Higman v. Stewart

• Decision Date: 03 April 1878
• Citation: 38 Mich. 513
• Court: Michigan Supreme Court
• Parties: William E. Higman v. Charles Stewart, Helen L. Stewart, Wellington Stewart and Thomas M. Jones

38 Mich. 513

William E. Higman v. Charles Stewart, Helen L. Stewart, Wellington Stewart and Thomas M. Jones

Supreme Court of Michigan

April 3, 1878

Submitted January 30, 1878

Appeal from Berrien.

Foreclosure. Stewart, being indebted to Higman, gave him a mortgage on his farm and also assigned to him as farther security, a mortgage that had been given to himself on certain mill property already subject to two mortgages and an execution sale. Higman afterwards took an assignment of the certificate of execution sale, and as there was no redemption he received a sheriff's deed of the property. After he had taken possession, the original owners who had mortgaged the property to Stewart conveyed it to Higman with a covenant against all incumbrances except the levy and sale and the three mortgages. The deed also contained this clause "All these incumbrances the party of the second part agrees and undertakes and promises to pay as part of the consideration hereof." The defense was that Stewart was indorser for the owners of the mill property, who were indebted to a bank of which Higman was president, and that as Higman insisted upon security from Stewart, the latter took up the note to the bank and gave him a mortgage on his farm whereby the owners of the mill property became indebted to Stewart and accordingly gave him the third mortgage to secure that and other debts. Defendant claims that as Higman has bought the property and assumed the incumbrances he is actually liable to him (Stewart) for the amount of these other debts covered by the third mortgage which he (Stewart) had assigned to him. A decree of foreclosure and sale was granted to complainant and defendants appeal.

Decree affirmed, with costs to complainant.

N. A Hamilton and O. W. Coolidge for complainant. Retention of a void instrument must be intentional and work some injury to a third party, to amount to an acceptance, Fonda v. Sage, 46 Barb. 123; Sparrow v. Kingman, 1 Comst. 253; a grantee is not bound by recitals in a deed made to him by parties who have no title, especially where he holds under a prior independent conveyance, Coakley v. Perry, 3 Ohio St., 344; Carpenter v. Buller, 8 M. & W., 209: 2 Smith's Lead. Cas., 711; Murphy v. Jones, 7 Ind. 529.

Clapp & Fyfe for defendants Charles and Helen Stewart. A mortgage placed in one's hands as a fund from which to pay the note it secures cannot be defeated by the holder by purchasing the land on an execution sale, Green v. Winter, 1 Johns. Ch., 36; Sheldon v. Rice, 30 Mich. 301; Kellogg v. Wood, 4 Paige 621; Iddings v. Bruen, 4 Sandf. Ch., 263; Torrey v. Bank, 9 Paige 662; Van Epps v. Van Epps, 9 Paige 237; Hawley v. Cramer, 4 Cow. 736; Diefendorf v. Spraker, 6 Seld. 246; acceptance of a deed is presumed from possession, Dawson v. Hall, 2 Mich. 392; Beers v. Beers, 22 Mich. 42; Verplank v. Sterry, 12 Johns. 550; Sicard v. Davis, 6 Pet. 135.

OPINION

Graves, J.

May 16, 1874, the defendants Stewart and wife joined in a promissory note to complainant for $ 3000, payable three months after date with semi-annual interest at ten per cent. They also made their mortgage of even date, but acknowledged May 20th, to secure the same debt. It was given on the northwest quarter of the northeast quarter and the north half of the southwest quarter of the northeast quarter of section sixteen, of township five south of range nineteen west.

The debt seems to have been the unpaid remainder of an original debt of $ 5000 which had been incurred by Stewart and Theodore and Franklin Pew, in certain business transactions not much explained. At the time of this mortgage from Stewart to Higman, the Pews held the legal title to a mill property at the mouth of the Paw Paw and St. Joseph rivers which some time previously appears to have been regarded as quite valuable. They had become embarrassed; the property was considerably encumbered and had very much depreciated in value. Exactly what land the property includes is not certainly described in the record, but it probably embraces University lots 18, 19, 28, and a portion of lot 27.

Through its endowment fund committee the Albion College held a mortgage given by the Pews December 6, 1871, on lots 18, 28, and part of lot 27 for about $ 3000, and the representatives of the estate of one Becker held another on the same parcels given by the Pews Oct. 15, 1873, and calling for between $ 2000 and $ 3000.

Besides these encumbrances by mortgage there was a levy. May 18, 1874, the sheriff had levied an execution in favor of one Swinson, against the Pews, on the parcels covered by these two mortgages, and also on lots 19, 3, 11 and 12. At this stage Stewart obtained a lien. May 21st, 1874, and the next day after Stewart's acknowledgment of his mortgage of $ 3000 to complainant, the Pews mortgaged to Stewart lots 18, 19, 28, and part of 27, for $ 4100, to secure their note to him of even date for that sum, payable in two years with annual interest at ten per cent. Stewart represents that the consideration of these securities from the Pews was the $ 3000 he was bound to pay to complainant and $ 1100 of other debts the Pews owed him.

October 10, 1874, sale was made on the Swinson execution, and the whole premises covered by his levy were struck off to him in parcels, for the aggregate sum of $ 1048.82, and the sheriff delivered to him the necessary certificates. As the levy under which this sale was made was prior to the mortgage given to Stewart, the right acquired by the purchase under it was superior; but it was subject to the earlier mortgages to the College and Becker estate, as to lots 18, 28 and part of 27 which all covered.

September 8, 1875, and when the time for redeeming on the part of the Pews had still a month left, Stewart assigned to complainant the note and mortgage which the Pews had given for $ 4100.

This assignment was in form absolute, but a paper was made simultaneously from complainant to Stewart which declared that the note and mortgage were assigned as collateral security only for notes which complainant held against Stewart, and further, that the transfer was subject to the understanding that the difference between the cost of the property to complainant if it were bought by him and the amount realized if sold, should be applied towards liquidating Stewart's indebtedness to him.

September 9, 1875, the next day after the date of this transaction, complainant received an assignment of the certificate of sale under the Swinson levy. He paid $ 630 to obtain it. The Pews failed to redeem, and January 12, 1876, the sheriff conveyed to him and immediately, or very soon afterwards, he assumed possession under this title. After he had received this conveyance and had taken possession under it, and on January 24, 1876, the Pews together with their wives executed to him a deed of lots 18, 19, 28 and part of 27. It recited a consideration of $ 1000 and contained the usual covenant of seizin, and covenanted against incumbrances except the levy and sale and except the three mortgages, and also covenanted for quiet enjoyment. But immediately preceding the attestation clause and after enumerating the before mentioned charges upon the property, it stated as follows: "All these incumbrances the party of the second part agrees and undertakes and promises to pay and discharge as part of the consideration hereof." This instrument was handed to complainant by one of the Pews and left thereafter in his possession. Shortly afterwards and before the month ended complainant transferred half of the property to Mr. Hinckley.

Meanwhile proceedings in chancery had been going on to foreclose the Albion College and Becker estate mortgages, and sales were at length advertised under decrees, for September 11, 1876. On the occurrence of the sales complainant became purchaser at both and received conveyances accordingly. The wholesale price is stated to have been $ 5643.83.

These purchases by complainant appear in the evidence as settled by the judge and they are therefore noticed in this connection. They occurred, however, long after the commencement of this suit, and their admission in the case is not explained.

A few weeks after the sheriff's deed and the taking of possession under it, namely, in March, 1876, the complainant filed this bill to foreclose the mortgage for $ 3,000 Stewart and wife gave him on the farm. It was taken as confessed by Jones and Wellington Stewart. Charles Stewart and his wife answered separately. Both admitted the note and mortgage and denied that anything was due. She alleged that the transaction was in the exclusive interest of her husband and on information and belief charged that the whole demand had been paid.

He alleged that the demand originally belonged to the First National Bank of St. Joseph, of which complainant was president, and stood against the Pews as principals and himself as endorser; that the Pews having become seriously embarrassed, the complainant as president of the bank insisted on payment or that he should give security; that thereupon he and his wife by agreement with complainant and on his suggestion, gave the note and mortgage in question and took up the note running to the bank; that by this arrangement the Pews became "obligated" to him for the $ 3000; that aside from this they were also indebted to him for "some $ 1100 for other matters," and in order to secure him for the whole, they gave him May 21 1874, the note and mortgage for $ 4100, which on the 8th of September, 1875, he assigned to complainant as "farther security" for the note of $ 3000; that the property so mortgaged by the Pews was then valuable, and "before the hard times came on" had been "considered reasonably worth $ 20,000 to $ 30,000," and at this time...