Bldg. Ass'n v. Clark

• Decision Date: 27 October 1885
• Citation: 43 Ohio St. 427,2 N.E. 846
• Parties: BUILDING ASS'N v. CLARK.
• Court: Ohio Supreme Court

43 Ohio St. 427

2 N.E. 846

BUILDING ASS'N

v.CLARK.

Supreme Court of Ohio.

Filed October 27, 1885.

Error to district court, Franklin county.

The Home Building & Loan Association of Columbus, Ohio, being the owner of lot No. 36 in R. E. Neil's addition to the city of Columbus, Ohio, on the twentieth day of November, 1876, for the consideration of $2,000 sold and conveyed the same to Augustus Johns. On the same day Johns executed and delivered to such association his notes for $1,250, being for deferred payments of purchase money, and a mortgage deed reconveying the realty to the association to secure the payment of the notes. On the same day Johns also executed and delivered to the Capital Building & Loan Association his notes for $1,000, and secured the same by a mortgage to the latter association. The money so procured was used to make the down payment on the premises to the Home Building & Loan Association. These mortgages were not filed for record until December 17, 1877, and were then both recorded as of the same time. On July 25, 1877, Johns, for the consideration of $1,800, as expressed, sold and conveyed to William J. Waters the S. 1/2 of lot No. 36, who took such conveyance with full knowledge and notice of the unrecorded mortgages, and that the same were wholly unpaid. At the same time, and as a part of the same transaction, Waters reconveyed the premises to Johns by mortgage deed to secure the payment of $500, being for so much of the purchase money of the S. 1/2, which mortgage was filed for record July 26, 1877. On December 28, 1877, Wesley Royce, assignee, etc., filed in the clerk's office of Franklin county the transcript of a judgment for execution against Waters for $72.76 debt, and $17.70 costs, and on same day a lien was acquired thereunder on the S. 1/2 of lot No. 36, as the property of Waters. On July 16, 1878, Waters and wife, by a deed of general warranty, conveyed the S. 1/2 to Michael Wackerman for the alleged consideration of $2,500; and on March 30, 1880, Wackerman, by deed duly executed, and for the alleged consideration of $25, conveyed the same to Kittie Waters, the wife of William J. Waters. On August 1, 1878, the Home Building & Loan Association brought suit in the court of common pleas of Franklin county against Augustus Johns and wife, the Capital Building & Loan Association, and William J. Waters, to foreclose its mortgage; and by an answer and cross-petition, filed August 16, 1878, the Capital Building & Loan Association also sought to foreclose its mortgage on lot No. 36. September 17, 1878, Johns filed his answer, in which, among other things, he alleged that on or about July 23, 1877, he sold and conveyed by deed to William J. Waters the S. 1/2 of lot No. 36, and took notes and a mortgage from Waters as a part of the purchase money for $500; that at the date of such purchase Waters was fully aware of the two unrecorded mortgages to the building associations, and prayed that if it became necessary to sell the premises to pay the liens, the N. 1/2 of lot No. 36 be first exhausted, and if the S. 1/2 should be sold, then that the amount due to Johns from Waters under his mortgage be applied to pay the amount due the associations.

After filing that answer, and during the pendency of the action, Johns sold and assigned the notes and mortgage to the defendant Charles T. Clark. The latter, on his own motion, was afterwards made a defendant, and, by leave of the court, on May 9, 1881, filed his answer and cross-petition, alleging the execution and delivery of the notes and mortgage from Waters to Johns, and that, for a valuable consideration, the latter had sold, assigned, indorsed, and delivered the same to himself. In his answer he also alleged the recovery of the judgment by Royce, assignee, etc., against Waters, and that in January, 1880, Royce assigned such judgment to him, (Clark.) He averred that at the time Johns conveyed to Waters, and Waters mortgaged the property back to Johns, the mortgages of the associations had not been filed for record, and by reason thereof, as assignee of the Johns notes and mortgage, he had a lien on the S. 1/2 of lot No. 36, superior to the liens of the associations; and that the lien, by reason of the Royce judgment, was superior to the liens of the associations.

The associations replied to the answer of Clark, and, after certain other averments, recite that they have no means of knowing, except from the allegations of the answer, anything in regard to the averments in the answer; that ‘after the maturity of said note the said Augustus Johns, for a valuable consideration, indorsed and delivered said note to said Charles T. Clark, and he is now the lawful owner and holder thereof,’ and that they ‘cannot admit or deny the same, but demand proof thereof.’

Since the pendency of the proceedings, the N. 1/2 of lot No. 36 has been sold, and the money applied to pay the liens of the associations, and the S. 1/2 has also been sold, and the proceeds thereof are in the custody of the court for distribution.

On trial in the district court the court ordered the proceeds of sale to be distributed, (1) to pay taxes; (2) costs; (3) to pay Clark $685.75 on the Johns mortgage; (4) to pay Clark $113.16 on the Royce judgment; and, (5) the residue, if any, to Kittie Waters; and the court further ordered that the mortgages to the associations be canceled. The associations prosecute petitions in error to reverse the judgment of the district court.[Ohio St. 430]Gilbert H. Stewart, for plaintiffs in error.

[Ohio St. 432]J. Wm. Baldwin, for defendant in error Kittie Waters.

[Ohio St. 431]S. Hambleton, for defendant in error Clark.

D. C. Welling, for defendant in error Beebe.

ATHERTON, J.

The principal controversy in this cause is between the two building associations on the one side and Charles T. Clark on the other, touching the disposition of the proceeds of the sale of the S. 1/2 of lot No. 36. The former claim the funds in the hands of the court under their unrecorded mortgages, and the latter under the mortgage made by Waters to Johns, and under the lien of the judgment obtained against Waters by Royce, assignee, etc. What are the relative rights of the associations and Clark to the fund, and which of them is entitled to it?

It is claimed on behalf of the associations that inasmuch as Johns and those claiming under him had knowledge of the amount, existence, and non-payment of the mortgages, and that one of the mortgages was given to the Home Building & Loan Association for purchase money, and the other was given to the Capital Building & Loan Association for money borrowed to make a down payment to the former association, their equity is superior to that of Clark, and that Johns and Clark are not bona fide purchasers, and that the unrecorded mortgages are first to be satisfied; and, further, that the judgment held by Clark on these premises is confessedly subsequent to the record of these mortgages, and so must be postponed to them.

It is quite clear that the mortgage to the Capital Building & Loan Association...