Knox v. Randall

• Citation: 24 Minn. 479
• Parties: JOHN JAY KNOX and another <I>vs.</I> ELIZABETH C. RANDALL and others.
• Decision Date: 06 April 1878
• Court: Supreme Court of Minnesota (US)

24 Minn. 479

JOHN JAY KNOX and another vs. ELIZABETH C. RANDALL and others.

Supreme Court of Minnesota.

April 6, 1878.

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On September 10, 1857, one William H. Randall, being indebted to various banking houses in the city of St. Paul, and among them to the firm of John J. Knox & Co., of which the plaintiff was a member, executed promissory notes for the several amounts due his creditors respectively, all which notes were made payable to the order of one Joseph M. Marshall, and were by him indorsed without recourse, and delivered to the respective creditors. At the same time Randall, to secure these notes, executed to Marshall a mortgage upon a large amount of real estate in St. Paul, and Marshall by an instrument bearing even date with the mortgage, and recorded at the same time with it, on September 15, 1857,

wherein he declared that he held such mortgage in trust for the respective holders of the several notes described therein.

At the date of these transactions the mortgaged property was subject to the liens of certain judgments recovered against Randall in 1856 and 1857, under which the mortgaged property was sold on execution, and was redeemed from such sales by Marshall with moneys furnished by the holders of the mortgage notes. These redemptions were made by Marshall, the trustee, as holder of a junior judgment against Randall, purchased for that purpose with moneys also furnished by the holders of the mortgage notes, and no redemption having been made from him, he received from the sheriff, on March 31, 1859, proper deeds of the property so redeemed by him. On February 10, 1859, after he had made the redemptions, and before receiving the sheriff's deeds, Marshall executed a second declaration of trust, reciting the mortgage and his former declaration, and the redemptions made by him, and declaring that he held the title acquired or to be acquired by virtue of the redemptions in trust for the holders of the mortgage notes. This last declaration was recorded February 21, 1859.

On September 17, 1850, prior to the rendition of any of the above mentioned judgments, a judgment for $3,635.13 was rendered and docketed in the territorial district court for Ramsey county in favor of one Henry N. Hart and against Randall Execution on this judgment was issued on March 29, 1859, and on September 29, 1859, delivered to the sheriff of the county, who by his deputy levied on the greater part of the mortgaged property, and on September 8, 1860, after he had gone out of office, the sheriff, by virtue of his execution, sold the property levied on to Hart, the judgment creditor, in parcels, and delivered to him the proper certificate of sale. The sale was made by the same deputy who made the levy. At various dates in 1861 Hart made several transfers of his interest in different parcels purchased by him, at the price he had himself bid for them, with interest, such transfers being made to Israel G. Lash, to Orlando B. Turrell, to Ira Bidwell and to William P. Burrall, each of whom was at the time of his purchase a holder of one or more of the mortgage notes, and to each of whom, or his grantees, the sheriff, after the expiration of the time for redemption from the execution sale, and no redemption having been made, executed the proper conveyances. By sundry mesne conveyances and transfers, the defendants Davidson and Allis had become owners of the greater part of the lands sold under the Hart judgment, and of most of the mortgage notes.

The circumstances relied on by the plaintiff as invalidating the Hart judgment, and the execution and sale thereunder, are stated in the opinion.

Marshall, the trustee, having left the state in 1859, or 1860, and remained absent, paying no attention to his duties as trustee, the plaintiff, as owner of three of the mortgage notes, which had been transferred to his father, John J. Knox, in July, 1860, and by him to the plaintiff in 1870, brought this action in July, 1870, in the district court for Ramsey county, claiming that the Hart judgment and execution, and the sale thereunder, were void, and praying that the mortgage be foreclosed, and the mortgage property sold; that all sums advanced by any note-holder in payment of any liens that might be adjudged prior to that of the mortgage on any part of the mortgaged premises, be deemed to have been paid out and advanced for the benefit of all the note-holders in proportion to their interest in the mortgage debt; and that any sum so advanced by any cestui que trust be first paid with interest out of the proceeds of the sale, and that the proceeds be then applied in payment of the amount due on the mortgage notes; or if the court should determine that no trust arose in said lands for said advancements, and by reason of the purchase of alleged prior liens, and that the defendants so purchasing and advancing have acquired an indefeasible and absolute estate, then that the actual value of the lands to which the title has so vested in such cestuis que trust be ascertained by the court, and applied to the payment and extinguishment of the mortgage notes held by such cestuis que trust at the time such advancements and payments were made, and that any residue of the mortgaged premises not so vested may be sold and the proceeds applied as above prayed, after applying the value of the mortgaged premises to which title has thus been made, to the payment of such portions of the mortgage debt as shall remain unpaid after such applications.

Upon a trial before Wilkin, J., the court found the facts above recited, and others which are set forth in the opinion.

Among other conclusions of law the court held that the plaintiff had no claim to a division of any of the property purchased under the Hart judgment, or to subject it to a foreclosure, and directed a foreclosure and sale of the mortgaged property, other than that sold under the Hart judgment. Judgment was entered accordingly, and the plaintiff and William H Nobles, one of the defendants, appealed.

John B. & W. H Sanborn, for the appellant John Jay Knox.

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W. P. Warner, for appellant William H. Nobles.

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Williams & Davidson, for respondent W. F. Davidson.

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Morris Lamprey, for other respondents.

BERRY, J.

On September 10, 1857, William H. Randall, being indebted to certain bankers of St. Paul in the sum of $176,288.80, executed notes for the amounts owing to each respectively, and a mortgage upon real estate to secure the same. The notes and mortgage were made to run to Joseph M. Marshall, who at the same time transferred the notes to the creditors, so as to give to each respectively notes for the amounts owing to him. Marshall at the same time executed and recorded a declaration of trust to the effect that he held the mortgage in trust for such creditors in proportion to their respective demands. The mortgaged premises were encumbered by five judgment liens, paramount to the mortgage. Upon four of the judgments execution sales were had of portions of the mortgaged premises.

For the purpose of protecting their security, the beneficiaries in the mortgage, in proportion to their respective interests and upon Marshall's requisition, advanced money, with which Marshall, in March, 1858, purchased one of the five judgments, and under the same redeemed all the property sold upon the former execution sales, except the portion which was sold at one of the sales to one Oliver. No one having redeemed from Marshall, he received sheriff's deeds of the redeemed property.

February 10, 1859, Marshall executed and recorded a second declaration of trust, reciting the facts aforesaid, relative to the judgments and redemptions, and declaring that he held the judgments and redemption titles, and all right, title and interest acquired, or which he might acquire, by virtue of such redemptions, for the benefit of the parties for whose benefit the first declaration of trust was executed, and their representatives and assigns, in accordance with their interests and equitable rights in the premises.

The plaintiff is the owner and holder of three of the notes made to Marshall as above stated, subject to the interest therein of R. B. Galusha, as assignee of W. L. Banning & Co. All of the other notes made to Marshall are owned by defendants Allis and Davidson, except one, which is owned by defendant Warner.

It is found by the court below that a certain alleged judgment in favor of Henry N. Hart against William H. Randall was a valid judgment, and was a prior lien upon the property embraced in the mortgage to Marshall.

This judgment came in question in Marshall v. Hart, 4 Minn. 352, (450,) upon substantially the same objections made to it in the case at bar, and was held to be valid. As respects the question of the validity of the Hart judgment, the interests of all of the parties to the action at bar were represented in that action. The judgment in Marshall v. Hart is, therefore, as respects the question of the validity of the Hart judgment, binding and conclusive upon the parties to this action, for they were all either parties to the judgment in Hart against Marshall, or the privies of those who were parties. It follows that, upon the question of the validity of the Hart judgment in the present action, the judgment in Hart v. Marshall might have been pleaded in estoppel. It was not so pleaded. Neither does it appear to have been introduced in evidence, as it might have been, although not pleaded in estoppel. Stephen on Evidence, art. 43. But, although the defendants have not availed themselves of it as they might have done, we think it ought to control, in this case, upon the principle of stare decisis. It is a decision of this court upholding the validity of the identical judgment involved in the action at bar. Whether it is necessary to treat it as a...