58 Mich. 138 | Mich. | 1885
This is a suit in equity. The purpose of the suit is to obtain a decree vacating a discharge of mortgage which was entered upon the record by inadvertence or error, and also a foreclosure of the mortgage as against a .party to whom the mortgagor had conveyed the land after the discharge had been entered, but with notice, as the bill avers, that the mortgage had not been paid.
The facts, as they are disclosed b}7 the evidence, we find to be the following:
Thomas Holmes, the mortgagor, borrowed of complainant .on May 29, 1860, the sum of fourteen hundred dollars, and gave him a mortgage in consideration thereof for the sum of fifteen hundred dollars, payable in five years from that date, with interest at the rate of ten per cent, per annum, payable semi-annually. In the spring of 1870 the whole principal sum of this mortgage remained unpaid, and also the interest except about a hundred and seventy dollars which had been paid at different times, and complainant began foreclosure. The matter was however arranged between the parties by the mortgagor giving to complainant a new mortgage for the sum of three thousand seven hundred
On November 25, 1872, the mortgagee went to the office of the register of deeds, where the mortgage was recorded, and in his presence entered on.the margin of the record a full discharge of the mortgage. Up to that time only two hundred dollars had been paid upon it, and nobody is able to make any explanation how this discharge came to be made. It is suggested that it was made by mistake when the discharge of a different mortgage was intended, but no evidence is given to that effect, and the discharge therefore remains unexplained and unaccountable. The mortgagor was not aware of it for two years or more thereafter, and when it came to his knowledge, he said nothing about it, but made further payments, the whole, up to March 3, 1877, amounting to $943.39. It seems evident that up to that time the mortgagor had formed no purpose to take advantage of the inadvertent or erroneous discharge.
On March 14, 1879, however, the mortgagor with his wife executed to his son Abiram Holmes, then resident in Ohicago, a warranty deed of the land mortgaged, for the nominal consideration of six thousand dollars, receiving, as the parties to the transaction claimed, one thousand five hundred dollars in cash and prior indebtedness, and taking back from the grantee a mortgage of four thousand five hundred dollars. There were circumstances attending this trade indicating great haste, and it is not disputed now that Thomas Holmes
The chief contention in the suit was over the question whether Abiram Holmes was aware, when he took the deed from his father, that the mortgage had not been paid, and must have been discharged by inadvertence. The circuit judge found that he was, and gave decree of foreclosure for* $9080.19, and charged the defondants Thomas and Abiram Holmes personally with all costs. Abiram Holmes alone appealed.
There is no direct evidence that Abiram Holmes was aware, when he received the deed from his father, that his father was not in justice and equity entitled to make a conveyance free of liens. The indirect evidence, however, is strongly relied upon, and is thought to be conclusive.
First, it is said there was gross inadequacy in the price which Abiram Holmes was to pay for the land. Complainant produced a number of witnesses whose testimony -went to show that the land was worth from $8000 to $10,000, whereas Abiram Holmes was to pay but $6000. A consideration of all the evidence does not, however, make out such a case of gross inadequacy as would be evidence of fraudulent purpose; and in a transaction between father and son, especially when the father was considerably advanced in years, as was the case here, and was expected to remain upon the land, as also appears, the fact of low selling price would scarcely excite remark, unless it appeared that some other party might be wronged thereby. But in this case the question in dispute is whether the son knew that any other person was in position to be wronged thereby; and it cannot well be claimed that the mere fact that his father was willing to sell to him at a low price would charge him with notice of an intended fraud. On the contrary, he had a right
Then it is mentioned as a suspicious circumstance that Abiram Holmes procured an abstract of the title to the land, which showed this mortgage to have been discharged. This is charged to have been done for appearances' merely and in order that he might be able tó make a showing that he was relying -upon a clear record. And why, it is asked, should the son, when dealing with his father, go to the record- to ascertain what the title was, when presumptively the father would have truthfully told him its exact state? This is a pertinent question,-but Abiram Holmes, if he was honest in the transaction, could easily make sufficient answer to it; it is only when we assume that he was dishonest in taking the deed that the procuring of an abstract becomes a suspicious circumstance. Lands, as every lawyer in Michigan knows, were at an early day bought and sold very carelessly, and with little investigation of title; and it often happened after many years’ póssession and cultivation that a party found to his astonishment that he had no title to land he had bought and long occupied. Experience and observation inculcated prudence; and the reasons for being particular to know what was shown by the record applied as well when one was dealing with his father as when buying of a stranger. There would be a lack of common- business caution if he were not thus particular; and common business caution can never, by itself, afford ground of suspicion. Much less can it be proof of intended fraud.
It is further said that for many years- Thomas Holmes had been an unthrifty man, and Abiram Holmes had had no reason for believing that he had paid off the mortgage in
There is nothing in all this that brings home to Abiram a knowledge that his father in 1879 had an unpaid mortgage on his farm, or that fairly charges him with notice that such was probably the case. At most it would only apprise him that his father did not feel that, in addition to supporting his family and meeting his own obligations, he could spare anything to aid his son in getting started in the world. But the son, if he knew of the mortgage, might well refer this inability to the necessity he felt of paying it off. He might well agree with the father that such payment would be the father’s first duty. And we find nothing in this record which fairly tends to show that when Abiram Holmes found the mortgage discharged of record, he was notified, either directly or by the circumstances, that the discharge was not made in consideration of payment, as it professed to be.
On the argument much stress was laid on the relationship between Thomas and Abiram, as raising a probability that the latter was fully apprised of his father’s embarrassments. But if the relationship were to be accepted as the basis for a
But if we assume that Abiram Holmes knew of the origin and early history of the' indebtedness to complainant, the assumption will fall far short of making out the necessary support to the complainant’s case. Ho would then have known that his father, the owner of a good farm worth five or six thousand dollars, contracted in 1860 an obligation to pay $1500, with seventy-five dollars every six months as interest thereon. ' This was not a very serious burden, and the son might well suppose the father without difficulty would keep the interest paid. He would know that the amount, even if the interest remained unpaid, could not in ten years be increased to $3700, or even to near that sum by any process which could be justified to the conscience; and when in 1879 he saw by the abstract that there had been a mortgage of $3700 on the land which was also discharged, there was nothing in the circumstances, as they are brought before us in this case, to charge him with knowledge or notice that so large a debt as $3700 had existed at the date of the mortgage. It did not exist in fact, as we have seen; and when Abiram Holmes found the mortgage discharged of record, lie was no more called upon to indulge in conjecture
Complainant in this case had the burden of proving notice-to Abiram Holmes not only that there was once a mortgage, but that it was still in existence. The prima facie case was-all against him. The mortgage, by his voluntary act, was discharged of record. The mortgagor, even if unthrifty, might; well have been supposed able to pay off the original indebtedness, and Abiram Holmes is not proved to have known of any other. The mere fact, therefore, of Abiram Holmes'acting upon the proof of payment which the discharge would afford, and which of itself was of the very highest nature, is-not suspicious. The fact that Thomas Holmes intended to-take advantage of the discharge to cut off the mortgage is-not proof that he disclosed the design to his son: on the-contrary he would naturally be careful to conceal it, lest by the disclosure the design might be defeated. Complainant-attaches importance to the testimony of one Sheridan who-had been in the same employment vdth Abiram Holmes and is supposed to have obtained damaging admissions. According to his statement, Sheridan was a stranger to complainant, but was applied to a year before he gave his testimony, to
We find, therefore, that complainant has not made the necessary showing of notice in Abiram Holmes. The decree should therefore be reversed. It may be proper, to add, however, that even if notice were proved, the decree ought not to stand. Complainant has come into a court of equity to obtain relief against the consequences of his own blunder for which none of the defendants was in any way responsible. When the bill was filed Abiram Holmes had done nothing which he was not legally and equitably entitled to do. He had simply taken a deed and given back a mortgage ; and this he had a lawful right to do even if the mortgage of complainant was still a valid lien on the land. Complainant had no right, on the facts as they then stood, to put Abiram Holmes to the cost of correcting complainant’s own error by suit in equity, but he should have taken some step
The Court, however, is inclined to hold that as to any sums still owing by Abiram Holmes on' his purchase at the time when, after making such purchase, he was notified of complainant’s equities, said Holmes is not entitled to protection, and that complainant to that extent is entitled to foreclose his mortgage. This will give the defendant Abiram Holmes all the protection that is required by any rule of justice, and does not increase his liability, but only appropriates his subsequent payments to the party equitably entitled.
The decree must be reversed, with costs of this Court, and the cause remanded for further proceedings. A reference to determine the payments made by Abiram Holmes will probably be essential.