Jones v. Smith

• Decision Date: 05 April 1871
• Citation: 22 Mich. 360
• Court: Michigan Supreme Court
• Parties: Charles W. Jones et al. v. Timothy Smith et al

22 Mich. 360

Charles W. Jones et al. v. Timothy Smith et al

Supreme Court of Michigan

April 5, 1871

Heard January 11, 1871 [Syllabus Material]

Appeal in chancery fro Kalamazoo circuit.

The bill in this cause was filed by Charles W. Jones, Ephraim Jones and John J. Johnson, in the circuit court for the county of Kalamazoo in chancery, against Willard Jones Gilbert C. Jones and James Bassett, administrators of the estate of Harvey Jones, deceased, Timothy Smith, Allen Rossman and Augustus McKinstry, to procure the discharge of record of a mortgage executed by Ephraim Jones to Harvey Jones, in his life time, upon the ground that it had been satisfied; the bill averring that the defendants Rossman and McKinstry claim to be assignees of the mortgage, and that they had, subsequently to the payment of the mortgage by the complainant Ephraim Jones, caused their assignment to be recorded, insisting that it was valid and unsatisfied. The complainants deny any notice of the assignment of the mortgage until after it was paid, and aver that the mortgage constitutes a cloud upon their title; two of them, Charles W Jones and John J. Johnson, being grantees of Ephraim Jones of portions of the premises subsequent to the execution of the mortgage. The bill was taken as confessed by all the defendants except Timothy Smith, who answered. Issue was joined upon his answer, and proofs were taken. The cause was heard upon pleadings and proofs; the circuit court adjudged the mortgage to be satisfied, and decreed that it be surrendered and discharged of record; from which decree the defendant Timothy Smith appeals to this court.

Decree affirmed, with costs.

Stuart & Edwards and G. V. N. Lothrop, for complainants:

1. The bond and mortgage of Ephraim Jones in the hands of the administrators of the estate of Harvey Jones was a chose in action unlike negotiable securities, incapable of transfer except by an assignment or agreement to assign perfected by notice to Ephraim Jones: Adams' Equity, 53-4; 1 Pars. on Cont., 198-9; Campbell v. Day, 16 Vt. 558; Ward v. Morrison, 25 Vt. 593; Loomis v. Loomis, 26 Vt. 198; Comstock v. Farnum, 2 Mass. 95; Jones v. Witter, 13 Mass. 304; Chitty on Cont., 10 ed. 138, and notes.

2. Until the notice of the assignment to the debtor, the rights and interests of the debtor are in no way affected by it. If, in the mean time, and before such notice, the debtor pays the debt to the assignor, or his subsequent assignee, he will be discharged. It is the notice of the assignment that binds the debtor, and devolves on him an equitable obligation in favor of the assignee. The assignment operates between the assignor and assignee only until the act of notice takes place which brings the debtor into the arrangement: Crocker v. Whitney, 10 Mass. 316-19; Mowry v. Todd, 12 Mass. 281; Parkhurst v. Dickerson, 21 Pick. 310; Litchfield v. Story, 3 Johns. 421; Eels v. Finch, 5 Johns. 193; Anderson v. Van Allen, 12 Johns. 343; Briggs v. Dorr, 19 Johns. 95; Megham v. Mills, 9 Johns. 64; Timan v. Leland, 6 Hill 237; Wheeler v. Wheeler, 9 Cow. 34; Muir v. Schenck, 3 Hill 230; Huntington v. Potter, 32 Barb. 300; Myers v. Davis, 22 N. Y., 489; Robinson v. Howes, 20 N. Y., 84.

3. The assignee of a chose in action takes it subject to all the equities existing between the assignor and the debtor at the time the debtor has notice of the assignment.

Severens & Burrows, for defendant Smith:

The bill is not one for redemption of a mortgage--it asks for no accounting, and there is no offer to pay any amount which might be found to be due upon it. It is the case of a bill filed to quiet title, and in such case the ground of the jurisdiction rests in the reason that the party is not in a position to force the holder of the adverse claim into an active assertion of his rights.

But in such a case as this, the court requires clear and indubitable proof of the right of the complainant. If the case is not clear he will be left to his remedy by a bill to redeem, or to defend upon a bill for foreclosure. It is alleged in the bill (as seems to be necessary in this class of cases (2 Comp. L., section 3490), that the complainants are in possession of the premises. This the answer does not admit, and there is no proof to support the allegation. The principle of the following cases seems applicable here: Trustees of Louisville v. Gray, 1 Litt. 147; Harris v. Smith, 2 Dana 10; Clark v. Hubbard, 8 Ohio 382; Smith v. McConnell, 17 Ill. 135; Haythorne v. Margerem, 3 Halst. Ch., 341.

To whatever head of equitable jurisdiction this bill may be referable, we say that if the case did not satisfy the court that E. Jones had actual notice of the assignment, it is perfectly clear that the facts were sufficient to put him upon inquiry--and that is equivalent to notice, and, consequently, that he paid the money to the administrator at his own peril; for the rule is, that when a party having knowledge of such facts as would lead any honest man, using ordinary caution, to make further inquiries, does not make, but avoids making such obvious inquiries, he must be taken to have notice of those facts, which, if he had used such ordinary diligence, he would have readily ascertained: Anderson v. Van Allen, 12 Johns. 343; Wilkins v. Batterman, 4 Barb. 47; Whitbread v. Boulnois, 1 Y. and Col. Ex., 303; Tritt v. Colwell, 31 Penn. Stat., 228; Booth v. Barnum, 9 Conn. 286; Cameron v. Little, 13 N. H., 23-6; Sigourney v. Munn, 7 Conn. 324-33; Blaisdell v. Stevens, 16 Vt. 179.

OPINION

Cooley, J.

The object of the bill in this case is to have a certain mortgage, which is described therein, decreed to be satisfied and discharged. The defendant Smith is assignee of the mortgage, and the claim of the complainants is, not that it has been paid to him, but that the mortgagor, in ignorance of the assignment, has made payments and advancements to the mortgagee and his representatives which satisfy it.

The mortgage in question was given by Ephraim Jones to Harvey Jones on the first day of April, 1847, and was conditioned for the payment of two thousand dollars, in seven equal annual payments, with annual interest; the first payment to be made April 1, 1849. Harvey Jones, when the mortgage was given, resided in the state of New York, but he removed soon after to the state of Wisconsin, where he died in November, 1849, and the defendant Loyal H. Jones was appointed administrator of his estate. Before the death of Harvey Jones, however, he had given the mortgagor an agreement, making the mortgage payable in fifteen annual payments instead of seven, and the mortgagor had made payments amounting to several hundred dollars.

By an instrument which bears date October 14, 1850, the administrators upon the estate of Harvey Jones assigned the mortgage to the firm of Rossman & McKinstry. The complainants deny that this assignment was made at the time it bears date, and the oral proof on the subject is not very satisfactory or conclusive. We do not regard this, however, as very important. Attached to the assignment, as given in evidence, is an instrument signed by Rossman & McKinstry, reciting that the assignment is made to secure an indebtedness of the estate to them of $ 5,273.31 and interest. This instrument is dated November 28, 1857.

Rossman & McKinstry assigned the mortgage to the defendant Smith, December 19, 1860, and the two assignments were recorded in the office of the register of deeds of the county where the lands lie, August 19, 1862. It is not claimed that prior to this recording the mortgagor had any actual notice of the assignments.

After the death of Harvey Jones the mortgagor made payments for the estate and advanced moneys to the administrator for the benefit of the estate, amounting in all, previous to the recording of the assignments, to more than sufficient to satisfy the mortgage. These payments and advances were none of them applied on the mortgage at the time they were made but the mortgagor had a settlement with the administrator May 15, 1863, at which time a balance was struck against the estate of $ 2,500.34. At the time of this settlement, the mortgagor was for the first time informed that the mortgage had...