Hoile v. Bailey

58 Wis. 434 | Wis. | 1883

■ Cassoday, J.

The failure to furnish a complete, consecutive, and succinct statement of the facts involved, with appropriate references, has made it extremely difficult to comprehend the merits of the real contention on either side. After a very thorough reading and re-reading of the printed case, and as careful an examination of the voluminous unprinted record as time will permit, we are still in doubt as to some of the facts involved. Upon such doubtful questions of fact we are, therefore, necessarily forced to acquiesce in the findings of the trial court. These facts, together with such as are clearly established by the record, are stated above, and need not be here repeated. The conclusions of fact and law to be drawn from such statement remain to be considered. This is an action for the strict foreclosure of the-contract executed February 8, 1879, whereby Bratt purchased of Hoile the lands and mills in question. Bailey and McCulloch each separately defended, and each bring separate appeals. Both are urging, however, that the plaintiff has lost his cause of action, if he ever had any, by reason of the strict foreclosure of the contract given by Ebenezer Whitney on the sale of the land, November 22, 1875, and the deed from him to McCulloch, October 23, 1879, whereby it is claimed that the title became absolutely vested in the latter,discharged of all claim of the plaintiff, and all liens and in-cumbrances accruing after the date of that contract. It appears that the title was allowed to become absolute in Ebenezer Whitney, and the deed from him to MoOuUooh was made in pursuance of an agreement and understanding made and had with them and Bailey in behalf of the firm of Bailey & Bratt, as above stated. From what was said and done at the time, and subsequently, there can be no question but what the title was allowed to be made absolute, and the deed given and accepted for the use and benefit of Bailey & Bratt.

It is well settled that where the owner of the equity of redemption procures another to advance money and bid in his property on sheriff’s sale, and take the title thereof for the benefit of such owner, with the understanding that he will reconvey the same to such owner on repayment of the. money so advanced and interest, the transaction in equity constitutes a mortgage. Sweet v. Mitchell, 15 Wis., 641; Spencer v. Fredendall, 15 Wis., 666; Wilcox v. Bates, 26 Wis., 465. The same principle has been applied to a case where lands were purchased from a third person for the use and benefit of one in possession. Starks v. Redfield, 52 Wis., 349. Here McCulloch merely advanced the money and took the title as security at the request, and for the use and benefit, of Bailey & Bratt, and for that purpose and with that understanding the title was allowed to become absolute in Ebenezer Whitney. Thereby Bailey & Bratt became, in equity, debtors to McCulloch for the money so advanced and to be advanced, and he became their creditor. Whenever property is transferred, no matter in what form or by what conveyance, as the mere security for a debt, the transferee takes merely as a mortgagee, and has no other rights or remedies than the law accords to mortgagees. Id., 352.. Under the facts and authorities, McCulloch must be regarded as a mere mortgagee of Bailey & Bratt, or at least of Bratt.

2. It is claimed on the part of Bailey, who'negotiated the transaction, that he never, in iact, purchased nor agreed to purchase any interest in the equity of redemption; and that if he did so agree, yet that the agreement was by parol and void under the statute of frauds. But the trial court has found*that he did mate such an agreement, and the evidence to the contrary is not sufficiently convincing to justify ns in disturbing that finding.

"Was the agreement void under the statute by reason of its being in parol? In consideration of Bratt’s equitable interest in the lands, mills, buildings, and his other property being put into the firm as partnership property, Bailey agreed, as such partner, to assume with Bratt the payment of the debts of Bratt to Hoile and the several claims which Bratt had assumed a,nd agreed to pay. Upon that agreement being made, Bailey, as a partner with Bratt, immediately entered into complete possession of the mills, buildings, and real estate as such partner, and the firm thereupon cut and removed from the land large quantities of logs and timber, and manufactured the same into lumber and other things, and sold and converted the same to their own use. Do the facts bring the case within subd'; 2, sec. 2307, B. S., which declares that “ every special promise to answer for the debt, default, or miscarriage of another person,” “ shall be void, unless such agreement, or some note or memorandum thereof, expressing the consideration, be in writing'and subscribed by the party charged therewith.” This language has given rise to much contrariety of opinion in different courts, and sometimes in the same court, not only as to the several classes which do and which do not come within its provisions, but also as to the precise language in which to state the rule of law applicable to a given class. We have no purpose of reviewing, much less of attempting to reconcile, these decisions, nor of considering the law applicable to any class of cases except' the one here presented.

In Young v. French, 35 Wis., 116, the present chief justice stated one distinction between cases within and without the statute thus: “Where the party promising bas for his object some benefit and advantage accruing to himself,, and on that consideration makes the promise, this distinguishes the case of an original undertaking from one ^within the statute.” This is quoted approvingly by Mr. Justice LyoN in the recent case of Clapp v. Webb, 52 Wis., 641. The facts in each of those cases differ from the facts here, but the distinction thus stated is substantially the same as that announced by Chief Justice Shaw in Nelson v. Boynton, 3 Met., 400, which was followed in Alger v. Scoville, 1 Gray, 397; Draper v. Putnam, 7 Allen, 174; Burr v. Wilcox, 13 Allen, 273; Ames v. Foster, 106 Mass., 403. To the same effect is the able opinion of PolaNd, C. J., in Fullam v. Adams, 37 Vt., 403. The rule thus stated also received the sanction of Chief Justice Savage in these words: “In all these cases, founded on a new and original consideration of benefit to the defendant or harm to the plaintiff, moving to the party making the promise, either from the plaintiff or original debtor, the subsisting liability of the original debtor is no objection to a recovery»” Farley v. Cleveland, 4 Cow., 439. “ This language,” was said by Comstock, C. J., in the leading case of Mallory v. Gillett, 21 N. Y., 419, to have “greater precision than that of Chief Justice KeNt” in the much-criticised case of Leonard v. Vredenburgh, 8 Johns., 29. In the case of Mallory v. Gillett, supra, the meaning of this statute was ably discussed, both in the opinion of the majority and minority of the court, and although the two opinions are in direct conflict upon the question there involved, yet they substantially agree, among other things, as to the rule of law applicable to the case here presented. That rule of law may be summarized thus: Where B. purchased property of A. on credit, and thereupon sold the same to C., who, in consideration therefor, and as a part of the purchase price thereof, promised to pay B.’s debt to A. upon the former purchase, such promise on the part of 0. is nothing more nor less than an agreement to pay his own debt, although the incidental effect of such payment would be to pay and discharge B.’s debt to A.

A different rule might be inferred from a remark of DixoN, 0. J., in Dyer v. Gilson, 16 Wis., 559, where the consideration moved from the plaintiff to the defendant, and not from the original debtor to the defendant, as here. lie there said: “ The distinction is between cases where the person promising has for his object a benefit accruing to himself, in which the original debtor has no interest, a/nd from which he derives no advantage, and cases where his primary and leading object is to become surety for the debt of another without benefit to himself, but for the exclusive advantage of the other parties to the contract.” But the same learned judge, in the later case of Putney v. Farnham, 27 Wis., 187, virtually eliminated the words in italics from the proposition. In that case the defendant purchased certain property of one Cor-bett, and as a part of the purchase price agreed with him to pay certain debts incurred by Corbett on a former purchase of the same property, and although the original debtor did have an interest in the sale to the defendant, and did derive an advantage from his promise, yet DixoN, C. J., observed, that “it was a guaranty in form, but not in substance or effect, within the meaning of the statute of frauds. It was not a mere promise by the defendant to be responsible for the debts of Corbett to those parties, and to pay those debts, but a promise by him to pay his own debt in that particular way. It was a promise founded upon a new and sufficient consideration moving to the promisor from the debtor at the time the promise was made. Such a promise or agreement is not within the statute of frauds.” This enunciation is in strict harmony with the rule above stated. The mere fact that Bailey did not contract with Hoile personally, and that the consideration for the promise of the former did not move to him from Hoile, but from Bratt, is no valid reason why ■Hoile should not be allowed to enforce the contract made by Bratt with Bailey for his benefit. Cotterill v. Stevens, 10 Wis., 422; Putney v. Farnham, supra; Bassett v. Hughes, 43 Wis., 319; Kollock v. Parcher, 52 Wis., 399; Houghton v. Milburn, 54 Wis., 561. We must therefore conclude that the parol contract between Bailey and Bratt was not within the statute of frauds, and hence that the former took the undivided one-half of all the property held by Bratt under his contract with Hoile, subject to the liens and claims of the latter, which Bailey, in consideration of the purchase, thereby became equally bound to pay, and which Hoile, as vendor, could enforce against both Bailey and Bratt in this action. ’

3. Having determined the relations of the parties, it becomes necessary to consider whether the plaintiff can reclaim the land, and at the same time recover damages by reason of waste upon the land in this action of strict foreclosure. It was held in Button v. Schroyer, 5 Wis., 598, that the proper decree in an action of strict foreclosure is “ that the money due upon the contract be paid within such reasonable time as the court may direct, or that the vendee be foreclosed of his equity of redemption.” A judgment foreclosing the contract and directing a sale of the premises, and payment of the amount due and a personal judgment for any deficiency was reversed in Baker v. Beach, 35 Wis., 99, for not complying with that rule. The practice thus indicated was followed in Kimball v. Darling, 32 Wis., 615; Landon v. Burke, 36 Wis., 378; Church v. Smith, 39 Wis., 492. Here the interlocutory order provided that unless Bailey & Bratt paid the amount due as specified within the time limited, then, upon proof of such failure and notice, the plaintiff should have judgment against them and McCulloch, and all persons claiming by, through, or under them since the commencement of the suit, forever barring and foreclosing them, and each of them, from all right, title, and interest in and to the premises, or any part thereof; and in that event the plaintiff was also to recover of and from Bailey & Bratt the value of'the use of the mill, and all timber cut and taken from the land after February 8,1879, and that McCul-loch should also be held liable with Bailey & Bratt for the value of the use of the mill and all timber cut by them after October 30, 1879. Default having been made, a judgment absolute was entered therein, barring and foreclosing the defendants of all rights in the premises, and restoring the same to the plaintiff, free and clear df all claim or lien of any of the defendants, and authorizing the plaintiff to recover of Bailey, Bratt and McCulloch $8,235.80 damages for the timber cut and the use of the mill as aforesaid and for costs, and to be let into possession. " Was the plaintiff entitled to such damages in this, action ?

In Bechwith v. Philleo, 15 Wis., 223, the vendee was to-pay taxes and have possession and use of the premises without impeachment of waste or claim of damages against him, so long as he performed the conditions on his part to be performed ; and it was held that the vendee had a right to cut timber from the land, and that such right passed to his assignee; and further, that a default of the assignee in not delivering the instalment of lumber when due, did not give .the vendor any property in the lumber cut, and hence that he could not maintain replevin for it. In Seatoff v. Anderson, 28 Wis., 212, it was held, in effect, that the vendee in possession, and in default of payment, under an executory contract, had no right to remove buildings erected upon the premises, and that a stranger removing such buildings under the alleged authority of such vendee was liable in damages to the owner of the legal title. In Huebschmann v. McHenry, 29 Wis., 655, it was held, in effect, that where one acting under a claim of right, adverse to the true own'er, entered upon the premises of another and erected a building thereon so as to become a fixture, and then, after .being evicted, again, entered upon the land and removed the same, such severance converted the building into personal property, and the land-owner could thereupon reclaim the building from such trespasser in an action of replevin. In Northrup v. Trask, 39 Wis., 515, the vendee had agreed to erect a house on the lot purchased of the plaintiff, which he did, and thereafter removed the house and attached the same to a lot belonging to the defendant, to whom he was indebted for the lumber with which he built the house. The house having thus become the realty of the defendant, it was held that he was not liable for its conversion and value to the plaintiff as the vendor of the first lot upon which it was erected.

The above cases were all actions at law, and hence not strictly applicable. This is an equitable action, and the court should, as far as possible, enforce good conscience between the parties. There may be some things said in Northrup v. Trask, supra, from which it may be inferred that damages for waste can in no case be recovered by the vendor against the purchaser. But without affirming or denying alL that is there said, it is enough here to say that that case is clearly distinguishable from the one before us. By the terms of the contract of February 8, 1819, here sought to be enforced, Bratt was to have and take immediate possession of the lands, and all the personal property formerly belonging to the firm of Hoile & Bratt, and to have the right to cut the timber on the lands and manufacture the same into lumber in the usual course of said business: provided, that there should at all times be left standing on said lands sufficient good pine timber, the stumpage of which, at $1.50 per thousand feet, should be sufficient in quantity to cover and include all the indebtedness and liability owing or assumed by Bratt as stated. It was under that agreement that Bailey went into possession with Bratt, and, with the liabilities he assumed, he became entitled to the same rights that Bratt had under the agreement. Manifestly the contract contemplated the continuance of the business right along as it had been conducted by Hoile & Bratt;— that the mill should be used, and the timber cut and manufactured into lumber and sold, provided, only, that the limit in cutting pine timber, specified, should not be transcended.

The use thus expressly stipulated for could not be enjoined, nor give the plaintiff any ground of complaint. Nor could any cutting of timber, except such “good pine timber” as was expressly reserved as security. What would be the rights of the respective parties, in the absence of such express stipulation, is not before us for consideration. Here the parties to the contract did stipulate, and hence the terms of their stipulation must be considered in determining their rights and liabilities. In this respect the case is like Beckwith v. Philleo, supra. Without continuing the discussion, we must hold that Bailey & Bratt were not liable as for waste in damages for the use of the mill, but were liable for all good pine timber cut in excess of the amount prohibited by the contract. But the value of such excess so cut is not necessarily to be limited to the price named in the contract, as. that price was named merely for the plaintiff’s benefit and to keep good his securities. It appears from the findings, however, that at the time of making the contract of February 8, 1879, there was not sufficient in quantity of good pine tim•ber standing upon the land, at $1.50 per thousand feet, board measure, to cover and include all the indebtedness and liability owing and assumed by that contract. This being so, it follows that Bailey & Bratt had no right, under the contract, to cut any pine timber from the land. Having done so in violation of the contract, they were bound in equity to pay, from the timber so cut, at least the amount of the value of the stumpage, upon the debts which they had assumed and agreed to pay. The court found that Bailey & Bratt had cut and removed from the premises 4,000,000 feet of pine lumber, and that the same was worth $1.65.per thousand feet, board measure, or $6,600. For this amount, therefore, they were properly answerable in damages. But it appears that they had actually paid more than that amount upon the debts which they had assumed and agreed to pay. It. may be, however, that these payments, or some portion of them, were realized from other sources; but in so far as they were realized from pine timber so cut by them from the premises, the amount of the value of such stum page, as damages, should be reduced. This court will, therefore, allow testimony to be taken of the amount of such payments (if any) as were made from money or property realized from the pine timber so cut from the premises, and when ascertained the same must be deducted from the value of the stumpage so found ($6,600), and the balance (if any), with interest from the time of such cutting, the plaintiff will be entitled to, as damages, against Bailey & Bratt in the final judgment of strict foreclosure. It follows that that portion of the judgment from which the defendant Bailey has appealed is reversed, and the cause, as to him, is remanded for further proceedings according to law.

4. McCulloch's relation to the property and the parties is different, and the damages to be recovered against him stand upon different ground. He took the title from Ebenezer Whitney as security for money advanced and to be advanced, and for the use of Bailey & Bratt, as above stated. He held the legal title as mortgagee merely. His claim, however, was prior in time and right to every other claim or lien upon the premises. McCulloch took actual possession of the mill, April 1, 1880, and held it until April 1, 1881. During that time he manufactured in the mill, as found by the court, 3,230,215 feet of lumber, and the value of the use of the mill and premises to manufacture the same was eighty-five cents per thousand feet, board measure, or $2,745.68; and during the same time he manufactured in the mill 1,500,000 shingles, and the value of the use of the mill and premises to manufacture the same was fifteen cents per thousand, or $225, making in all for such use $2,970.68. None of the timber from which McCulloch so manufactured lumber and shingles was taken from the premises in question. The court found that during the time McCulloch was so in the possession and use of the mill, he expended for repairs $573.97, for which sum the court found he was entitled to credit upon so much and such part of the judgment as he, McCulloch, was liable to pay. McCulloch had also paid Ebenezer Whitney, as a part of the consideration of the conveyance to him from the latter, $900, no part of which was ever repaid to' him by Bailey & Bratt, or either of them, nor any one, except as he got it back by way of the use of the mill and premises, as stated. For the purpose of obtaining payment of the amount so advanced, McCulloch had the right to the possession of the mill and premises, and use of. the same, as against the plaintiff and all other claimants.

The question recurs, For what amount was McCulloch, as such mortgagee, liable to the plaintiff? The doctrine was settled in Wilcox v. Bates, 45 Wis., 138, that “ trustees in possession are in general chargeable with actual receipts only, except upon proof of gross negligence or of fraud in lessening or concealing receipts; and a mere attempt by them to ignore the trust and deal with the property as their own, is not such a fraud as will charge them beyond actual receipts; nor does it tend to prove, but rather repel, negligence in the administration of the estate.” Here the actual receipts would be the value of the use. Unless there is something in the case at bar to take it out of the rule thus settled, it is evident that McCulloch was only chargeable with such use; and the difference between the value of such use and the sum of the amount due him on the purchase price and the repairs allowed, would be the true amount for which the plaintiff was entitled to judgment against him. That difference was $1,496.11. Is there anything in the case which takes it out of the rule thus settled and makes McCulloch liable to the plaintiff for any part of the timber cut by Bailey & Bratt, or the use of the mill by them? Certainly there can be no ground for such claim by reason of the purchase from Whitney, nor of the manner in which it was effected. There is no evidence that the plaintiff knew anything about it until long after it was completed. Whitney’s judgment was about to become absolute; and had it not been for the fact that the purchase was brought about by Bailexj in the manner indicated, the plaintiff’s claim upon the mill and real estate would have been thereby wholly terminated and forever extinguished. Instead, therefore, of being an injury to or in any fraud of the plaintiff’s rights, it was the only thing which preserved to him the continuance of any claim to the premises. Nor do we think that the mere fact that Bailey & Bratt did their business at Mc-Culloch's bank, — depositing their money and drawing it out like other customers, — -is any evidence of fraud, or any reason why McG%dloch should be held chargeable with the money thus passing through the bank.

The only circumstance from which it can be plausibly argued that McCulloch should be held liable for the action of Bailey & Bratt prior to the time when he took actual possession, April 1, 1880, is the execution of the lease to Bailey, October 80, 18Y9. At that time Bailey & Bratt were in possession of the property, and using it as a firm, the same as they had for a long time previously. The lease did not run to the firm, but to Bailey alone. There is no evidence that Bratt had anything to do with or about the lease, nor that he had any knowledge or information of its execution until after McC%Moch had taken possession, but the evidence is to the contrary. Bratt, as a member of the firm, continued in possession, cut timber, and ran the mill after the lease the same as he had done before. The lease was not a matter of negotiation, nor of terms insisted upon or exacted by MeOulloch. He seems to have executed the lease because it was requested of him by Bailey. The lease seems to have been drawn at the instance and under the direction of Bailey. There is nothing about it, nor in the evidence, to indicate that Bratt or the firm were to hold possession under the lease. It ran to Bailey alone, and was signed by MeCulloeh, and him alone. It did not purport to put Bailey or any one in possession, but merely to “ authorize and empower” Bailey, “for the consideration and upon the terms and conditions ” therein stated, “ to enter upon and take, possession ” of the “ lands and premises ” therein described. There is no evidence that such authority or power was ever exercised by Bailey, or any one in his .behalf, or that MeCulloeh ever received or claimed anything of Bailey under the lease. The property was treated by all the parties until April 1, 1S80, as though no lease had ever been made by MeCulloeh, and no .deed ever made to Me-Culloeh.

There is no evidence tending to show that the plaintiff was ever deceived or misled by reason of the lease, or that he ever had any knowledge or information of its existence, until long after Bailey & Bratt abandoned the premises. The execution of the lease seems to have been a secret, known only to Bailey, Baymond, and MeCulloeh. MeCulloeh does not seem to have had any purpose in its execution. The motive of Bailey in having it so executed is, at most, mere conjecture. He may have thought that the deed to MeCul-loeh gave him the absolute title to the land, and that, as he had personally negotiated the transaction, he might with such a lease drive Bratt from the possession, and take the same to himself; and then, by repudiating Bratt’s contract with Hoile, he might, through MeCulloeh, obtain a good share of the property for himself, discharged of all incum-brances. A lease seems to be the common resort to strengthen the apparent legal title, when, taken merely as security. Plato v. Roe, 14 Wis., 453; Pagan v. Simpson, 27 Wis., 355. Bat the failure of both Bailey and MeOulloeh to ever exercise, assert, or claim any right or privilege uuder the lease, or to inform the plaintiff, or any other person, of its existence, leaves us to guess at the motive which prompted its secret execution and retention. It is quite obvious, however, that such mere secret execution and retention never operated to prevent the plaintiff from redeeming the property from Ebe-nezer Whitney before his judgment became abso lute, nor from redeeming the same from MeOulloeh after he got the deed. On the contrary, he was at perfect liberty all the time to proceed against Bailey & Bratt as he might be advised, and also to redeem from MeOulloeh. Under all the circumstances, we are constrained to hold that there is noth-' ing in the case which takes it out of the settled rule above stated, nor that would make MeOulloeh answerable for the acts of Bailey & Bratt in cutting timber upon the premises prior to the time he in fact took possession.

It follows that that portion of the judgment appealed from by the defendant MeOulloeh is reversed, and as to him the cause is remanded, with direction that in the final judgment of strict foreclosure the plaintiff have and recover of Me-Gulloeh, as damages, the sum of $1,496.71, with interest thereon from April 1, 1881.

By the Court.— Ordered accordingly.

Case Details

Case Name: Hoile v. Bailey

Court Name: Wisconsin Supreme Court

Date Published: Nov 20, 1883

Citation: 58 Wis. 434

Court Abbreviation: Wis.