Blanton v. Keneipp

• Decision Date: 15 January 1931
• Citation: 156 S.E. 413
• Court: Virginia Supreme Court
• Parties: BLANTON. v. KENEIPP et al.

156 S.E. 413

BLANTON.

v.KENEIPP et al.

Supreme Court of Appeals of Virginia.

Jan. 15, 1931.

Appeal from Circuit Court, Fairfax County.

Suit by E. S. Blanton against Hugh Keneipp, Frances A. Keneipp, and others. From a decree sustaining a demurrer and dismissing the bill as to the defendants named, complainant appeals.

Reversed and remanded.

E. A. Bilisoly, of Norfolk, and H. W. Dudley, of Clarendon, for plaintiff in error.

Wilson M. Farr, of Fairfax, for defendants in error.

EPES, J.

This is a suit in chancery instituted in October, 1928, in the circuit court of Fairfaxcounty by E. S. Blanton against Hugh Ke-neipp and Frances A. Keneipp and R. L. Roberts, George L. Knight, E. L. Bowling and Naples Gulf Front Company, a corporation.

The object of the bill is to enforce the payment by Hugh Keneipp and Frances A. Keneipp of a certain note for $38,700, drawn by E. L. Bowling, payable to E. S. Blanton, which note was negotiated by Blanton to Naples Gulf Front Company, and subsequently reassigned by said company to Blanton. Said note, it is alleged, was secured by a mortgage from Bowling to Blanton conveying certain property in Collier county, Fla., owned by Bowling, which property, subject to said mortgage, was later conveyed by Bowling to Hugh Keneipp and Frances A. Keneipp by a deed poll in which it is stated that said mortgage "is assumed by the grantee herein as a part of the consideration of this deed."

Personal service was had on Hugh Keneipp and Frances A. Keneipp, who appeared and demurred to the bill. An affidavit was made, the record certified up does not show by whom, that the other defendants were not residents of Virginia, and that their addresses were unknown, and they were proceeded against by order of publication, but none of them have appeared in said suit.

The cause was heard on the bill, the exhibits therewith filed, and said demurrer. The court entered its decree sustaining said demurrer, and dismissing the bill as to said demurrants, from which decree E. S. Blanton has appealed.

The grounds of demurrer assigned by the appellees, the defendants below, are as follows:

(1) "There are no grounds of equitable relief set forth in the said bill of complaint; and the mere fact that complainant has no cause of action on the law side of the court against demurrants does not empower a court of equity to entertain this suit."

(2) "All and every of the matters in the said complainant's bill mentioned and complained of are matters which may be tried at law, and in respect to which the said complainant is not entitled to any relief from a court of equity."

(3) "It appears from the bill and the exhibits filed therewith, that complainant does not come into court with clean hands and that he is not entitled to any equitable relief against demurrants."

The trial court does not indicate upon what ground or grounds it sustained the demurrer. The assignment of error is that the court erred in sustaining the demurrer upon any of said grounds. Appellees seem to place chief reliance upon their third ground of demurrer, and argue at length and with much insistence that the bill and exhibits show that Blanton has not come into court with clean hands, and that his conduct in taking a reassign ment of the $38,700 note here Involved and bringing this suit to enforce payment thereof by these appellees is such as to shock the conscience of the court and debar him from any relief in a court of equity. Because of this fact, and in order that all facts which the appellees contend contribute to sustain their charge of unconscionable conduct and unclean hands may be stated, it becomes necessary to state the facts pleaded in the bill and those appearing from the exhibits more fully and in more detail than would otherwise be necessary.

The facts alleged in the bill and those which appear from the bill and the exhibits therewith filed, which are made a part thereof, are as follows:

By deed or mortgage dated July 3, 1925, R. L. Roberts conveyed a parcel of land owned by her in Collier county, Fla., to George L. Knight to secure to said Knight a debt aggregating $35,000, evidenced by three notes of even date therewith, drawn by said Roberts, payable to the order of said Knight, two, three, and four years after date, with interest at 8 per cent, per annum from date. Each of said notes provided that the maker would pay all costs and a reasonable attorney's fee, if placed in the hands of an attorney for collection; and said mortgage provided that, upon default for thirty days in the payment of any installment of principal or interest due on any of said notes, Knight or his assignees, at his or their option, might declare all said notes due and payable.

Said George L. Knight indorsed said notes "pay to the order Naples Gulf Front Company" (a corporation of which he was president), and, by a deed of assignment, dated July 3, 1925, assigned said mortgage, together with the notes therein described, to said Naples Gulf Front Company.

By deed dated August 7, 1925, said Roberts conveyed said parcel of land, subject to said mortgage, to E. L. Bowling, who, the deed states, "assumes the payment of said mortgage as a part of the consideration for this deed."

By a deed of mortgage dated the same day. said Bowling conveyed said parcel of land to E. S. Blanton to secure to him a debt aggregating $51,000, evidenced by four notes of even date, drawn by said Bowling, payable to the order of said Blanton; one note for $38,-700 and another for $4,300 being payable one year after date, and one note for $4,300 and another for $3,700 being payable two years after date. Said notes bore interest at 8 per cent, per annum. In this mortgage it is stated that it is a "subsequent and second mortgage" to said mortgage from Roberts to Knight.

By deed dated November 17, 1925, Bowling conveyed said parcel of land to Hugh Keneipp and Frances A. Keneipp, who are therein stat-ed to be man and wife, for $10 and other valuable consideration. This deed is not signed by the grantees. This conveyance is made subject to three mortgages, upon which the deed states the amounts due are as follows: Said mortgage from Roberts to Knight to secure $35,000; a mortgage from said Roberts to E. G. Wilkinson, dated July 3, 1925, "on which there is a balance due of $8,600"; and said mortgage from Bowling to Blanton, "upon which there is a balance of $42,400." It is expressly stated in said deed that "the payment of the above mortgages is assumed by the grantee herein as a part of the consideration of this deed." This deed has United States revenue stamps to the amount of $174 affixed.

On June 2, 1926, Hugh Keneipp paid to Blanton said $3,700 note, and by deed dated that day Blanton assigned to said Hugh Keneipp "thirty seven four hundred and twenty fourths interest in a certain indenture of mortgage, " to wit, the mortgage from Bowling to Blanton above mentioned, "together with the note or obligation described in said mortgage for $3,700 and the money due and to become due thereon." Said deed of assignment further states: "The mortgage herein mentioned secures two notes, one for $38,700 and one for $3,700. This assignment is intended to transfer only the note for $3,700."

By deed of assignment dated June 28, 1927, said Blanton, "in consideration of the sum of ten dollars, " assigned to Naples Gulf Front Company "all my right, title and interest in and to" said mortgage from Bowling to Blanton, "together with the note—described in said mortgage, and the money due and to become due thereon." This deed of assignment further states: "The interest in the aforesaid mortgage hereby conveyed is represented by a note number one therein secured amounting to $38,700, and is ³⁸⁷/₅₁₀ of the total original amount secured in said mortgage. That portion of said mortgage is hereby conveyed and none other." When said $38,700 note was assigned to Naples Gulf Front Company, it was indorsed by Blanton "without recourse."

Default was made in the payment of the first two notes secured by said mortgage from Roberts to Knight and in said $3S, 700 note secured by said mortgage from Bowling to Blanton; and in November, 1927, Naples Gulf Front Company, the holder of all the notes secured by said first mortgage and of said $38,700 note secured by said subsequent mortgage, instituted its suit in chancery in the circuit court for Collier county, Fla., to foreclose both said mortgages.

The foreclosure suit was brought by O. D. Batchelor as counsel for the complainant; but in March, 1928, E. S. Blanton, as the representative of Naples Gulf Front Company, appeared before the master to whom this cause had been referred under a letter of au thority from Naples Gulf Front Company, signed by its president, George L. Knight, authorizing Blanton, as "the agent and representative of the complainant, " to appear "and make proof of the case of the complainant." This letter states that Blanton is appointed because of his "familiarity with the facts involved in the foreclosure suit."

R. L. Roberts was made a party defendant to the foreclosure suit and filed her answer. E. L. Bowling was not made a party defendant to said bill, and did not appear; but L. A. Bowling, Hugh Keneipp and Frances A. Keneipp, his wife, were made parties defendant in the bill, and upon affidavit that they were nonresidents were proceeded against by order of publication. However, none of the three appeared in the foreclosure suit in any way.

In said foreclosure suit, the decree of the court took the bill for confessed as to the nonresident defendants, who were before the court only upon order of publication, but the evidence taken therein is sufficient to support the decrees entered therein, and no personal judgments were entered against any of the parties defendant.

Said mortgaged property was sold in said suit for $45,000. After the payment of costs, including an attorney's fee of $4,813.25 allowed by the court to the complainant's attorney, O. D....