Timms v. Shannon ex rel. Shannon

| Md. | Dec 19, 1862

Bartol, J.,

delivered the opinion of this Court: c-

On the 3rd day of July 1851, by articles of agreement, Thomas Keen contracted to sell to William Timms a tract of'land in Cecil county for $5,000. Keen bound himself to convey the land by deed, with general warranty, on or before the 1st day of August 1851, and Timms, on his part, contracted to pay $500 of the purchase money on the 1st day of August 1851, with interest on the whole sum from the date of the articles, and to pay the residue -as follows: $1,000 on the 1st day of May 1852, $1,000 on the 1st day of May 1853, $1,000 on the 1st day of December 1854, $1,000 on the 1st day of December 1855, and $500 on the 1st day of December 1856. The interest on the whole sum remaining unpaid, to be paid at the respective times mentioned.; and to secure tbe payment of these sums, Timms contracted to execute his bonds and a mortgage of the land purchased, as well as of another parcel of land belonging to him' in Cecil county.

On the 31st day of July 1851, Thomas Keen and wife executed a deed conveying to Timms the land mentioned in the articles of agreement, with a covenant of warranty against all persons claiming under the said Keen. And on the following day (the 1st of August 1851) Timms paid the sum of $500, and executed six bonds to secure the payment of $4,500, and interest, at the times mentioned in the articles of agreement, four of them for $1,000 each, and two for $250 each. At the same time a mortgage was executed by Timms, which is not exhibited in the cause, nor does it appear in proof for what reason it was can-celled, destroyed or abandoned. Timms, in his supplemental answer, alleges that it was deemed defective. And on the 16th day of January 1852, the mortgage sued on was executed, in lieu of the other, describing the several bonds of the 1st of August 1851, and conditioned for their payment.

After the payment by Timms of all the bonds except the last three, one for $1,000, and two for $250 each, Thomas Keen, the mortgagee, on the 8th day of December 1856, assigned the mortgage to the appellee, William Shannon, and transferred to him the three last mentioned bonds, and to enforce' their payment, Shannon, on the 23rd day of December 1856, filed this bill.

The defences relied on by the appellants, are as follows: It appears that in January 1856, Timms sold and delivered to Keen goods to the amount of $14.02, and on the 22nd day of May 1856, he sold and delivered to Keen a horse and yoke of oxen at the price of $115, and claims that he is entitled to have these sums applied as credits upon the mortgage debt, by virtue of an agreement and understanding made at the time with Keen, tbe mortgagee, tbat tbejT should be so applied.

It further appears from tbe proceedings, tbat at tbe time of tbe sale and conveyance of tbe land in, question by Keen to Timms, there was an outstanding mortgage on tbe same land executed by Keen and held by one George Davis, dated tbe 29th day of December 1849, and intended to- secure tbe payment of $1,000, with interest,, one-half on tbe 1st day of January 1855, and one-half on tbe 1st day of January 1856; and the appellant contends tbat he is entitled to have abated from tbe mortgage debt tbe amount due on that outstanding mortgage to Davis, a portion of tbe interest on which be claims to have paid on the 1st day of January 1857, and tbe whole of tbe principal and interest on tbe 6th day of October 1857.

This claim for allowance or abatement on account of tbe mortgage to Davis, will be first disposed of.

In tbe argument it was based on several grounds,

1st. An alleged agreement by parol, made by Keen at tbe time tbe deed for tbe land was made, and the bonds and mortgage of tbe 1st of August were executed, to tbe effect tbat be would pay tbe mortgage debt to Davis, and if be should fail to do so, tbat Timms should retain a sufficient sum for tbat purpose out of the last instalments of tbe purchase money.. To prove this agreement, tbe testimony of tbe witness, Lloyd, was adduced and excepted to as inadmissible, because it varies or contradicts tbe written contract between tbe parties as evidenced by tbe bonds and mortgage. An examination of tbe authorities cited by tbe appellee on this point, has satisfied us that this exception is well taken, and that tbe parol evidence is wholly inadmissible.

In this case there is no allegation of any fraud, accident or mistake in tbe execution of the bonds or mortgage, and in tbe absence of such allegation, tbe same general rule prevails in equity as at law. 2 Story’s Equity, sec. 1531. Watkins vs. Stockett, 6 H. & J., 435. In tbe case of Parkhurst vs. Pan Gortlandi, Chancellor Kent, in speaking of this rule of evidence, said: “But I apprehend the rule to be too reasonable and too well settled to be now disturbed, that when an agreement is reduced to writing, all previous negotiations are resolved into the writing, as being the best evidence of the certainty of the agreement; every thing before resting in parol, becomes thereby extinguished or discharged.” Under this rule, which this Court is not at liberty to disregard, the alleged parol agreement, and the evidence adduced to prove it, must be entirely excluded from our consideration. In no possible view of the case could such evidence be introduced to raise an equity against this complainant, who took his assignment in good faith, without any notice or knowledge of such an agreement.

2nd. As to the articles of agreement on which the appellants next rely, it is only necessary to say, that the contract between the parties having been executed, by the acceptance of the deed of conveyance of the land, and the execution of the bonds and mortgage, by the appellants, and no fraud, mistake or surprise being charged or proved in the transaction, the stipulations in the agreement must be considered as thereby discharged; and on these instruments alone, viz., the bonds, mortgage and deed, must depend the rights of the parties.

We shall therefore proceed to consider—

3rd. Whether the appellants are entitled to the abatement or allowance claimed, of the amount of the mortgage held by Davis, by reason'of the special warranty in the deed? In deciding this question, we treat the mortgage sued on as if it had been executed on the 1st day of August 1851, when the bonds were given. We understand the appellee, in his written argument, to admit that at that time a mortgage was executed, for which this one was afterwards substituted. Tbe point then presented, is, whether, if a purchaser of land accept a deed with special warranty, and execute his bonds and mortgage for the purchase money, he can, in a suit in equity, brought by an assignee of the mortgage to enforce its payment, claim to be allowed a deduction or abatement from the mortgage debt, by reason of an outstanding incumbrance on the land within the warranty. It is material to observe that the parties litigant are not the original parties to the transaction. The complainant claims as a tona fide assignee of the mortgage; and the point stated involves the question of the effect of the assignment, and requires us to determine how far the equitable defence now set up by the mortgagor is thereby affected.

In Courts of Equity, a mortgage of lands is regarded as a mere security for money, a chattel interest or chose in action, the debt being considered as the principal, and the mortgage as the accessory or appurtenant thereto. See Jamieson, vs. Bruce, 6 G. & J., 74. Pratt vs. Vanwyck, 6 G. & J., 498. Chase vs. Lockerman, 11 G. & J., 210. Georges Creek Coal & Iron Co’s Lessee, vs. Detmold, 1 Md. Rep., 237. See also, Clark vs. Levering, 1 Md. Ch. Dec., 178; and Ohio Life Ins. & Trust Co. vs. Ross & Winn, 2 Md. Ch. Dec., 25.

In the case last cited, Chancellor Johnson, in considering the rights of an assignee of a mortgage of lands, recognized as applicable the well established rule,, “that an assignee of a chose in action not negotiable, takes it subject to the equities which existed against it, in the hands of the assignor, at the time of the assignment. The same point was ruled by this Court at the last term, in the case of The Central Bank of Frederick vs. Copeland & Wife, 18. Md. Rep., 305.

This brings us to the inquiry, whether the equitable defence now insisted on by the appellants, existed at the time of the assignment, and could have been then successfully urged to defeat a recovery of the mortgage debt. If not, then it cannot now be sustained; for the rights of the assignee are in no manner affected by the acts of the mortgagee and mortgagor, which may have been done since. At the time of the assignment of the mortgage to Shannon, there was an outstanding incumbrance on the land, against which Timms had accepted and held the personal covenant of warranty of Keen. In our opinion, that covenant created no equity which could affect the rights of Shannon, the assignee.

The general rule on this subject, as stated by Chancellor Kent, is, that after the purchase has been carried completely into execution by the delivery of the dee. ' has been no ingredient of fraud, and the purchaser is not evicted, the insufficiency of the title is no ground for relief against a security given for the purchase money. ’’ 2 Kent’s Com., 471. See also, Bumpus vs. Platner, 1 Johns. Ch. R., 213; and Abbott vs. Allen, 2 Johns. Ch. R., 519. In this last case, Chancellor Kent examines very fully the authorities, and states the law to be, “that a purchaser of land, who is in possession, cannot have relief in equity against his contract to pay, on the mere ground of defect of title, without a previous eviction.” A great number of cases in the different States will be found collected in a note to Sugden on Vendors, (681,) Perkins’ 7th Am. Ed., Vol. 2, 126. The conclusion from the cases is thus succinctly stated by the annotator: “In some cases it has been held that although in an action for the price of the purchase of an estate, an eviction is not necessary for a defence on failure of consideration from a defect in title, where there has been no conveyance; yet that an actual eviction is necessary to constitute a defence in such case, where a deed has been given and the vendee has entered into possession. The grantee not evicted, but remaining in undisturbed possession, must rely on his covenants, except in case of fraud.” The ground upon which the decisions- appear to go, is that the bond and mortgage for the payment of the purchase money, and the covenant of warranty from the grantor. are separate and independent covenants, and the breach of one cannot be urged as a defence to an action upon the other. See the case of Tallmadge vs. Wallis, 25 Wend., 107; and Whitney vs. Lewis, 21 Wend., 131.

Applying to the case before us the principles deduced from the authorities, we are of opinion that the covenant in the deed furnishes no ground for the equity claimed in this case against the assignee of the mortgage. We do not mean to express any opinion as to the effect of a payment by the mortgagor of an incumbrance like that of Davis, if this were a suit between the original parties; nor is it necessary to decide what might have been the effect upon this case if the payment had been made by Timms before the assignment. But as the case stands, we are clearly of opinion that the outstanding incumbrance cannot now be urged as a ground of relief against this complainant, who took the assignment before the payment* and consequently before any equity which may have arisen therefrom existed. The appellant must be left to his remedy at law upon the covenant. See Middlekauff vs. Barrick, 4 Gill, 290.

The question we have been considering was pressed upon us by the. appellants in argument, and although it is not specifically stated in the pleadings, we have deemed it proper to express our judgment upon it, because it arises on the face of the proceedings, and if we had thought the defence a good one, it would have been competent for us, as suggested at the bar, to remand the cause, to enable the appellants to make the necessary amendments in the pleadings.

In our opinion, the appellants were clearly entitled to the credits of the sums of §14, and §115, claimed in their answer; not because they were in themselves proper set-offs in this suit, but because wo think the proof established the agreement on the part of Keen that they should be so applied. That agreement shewed an application of those sums by the parties in part satisfaction of the mortgage debt, and constituted them payments pro tanto. The testimony of Jones proves that Keen agreed to apply the sum of §115 as a credit on the mortgage, and the fact that he gave a note or due-hill for the amount, constitutes no valid objection to the admissibility of the testimony.

( Decided December 19th, 1862.)

We tbink there was error in the sum ascertained by the decree to he due the complainant. By an examination of defendants' exhibits W T, No. 1, and W T, No. 8, being two of the bonds, it will be seen that Keen's receipts endorsed thereon, acknowledge the payment of interest on the bonds which were assigned to Shannon, up to the 1st of August 1853. The auditor has erroneously charged interest from the 1st day of August 1851.

For this error the^ decree must he reversed and the cause rtemanded, in order that a correct account may he stated and further proceedings had in conformity with the opinion of this Court.

Decree reversed and cause remanded.