Green v. Turner

• Decision Date: 05 April 1897
• Citation: 80 F. 41
• Parties: GREEN et al. v. TURNER et al.
• Court: U.S. District Court — Eastern District of Wisconsin

80 F. 41

GREEN et al. v. TURNER et al.

United States Circuit Court, E.D. Wisconsin.

April 5, 1897

The bill alleges substantially the following facts: The complainants owned the Glade Mountain Iron Ore property, and on August 23, 1890, entered into written contract to sell the same to Moore and Hibbert for the sum of $35,000, payable in installments; a deed to be executed upon payment of the second installment of $10,666.66, with reservation of a vendor's lien, according to the practice in Virginia. Moore and Hibbert made the first payment of $1,000, and on November 15, 1890, gave their three promissory notes for the installments subsequent to the second one. Before the payment of the second installment, Moore and Hibbert entered into contract, dated November 12, 1890, to transfer the contract of sale and all rights thereunder to the defendants for the sum of $55,000; the defendants agreeing to pay to the complainants the full amount payable under the contract of August 23, 1890. On November 22, 1890, a further contract was made between Moore and Hibbert and the defendants, which provided for certain contingent shares of Moore and Hibbert in the venture, and renewed the promise by defendants to pay the amounts due to the complainants. On December 12, 1890 the complainants deeded the property to Moore and Hibbert in accordance with the contract of August 23, 1890, retaining vendor's lien as provided. The defendants paid the second installment to procure such conveyance, and represented that they had succeeded to all the rights, and assumed and would perform all the liabilities of Moore and Hibbert under the contract with the complainants, and thereupon directed the conveyance to Moore and Hibbert. The defendants entered into possession of the property and began work thereon, under the conveyance made by complainants and a subsequent deed of Moore and Hibbert to them, and became the owners thereof in fee. The complainants have fully performed on their part, and the remaining installments of purchase money, amounting to the sum of $23,333 and interest, have matured, and no payment has been made thereon, except the sum of $1,075.22. The answer concedes the making of the several written contracts and the deed by complainants as set forth in the bill, but denies any representations, requests, or promises on their part to the complainants respecting the making of conveyances to Moore and Hibbert, or otherwise. It avers conveyance from Moore and Hibbert to the defendants, after the execution of complainants' deed, by deed dated December 12, 1890 which recites only, respecting the complainant's claim that it is 'subject to vendor's lien thereon to Green, Main, and Brown,' and, thereupon avers that the previous contracts were merged, and that the contracts between Moore and Hibbert and the defendants were, in effect, for advances to be made by the latter upon a joint venture of both parties. The answer further sets up certain false representations by Moore and Hibbert, upon which the defendants relied, and which induced the making of these contracts for the sole purpose of mining for iron ore; that they expended $25,000 in endeavors to develop the property for that object; that no body of iron ore existed on the land, and the property was worthless; that immediately upon the discovery of the truth the defendants offered to Moore and Hibbert rescission of the contracts and conveyance, refused to proceed therewith, and immediately abandoned possession of the property; that Moore and Hibbert refused to accept rescission, but the defendants have never since had possession, nor asserted any rights in the premises; and that the complainants subsequently sold the entire property under certain foreclosure proceedings, to which these defendants were nominal parties, but without personal service or appearance. The answer also attempts to raise the question whether relief in equity is not excluded by adequate legal remedies. The evidence, so far as it is deemed material, is referred to in the opinion.

Haring & Frost, for complainants.

Van Dyke, Van Dyke & Carter, for defendants.

SEAMAN District Judge (after stating the facts as above).

Upon each side an objection is raised which must be determined before inquiry is open upon the merits: (1) By the defendants, that equitable jurisdiction is barred, because there is an adequate remedy at law; and (2) by the complainants, that the defenses of false representations or mistake can be heard only upon a cross bill for affirmative relief.

1. The first objection is met by the doctrine, which is established for this court, whatever may be the conflict in other jurisdictions, that:

'The grantee is not directly liable to the mortgagee, at law or in equity, and the only remedy of the mortgagee against the grantee is by bill in equity in the right of the mortgagor and grantor, by virtue of the right in equity of a creditor to avail himself of any security which his debtor holds from a third person for the payment of the debt. Keller v. Ashford, 133 U.S. 610, 10 Sup.Ct. 494; Willard v. Wood, 135 U.S. 309, 10 Sup.Ct. 831;' Insurance Co. v. Hanford, 143 U.S. 189, 190, 12 Sup.Ct. 437; Willard v. Wood, 164 U.S. 502, 519, 17 Sup.Ct. 176.

If, therefore, it be assumed that this point is well presented by the answer, it must be overruled.

2. The second contention, on behalf of the complainants, which would debar any defense of fraud or mistake in the transaction arising between their grantees and mortgagors and the defendants as succeeding grantees, except through the affirmative and direct relief of rescission under a cross bill, for which...