186 Mich. 273 | Mich. | 1915
The complainant is the receiver of a partnership. It is charged in the bill that defendant Paul R. Dinsmore appears to own, and of record does own, certain premises which the partners conveyed to him by deed; that in fact he was merely a convenience used by them to acquire for themselves $5,0,00 from a third person (not a party to this suit) by way of a loan secured by the property. The method was to deed the premises to Dinsmore and to assign to him an outstanding lease thereof and sums due and to grow due thereon; Dinsmore personally borrowing the money upon his note and his mortgage of the premises. A further transaction, alleged to have been of much the same character, affecting personal property (choses in action), is set out, but is not here important. It is the theory of complainant that the premises conveyed to Dinsmore by the partners are of greater value than the mortgage lien, and that the surplus ought to be recovered for the benefit of the partnership. The consideration recited in the deed is $10,000, and there is testimony tending to prove that it was and is worth that sum and more. The bill prays for a decree requiring Dinsmore and his wife, Merle (who has no interest except as his
The defendant claims that, while the original purpose and proposition of the partners were to procure through him and the said property a loan of $5,000 by the method stated, he declined to be a party unless it was understood and agreed that title should pass to him — a reconveyance to be made, however, at the option of the partners, when the said $5,000 to be borrowed by him for them and his expenses should be repaid, and two notes held by him, one executed by each of the partners, should also be paid. These notes amounted to more than $6,000. The principal contention concerns the arrangement pursuant to which the property was deeded to defendant, and upon this subject the testimony is in conflict. The trial court entered a decree substantially as prayed for by complainant — a decree peculiarly framed, and which is complained about, even if the court is sustained in the conclusion as to the principal facts. •
Although admittedly Dinsmore’s note is out for the $5,000 and he personally liable thereon (the holder and owner not being a party to this suit), Dinsmore and his wife are required by the decree to execute and deliver to complainant a deed of the premises subject to the mortgage and to assign to it the lease. The extent of the relief granted is little discussed in the brief for defendants (appellants), and not at all in the brief for appellee. It further appears that certain promissory notes, the property of the partners, are pledged to a third party, not a party to this suit, to secure a note made by Dinsmore for the benefit of the partners. These notes are, by the decree, held to belong to the complainant, subject to the lien of the lending bank, and the said bank is directed to surrender “the residue of securities” to the complainant.
The character to be given the bill is a matter of importance. Courts of equity do not, for receivers or for other parties complainant, divest citizens of property which it is admitted they rightfully hold as security, at least not without actually relieving them of the obligation to secure which the property was pledged to them. It is obvious that the partners could not secure a reconveyance of the property upon the theory of the bill, unless they paid the debt which they gave the property to secure, or wholly relieved defendant from liability therefor. It is equally obvious that the holder and owner of defendant’s note and of the mortgage he gave to secure it, and the holder of the collateral pledged by defendant to secure the other note, which is brought in question, are not bound by the decree. In considering whether the bill can be amended, this court cannot know whether the complainant desires to maintain the bill as a bill to redeem, or whether the court appointing the receiver will permit it to maintain such a bill — whether it can tender to defendant the relief he is entitled to if complainant’s contention is sustained.
Since the argument, counsel have been requested to advise the court concerning the points which are herein suggested. The solicitor for the receiver has responded with a brief, and for complainant it is said, among other things, that neither the prayer of the
It is suggested by counsel:
(1) Whether the bill may be treated as a bill to redeem — Goodenow v. Curtis, 33 Mich. 505 — and whether, upon failure of complainant to redeem, the decree may not provide for a strict foreclosure of defendant’s lien. (2) Whether, if under all the circumstances a sale of the premises must be made, defendants may not now amend the answer in such way as to pray for foreclosure and sale.
It is pointed out that, in any event, defendant Paul Dinsmore having collected rent and paid out money for taxes, repairs, and insurance, an account must be taken. I think Goodenow v. Curtis, supra, is not authority for treating the present bill as a bill to redeem, and that the decree must be reversed, with costs of both courts to defendants.
The record will be remanded to the court below, with leave to complainant to file an amended bill within 60 days from date of remittitur, if so advised, in default of which the bill will be dismissed without prejudice.