Newell v. Neal, 50 S.C. 68

Newell v. Neal

50 S.C. 68 | S.C. | 1897

The opinion of the Court was delivered by

Mr. Justice Pope.

This action was commenced in the Court of Common Pleas for Anderson County, in this State, on the 4th day of September, 1894. At first the defendant, *79J. M. Stewart, as administrator of the estate of A. M. Neal, deceased, was not a party, but subsequently, on his petition therefor, was admitted as such. The complaint substantially made these allegations: That on the 3d day of March, 1881, the defendant, William A. Neal, made and delivered to Mary E. Newell his bond, whereby he promised to pay the said Mary E. Newell, one day-after its date, the sum of $1,000, with interest, and also to pay and discharge about $2,100, interest and costs growing out of two mortgages therein specified. That on the same day he executed a mortgage upon a plantation of land containing 245 acres to secure said bond, which mortgage was duly recorded in the office of register of mesne conveyance for Anderson County. That no part of said $1,000 has -been paid. That the said Mary E. Newell, for value received, has assigned said bond and mortgage to the plaintiff, Alfred T. Newell, who is now owner and holder thereof. That the said $1,000, and the interest thereon, are still due and unpaid, and that the conditions of said bond and mortgage have been broken. That the parties named as defendants, except W. A. Neal and J. Belton Watson, have or claim some interest in or lien upon said mortgaged premises, which has accrued since the execution of plaintiff’s said mortgage. The prayer of the complaint is in these words: “Wherefore, the plaintiff prays that the said mortgage may be foreclosed and the equity of redemption barred, the premises ordered to be sold, and the proceeds applied to the payment of plaintiff’s debt, and execution awarded for the balance against the defendant, W. A. Neal, and for such other and further relief as may be just and proper.”

The defendants, the Sullivan Hardware Company and J. S. Fowler, answered, denying any interest in the action. The defendant, J. Matt Cooley, in his answer, set up a mortgage superior in rank to that alleged to exist in favor of the plaintiff. But the defendants, William A. Neal and J. Belton Watson, while admitting the lien of the mortgage of J. Matt Cooley, stoutly contested the existence of the *80debt and mortgage of the plaintiff, as follows: “That on or about the 17th day of January, 1882, Mary E. Newell duly transferred and assigned the bond and mortgage referred to in said complaint to A. M. Neal, for valuable consideration, and said A. M. Neal was the lawful owner and holder thereof until the 7th day of February, 1888, when he satisfied said bond, which was cancelled and delivered up to this defendant, and satisfaction thereof was duly executed and entered of record in the office of the register of mesne conveyance for said county of Anderson, in book 27, pages 670, 671; and since said assignment up to the present time said Mary E. Newell has not had said bond, or any legal right thereto, and the subsequent assignment thereof to the plaintiff, as alleged, is a nullity and conveyed no title. That said plaintiff had knowledge of the said assignment to A. M. Neal, as well as knowledge and notice of the satisfaction upon the record for a period of more than six years, without questioning the legal title of the said A. M. Neal to said bond and mortgage, and no question thereof has been made until since the title to the mortgaged property has been passed out of defendant’s hands into the hands of bona fide purchasers, for value. That on or about the day of February, 1888, the plaintiff, A. T. Newell, with his mother, said Mary E. Newell, being codefendants with the defendant in an action in the Court of Common Pleas for the county of Anderson, State aforesaid, in the case of W. G. Watson et al. v. A. M. Neal et al., filed their answers now of record in said cause, wherein said Mary E. Newell set forth, in paragraph 4 of her said answer, that she had assigned said bond and mortgage to A. M. Neal, in part payment for 238 acres of land purchased from said A. M. Neal, and this defendant, in his answer, filed about the same time, in said cause, set up that said bond and mortgage so assigned by her to A. M. Neal had been satisfied and discharged of record; and this defendant! submits that said plaintiff and Mary E. Newell are estopped now from denying said trans*81fer and assignment to A. M. Neal, and satisfaction thereof by him.”

The defendant, J. Belton Watson, sets up in his answer, amongst other things, that he was a bona fide purchaser of said lands for full value without notice, reciting in his said answer all the foregoing facts set up in the answer of his codefendant, William A. Neal, particularly the answers as aforesaid, the assignment to A. M. Neal, and the entry of satisfaction of the bond and mortgage on the records of the office of register of mesne conveyance for Anderson County. The defendants, M. E. Watson and S. J. Watson, and Farmers’ and Merchants’ Bank, adopted the foregoing as their answers to the complaint. Under an order of Court, R. M. Burriss, Esq., as special referee herein, took and reported the testimony in the cause.

The action came on for trial before his Honor, Judge Earle, upon the pleadings and testimony, and on the 28th day of February, 1896, he filed- his decree, the effect of which was that the plea of purchaser for full value without notice by the defendant, J. Belton Watson, was fully sustained, and the lands purchased by him were declared to be freed and discharged from the lien of any bond and mortgage set up by the plaintiff, but he decreed that the defendant, William A. Neal, was liable on the bond of $1,000, which had been assigned by Mary E. Newell to A. M. Neal, the principal and interest amounting at the date of the decree to $2,047.51, and he gave the plaintiff judgment against said A. M. Neal for that amount. He also adjudged that the defendant, J. Matt Cooley, was entitled to his judgment against the lands owned by defendant, J. Belton Watson, which had been purchased by him from William A. Neal for the sum of $3,968.39, and also that said J. Matt Cooley was entitled to a judgment against William A. Neal for $113.59. From this decree the defendant, William A. Neal, has alone appealed. The decree of Judge Earle and the grounds of appeal therefrom must appear in the report of this cause.

*82We deem it important, in order that the issues now before us for decision may be correctly understood, that a summary of the findings of fact and conclusions of law by the Circuit Judge should be stated just here, and at the same time it will be repeated that no party to this action appeals from Judge Earle but the defendant, W. A. Neal. As to the findings of fact: First. That on March 3,1881, Wm. A. Neal executed and delivered the bond and mortgage set forth in the complaint to Mary E. Newell, mother of the plaintiff; that on or about January 17th, 1882, the said Mary E. Newell purchased from her father, A. M. Neal, a certain tract of land for $2,500, and in part payment assigned and transferred to said A. M. Neal the bond and mortgage set up herein. Second. That Mary E. Newell purchased the tract of land from her father, A. M. Neal, to enable him to pay off some mortgage debts which were liens on the tract of land so purchased, and also liens on a large tract of land that da}’ conveyed by A. M. Neal to the children of Mrs. Mary E. Newell. Third. That at the time of the assignment of said bond and mortgage to her father, A. M. Neal, it was agreed between them (the assignor and assignee) that said bond and mortgage were to be applied to the ex-tinguishment of the mortgage or lien debts on said lands. Fourth. That A. M. Neal did not collect the bond and mortgage so assigned to him by Mary E. Newell, and apply the same to the extinguishment of the mortgage liens on said lands, but, on the contrary, in violation of his agreement with the assignor, satisfied said mortgage of record on the 7th day of February, 1888. Fifth. That Wm. A. Neal does not claim to have paid to his father, A. M. Neal, the debt of $1,000 and the interest thereon, but that his father voluntarily cancelled and satisfied the same. Sixth. That the .plaintiff knew of the assignment of the bond and mortgage now in suit by his mother, Mary E. Newell, to her father, A. M. Neal, at the time it was made, and also that he knew, in the spring of the year 1888, as well as did his mother, that A. M. Neal had cancelled the same and entered satis*83faction thereof of record. Seventh. That subsequent to the 7th day of February, 1888, J. Belton Watson, to wit: on 22d December, 1888, purchased from W. A. Neal the tract of land for full value and without any notice of the agreement between the original mortgagee, Mary E. Newell, and her assignee, A. M. Neal, and without notice that A. M. Neal had received the mortgage on the agreement to collect and apply the proceeds thereof to the payment of his mortgage debts; that J. Belton Watson exerted the proper diligence to learn if there were any defects in the title to the lands— reciting those several efforts. Eighth. That the bond and mortgage were assigned to the plaintiff on the 25th July, 1894, the bond at that time being lost, as it is now claimed by plaintiff. Ninth. That the land conveyed to Mary E. Newell by her father, A. M. Neal, has not been sold to pay any mortgages over the same executed by A. M. Neal, but that said mortgage liens created by A. M. Neal on such land have been satisfied by the sale of other lands conveyed by said A. M. Neal, in which Mary E. Newell had no beneficial interest.

1 The Circuit Judge concluded as law, based upon these findings, that J. Belton Watson, as before remarked, was entitled to the protection of the doctrine of innocent purchaser for value without notice. In this conclusion all acquiesce. But he held W. A. Neal responsible on his bond, and gave judgment against him thereon. We cannot accept such a conclusion. Why should W. A. Neal be held responsible on this bond, which was satisfied and cancelled by the legal owner and holder thereof? It is attempted to bottom this idea upon some trust relation towards the same created by A. M. Neal with Mrs. Mary E. Newell, in 1888. It would be well to inquire how this trust relation was established by and between A. M. Neal and Mrs. Newell. There is no doubt, nor can there be any doubt, that Mrs. Mary E. Ne-well transferred this bond to her father, A. M. Neal, in part payment of a tract of land conveyed to her by the said A. M. Neal; it was received by *84A. M. Neal as $1,000 in part payment of a tract of land valued and conveyed as amounting in value to more than $2,500. Now, A. M. Neal owned the land he conveyed to Mrs. Newell, and his conveyance of this land to Mrs. Newell was for a valuable consideration. If this had not been true, the plaintiffs in the case of Watson v. Neal et al., 38 S. C., 90, would have had their judgment for the sale of Mrs. Newell’s land as that of A. M. Neal. This case just cited was an action by persons holding mortgages executed by A. M. Neal on lands which, after he had executed the mortgages, he conveyed by different deeds and at different times to his children and grand-children, and to this suit A. M. Neal and his children and grand-children, who had received such deeds, were made parties to foreclose such mortgages. The defendants insisted that, while the whole of the lauds conveyed by A. M. Neal were liable to sale under a foreclosure, yet that, as between themselves, the sales should be decreed to be made in the inverse order of their alienation; also, that as Mrs. Newell owed $1,000 on her purchase of land from her father, she should be required to pay that sum on the mortgages set up in that case. But it seems that, notwithstanding Mrs. Newell owed this $1,000, yet the decree required a 600 acre tract of land, which was latest in point of time of the conveyances made by A. M. Neal, to be sold first, and its sale realized a sum sufficient to pay off all the mortgages. Hence, Mrs. Newell escaped paying to the mortgage creditors this $1,000 that she still owed of the purchase money for the 350 acres conveyed to her, although the decree required and adjudged that she should pay this $1,000 she owed her father on the mortgage liens as a part payment thereof, and the Supreme Court adjudged that the Circuit Court decree should be affirmed. Now, the father, A. M. Neal, departed this life intestate while the suit of Watson et al. v. Neal et al. was pending. Thus we find that Mrs. Newell, plaintiff’s assignor, was not required to pay the $1,000 and interest that she owed her father for her land in that action. Then, when the suit *85was ended, for the sake of argument, admit that she had an equity under her original ágreement to compel him (A. M. Neal) to apply the proceeds of the W. A. Neal bond of $1,000 to the payment of the mortgages which were liens on lands conveyed to her children, how could she ask a court of' equity to enforce an equity which she herself, by her failure to pay the $1,000 due by her to her father, A. M. Neal, had frustrated? After her father’s death, it was in her power, if she had an equity, to have the $1,000, represented by W. A. Neal’s bond, settled in an action with the administrator of her deceased father’s estate. But who ever heard of a purchaser of land claiming an equity in the application of the purchase money she is to pay for the land, except to the relief of those lands so conveyed to her. If she is allowed to pay the $1,000 of the purchase money in the bond and mortgage she owns, why the moment she assigns the bond and mortgage its ownership is in her assignee, with an equity in her, under a contract therefor to compel her grantor to apply the purchase money to the satisfaction of any legal liens subsisting against the land she has purchased. It is true, the grantee might contract with her to apply such purchase money to the payment of other liens on lands than her own, but a breach of such a contract as to the application of such proceeds to the ex-tinguishment of the liens on other people’s land would not cause an equity in her to such proceeds. The legal ownership of the W. A. Neal bond and mortgage was in her father, A. M. Neal, and he might be liable as for a breach of contract, when he (A. M. Neal) entered satisfaction of the bond and mortgage on record; but we are not able to see that any equity existed in Mrs. Newell in said bond and mortgage, under which she could claim to be .the owner of the same, and as such owner might assign the same to this plaintiff. Why, look at this proposition in the light of common sense: Mrs. Newell purchased from A. M. Neal 350 acres of land, for which she agreed to pay $2,500. Of this sum she paid $500 in money, $1,000 in W. A. Neal’s *86bond and mortgage, and the remaining $1,000 in her own bond and a mortgage of the lands sold to her. When A. M. Neal conveyed her-the land, she owned the land and he owned the purchase money, made up of cash and bonds. No person has ever evicted her, nor has she been required to pay a dollar to discharge any liens on said lands created by A. M. Neal. She still owns and occupies the lands. How could she, or any assignee of hers, while she still owns this 350 acres of land, claim that she is the owner, or that her assignee is the owner, of any of the purchase money she paid A. M. Neal for his lands? To state the proposition is to answer the question — -it cannot be; yet that is what the Circuit Judge has adjudged to be the right of her assignee.

2 Besides all this, it is not shown that W. A. Neal is any party to any such agreement. It may be said that W. A. Neal evidenced his agreement to this equity by signing an agreement with his father, A. M. Neal, in 1882, which agreement was prepared in the names, as makers thereof, of A. M. Neal, W. A. Neal, Mary E. Newell, and Sarah C. Neal, on the 26th January, 1882, but it is shown that Mary E. Newell and Sarah C. Neal failed and refused to sign such agreement. In the case of Watson et al v. Neal et al., supra, the Circuit Judge said of this agreement: “2. That as to the alleged agreement between A. M. Neal, W. A. Neal, Mary E. Newell, and Sarah C. Neal, by which the three last named (children) were to pay the debts of A. M. Neal, I conclude from the evidence that no such agreement was made, either between A. M. Neal and his said children or between the children themselves. Mrs. S. C. Neal and Mrs. Newell repudiated the paper.” Now, what does the Supreme Court say at page 98? Here is the language of the Court: “Second. It is claimed ‘that the Judge erred in finding that there was no agreement between A. M. Neal, W. A. Neal, S. C. Neal, and Mary E. Newell, by which the three last named parties (the children) were to pay the debts of A. M. Neal, in consideration of his conveyance of lands to them, and that Mrs. Neal and Mrs. Newell repudiated the *87same; when he should have held that there was such agreement, and compelled the lands of the parties to contribute to the payment of the debts of A. M. Neal, according to the terms of said agreement,’ &c. It may have been unfortunate that the children of A. M. Neal did not adjust their family matters as to property before the death of the father, A. M. Neal. It seems that such adjustment was talked of, and some effort made towards its accomplishment, but it certainly failed, and that failure has produced much of the unusual confusion and difficulty in the case. There were three children, and only one of these, in the absence of the others, signed a paper for that purpose. The others did not sign, but, on the contrary, repudiated it. In the form of an agreement with mutual covenants, inter partes, it was never signed by the parties or delivered, but was left, for signature by the parties, in the possession of the friend who had prepared it. We know of no principle that would justify us in declaring that paper to be a completed binding covenant. We cannot say that the Circuit Judge committed error,” &c. It will be noticed that the master’s report in regard to this agreement used this language: “That A. M. Neal did not regard it as a valid agreement, all parties not signing, is evident from his subsequent conduct with reference to his assets. All the parties have stood by and seen him dealing with his property in a manner inconsistent with the provisions of the supposed agreement,” &c. When, therefore, the defendant, W. A. Neal, called to his aid the doctrine of res judicata, the plaintiff jirst denies that such doctrine is here applicable, and second, that the agreement is not necessary to his cause, for he relies specifically upon an agreement to the same effect incorporated in the assignment of the bond by his mother, Mary E. Newell, to A. M. Neal. We think the doctrine of res judicata was applicable, so far as this agreement was concerned. The case of Hart v. Bates, 17 S. C., 35, holds that three things are necessary to make out this defense: 1. The parties must be the same, or their privies. 2. The subject matter must be the same. 3. The *88precise point must have been ruled. Mary B. Newell and her assignee, the plaintiff, Alfred T. Newell, were parties to the suit of Watson et al. v. Neal et al., supra. 2. The subject matter was the same, the agreement. 3. The validity of this agreement was ruled upon by this Court in its judgment. Is the plaintiff safe in his second ground? We think not. It was the duty of Mrs. Newell, the assignor of plaintiff, to have produced all the proofs in her power when the subject matter of the “agreement” was before the Circuit Court, in the case of Watson et al. v. Neal et al. — she did not then pretend that the assignment written on the bond now attempted to be set up, which she now claims was signed by her, was to the same effect as the “agreement” then before the Court. She has had her day in Court on that matter, and it is not now in her power nor in that of her assignee to set up this same agreement — once repudiated by the Court — in a second action.

3 But, again, we do not see why W. A. Neal may not invoke the statute of limitations for a defense against the bond. Bet it be remembered that the Circuit Judge has held' that A. M. Neal, while he was the legal owner of this bond and the mortgage intended to secure it, did cancel and satisfy both of record on the 7th day of February, 1888. No appeal has been taken by the plaintiff from such finding of fact by the Circuit Judge. This suit was commenced 4th September, 1894. Certainly more than six years have elapsed since that date. Both plaintiff and- his assignor knew the facts at the date of their occurrence, or, in the language of the Circuit Judge, in the spring of 1888. No mortgage now exists. What more exists against W. A. Neal tlian the bond now sued on? It was a bond for the payment of money only. Six years is a bar to an action on such an instrument. The statute of limitations was pleaded formally by the defendant, W. A. Neal. Sections 111 and 112 of the Code of Procedure. We do not sustain the first exception, relating, as it does, to the form of the action in reference to a lost bond. If error— *89technical — had existed, it was curable by an amendment, and this being an action on the equity side of the Court, if such objection was not pressed so as to obtain a ruling thereon from the Circuit Judge, we will not interfere.

We sustain the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, and fourteenth exceptions.

4 As to the thirteenth, we cannot sustain the proposition there embodied. It is competent for people to make. contracts between themselves, and we would hesitate to say that a part of a contract was upon valuable consideration and the other part of such contract was without a consideration legal in its effects. In the abundance of caution, we take this position. And we may add, in concluding, that the exceptions sustained by us seem to be sustained by the views we have expressed without regard to the order of the exceptions as presented by the appellant.

It is the judgment of this Court, that the judgment of the Circuit Court, where the same has been appealed from, and in no other matters, is reversed, so far as the appellant, Wm. A. Neal, is concerned. And it is further adjudged, that the case be remanded to the Circuit Court to carry into effect so much of the judgment as was not appealed from by Wm. A. Neal.