Keely v. Gregg

33 Mont. 216 | Mont. | 1905

Lead Opinion

MR. JUSTICE MILBURN

delivered the opinion of the court.

Appeal of the plaintiff from an order overruling a motion from a new trial and from that part of the judgment which is in favor of the defendants.

Defendant Gregg, on the 18th day of December, 1893, made and delivered to one Kendall his four promissory notes for $5,000 each, and to secure the same he and his wife made a deed to Kendall of certain lands and town lots, it being expressly understood, as per contemporaneous written statement, signed and acknowledged by Kendall and Gregg, that upon the payment of the notes the property should and would be reconveyed by Kendall to Gregg. Among other things, it is recited in the contemporaneous instrument: “Whereas, the said Lucius P. Kendall and said Joseph 0. Gregg have this day accounted together concerning all dealings of every kind, character and description heretofore had between them, * * * and it has been ascertained and determined by said parties that the said Joseph O. Gregg is now indebted to said Lucius B. Kendall in the sum of $20,000, * * * and is at present unable to pay or discharge said indebtedness, but in order to secure the payment of said indebtedness and interest thereon, # * * has caused to be conveyed to said Lucius B. Kendall the following described lands: * * # ” It was agreed, as stated in said instrument, on the part of Kendall, that he would reeonvey as stipulated upon the payment of the indebtedness. Kendall had assigned and conveyed to the plaintiff herein all his interest in the notes, mortgages, lands, and all his rights under said contemporaneous agreement. This suit was brought on default of payment of the notes to foreclose the mortgage, for such the deed appeared and was intended to be.

Defendant Gregg answered, and admitted the above alleged facts, but in defense set up what he calls a “counterclaim”; that is to say, he, while admitting that he has not paid any of the money secured in the manner above stated, avers that plaintiff holds the record title to a certain piece of land called the “Lakey tract,” not mentioned in the mortgage or in the contemporaneous instrument referred to, and that it was part of the consideration of his (Gregg’s) executing the mortgage that he (Kendall) was thereafter to make in writing, sign and deliver to him an agreement or promise to convey to him the Lakey tract. In the contemporaneous agreement heretofore mentioned, there is stated a second consideration for making the mortgage, to-Avit, the withdrawal by Kendall of all objections on his part theretofore made by him to a certain decree of partition of certain lands. There is not any mention in the mortgage or in the said contemporaneous agreement of any promise or obligation of Kendall to convey to Gregg the Lakey land. “All dealings” are settled, but no mention is made of the Lakey land matter. Part of this Lakey tract had meantime been conveyed to Burlingame, one of the defendants herein, by Gregg. Burlingame intervened.

On the trial evidence was introduced by Gregg, over the objection of plaintiff, in support of his counterclaim. The position of Gregg is that his averments as to the Lakey land matter constitute a defense as going to show that the consideration of the mortgage failed, in part at least, for that Kendall never did sign and transmit to him the written agreement to convey the Lakey tract to him, and in fact refused to do so, and has failed to convey the same, and that the averments constitute also grounds of a counterclaim.

The court found and adjudged in favor of defendant Gregg as to the counterclaim, and ordered the conveyance of the Lakey tract to him, but seems originally to have failed to require reimbursement of plaintiff by the defendant of taxes and assessments made on the land and paid by the plaintiff and his predecessor.

It is alleged by Gregg that Kendall never intended to carry out the promise t'o convey the Lakey tract to him, and that the making of the promise to convey without then and there intending to perform was actual fraud. (Civil Code, subd. 4, sec. 2117.) Judgment went for the plaintiff on the mortgage, with adjudication as to the counterclaim, which we have mentioned above. Afterward the court, after hearing the motion of plaintiff for a new trial, conditionally granted the same, unless the defendants would consent to a modification to the effect that they should pay certain taxes and assessments. To this they assented, and, having performed, the motion for new trial was then denied. Neither of the defendants appeals. The defendants not making an attack upon the judgment by appeal therefrom, we have only the appeal of the plaintiff before us. This appeal is resisted by the defendants; in other words, they wish the ease to stand as it is — that is, they are willing that the mortgage shall be foreclosed according to its terms, but they demand that the- Lakey land be conveyed to Gregg. It does not make any difference in this case whether the evidence as to the Lakey property goes to the want of consideration in part for the mortgage and mortgage notes, or whether it is a matter of counterclaim. It is not necessary for us to remark upon the position taken by counsel that the Lakey land matter is a matter of counterclaim. It undoubtedly, judging from the record, was the intention of Kendall and Gregg to get title to said Lakey land from the government without disclosing to the United States general land office that Gregg, and not Kendall, was the purchaser of certain scrip, and the claimant of the land taken thereunder. Scrip had been bought by Gregg with money borrowed from Kendall. The scrip was put upon the Lakey land. It turned out to be fraudulent in that ‘the alleged soldier to whom it had been issued was not entitled to the same. Meanwhile the scrip had been put upon the land by the attorney in fact of Gregg, and the land conveyed to Kendall by the attorney in fact by order of Gregg, and with the consent of Kendall. It is alleged by Gregg that Kendall held the land as security for money owing by the former. Kendall, finding that the scrip was worthless, appears from the record in the land office, in evidence, to have proceeded under the Act of Congress of August 18, 1894 (U. S. Comp. Stats. 1901, p. 1417), making certain scrip “valid in the hands of tona fide purchasers for value,” and saying that “all entries heretofore and hereafter made with such certificates by such purchasers, shall be approved, and patent shall issue in the name of the assignee.” -But it seems that the general land office, differing with the local land office, held the Act of March 3, 1893 (U. S. Comp. Stats. 1901, p. 1416), to apply, it declaring that, “where soldier’s additional homestead entries have been made or initiated upon certificate of the commissioner of the general land office of the right to make such entry, and there is no adverse claimant, and such certificate is found erroneous or invalid for any cause, the purchaser thereunder, on making proof of such purchase, may perfect his title by payment of the government price for the land.”

Kendall -and Gregg labored under the mistaken idea that while Gregg, as he alleges, was the owner and purchaser of the scrip and the land taken up thereunder, Kendall could properly and lawfully make the necessary proofs that he was the purchaser of the scrip or of the land and procure patent. The record shows the fact that Gregg, and not Kendall, was the purchaser of the scrip and of the land upon which it was put, and that Kendall was acting not as the owner of the scrip or claimant of the' land was by them intentionally kept carefully from the knowledge of the government. The patent went to Kendall.

Now, under these circumstances, Gregg contends that the mortgage judgment (from which he does not appeal) should not be enforced unless Kendall’s assignee (the plaintiff) carries out what he (Gregg) declares was part of the agreement of December 18, 1893, to wit, the alleged promise to convey to him (Gregg) the Lakey eighty acres of land, which promise, if made, was deliberately left out of the written instrument of December 18, 1893. If, as we believe and hold, the contract between Kendall and Gregg to take the land from the government in the way agreed upon and above stated was invalid, then it does not make any difference whether Kendall intended at the time of the settlement of December 18, 1893, to make his promise to convey the Lakey tract or not. It was a promise which could not be enforced. A trust cannot result in one of two persons for the benefit of the other, if they intended and agreed to obtain land from the government unlawfully and fraudulently. In such a ease, in a suit between themselves as to the land, the court will leave the parties where it finds them.

It is obvious from the admissions of the answer as to the making of the notes and mortgage, the averments as to the counterclaim, and the prayer of the answer, that the only question submitted by the defendant in the court below was: Shall the plaintiff be permitted to foreclose his mortgage without first conveying to Gregg the Lakey tract? This was the only issue tried. This issue was forced upon the plaintiff by the defendants, with the consent of the court, and it led the court erroneously to admit the testimony as to the Lakey tract over the objection of the plaintiff.

. Defendants do not claim that the arrangement of Kendall and Gregg as to the Lakey tract was fraudulent, and do not say that the mortgage is void for any such reason. The appellant’s position is that the Lakey tract matter had nothing to do with the mortgage, and he relies upon the writings of December 18, 1893. to support his assertion. In short, defendants say the mortgage is good and valid, and may be foreclosed, provided the plaintiff be ordered to convey to Gregg a certain tract of land which, as we hold, was gotten from the government contrary to law, and which defendants say plaintiff’s assignor orally promised on December 18, 1903, to convey to Gregg.

We may not consider in this case, when there is no appeal from the judgment by the defendants, or any of them, whether or not the mortgage sued upon, if partly made in consideration of such or any promise of Kendall in relation to the Lakey tract, may be lawfully foreclosed.

It is not necessary for us to consider the point made by appellant that the contract in writing of December 18, 1893, covered all dealings between the parties. Whether it did or not, it is apparent, under the circumstances, that the defense or “counterclaim” of the alleged unfulfilled contemporaneous oral agreement of Kendall as to the Lakey tract may not, on this appeal, be considered by us as entering into or forming part of the consideration of the notes and mortgage.

The above being our view of the case on this appeal, after considering the oral arguments and reading the able brief of each of counsel, we need not discuss or pass upon the other points of appellant in regard to laches, the statute of limitations, etc. As we have said, the court erred in admitting evidence relating to the supposed “counterclaim” or defense as to the Lakey matter. ' Objection was raised below on the trial, and the point of its admissibility either as a defense or as a counterclaim is squarely raised by the briefs submitted to us.

Rehearing granted October 21, 1905. (Submitted December 4, 1905. Decided January 29, 1906.)

For the reasons above appearing, the court below is directed to modify its judgment by striking therefrom all reference to the north half of the southeast quarter of section 31, township 21 north, of range 4 east (the Lakey eighty acres). The appeal, therefore, of plaintiff from that part of the judgment referring to the Lakey land is sustained, the court having erred in making its conditional order overruling plaintiff’s motion for a new trial, whereas it should have granted it, and subsequently, upon the performance of the condition, having denied the motion; but the judgment now being modified herein and hereby as above stated, there is not any reason why a new trial should be had, and therefore the court below is ordered to modify the judgment as above stated, and to let the same stand as the judgment of the court without a new trial.

Judgment modified.

Mr. Chief Justice Brantly and Mr. Justice Holloway concur.

---

Rehearing

On Rehearing.

Mr. JUSTICE MILBURN

delivered the opinion of the court.

This case is before the court on rehearing, having been heretofore decided. For statement of facts and opinion see ante, p. 216, 82 Pac. 27. Our decision before was that the decree below should be modified by striking from it all reference to the Lakey eighty acres, which will be hereinafter called the Lakey land. After consideration of argument of counsel on rehearing, we now say that we erred in ordering the particular modification of the decree which we in the former opinion directed to be made.

The contemporaneous instrument of December 18, 1893, shows that the mortgage for $20,000 was given to secure certain. indebtedness, evidenced by four promissory notes of $5,-000 each, after an accounting as to all dealings between Kendall and Gregg. There is not any statement therein that there was made, or intended to be made, any release of the Lakey land held by Kendall as security for a certain sum of $3,000, being on such accounting considered as part of the $20,000, theretofore advanced by him to Gregg, or that the debt of $3,000, or any part thereof, had been discharged in any way. The fact*of this land being held as such security being set up by defendant Gregg in the equity suit to foreclose the $20,-' 000 lien on other property, we are now of the opinion that the court below was correct in attempting to adjust aE the equities growing out of the whole transaction and in requiring Keely, the successor of Kendall, to convey the Lakey land to Gregg, but was not correct in directing Gregg to pay only the taxes and assessments on said land accrued, with interest, but should have added a further condition to be performed by Gregg, to-wit, to pay the $3,000 and interest, or so much thereof as might remain unpaid after foreclosure and settlement of the $20,000 mortgage.

Counsel for plaintiff and appellant admitted in open court on rehearing that he would not complain of such amendment of the decree.

It appears that the Lakey land was taken as security for the $3,000. As the $3,000 and interest item was included in the settlement of December 18, 1893, interest should be computed on $3,000 from the date that the debt was incurred, to-wit, April 22, 1889, until December 18, 1893, at the then statutory rate, and at eight per cent upon the total of such $3,000 and interest from December 18, 1893, until tbe time of settlement or foreclosure of the $20,000 mortgage. If upon sucb settlement of tbe foreclosure suit under tbe decree there be a deficiency or a balance still unpaid, thus leaving tbe $3,000 and interest computed as aforesaid, or any part thereof, unpaid, then sucb sum of $3,000 and sucb interest, or so much thereof as is unpaid by sucb foreclosure, shall, with tbe amount now reported by counsel to be deposited with tbe clerk for taxes and assessments on the Lakey land, be paid to Keely, and then tbe said Lakey land shall be by Keely, or the clerk of tbe court as commissioner, conveyed to Gregg.

Upon further reflection and after further' examination we find that we were in error in this case, in our conclusion that because Kendall and Gregg apparently bad intended to conceal from tbe federal land office tbe fact that Gregg, and not Kendall, was tbe purchaser under the soup, any promise of Kendall to convey tbe land patented to him in pursuance of such secret plan, could not be enforced. It seems that tbe facts upon which we based bur conclusion that tbe arrangement to procure title in Kendall, and not in Gregg, were all known and considered by tbe interior department before issuance of patent, and that the government knowingly and willingly conveyed tbe land to Kendall intentionally, leaving him and Gregg to settle tbe equities between themselves, if any there were, in tbe courts after patent issued. For this reason w§ revoke what was said in the ^rmer opinion as to tbe arrangement between tbe parties being void, and that tbe courts would not enforce tbe intended trust. It now appears that Kendall took tbe patent in bis bwn name to secure tbe sum of $3,000 and interest, and bis successor should convey tbe same to Gregg whenever tbe amount for which it was held as security, sucb amount to be ascertained as hereinbefore said together with said taxes and assessments, is fully paid by or on behalf of Gregg.

Let tile decree below appealed from be modified accordingly, and let; tbe foreclosure of tbe $20,000 mortgage proceed as decreed*. Ererything in tbe former opinion not in conformity herewith is revoked. The decree, when amended as above decided, shall stand affirmed. Remittitur forthwith.

Modified and affirmed.

Mr. Chief Justice Brantly and Mr. Justice Holloway concur.