Brown v. Brown

• Decision Date: 18 November 1862
• Court: Michigan Supreme Court
• Parties: Lyman D. James v. John Brown and others

11 Mich. 25

Lyman D. James v. John Brown and others

Supreme Court of Michigan

November 18, 1862

Heard July 11, 1862; July 12, 1862 [Syllabus Material]

Appeal from Wayne Circuit in Chancery.

The bill was filed against John Brown and Emma his wife, Uzziel Durham and Walter C. Skiff, to foreclose a mortgage given January 21, 1855, by Brown and wife to Enoch James, to secure the payment of $ 13,000 in three payments, at three, four and five years respectively, with interest, for which notes were given. This mortgage was upon lot 39 in section number seven of the Governor and Judges' plan of the city of Detroit and was assigned to complainant January 19, 1858. The bill states that, before such assignment, and on January 21, 1857 Enoch James released to John Brown a portion of the mortgaged premises particularly described in the bill. At the time of filing the bill the whole principal, and $ 1,600 of interest, were claimed to be owing on the mortgage.

Brown and his wife answered, alleging that the mortgage was given to secure the payment of $ 6,500 money loaned, and $ 6,500 in satinet cloth, which was to be worth fifty cents per yard, to be thereafter delivered; that the requisite quantity of cloth was afterwards delivered, but of greatly inferior quality and value; and a deduction was claimed from the mortgage of $ 3,650 by reason of the inferior quality of the cloths.

Skiff answered, that he was assignee of a mortgage of $ 8,500, given to Brown, August 22, 1855, by Uzziel Durham, on a portion of the premises covered by the James mortgage and not released therefrom, which portion Durham had purchased of Brown at that date; that this mortgage was duly recorded August 24, 1855, and was assigned by Brown to Skiff, August 27, 1855, to secure the sum of $ 2,000 Brown was owing him. The answer further states that before James released to Brown any of the premises covered by his mortgage, they were ample security for the two mortgages; that the value of the portion released was $ 14,000, and of the remaining portion only $ 13,000, and that by the operation of the release Skiff's security will be entirely destroyed unless the court shall give him relief against the same--both Brown and Durham being entirely irresponsible. And it avers that James had notice of the Durham mortgage, and of its assignment to Skiff, before executing the release.

Replications having been filed to the answers, and testimony taken, the court below made a decree in favor of James, allowing him $ 6,500 for moneys included in the mortgage, but only twenty-seven cents per yard for the satinets; for the payment of which sums decree was made against Brown, but postponing the lien of complainant to that of Skiff on the premises covered by the Durham mortgage, to the extent that the security under that mortgage would be affected by the release to Brown. From this decree James appealed.

Decree modified as to give a priority of payment to complainant, with costs in this court.

C. I. Walker, for complainant, argued that the proof did not establish the contract, in regard to the satinets, set up in Brown's answer; that the record of the conveyance from Brown to Durham, and of the mortgage back, and the assignment of this mortgage to Skiff, was not constructive notice to James: 1 Johns. Ch, 409; 1 Sandf. Ch., 405; 2 Barb. Ch., 151; 3 Sandf. Ch., 192; 5 Rawle 51; 2 Stock. 119; that the notice of a subsequent incumbrance, to affect a prior incumbrancer, in the absence of collusion or fraud, or of an intent to injure the subsequent incumbrancer, should be a full and clear notice from the latter, that he has and relies upon such subsequent incumbrance, and that the prior incumbrancer must do no act to lessen his security. Just this kind of notice is contemplated by the cases above cited, especially by 3 Sandf. Ch., 208; 2 Stock. 124, and 5 Rawle 51. The burden of proof to show notice is upon Skiff, and it must be clear and distinct, so that James would have been acting in bad faith to disregard it: 4 Mich. 87; 2 Lead. Cas. in Eq., 136, and 190; 28 E. L. & Eq., 84.

H. M. Cheever, for defendants Brown.

Wells & Hunt, and G. V. N. Lothrop, for defendant Skiff, to the point that the holder of a prior mortgage can not release a part of the mortgaged premises, and thus increase the burden upon that part covered by a subsequent mortgage covering less than the whole, cited: 2 Barb. Ch., 151; 6 Paige 35; 1 Johns. Ch., 425; 3 McLean 587; 19 Pick 231; 11 Penn. 312; 4 Halst. 561; 8 N. Y., 271. And whatever is sufficient to put the party upon inquiry, is notice of the subsequent mortgage: 4 Mich. 87; 3 Sandf. Ch., 192, 208; 2 Stock. 119.

Manning, J. Martin, Ch. J. and Christiancy, J., Campbell, J. concurred.

OPINION

Manning J.:

Complainant, who is also appellant, insists that the decree of the court below, in his favor, is erroneous in two particulars:

1st. In not allowing a larger sum to be due him on the mortgage.

2d. In making the decree in his favor subject to Skiff's interest in the Durham mortgage.

The consideration of the mortgage the bill is filed to foreclose, was $ 6,500 cash, and $ 6,500 in satinet, at fifty cents per yard. The satinet was afterwards delivered, but it was not worth over twenty-five or twenty-seven cents per yard, as appears by the testimony; and the question is, whether it was to be received by Brown at fifty cents per yard, or was to be worth fifty cents per yard. * * * From the evidence before us, we must hold that there was a warranty that the satinet should be worth fifty cents a yard. The Circuit Court was right, therefore, in deducting from the amount of the mortgage the difference between the actual value of the satinet per yard and the fifty cents.

3d. Had James notice of the assignment to Skiff when he released a part of the premises covered by his own mortgage? On the answer to this question depends the correctness of that part of the decree postponing complainant's right to Skiff's interest in the Durham mortgage, so far as the release lessened the security for the payment of what was due Skiff on the latter mortgage.

If A has a mortgage on two pieces of property, and B. a subsequent mortgage on one of the pieces only, and A. files a bill to foreclose his mortgage, in order to protect B. without injuring A., equity will require A. first to sell the piece not covered by B.'s mortgage, before selling the latter, when it can be done without prejudice to the recovery of A.'s debt, but not otherwise. Acting on this principle, if A., with a knowledge of B.'s mortgage, releases a part or the whole of the lot not covered by B.'s mortgage, and the remaining property...