Emerson v. Atwater

• Decision Date: 03 May 1864
• Citation: 12 Mich. 314
• Court: Michigan Supreme Court
• Parties: Curtis Emerson v. Samuel T. Atwater and others

12 Mich. 314

Curtis Emerson v. Samuel T. Atwater and others

Supreme Court of Michigan

May 3, 1864

Heard December 2, 1862; December 3, 1862; December 4, 1862 December 5, 1862,

Appeal in chancery from Saginaw Circuit.

The principal question in this case was disposed of by a decision of this court reported in 7 Mich. 12. By the decree then entered, the case was ordered to be referred to a Circuit Court Commissioner for the county of Saginaw, to take and state an account between the parties on a basis then settled. To the commissioner's report on this reference a large number of exceptions were taken by the defendants, the most of which, on the final hearing in the Circuit Court, were overruled, and decree entered that complainant pay to defendant Atwater the amount found due--about $ 5,000--and that defendants reconvey. In default of payment a sale in the usual manner in foreclosure cases was ordered, to satisfy the amount and costs.

Defendants appealed.

Decree of the Circuit Court reversed, with costs, and the report of the commissioner referred back to him, with instructions.

W. L Webber, S. T. Douglass and J. L. Talcott (of Buffalo, N. Y.) for defendants.

J. Moore, G. C. Bates and C. I. Walker, for complainant.

Manning, J. Christiancy, J. concurred. Martin, Ch. J. concurred in part, but dissented from some of the conclusions. Campbell, J. did not sit.

OPINION

Manning J.:

The exceptions are numerous. I shall not notice them all separately. The principal ones are, that the commissioner erred in fixing the indebtedness of complainant at the time the deed was executed at $ 30,000; in holding the answer of Atwater as to such indebtedness binding on Green; and in crediting complainant, in the account subsequent to May 27th, 1853, with the lumber shipped to Atwater previous to the execution of the deed, and then in his hands unsold. Most of the other exceptions to the commissioner's report will be found to turn on one of these.

Pleadings would avail little or nothing if parties were not bound by them. They would be worse than useless, if parties were permitted to allege one thing in them and to prove another on the trial, or at the hearing. Instead of aiding the court and parties in the subsequent investigation, by narrowing the field of controversy, they would serve as a lure to mislead and entrap an adversary. That the evidence must be confined to the issue between the parties, is a rule so well settled as to admit of no controversy. An attempt was made on the argument to take the present case out of this rule. It was said that if Atwater chose to rest the question of mortgage or no mortgage on a statement of indebtedness less in amount than whet was due him in fact, he was not bound by such statement in a subsequent reference after the question had been decided against him. I do not think the argument a sound one. I cannot admit that a fact material to the decision of a question, in one stage of a cause, can afterwards be changed or proved to be different when used by the same party in a subsequent stage of the same cause.

The bill was filed to have a deed given by complainant to Atwater declared a mortgage. In such cases the pecuniary embarrassment of the grantor, his indebtedness to the grantee, and inadequacy of consideration, are circumstances the court looks to in determining the true character of the instrument. They were all set forth in the bill. And of the three, inadequacy of consideration is the most important. For without that, why declare a deed a mortgage? No good would come of it; and there would be nothing to warrant the inference of undue advantage, always relied on by the court, and made the basis of its action in this class of cases.

Defendants must be supposed to have known what they had to meet, and to have shaped their defense accordingly.

Atwater put in an answer on oath, although an answer on oath was waived by the bill, and Green filed a plea, stating himself to be a bona fide purchaser, without notice of complainant's equities. On appeal, we declared the deed to be a mortgage, and that Green was not a bona fide purchaser without notice, and directed a reference to ascertain the amount due from complainant to Atwater on the 27th of May, 1853--the date of the deed--and for an account to be taken of all subsequent dealings between the parties. Atwater in his answer to the bill says:

"This defendant further saith, that at the time of the execution and delivery of the said deed of conveyance by the said Emerson, to him, he, the said Emerson, owed him thirty thousand dollars, for advances made to him theretofore, and became and was insolvent, and proposed to and did execute and deliver to this defendant the said deed of conveyance, in fee simple, in consideration of the said debt--subject to said incumbrances described in said bill of complaint--and that said deed of conveyance was executed and delivered absolutely, without any condition, trust or agreement whatsoever, either express or implied; and that, at the time of the said conveyance, his said debt, together with said incumbrances, far exceeded the whole value of the said lands; and that the statement in said bill of complaint, that such deed of conveyance was, or is, subject to any condition, trust or agreement, is wholly untrue.

"That at the time of the execution and delivery of the said deed of conveyance, this defendant held and owned a mortgage upon the said premises, for the first accruing part of his said demand, to the sum of $ 8,200, executed and delivered to him by the said Emerson--bearing date November 1st, 1850--to secure to him the payment of the said $ 8,200 according to its terms (recorded November 5th, 1851, in B of Mortgages, on pages 155 and 156), and that, at the time of the execution and delivery of the said deed of conveyance, the said mortgage moneys were wholly unpaid, as well as the balance of the said thirty thousand dollars; and that the said deed of conveyance was executed and delivered to him by the said Emerson in lieu of and as a substitute for the foreclosure of said mortgage, to release his equity of redemption in the said lands."

Here is a clear and explicit statement on oath of complainant's indebtedness to Atwater at the time the deed was given. There is no ambiguity in it. He is so particular as to state that a mortgage of $ 8,200 is a part of it, and that complainant's "said debt, together with said incumbrances" (incumbrances on the property due to others) "far exceeds the whole value of the said lands." Why this last statement if it was considered immaterial by the pleader to the investigation that was about to follow? And if material, as it certainly is, can we suppose a debt of forty-six thousand dollars and upwards would have been stated in the deed and answer at $ 30,000? We can hardly presume such a mistake possible. And if a mistake, Atwater should have applied to the court, showing how it occurred, and asking leave to amend his answer, which must be taken as true against him.

But it is insisted by Green's counsel that if Atwater's answer is binding on him, Atwater, as to complainant's indebtedness, Green is not bound by it. The ground of the objection is, that the answer of one defendant is not evidence against a co-defendant. This, as a general rule, is true where the interests of the different defendants are several and not joint. If Atwater had stated in his answer that when he conveyed to Green, he, Green, knew that complainant's deed to him was only intended as security for the payment of the aforesaid $ 30,000, the answer could not be received as evidence of that fact to disprove the truth of Green's plea. It would come within the rule referred to. But I do not understand the rule to go further than this; and that where a defendant seeks to get rid of one equity by interposing another, and fails in it, that the evidence that establishes the first equity against his grantor is not sufficient to establish it against him also.

The plea admitted the allegations in the bill; and, it having been found untrue by the court on the hearing, Green stood defenseless, except so far as he was protected by the answer of Atwater. He is entitled to all the benefits of Atwater's defense, but we know of no rule of law or equity giving him the right to claim and repudiate its benefits at the same time, or to claim a part and repudiate a part. Besides, he took the land subject to the equities between complainant and Atwater growing out of the agreement and deed of the 27th May, 1853. These equities did not cease, and the relation of the parties was not changed by the conveyance of the land to Green. For complainant and Atwater continued to deal with each other thereafter as before, with the knowledge of Green, and without any objection on his part. And there is no pretense of collusion or combination between them to defraud Green. When this case was before us on the former appeal, we came to the conclusion that the deed to Green was itself a mortgage to indemnify him for past and future advances to Atwater, and that their interests were the same, and that for that reason Atwater could not be a witness to prove the truth of Green's plea: 7 Mich. 31, 33.

I think the commissioner was right, therefore, in holding the defendants bound by the statement in Atwater's answer, that the debt was $ 30,000 on the 27th May, 1853. But I think he erred in crediting complainant, in the subsequent account made out by him between the parties, with the unsold lumber in Atwater's hands at that time. The evidence and surrounding circumstances show pretty clearly that this lumber must have entered into the adjustment made by the parties of their matters at the time the deed was executed.

Complainan...