57 Mich. 430 | Mich. | 1885
The original bill in this case was filed on the 12th day of May, 1877, and the answer thereto on the 27th of August, and the amended answer on the 28th of August, 1881. Cross-bill was filed on the 1st of October, 1881, and the answers thereto on the 21st of October following.
On the 9th day of April, 1866, Mrs. Lucy W. S. Morgan was the owner of the south part of the northeast quarter of section 2, in township 3 south, of range 1 west, in the county of Jackson. On that day she sold and conveyed the same to George H. Lathrop, one of the defendants, for the sum of $16,000, for the payment of which, and the interest thereon, he gave her a bond in the penal sum of $32,000, executed by himself and Moses A. McNaughton, and to secure the payment of the latter Lathrop executed and delivered to Mrs. Morgan a mortgage upon the eighty acres of land described. The condition of the bond is that if the
“obligors, GeorgeH. Lathrop and Moses A. McNaughton, or their heirs, executors, or administrators, shall and do well and truly pay, or cause to be paid, unto the above-named obligee, or to her certain attorney, executors, administrators, or assigns, the sum of sixteen thousand dollars within ten years,*432 •in sums not less than one thousaud dollars a¡t a time, and only at the time of paying interest or after thirty days’ notice, and shall semi-annually, and on or before the ninth ■day of April and October in each and every year pay all the interest that shall have accrued on the whole sum, and shall also, in case any sum of principal or interest xshall not be paid when due, pay interest thereon at the rate of ten per cent, per annum during all the time the same may remain ■overdue and unpaid, without fraud or delay, then the preceding obligation to be void ; otherwise to remain in .full force and virtue.”
The bill in this case is filed to foreclose said mortgage, and ■complainant claims there was due, at the time the bill was filed (August 27, 1878), the sum of $24,490.39, and gives the following statement of payments made upon the mortgage, and the application made thereof, viz.: “ Fifty dollars paid at the date of said bond and mortgage : five hundred and sixty dollars, October 12, 1866 ; three hundred and fifty dollars, April 18, 1867; four hundred and twenty dollars, July 13, 1867; three hundred and fifty dollars, October 10, 1867; and eleven hundred and twenty dollars, July 11, 1868; which several sums, exclusive of the fifty dollars paid at the date of the mortgage, were paid, accepted, and indorsed as the payment of interest to October 9, 1868, as if paid when due, and no interest not paid is to be charged or paid on any interest overdue prior to October 9, 1868; and that the further sums paid, — forty-seven dollars and seventy-five cents, ■September 13, 1869; thirty-four dollars and seventy-seven ■cents, January 31, 1870; one thousand dollars, April 10, 1871; eighty-seven dollars and thirty-six cents, December 14, 1871; seven dollars and forty-seven cents, December 13, 1872; five hundred dollars, December 16, 1872; and two -thousand dollars, August 4, 1874, all of said sums paid since 1868 being paid, accepted and receipted, — to apply, first, to make up the difference between paying all sums as they be■come or might become 'due, and paying compound semiannual ten per cent, interest on such sums as had remained, •or might remain, overdue and unpaid while overdue, until paid: and that no further, other or different sum has been
The bill of complaint avers that Lathrop and wife, on the •14th day of May, 1866, conveyed the west thirty acres of the-mortgaged premises to the Mayor, recorder and aldermen •of the city of Jackson, and their successors in oflicé, to be used for the purpose of a public park and not otherwise. And complainant further avers that soon after such conveyance of -such thirty acres the corporate authorities of said city'of Jackson, at the request of the common council of the said city and on the making of said bond, and upon the representations of the members of the common council of the said city of Jackson, making such request and representation in behalf of said common council, that said thirty acres would without any unnecessary delay be immediately improved, and used and kept as a public city park, and the right-hand or northeasterly bank of Grand river, which runs near the westerly part of said thirty acres, would very soon be dyked by said city, or so embanked or raised as to prevent any of the water of said river from being made to overflow any part of said mortgaged premises by reason of the dam in said river on the same section below said mortgaged premises, and that such park land would be thoroughly drained by means of a ditch, or ditches or drains, constructed by said city of Jackson, extending across such mortgaged premises from north to south, and emptying into said river below ■such dam, and that the remainder of the mortgaged premises would be greatly benefited, and the value thereof greatly increased, by such improvements, and the permanent use of such thirty-acres as a public city park, she was induced to and did, on the 15th day of June, 1866, release to the city, and discharge from the operation of the mortgage, the said park lot for a public park, but for no other purpose, and that the important part of the inducement for the release was the •speedy and permanent improvement of the park, as above promised, which would increase the value of the remainder of the mortgaged premises, and that the city never made -any of the improvements promised.
Complainant further states that upon certain flattering-representations of Lathrop as to the increase in value of the-mortgaged property from time to time, and its probable-future increase in value, she has been induced to release several parcels of land mentioned in said plat from the operation of said mortgage, and in so doing she released by mistake lots 8, 10, 11, and 12, in block number 13, and claims they are still subject to her equitable lien under said mortgage.
She further avers “ that said Lathrop and McNaughton-have sold and conveyed many of said lots to different persons, who have erected buildings thereon, which are subject to said mortgage, and in some cases the purchasers have sold to others; and said Lathrop has given several mortgages upon the lands, which are still outstanding and unpaid. That., complainant, at time of making said releases, had no knowledge or information that Lathrop had in any manner incumbered said lands, or conveyed any portion thereof, except said mortgage to complainant, and his deed of park and deed to Moses McNaughton, and except lots released by her; and at time of -such releases by her she had no knowledge that, said Lathrop or McNaughton had conveyed or incumbered! said mortgaged premises except the. parcels released by herv and did not know that any person, except said Lathrop, McNaughton and complainant, had any interest in said premises except as above stated. . That on March 19, 1869, said Lathrop and McNaughton contracted to sell to Michigan Air Line Railroad a strip of land fifty feet .wide across said mortgaged premises, and adjoining the route of Ft. Wayne, Jackson & Saginaw Railroad, for the purpose of using the same:
The Michigan Air Line Railroad Company, the Michigan Central Railroad Company, and James F. Joy, trustee, appeared and filed their joint and several answer to the complainant’s bill. Three of the other parties appeared, but made no answer, and the bill was taken as confessed against all the parties who failed to appear, or, appearing, failed to answer.
The defendants answering admit the making of the bond and mortgage, and that they were given for the purchase
The defendant the Michigan Central Railroad Company further avers that on its purchase of the pump-lands the complainant voluntarily released parcels of the mortgaged premises, which defendant had the right to have held under the lien of said mortgage, and the value of which should have been applied to its satisfaction, before the interest of defendant could be affected, and that the same, together with the collateral securities above mentioned, «would have been sufficient to pay the entire mortgage lien.
The Michigan Central Railroad Company and defendant Joy further say that the deed of the park lot to the city vested a title in fee in the city ; that when the land was purchased by Lathrop it was understood between Mrs. Morgan and Lathrop and McNaughton that really the said thirty acres of land was being purchased for the city, and she then expected such conveyance would be made by Lathrop and McNaughton to the city, and that the purchase price would be paid by the city to her, or to others for her, and that all
Defendants further aver that the city did make improvements on the lot after its purchase, and that it never dedicated it as a park, and it was never used as such. They admit ■that the city did, in January, 1871, convey in fee simple to •defendant Joy, as trustee, the land mentioned in the bill as ■conveyed to him, but deny he had any notice that the land had •been conveyed or released to the city solely for a park, or ■that the deed to the city contained any limitations to that ■effect, and deny such to be the fact; and they further admit ■that a part, but not the only,- consideration for the deed to .him was that the railroad company would remove to or erect ¡their central engine and repair-shops at Jackson ; that it did ■remove its shops there as agreed upon, and the mortgaged ■premises are greatly increased in value thereby, and that the ■company has'paid a good and valuable consideration for the lands conveyed to it, and that complainant had notice of the ■conveyance when it was made, and that she is estopped by such knowledge and acquiescence from now asserting the lien -she claims against such lands.
•Defendants further claim that if they are mistaken in the view that the release is good as to them, yet they are entitled ■to have the full amount of the aforesaid collaterals, with the value of the lands which were subsequently released, ¡applied to the payment of the mortgage, and which were worth $8500, and in that event nothing would remain for the Michigan Central Railroad Company to pay. They further ¡admit the platting of Morgan’s addition; do not know what
Defendants further aver that as to every conveyance to the defendants, or either of them, by Lathrop and McNaughton, or to the city of Jackson, the complainant had full knowledge thereof, and the purpose for which they were made, both at and before the time of making the same, and also knew that Lathrop and McNaughton had assigned and conveyed portions of the mortgaged premises, and that she-had a general knowledge of all the acts and doings of Lathrop and McNaughton and of said city in the premises, and it was agreed between herself and Lathrop and McNaughton that they were to turn over the securities they might receive upon the sales of said mortgaged lands to her, and that her husband, who is an attorney and had charge of her business, frequently visited Jackson and examined into the condition of the mortgaged premises and her securities, and consulted with Lathrop and McNaughton, and consulted the records with reference to incumbrances and what was being done, and had notice of all liens and transfers of the property.
Defendants further deny that any such contracts with the Michigan Air Line Railroad Company as are set up in the bill were ever made by said company with Lathrop and McNaughton ; that such contracts, if made, were null and void - that the parties pretending to make them on behalf of the company had no power so to do. And they further say that so much of the mortgaged premises as has been occupied by the Michigan Air Line Railroad Company and the Central Company has been by permission and under license of Lathrop and McNaughton, and deny any liability on the part of either of the companies to perform either of said contracts. They further say it would be impossible to make the drainage called for in the contract, because of insufficient
The defendants further say that the Air Line Kailroad Company neglected until 1881 to locate the right of way across said mortgaged lands, when it was constructed, or to-make and file the map thereof required by law, but that omission has been supplied, and the Central Company has been authorized to proceed, in the name of another company, to-condemn the land for the right of way ; that both said companies have attempted to negotiate with complainant, and with Mary McNaughton, for the same, but Mrs. Morgan claims that the matter of the right of way has been arranged by the pretended contracts set up in her bill, and she refuses-to release the same from the lien of her mortgage, except upon payment of the sum due her upon the contract, and neither she nor Mary McNaughton will accept reasonable compensation for their interest in the right of way; and defendants claim that the sum stated to be due upon the contract is more than twenty times the value of the land used and the damages suffered.
Defendants admit said Lathrop is a bankrupt, but do not know whether complainant has been authorized by the court to bring this suit. Neither do they know what amount has-been paid on the mortgagi, or what is secured and unpaid. They, however, deny that the complainant is entitled to compound semi-annual interest on any portion secured by the-mortgage, as claimed in the bill. They believe the computation stated is correct, according to the premises and rule-
On the 3d day of September 1S81, the Air Line and Michigan Central Companies, defendants, filed their cross-bill •against complainant and defendants Moses A. McNaughton and Mary R. McNaughton, in which substantially the same matters are set up as are contained in the amended answer, and further allege that the equity of redemption of said mortgaged premises is now owned by the said defendant Mary R. McNaughton, and that the mortgaged premises remaining undischarged are worth over $10,000 less than the amount •claimed to be owing upon the said bond and mortgage; and that the said defendant George ET. Lathrop has been duly discharged in bankruptcy for his debts, and no personal claim is made against him in complainants’ bill.
Complainants pray in their cross-bill that the contract of December 9, 1869, between the Michigan Air Line Company •and Lathrop and McNaughton, in regard to the right of way across the mortgaged premises mentioned in Mrs. Morgan’s bill, may be decreed fraudulent and void, and ordered to be delivered up and canceled.
To the cross-bill Mrs Morgan made and filed her separate answer, in which she states in substance what she stated in her bill relating to the contract of the Michigan Air Line Company with the defendants Lathrop and McNaughton; avers that the contract was known to, and approved by, the executive committee of said Air Line Company, and that said committee was authorized by the board of directors to obtain the right of way for the company,® and that the contract was understood and approved by the directors and stockholders ; that the railroad was constructed thereunder across the mortgaged land, and that no other license was ever given upon any other terms to the company for its construction, except
Defendants Mary McNaughton and-her husband filed their joint and several answer to the cross-bill, and say that while they appeared in the original suit by solicitor, they, nor either -of them, ever read, or heard the original bill read, nor was the substance thereof stated to them, except that it was a bill to foreclose Mrs. Morgan’s mortgage, and their knowledge of its contents in filing their answer is derived from the cross-bill, and they leave the complainants to make their proofs of what is stated in the cross-bill; that they were informed the ■appearance and answer of the defendant, the Michigan Air Line Railroad, to the original bill, was unauthorized, and that it has no authority to join in the cross-bill. In relation to the -contracts for the right of way, they claim that they are valid, and Mrs. Morgan is entitled to pay thereon from complainants ; and pray that the cross-bill may be dismissed.
A motion was made to strike the cross-bill from the files, on the ground that the solicitor for the Air Line Railroad had no authority to file the same. The motion „was subsequently heard and denied. Proofs were taken in both cases, .and the cases were heard together, upon the pleadings and proofs, before Judge Newton, who made a decree dismissing
The circuit judge also further found and decreed that the indebtedness upon the mortgage was for purchase money of the mortgaged premises. That only $50 of the principal had been paid. That the time for payment was ten years, with-interest at seven per cent, payable semi-annually, except when payments were overdue of either principal or interest, they should draw interest at ten per cent, to be computed semiannually until paid; and that all interest was paid up to October 9, 1878. That all sums received since then were paid and receipted to apply, so far as might be necessary, to make up the difference between paying the sum or sums due,, whether of principal or interest, as they became due, and ten per cent, compound semi-annual interest that remained overdue and unpaid, and that all sums which had been paid on account of said bond and mortgage before bringing this suit had been so paid and received to so apply before any defendant corporations had acquired any legal interest in block 6 used for pump-house. That it is proved by the evidence in the case that it was understood by the city authorities, and by Lathrop and McNaughton, and all parties interested, that the-park land, and complainant’s release thereof to the city, were applied for, accepted and deeded, and only intended for the purpose of a public park, and for no other use or purpose. That it was not intended or understood by any of the parties that the collateral securities deposited with Gibson, or the Jackson city bonds, or any other securities for which they might be exchanged, were to apply as payment on the bond and mortgage, and none of them were ever in complainant’s-possession, or within her control, and that she never saw any
The decree further designates the land released, and ■describes the parcels to be sold, and the class to which each parcel belongs, and directs the same to be sold in the inverse ■order of alienation, according to the order in which the parcels •are given in the classes. The second class contains the lands in which the Michigan Central Railroad Company claim an interest in the mortgaged premises; also the lands which the Michigan Air Line Railroad purchased by contract. But the ■decree further provides that if the defendants interested in these parcels shall pay the amounts mentioned in the contracts before the day of sale, then they are to be excluded from the ■sale decreed.
The case is an important one, and is very complicated in its facts, and, as presented in the arguments of the able counsel upon both sides, presents a variety of legal questions for solution not easily disposed of. The case, as presented upon the record, contains an amount of detail seldom submitted for our consideration and review, and the decree rendered by the learned judge who heard the cause at the circuit shows a careful examination and thorough review of' all the questions necessarily involved in the case. The record is a large one, and a discussion of the testimony will not be attempted ; neither do I deem it necessary, in determining-the legal bearing of the several contracts and conveyances between the parties, nor in elucidating the views I entertain of their rights thereunder, so far as is necessary to-a proper, decision of the case. In gi ving interpretation to the various undertakings of the parties and changes made in the-dealings of those interested from time to time, we cannot put aside their intentions and the objects sought to be accomplished by each.
It clearly appears that the mortgaged land was purchased . by Lathrop for the purposes of speculation, and that the same was true of McNaughton’s purchase; while on the part of complainant, it is equally plain her sole object was to keep the purchase money of the property securely invested at the largest rate of interest which could be obtained, even though from reckless speculators, on the longest possible time, giving any assurance of safety, and she now seeks to enforce payment from the securities taken. The city of Jackson see/ns to have been made to participate in the transactions more in the interests of the railroad companies, and in the scheme of speculation by the purchasers, than in sub-serving any want, necessity or convenience of the municipality or of its inhabitants.
The object of the Air Line Railroad in its negotiations is.
The defendant Joy is the president of the Michigan Central Kailroad Company, ever true and vigilant in guarding, protecting and administering the great trusts committed to his charge. With all the learning of the profession he watches over the company’s legal rights, with an eye single to its pecuniary interests and every advantage attainable, when its property is placed in jeopardy. His position will not permit him to concede what the law does not require. And he expects nothing which the law does not allow or secure to the interest he represents.
With this statement of the claims of the respective parties, their motives, intentions and objects to be accomplished in their dealings, and the mode and manner of their doing the business out of which the complainant’s claim has arisen, and upon which the defendant’s ground of defense is placed, it remains to be ascertained what change, if any, should be made in the decree made by Judge Newton, to protect and secure the rights of these parties. In this review, however^ we cannot consider the rights of those defendants who have allowed the complainant’s bill to be taken as confessed, any
The first thing to be ascertained is what amount is due upon complainant’s bond and mortgage. The defendants' appealing admit that the sum claimed and stated in the bill was correct at the time the same was filed under the facts as she claims them, adopting her rule of computation. But they deny her right to compound the interest, or to compute interest upon interest, under the law as it stood at the time the bond and mortgage were made. The following is the provision contained in the bond for its payment:
“ The condition of this obligation is such that if the above-bounden obligors, George l£-Lathrop and Moses A. McNaughton, or their heirs, executors, or administrators, shall' and do well and truly pay, or cause to be paid, unto the. above-named obligee, or to her certain attorney, executors, administrators, or assigns, the sum of sixteen thousand dollars within ten years, in sums not less than one thousand dollars at a time, and only at the time of paying interest, or after thirty days’ notice, and shall semi-annually, and on or before the ninth day of April and October in each and every year, pay all the interest that shall have accrued on the whole sum, and shall also, in case any sum of principal or interest shall not be paid when due, pay interest thereon at the rate of ten per cent, per annum during all the time the same may remain overdue and unpaid, without fraud, or delay, then the preceding obligation to be void, otherwise to remain in full force and virtue.”
Under this clause of the bond compound interest could not legally be allowed, and the computation was erroneous. The principal did not become due until ten years after the date of the-bond, but the interest was payable at seven per cent, semi-annually, and if any sum, whether of principal or interest, remained unpaid after due, it then drew interest at ten per cent, until paid; neither semi-annual interest nor compound interest could bo computed on overdue payments) either of principal or interest.
By the conditions of the bond, payments of principal -could only be made before due in sums of $1000, and such payments were optional with the obligors. Payments of a
We next consider what other moneys should be applied in payment of the bond and mortgage, if any, than such as appear indorsed on the same. There can be no doubt, I apprehend, but that the city of Jackson could make the purchase it did of the park lands, and legally issue its bonds in payment therefor. The city paid for this land $6000 dollars, and gave six bonds of $1000 each, drawing interest at seven ■per cent, payable semi-annually. These bonds were payable yearly, a bond a year until fully paid, and were all paid by the •city, principal and interest, according to their terms. They ■were issued to Lathrop, by whom they were assigned to Mrs. Morgan as collateral security to her mortgage, she having released the same upon the park lands. The first parcel of the mortgaged premises conveyed by Lathrop, or by Lathrop and McNaughton, was the park lands, and the several conveyances of this parcel seem to have preceded .all other ■conveyances or contracts, except for right-of-way lands, and the conveyance by Lathrop to McNaughton in 1868 of an undivided half of the lands, east of the park. The next ■parcel sold was conveyed to the Michigan Central Railroad Company in 18J5; but was sold and possession thereof taken by the company in 18Y1. The witness Philip Reith fixes the «date of sale in September or October, 1%11; but the time
A distinction exists between these securities, and should1 be made, I think, between the funds they represent. The-$4000 of securities deposited with Gibson was, by the contract of April, 1S66, the primary fund for the payment of the first quarter of the purchase price, and the $6000 of city
The bond and the mortgage, as well as the original contract between Lathrop and Mrs. Morgan for the purchase of the land, required the payment of the entire principal sum within ten years from its date. There may be some doubt in regard to the interest, but we have treated it as payable semi-annually. This agreement did simply one thing as to Mr. Gibson ; it stipulated that his judgment should be taken by both parties .as to the sufficiency of the bonds and the mortgages with which the first payment might be secured.
In regard to the contracts for the right of way made with
From the time the mortgage was given, until the hearing in these cases, Mrs. Morgan cannot be held entirely ignorant, nor without some notice, of what was going on and how her interests were cared for, and how they were to be affected thereby. Her own husband, who is a reputable lawyer, of large business experience, evidently had the general charge of her affairs, and was frequently at Jackson, making inquiries, and could not very well avoid seeing what was being done upon the premises by the complainants in the cross-bill. Both Lathrop and McNaughton were old, intimate, and trusted friends of the Morgans, and Gibson and Bennett were not obscure men in the city of Jackson. These were all complainants’ trusted agents, and who were cognizant of all that was being done by the railroad companies, and participated in nearly all the business in which Mrs. Morgan was interested. She therefore has no bona fide rights in the premises, arising from any want of knowledge or notice, either express or necessarily implied, to be guarded or protected. McNaughton, as director and principal manager of the Air Line Railroad Company, could not purchase land of himself for the company. The Michigan Central Railroad Company took the Air Line Company’s property and rights as it found them. The contract described the right-of-way lands used and intended to be used by the Air Line Company, and which it transferred to the Michigan Central Company, or such interest therein as it had. These rights of way the Michigan Central Company took possession of and have used, or have the right to use, as it claims, under their rights ac
The Central Company have made large and valuable improvements upon the premises mentioned, under their license claimed, and their equitable rights therein, with the full knowledge and (so far as the record shows) assent of the owners of the fee and ¡mortgage: And we think, under all the circumstances, equity and justice require that the Michigan Central Railroad Company should pay to the complainant, Mrs. Morgan, as full compensation, in addition to what lias already been paid, for the said right-of-way lands and the pump-house lots, and for the use heretofore made thereof, the sum of $4000 within ninety days from the fii'st day of December next, and that upon such payment or tender thereof being made, the complainant, Lucy W. S. Morgan, and the defendant Mary A. McNaughton make, execute and deliver to the Michigan Central Railroad Company a conveyance of the land described in the said right-of-way contracts and the said pump-house lots, free from all liens except those of the Michigan Central Railroad Company ; and that Mrs. Morgan deliver up said right-of-way contracts to be canceled, and that said $4000 thus paid to Mrs. Morgan be applied to the payment of her said bond and mortgage, and that the decree at the circuit should be modified accordingly.
We do not think the park lands can, under the circum.stances and testimony in the case, be again subjected to the lien of the complainant’s mortgage. A re-computation must
Afterwards, at the following January term, a re-hearing in this case was .denied, and the following memorandum filed:
Per Curiam. In this case the motion for a rehearing is-denied. Any mere details can be fixed when the decree is- ■ settled.