Jourolmon v. Ewing

• Decision Date: 10 May 1897
• Docket Number: 381.
• Citation: 80 F. 604
• Parties: JOUROLMON et al. v. EWING et al. [1]
• Court: U.S. Court of Appeals — Sixth Circuit

80 F. 604

JOUROLMON et al. v. EWING et al. ^[1]

No. 381.

United States Court of Appeals, Sixth Circuit.

May 10, 1897

Henderson & Jourolmon and Webb & McClung, for appellants.

Geo. W Easley and Pritchard & Sizer, for appellees.

Before TAFT and LURTON, Circuit Judges, and SEVERENS, District Judge.

SEVERENS District Judge.

The Tennessee Coal, Lumber & Tan-Bark Company on the 8th day of November, 1889, being then the owner of a large tract of lands lying in Morgan county, Tenn., the title to some parcels of which rested under clouds arising from the claims of other parties, and having in contemplation the purchase of certain other inlying parcels, entered into a contract with the East Tennessee Land Company for the sale to the last-named company of all of the said lands for the agreed price of $10 per acre, amounting in the whole to the sum of $125,000. A part of the purchase price was paid down, and it was stipulated in the contract that the balance should be paid in installments, with interest from the date thereof. It was further provided in the contract that the parties should meet at Knoxville on the following 15th day of January for the purpose of executing the deed and the notes to be given for the deferred payments. At the last-mentioned date the parties met as agreed, and in execution of the contract a deed was executed for the whole of the above-mentioned tract by the Tennessee Coal, Lumber & Tan-Bark Company to the East Tennessee Land Company, in which certain other parties joined as grantors, who held the legal title to, or had claims upon certain parcels of the lands sold. This deed, after acknowledging the receipt of the sum of $12,000, which had already been paid, stated that the further consideration of the deed was $113,000, to be paid in three installments evidenced by notes for that amount, and due as follows: The first, for $31,000, due April 15, 1890; the second, for $41,000, due July 15, 1890; and the third, for $41,000, due January 15, 1891,-- each bearing interest from November 8, 1889, to secure the payment whereof a specific lien was retained on the property thereby conveyed, and granted, bargained, sold, and conveyed the lands therein described, with covenants of seisin and of right to convey, of freedom from incumbrances, to warrant and defend the title, and for further assurance. The warranty of the Tennessee Coal, Lumber & Tan-Bark Company extended to all of the lands conveyed. The warranty of the other grantors was limited to the particular parcels in which they respectively claimed the title or some interest therein. The notes of the East Tennessee Land Company for the deferred payments mentioned in the deed were at the same time executed and delivered. These notes were alike in form, except in respect of the amounts and the dates when payable, which corresponded with the amounts and dates specified in the deed. One of the notes is here copied: '$41,000.

'On or before the 15th day of July, 1890, the East Tennessee Land Company promises to pay to the order of the Tennessee Coal, Lumber and Tan-Bark Company forty-one thousand dollars, with interest from November 8, 1889, value received in deed bearing date January 15, 1890, from the Tennessee Coal, Lumber and Tan-Bark Company and others to the East Tennessee Land Company, conveying four tracts of land in Morgan county, Tennessee, known as 'Entries Numbers 1,969, 1968, 1959, 2,314,' and this note is secured by lien expressly retained in, and is subject to all equities of, said deed; but this note is based on a purchase price of ten dollars per acre, as recited in said deed, and is given for one-third of the purchase money, less six hundred and sixty-six and sixty-six one-hundredths dollars (paid in cash previously to the execution of the said deed, and credited on second payment), under contracts dated November 8th, 1889, that said land is to be paid for in three payments, and any abatement or increase in purchase money that may be brought about by determination of acreage by more careful surveys shall apply proportionately to each note, and any overpayment shall apply on the note next falling due.

'Land adversely owned, or in litigation, or in adverse possession, shall not be paid for until such adverse claims be removed of record.

'East Tennessee Land Company, 'By Frederick Gates, General Manager.'

These notes were subsequently assigned by the Tennessee Coal Lumber & Tan-Bark Company to Leon Jourolmon and Hu. L. McClung, the petitioners herein, as trustees. The parties who represented the East Tennessee Land Company in this purchase were Frederick Gates and J. W. Scott. These persons were cognizant of the state of the title of the lands conveyed; Scott being a practical surveyor and abstracter of titles, living in the county of Morgan, in which the lands were located. It was well known to these parties that the title to some parts of these lands was in litigation, and that, with respect to others, the title was yet to be acquired by the Tennessee Coal, Lumber & Tan-Bark Company; and it was understood that the title to all the lands covered by the deed of the Tennessee Coal, Lumber & Tan-Bark Company, which was not then perfect, was to be cleared of adverse claims, or bought in, and it was therefore stipulated in the three purchase-money notes that the 'land adversely owned, or in litigation, or in adverse possession, shall not be paid for until adverse claims be removed of record. ' Possession was at once delivered of all the lands, and the Tennessee Coal, Lumber & Tan-Bark Company proceeded to acquire and perfect the title to such as it did not already hold by complete title, and no question is made now with respect to the validity and completeness of the title to all the lands covered by the deed. In November, 1893, Ferdinand Schumacher and others, general creditors of the East Tennessee Land Company, filed their bill in the court below for the purpose of winding up the East Tennessee Land Company as an insolvent incorporation; and in March, 1894, the Central Trust Company of New York also filed in the same court its bill against the East Tennessee Land Company for the purpose of foreclosing a mortgage which had been given by the last-named company to the said Central Trust Company to secure certain bonds which it had issued. These two causes were, by an order of the court, consolidated under the style of 'The Central Trust Company of New York v. The East Tennessee Land Company,' and all the creditors of the East Tennessee Land Company were directed to come in by petition and file their claims. On June 11, 1894, Jourolmon and McClung, as trustees, filed their petition in the consolidated case, setting forth the above-stated purchase and sale of lands, the execution of the three notes given for the purchase money, and the assignment thereof to them; that certain payments had been made, but that the balance still remained due. They prayed a reference to ascertain the balance due, and for a decree establishing the balance as a first lien upon the lands sold. On the same date (June 11, 1894), W. H. Russell and A. A. Hopkins, who had been appointed receivers in the consolidated case, and to whose office the defendant has succeeded, also filed a petition, and therein admitted that there was still a large balance of purchase money due upon the notes given by the East Tennessee Land Company to the Tan-Bark Company, for the payment of which an express lien had been retained by the vendor; and they further stated that they had entered into a contract with the state of Tennessee by which they had agreed to sell to it, for the price of $80,000, a large portion of the lands which the East Tennessee Land Company had purchased from the Tennessee Coal, Lumber & Tan-Bark Company; and they prayed that their contract of sale be confirmed, and that the title to land so sold to the state of Tennessee should be vested in the state, free of the original vendor's lien, and that an account should be taken between the East Tennessee Land Company and its vendor of the amount still due. Such a reference was ordered, and a special master appointed, who proceeded on the reference and made his report. The matter was recommitted for the purpose of making certain special inquiries, and again further recommitted for a like purpose. It is unnecessary to enter into the particular matters involved in these references, further than to say that the principal source of difficulty, and the one which is involved in the controversy here, was created by the objection raised by counsel for the receivers of the East Tennessee Land Company upon the question as to the date from which the petitioners were entitled to recover interest upon their notes; the position taken by the petitioners being that interest should be computed according to the terms of the notes (that is to say, from the 8th day of November, 1889); the receivers, on the other hand, contending that the petitioners were not entitled to claim interest upon the purchase price in respect of the several tracts until the title thereto was cleared up and made acceptable. This position counsel for the receivers has all along maintained, and still maintains. He insisted before the master and before the court that, this being a proceeding in a court of equity, the complainants were not entitled, as standing in the place of vendors in this respect, to recover interest on the purchase price of land, the title to which was not marketable, and that th...