Alvin Johns v. James Wilson

• Decision Date: 11 March 1901
• Docket Number: No. 67,67
• Citation: 21 S.Ct. 445,45 L.Ed. 613,180 U.S. 440
• Parties: ALVIN L. JOHNS et al., Appts. , v. JAMES WILSON
• Court: U.S. Supreme Court

180 U.S. 440

21 S.Ct. 445

45 L.Ed. 613

ALVIN L. JOHNS et al., Appts.,

v JAMES WILSON.

No. 67.

Submitted November 1, 1900.

Decided March 11, 1901.

This was a complaint in the nature of a bill in equity, under the Arizona Code, filed in the district court of Maricopa county, by the appellee, Wilson (who had already, in a prior suit, foreclosed a mortgage upon certain real estate against John M. Armstrong, mortgagor, and Robert E. Daggs, purchaser of the premises), against Alvin L. Johns, subsequent purchaser pen- dente lite of the same premises, and also against William A. Daggs, tenant in possession, Robert E. Daggs, his landlord, and A. Jackson Daggs, agent of Robert E., to charge Johns and Robert E. Daggs with the payment of the mortgage debt, for a foreclosure of the mortgage against all the defendants, for a receiver, and for a judgment against all for damages.

The complaint, which was filed June 22, 1895, alleged that when the former bill foreclosing the mortgage was filed, April 26, 1894, John M. Armstrong, the mortgagor, and Robert E. Daggs, who purchased the premises December 18, 1893, were the only parties known to the plaintiff to be liable upon the notes, or to have any interest whatever in the mortgaged property; but that the defendants Robert E. Daggs and A. Jackson Daggs, conspiring together to hinder and obstruct the plaintiff in the collection of his mortgage debt, procured a deed of conveyance of the property from Robert E. Daggs to Johns for the sole purpose of hindering, delaying, and obstructing him in the collection of his mortgage debt; that the deed, though dated March 17, 1894, before the proceedings for a foreclosure were begun, was withheld from record until April 28, 1894, after the summons in the foreclosure action had been served and after the lis pendens had been filed; that in this deed Johns expressly agreed and bound himself to pay the plaintiff's mortgage debt; that William A. Daggs, who was at the time of the foreclosure in possession as tenant of Robert E. Daggs, did not advise plaintiff of his surrender of the premises as tenant of Robert E. Daggs, or of his having taken possession as the tenant of Johns; and that such abandonment and release of the property, and the taking possession thereof as tenant of Johns, were done secretly, without any notice to the plaintiff, with intent to deceive him into the belief that he (William A.) was still holding possession as tenant of Robert E. Daggs, and that the plaintiff, on account of such secret transfer of possession, if any was made, was deceived, as the defendant intended him to be, and that the foreclosure action therefore proceeded to judgment without his joining or making the said Johns and William A. Daggs defendants therein; that plaintiff had no knowledge or information when he began his action and filed his lis pendens, that any other persons than Robert E. Daggs had any claim to the premises. Wherefore plaintiff prayed for a judgment against Robert E. Daggs and Alvin L. Johns, who had assumed and agreed to pay the mortgage debt, for the amount of such debt, and for the sum of $1,000 as damages; that his mortgage be adjudged unpaid and unsatisfied: and that the same be foreclosed against all the defendants and all persons holding under them; and for such further relief as the circumstances of the case required.

On a hearing upon pleadings and proof a judgment was rendered setting aside the sale had in the foreclosure suit of Wilson v. Armstrong and Daggs, and the satisfaction of the judgment made upon such sale; that the plaintiff Wilson recover of Robert E. Daggs and Alvin L. Johns, who had assumed and agreed to pay the mortgage debt, the amount of such debt; declaring such amount ($8,541.13) to be a lien upon the property, which was also foreclosed; ordering a sale of the premises as against Rovert E. Daggs and Johns; and also finding that appellants had fraudulently conspired together to cheat, wrong, and defraud the appellee, and declaring the deed of Daggs to Johns to be fraudulent and void. It was further ordered that the former judgment stand and be carried into effect by a resale of the property, and, in case the proceeds be insufficient to pay the judgment, that the sheriff make the deficiency out of the other property of Robert E. Daggs and Johns. The property was subsequently sold and bid in by the appellee for $2,000, leaving a deficiency of $6,861.26. There was no decree for damages.

An appeal was taken to the supreme court of Arizona, which modified the action of the lower court by omitting therefrom the personal judgment against Johns for the deficiency, but otherwise affirming it (53 Pac. 583), and, upon an appeal being taken to this court, made the finding of fact set forth in the margin.

Mr. A. J. Daggs for appellants.

Messrs. D. H. Pinney and Louis T. Orr for appellee.

Mr. Justice Brown delivered the opinion of the court:

This case involves the right of a mortgagee to relief against one who secretly purchased the premises just prior to a bill being filed for the foreclosure of the mortgage, and who withheld his deed from record until after the summons in the foreclosure suit had been served and a lis pendens had been filed.

At the time the original foreclosure suit was begun, the defendant William A. Daggs was in possession of the premises, and the title, so far as disclosed by the record, then appeared to be in Robert E. Daggs. But after it had culminated in a sale of the premises, June 6, 1894, and the sheriff had executed his deed, December 12, 1894, William A. refused to surrender possession, and claimed to hold as the tenant of Johns, and from that time continued to hold as such tenant, to the exclusion of plaintiff.

The supreme court found as a fact that the defendants Robert E. and A. Jackson Daggs had conspired together to hinder and obstruct Wilson in the collection of his mortgage debt, and to that end procured the deed from Robert E. Daggs to Johns, and withheld it from record until after the foreclosure suit had been begun; that such deed was fraudulent and void as against Wilson, and was executed and recorded by Robert E. Daggs for the purpose of hindering and delaying the plaintiff in securing possession of the mortgaged premises, and in obtaining satisfaction of his judgment by process of law.

A large number of errors are separately assigned by the different defendants, but we shall notice only such as were passed upon by the supreme court, or pressed upon our attention in the briefs.

1. The most important is that Robert E. Daggs, the grantee of the original mortgagor, was not liable in a direct action by the mortgagee, because no privity of contract was shown between such grantee and the plaintiff mortgagee; and the action was not brought in the name of, or for the benefit of, the mortgagor Armstrong.

This assignment should be read in connection with the second finding, which is in substance that, in December, 1893, Armstrong sold to the defendant Robert E. Daggs the premises previously mortgaged to Wilson, the appellee, and conveyed the same to him by deed, in which Daggs agreed and bound himself to pay the two notes executed by Armstrong and secured by the mortgage. Under this sale and transfer Daggs entered into possession of the premises by William A. Daggs, his tenant. There was also in the deed of March 17, 1894, from Robert E. Daggs to Alvin L. Johns, as appears from a copy of the deed sent up with the record, a similar agreement by Johns to assume and pay the Wilson mortgage; but as the supreme court held this deed to be fraudulent and void, and that there could be no recovery upon the agreement against Johns, this deed becomes immaterial. The question is whether there can be a personal judgment against Daggs upon the agreement in his deed from Armstrong to pay this mortgage. In the first decree rendered in the suit of Wilson v. Armstrong and Robert E. Daggs there was a personal judgment against Armstrong upon the notes which the mortgage was given to secure, and an order for a foreclosure and sale of the premises; and in case the proceeds of the sale were insufficient to satisfy the judgment, the sheriff should make the balance out of any other property of the defendant Armstrong; but there was no personal judgment against Robert E. Daggs. Such judgment was prayed for and granted in this case.

The question whether a mortgagee can recover against the grantee of the mortgagor upon a stipulation in his deed from the mortgagor to assume and pay off the mortgage, as well as the more general question how far a third party may avail himself of a promise made by the defendant to another party, has been the subject of much discussion and difference of opinion in the courts of the several states; but we think the decisions of this court have practically removed it from the domain of controversy.

In Second Nat. Bank v. Grand Lodge of F. & A. M. 98 U. S. 123, 25 L. ed. 75, the Masonic Hall Association, a Missouri corporation, had issued a large number of bonds which the grand lodge had assumed by resolution to pay. The bank brought an action at law against the grand lodge to compel the payment of certain coupons attached to these bonds, of which it was the holder; and this court held that it was not entitled to recover, upon the ground that the holders of the bonds were not parties to the resolution, and there was no privity of contract between them and the lodge. In delivering the opinion of the court, Mr. Justice Strong observed: 'We do not propose to enter at large upon a consideration of the inquiry how far privity of contract between a plaintiff and defendant is necessary to the maintenance of an action ofassumpsit. The subject has been much debated, and the decisions are not all reconcilable. No doubt the general rule is that such a privity must exist. But there are confessedly many exceptions to it. One of them, and by far the most frequent one, is the case...