tyler, 9 Paige, 432; Stevenson v. Black, Saxton, 338; Tichenor v. Dodd, 3 Green (N. J.), 454; Crawford v. Edwards, 33 Mich., 354; Miller v. Thompson, 34 Mich., 10. In this aspect the doctrine does not contemplate an obligation from the grantee to the mortgagee, but a promise from the former to .the mortgagor which may be caused to inure by an equitable subrogation to the mortgagee’s benefit.
Row, the Pews to whom tfie agreement is alleged to have been made are not parties and the practicability of
Other circumstances are admissible to explain or overcome their prima facie import, and in the present case we ñnd a state of things which deprives them of importance. Without further reference to the facts it is enough to" say that on a fair construction of the evidence it does not appear that complainant received the paper in the sense of making himself a party to it.
The conclusion reached leads to 'an affirmance of the decree, with costs to complainant.