Beach v. Osborne

• Decision Date: 09 January 1902
• Citation: 50 A. 1019,74 Conn. 405
• Court: Connecticut Supreme Court
• Parties: BEACH v. OSBORNE et al.

50 A. 1019

74 Conn. 405

BEACH

v. OSBORNE et al.

Supreme Court of Errors of Connecticut.

Jan. 9, 1902.

Appeal from superior court, Fairfield county; Silas A. Robinson, Judge.

Action by Samuel B. Beach against Frank Osborne and others. From a judgment for plaintiff, defendants appeal. Affirmed.

The defendants Charles B. and Edward H. Marsh, real estate dealers and builders under the name of Marsh Bros., on December 30, 1899, applied to the plaintiff for a loan of $3,500, to be secured by mortgage upon two adjoining building lots. The applicants showed Beach two lots, one having a dwelling house thereon, as the lots to be mortgaged. The plaintiff consented to make the loan. The plaintiff gave to the mortgagors $2,500 in money and checks, and, not having more cash in hand on that day, a duebill for $1,000, given in place of cash, and to adjust and make up the balance of the loan. This duebill was cashed within from 30 or 60 days. Marsh Bros., upon receipt of the $2,500 and the duebill, made their note to the plaintiff for $3,500, and to secure the same executed to him a mortgage for said sum upon two lots of land, the description of which proved them not to be those shown to the plaintiff, but other vacant lots, and thereupon the plaintiff recorded said mortgage. The first of these lots was described as free of incumbrance, and the second as subject to a mortgage of $1,000. The plaintiff was ignorant of the fact that the loan was not secured by the property shown until within a few days of the bringing of this action. In August 1900, the defendant Osborne made an oral contract with Marsh Bros, for the purchase of the lot first described in the plaintiff's said mortgage, and then vacant. This contract called for the erection of a house upon the lot by Marsh Bros. The agreed price for the lot with the house thereon was $5,400. Osborne having made a payment on account Marsh Bros, conveyed said lot to him by warranty deed, which described and warranted it as free and clear of all incumbrances. Osborne at once mortgaged the premises to Burr & Knapp for $4,000, the proceeds of the mortgage being assigned by him to Marsh Bros, in part payment of thepurchase price, to whom the money was paid from time to time as the construction of the house thereon progressed. This mortgage Burr & Knapp sold and assigned to the defendants Helen F. and Adah C. Knapp, who paid full value therefor. Osborne, Burr & Knapp, and said Helen F. and Adah C. Knapp were all ignorant of the existence of the plaintiff's mortgage, and believed that the mortgage to Burr & Knapp was the first incumbrance on the property. Osborne never, by himself or agent, examined the land records, but relied entirely upon the statement of one of the Marshes that the land conveyed was free from incumbrance, and that their attorney, one Percy L. Johnson, had searched the title, and found it so. Burr & Knapp, before making their loan, received the certificate of said Johnson, an attorney then in good repute, that the title to said premises was clear; and this certificate they passed to their assignees. Neither said Burr & Knapp nor said Helen and Adah Knapp made any further inquiry, but acted upon the strength of said certificate. Said house has never been fully finished, but said Osborne moved into it in December, 1900, and now occupies it. Neither Burr & Knapp nor said Helen or Adah Knapp knew of the existence of the plaintiff's mortgage until the failure of Marsh Bros, in the latter part of December, 1900. Osborne first learned of it when these proceedings were begun. The second piece described in the mortgage to the plaintiff has no equity in it over and above the $1,000 mortgage thereon. The defendant Osborne made default of appearance. Said Helen and Adah Knapp alone appeared to defend, and took the appeal.

John C. Chamberlain, for appellants.

Curtis Thompson and William H. Kelsey, for appellee.

PRENTICE, J. (after stating the facts). The defendants contend that the plaintiff's mortgage is void for the insufficiency of the description therein of the mortgage debt The mortgage is expressed to be given to secure the payment of A note for $3,500. What was the actual transaction in precise detail? The mortgagors had applied to the plaintiff for a loan of $3,500, which he consented to make upon the receipt of certain mortgage security. When the transaction was consummated, the plaintiff gave to the mortgagors $2,500 in cash and checks, and, in want of more cash on hand, a duebill for $1,000, which the court finds was given and received "in place of cash to adjust and make up the balance of said loan." The $3,500 mortgage note and the mortgage to secure it were then given. The law requires "that a mortgage, to be valid against subsequent bona fide purchasers and incumbrancers, must be so drawn that the record of it will give notice with reasonable certainty of the nature and amount of the incumbrance upon the property" (Bouton v. Doty, 69 Conn. 544, 37 Atl. 1008); or, as another case puts it, "that the debt must be described with sufficient certainty to enable subsequent purchasers and creditors to ascertain either by the condition of the deed, or by inquiry aliunde the extent of the incumbrance" (Hubbard v. Savage, 8 Conn. 219). The description of the debt in this case fully satisfies these requirements, both in their letter and their spirit. The note described existed. It was given in a straightforward business way for an equivalent amount in money actually advanced, or absolute obligation to pay money incurred. The duebill was such an obligation. It was given in place of money which was not then at the party's command, and in a few days, pursuant to intention, it became money. The whole transaction was regarded by the parties as a cash transaction, and there was no impropriety in law in their so regarding it, and accordingly making the mortgage note one for $3,500, and so describing the mortgage debt in the mortgage itself. The rule of law stated is not a purposeless one. It was not made as a trap for the unwary. Its purpose was to prevent opportunities for fraud and concealment, and thereby to protect the interests of third parties. What possible harm could come to anybody from a transaction such as the record outlines, so that we should say to this plaintiff that he ought not to have any protection at the hands of the law. No countenance for such a claim can be found in the application of the rule to the facts of any case within this jurisdiction. If the mortgage debt was sufficiently described in the case of Mix v. Cowles, 20 Conn. 420, as this court said it was, certainly litthe remains to be said in objection to the description in this case.

The defendants contended in the court below, and contend here, that the improvements made upon the land should not be held to be subject to the plaintiff's mortgage, but that he should be compelled to pay the defendants the value thereof, or that the defendants be permitted to redeem by paying the value of the land regardless of the improvements thereon. We have a statute that provides that "final judgment shall not be rendered in any action to recover the possession of land against any defendant who has, or whose grantors or ancestors have, in good faith, believing that he or they, as the case may be, had an absolute title to the land in question, made improvements thereon, before the commencement of the action, until the court shall have ascertained the present value thereof, and the amount reasonably due to the plaintiff from the defendant for the use and occupation of the premises; and, if such value of such improvements exceeds such amount due for use and occupation, final judgment shall not be rendered until the plaintiff has paid said balance to the defendant; but, if the plaintiff shall elect to have the title confirmed in thedefendant, and shall, upon the rendition of the verdict, file notice of such election with the clerk of the court, the court shall ascertain what sum ought in equity to be paid to the plaintiff by the defendant, or other parties in interest, and on payment thereof may confirm the title to said land in the parties paying it." Gen. St., § 1055. In the absence of Osborne, the equity owner in possession, as a party before us, counsel for the defendants who are before us have placed little real reliance upon this statute. We are therefore not called upon to determine whether or not its provisions apply to proceedings of foreclosure where possession is Incidentally asked to be given to the mortgagee plaintiff. This question, however, bocomes one of comparative insignificance in view of the broader claim which the defendants do make and urge, to wit, that the statute recited is only the formal legislative enactment of a recognized equity principle in one of its applications. The plaintiff comes to the superior court as a court of equity. To obtain equity, he must do equity; and he must do it to all those whom his desired judgment of foreclosure will affect injuriously. So far this, their course of argument, is plainly logical and sound. The doing of equity in the case disclosed by the record, they next say, requires that they be permitted to redeem by the payment to the plaintiff of the value of the land alone, or that he, as a condition of the foreclosure, pay to them the present value of the improvements which they or their grantor put upon the land. The reason for the existence of this equity in them, they say, arises from the fact that they made the Improvements, which are conceded to be permanent and beneficial, in good faith, believing that the property was under no prior incumbrance to the plaintiff. The general principle of allowance for improvements made in good faith and in ignorance of defects in title, thus invoked, is one borrowed from the civil law. For a long time it seems to have been recognized only in cases where the person who or whose grantor had made the improvements...