Hosley v. Holmes

• Decision Date: 15 July 1873
• Citation: 27 Mich. 416
• Court: Michigan Supreme Court
• Parties: William Hosley v. George Holmes and others

27 Mich. 416

William Hosley v. George Holmes and others

Supreme Court of Michigan

July 15, 1873

Heard April 10, 1873

Appeal in Chancery from Shiawassee circuit.

Decree of the court dismissing the bill, reversed, with costs to complainant in both courts, and a decree entered in this court for a foreclosure and sale, as prayed by the bill, for the one-half of said note of six hundred and sixty-two dollars and seventy-nine cents, with interest at the rate of ten per cent., and such amount of the taxes and insurance stated in the bill as complainant may prove upon a reference and the record remitted to the court below for the purpose of executing this decree.

H. H Harmon, for complainant.

Gould & Lyon, for defendants.

OPINION

Christiancy Ch. J.

This was a bill to foreclose a mortgage. Substantially the case stated by the bill is this: Complainant having a mortgage (with a note) executed to him by the defendant Holmes, upon certain land with a gristmill thereon, in the village of Laingsburg (Shiawassee county), dated January 9, 1868, for two thousand eighty-seven dollars and twenty-one cents, payable one year from its date, with interest at the rate of ten per cent., which was duly recorded, and being also the owner and holder of a joint and several promissory note executed to him by the defendant George Holmes and one Holland C. Hosley, also dated on the 9th of January, 1868, for six hundred sixty-two dollars and seventy-nine cents, payable one year after date with interest at ten per cent., no part of which was secured by the said mortgage; and the said mortgage and the said last mentioned note being over due and unpaid, and the said Holmes being unable to pay, but wishing further time, did, together with his wife (defendant Eliza), on the 12th day of February, 1869, execute and deliver to complainant a deed purporting to convey to him the undivided half of certain lots, known as the mill lot, in the village of Laingsburg, together with engine, boiler, weights and scales, and all appurtenances, which deed was absolute on its face and in the ordinary form of a full covenant warranty deed, but which the bill alleges was executed for the purpose of securing the payment, by the 9th of January, 1870, not only of the money secured by the mortgage above mentioned, with the interest, but also the one-half of the said note made by the said George Holmes and Holland C. Hosley, with the interest, and also to secure the expense of keeping the buildings on the premises described in the deed and mortgage, insured in the amount of two thousand five hundred dollars, for the benefit of the complainant, and for the payment of the taxes of 1869; that for the purpose of explicitly declaring and showing that such were the objects of said deed, the complainant and one Thomas Goldsmith, at the time of the execution and delivery of the deed (February 12, 1869), executed and delivered to said George Holmes a bond or obligation to him, which bond is in the penal sum of two thousand five hundred dollars, and, after referring to said deed, contains the following condition: "That if the said Holmes pays said Hosley the amount of a certain mortgage which said Hosley holds against the mill, of about two thousand one hundred dollars and interest on the same; also one-half of a certain note of six hundred dollars or thereabouts, which note was signed by the said George Holmes and Holland C. Hosley; said moneys, both note and mortgage, to be paid by the 9th day of January, 1870, by said Holmes; and further, said Holmes is to remain in the mill, do one-half of the work, and pay his equal one-half of all expenses, have the half of the mill insured to the amount of two thousand five hundred dollars, which policy is to be assigned for the benefit of said Hosley in case of fire; and to have an equal one-half of all the profits of said mill to the said 9th day of January, 1870; and the said Hosley agrees, if the money and interest is paid at any time between now and the said 9th day of January, 1870, to deed the same property back to said George Holmes or any other person whom Mr. Holmes designates; but if the money mentioned in said mortgage and note be not paid by the said 9th day of January, 1870, then said deed to become operative, and this bond be null and void."

That on the 13th day of February, 1869, the said deed and the said bond were, by mutual arrangement and consent, left with one Sidney S. Manzer of said county of Shiawassee, to be kept by him until the 9th day of January, 1870, then to be delivered to complainant, unless called for by said Holmes and complainant, both being present; that in accordance with said arrangement they were kept by said Manzer without being called for by said Holmes and complainant, until January 9th, 1870, when they were delivered to complainant, and both said deed and bond were duly recorded January 29th, 1870, and are now in the possession of complainant, ready to be produced and proved, etc., and to which reference is made; that after said deed and bond were so executed and delivered and placed in Manzer's hands, viz: about the 22d of July, 1869, said George Holmes and wife sold and conveyed the land and premises described in said deed, to defendant George A. White, by deed of that date, subject to the lien thereon of complainant's said mortgage of two thousand eighty-seven dollars and twenty-one cents and interest thereon, and also a levy thereon of four hundred sixty-eight dollars and thirty-three cents, which liens said White, in and by said deed, agreed to pay; which deed was recorded, etc., and to which reference is made; charges that White before he purchased or took said deed, had full knowledge of the existence of said deed made to complainant, and of said bond, and of complainant's lien to the amount of his said mortgage, and the half of the said Holmes and Hosley note, insurance, taxes, and expenses; that there is now due upon the mortgage and securities last mentioned, the sum of three hundred and thirty-one dollars and thirty-nine cents, and interest thereon from January 9, 1868, at ten per cent., and seventy dollars for taxes, insurance, and expenses paid by complainant on the premises.

It may as well be stated here that previous to the filing of the bill, White had paid complainant the full amount of his original mortgage of two thousand eighty-seven dollars and twenty-one cents and interest, and complainant had released that mortgage of record; so that the only questions in the case relate to the claim for half the Holmes and Hosley note, insurance, taxes and expenses.

The bill calls for an answer without oath, for foreclosure and sale, in the common form of foreclosure bills. All the defendants, by answer, admit the original mortgage of two thousand eighty-seven dollars and twenty-one cents to complainant, but allege its payment in full by White (about which there is no dispute). As to the note of Holmes and Hosley for six hundred and sixty-two dollars and seventy-two cents, White alleges his ignorance, and leaves complainant to the proof, and defendants, Holmes and wife, deny that complainant was the owner or holder of any such note as he alleges in his bill. All the defendants admit the making, execution, acknowledgment and recording of the deed by Holmes and wife to complainant, of February 12th, 1869, but deny that it was executed for the purpose of securing any indebtedness from Holmes to complainant, or to secure him for any expense, taxes or insurance; and deny that the deed was delivered to complainant, or to any person for him by Holmes and wife, or by their consent or direction. All the defendants deny the execution by the complainant and Goldsmith, of the bond stated in the bill, or that Holmes ever knew of the execution of the same, that such deed or bond were left with Manzer by the arrangement stated in the bill, or that they were kept under such arrangement by him, or delivered to complainant, as claimed by the bill; admit that the deed of Holmes and wife to White was subject to the original mortgage and to the attachment alleged in the bill; but deny all notice or knowledge by White of the said six hundred and sixty-two dollar note of Holmes and Hosley, or that complainant had any claim or lien on the property for any part of it, or for the insurance, taxes, or expenses, or for any thing except the original mortgage and interest. White insists that he purchased in good faith, and sets up the defense of a bona fide purchase for valuable consideration without notice. He, however, admits that before he paid the original mortgage, or the judgment in the attachment suit, he heard rumors that there were certain papers between Holmes and complainant, relating to the property in some way, in the possession of Manzer; and says he applied personally and by his attorney for information and inspection thereof, which Manzer refused, and refused to give copies; that the papers were sealed up in an envelope, and he refused any information in respect to them; and insists that the agreement stated in the said bill as to delivery of deed is unconscionable and void. All the defendants deny that the sum stated in the bill as due on said mortgage and deed is due. Defendants Holmes and wife say, that long before the execution of their deed to complainant, Holland C. Hosley had been in partnership with Holmes in the use of said premises and mill; that they could not agree and stopped doing business; that if they ever gave the six hundred and sixty-two dollar note, it was a partnership note, and should be...