Lewis v. Lindley
| Decision Date | 03 May 1897 |
| Citation | 48 P. 765,19 Mont. 422 |
| Parties | LEWIS v. LINDLEY et al. |
| Court | Montana Supreme Court |
Appeal from district court, Gallatin county; F. K. Armstrong, Judge.
Action by Thomas Lewis against Joseph M. Lindley and Rachel M Lindley to establish and enforce an equitable lien on land. From a decree for plaintiff, and an order denying a new trial, defendants appeal. Affirmed.
Appeal from a judgment and an order overruling defendants' motion for a new trial. The allegations of the complaint substantially are that the defendants and appellants are husband and wife; that on September 12, 1888, one Susan E Rouse owned a large amount of real estate, described in the complaint, situate in the county of Gallatin, Mont; that on said 12th day of September, 1888, said Susan E. Rouse and her husband executed to one George Nichols their promissory note for $5,500, due in five years after date, with interest, and to secure the payment of said promissory note the Rouses executed a mortgage on the real estate referred to; that said mortgage was the first lien upon said real estate, and was duly filed for record on September 13, 1888; that on July 7 1890, this plaintiff and respondent, Lewis, purchased the said promissory note and mortgage, which said note was transferred by Nichols to the plaintiff, and the mortgage securing the note was duly assigned to plaintiff by Nichols that about August 17, 1891, the appellant Joseph M. Lindley was the owner and holder of certain other notes made and delivered to him by the Rouses, aggregating $11,600; which notes were also secured by second mortgage upon the property which the Rouses had therefore mortgaged to Nichols, and which mortgage Nichols had assigned to this plaintiff and respondent, Lewis; that the defendant Joseph M. Lindley, to more fully secure his claim and notes against the Rouses, and at the same time to preserve the lien that Lewis had upon the real estate referred to for the security of his note, made an agreement with Lewis by which it was understood and agreed that plaintiff, Lewis, should release and cancel the mortgage securing the note of $5,500 in consideration of the defendant Joseph M. Lindley executing to plaintiff, Lewis, his note for $5,500, and giving to the plaintiff, Lewis, as collateral security therefor, a note for $19,659, made by the Rouses to the defendant Joseph M. Lindley, which said note should include the entire sum due from the Rouses to the plaintiff upon the $5,500 note, and which was to be secured by first mortgage to be executed by the Rouses to the defendant Joseph M. Lindley upon the property already referred to and described in the complaint; that according to this agreement the Rouses made and delivered their note for $19,659, dated August 17, 1891, to Joseph M. Lindley, due on or before August 17, 1893, which said note included the amount due the respondent, Lewis, and the said Joseph M. Lindley by the Rouses, and to secure the payment of said note the Rouses executed a mortgage upon the aforesaid property to the defendant Joseph M. Lindley, which mortgage was recorded on August 24, 1891; that defendant Lindley, in accordance with the terms of the agreement just referred to, made and delivered the said note for $5,500 to the plaintiff, Lewis and at the same time transferred to him the note of the Rouses for $19,659 as collateral security for the $5,500 note, and thereupon plaintiff canceled the mortgage securing the note for $5,500; that prior to August 17, 1893, the defendant Lindley paid the interest on the said $5,500 note and $1,400 of the principal thereof, and that on August 17, 1893, there was still due on the said note $4,100; that on said August 17, 1893, Joseph M. Lindley executed his note to this plaintiff, Lewis, for $4,100, in renewal of the balance due upon said $5,500 note, the last-mentioned note being due one year after date; that the plaintiff still owns the said note, and that nothing has been paid thereon except $213.50, paid November 7, 1894; that it was agreed between plaintiff, Lewis, and the defendant Joseph M. Lindley at the time of the execution of the $4,100 note just referred to that the note for $19,659 secured by mortgage and indorsed by Lindley to Lewis should continue and remain, as theretofore, in the hands of plaintiff, Lewis, as collateral security for the payment of said note of $4,100, and the note for $19,659 did remain in plaintiff's possession as collateral for the payment of said $4,100 note until surrendered to the defendant Joseph M. Lindley for purposes herein after specified; that about September 28, 1894, the defendant Joseph M. Lindley represented to the plaintiff, Lewis, that he (Lindley) was about to effect a settlement and adjustment of the $19,659 note due by the Rouses to him, the said Lindley, and, to avoid foreclosure and sheriff's sale, he, the defendant Lindley, had agreed with the Rouses that they were to make to him (Lindley) a warranty deed for the property described in their mortgage securing said note, upon the condition that Joseph M. Lindley would surrender to them the said note of $19,659, and cancel the mortgage securing the same; that defendant Lindley agreed with the plaintiff at that time that in consideration of Lewis surrendering to him (Lindley) for delivery to the said Rouses the said $19,659 note held by him as collateral as aforesaid, he (Lindley) could and would cause to be executed to himself--that is, Joseph M. Lindley--a warranty deed from the Rouses, conveying to him all the property described in the said mortgage, and immediately after such conveyance by the Rouses he (Lindley) would liquidate and pay the $4,100 note, with interest, or, in default thereof, would execute to this plaintiff, Lewis, a mortgage upon the property so conveyed to him (Lindley) by the Rouses as security for the said $4,100 note, and cause the said mortgage so to be executed to be executed and signed by the defendant Rachel M. Lindley, and that said property should continue to be security to the plaintiff, Lewis, for his debt; that pursuant to the terms of this agreement last mentioned, and relying upon the representations and agreements of the defendant Joseph M. Lindley, and without any intention of releasing or waiving the lien that Lewis, the plaintiff, had on the property described in the mortgage, he (Lewis), on September 28, 1894, surrendered to Joseph M. Lindley the $19,659 note; that on September 27, 1894, the Rouses made and delivered to Joseph M. Lindley their warranty deed conveying to him all the real estate described in the mortgage heretofore referred to, excepting about 14 acres thereof, and that about the same day Lindley surrendered and transferred to the Rouses the $19,659 note in consideration of the deed, and afterwards, about November 15, 1894, Lindley released and canceled the mortgage securing the said $19,659 note,--all of which, plaintiff alleges, was done by Lindley in violation of his said agreement with plaintiff, Lewis, and with the intention of defrauding and cheating Lewis out of his said debt and his security therefor upon the said lands described in the mortgage given to secure the $19,659 note.
Plaintiff further alleges that about October 25, 1894, the defendant Joseph M. Lindley, disregarding his promises and agreement made as aforesaid, together with his wife, Rachel M. Lindley for the purpose of defrauding and cheating plaintiff out of his debt due him on the $4,100 note, and his just lien as security therefor against the real estate described in the mortgage securing the $19,659 note, and without any consideration therefor, and with full knowledge on the part of both defendants of the debt of $4,100 and of the lien as security therefor, conveyed all the real estate included in the mortgage, except 14 acres, omitted as heretofore mentioned, together with all other real estate owned by the said Joseph M. Lindley, to one B. F. Osborne, and the said Osborne on the same day reconveyed all of said property so conveyed to him to this defendant Rachel M. Lindley, wife of Joseph M. Lindley, without any consideration therefor, and for the purpose of cheating and defrauding the creditors of Joseph M. Lindley, and especially this plaintiff, and that the said Osborne and both of the defendants intended to cheat the creditors of Joseph M. Lindley; that during the time which elapsed between the surrender of the $19,659 note by this plaintiff, Lewis, to the said Joseph M. Lindley, and the execution and delivery of the deeds to Mrs. Lindley, and both before and after the making of the conveyances to Osborne and by Osborne to Mrs. Lindley, the said defendant Joseph M. Lindley represented to this plaintiff, Lewis, that he expected to and would pay the $4,100 note if he could secure the money by mortgage upon the realty described in the said $19,659 mortgage, and that, if he failed to borrow said money, he would execute a mortgage to this plaintiff to secure the said $4,100 note, and that he did pay during the said time the sum of $213.50 to plaintiff, and that plaintiff relied upon his representations and statements made during said time and at the time of the surrender of said note as aforesaid, and believed the same to be true, until November 17, 1894, when he accidentally discovered the conveyances to Osborne by the defendants, and that of Osborne to Mrs. Lindley, and that said discovery was the first knowledge of said conveyances, or of the intentions of said Lindley, which came to plaintiff; that immediately upon said discovery he demanded of Joseph M. Lindley the payment of the $4,100 note, or that he execute and cause to be executed to the plaintiff a mortgage upon the realty described in the $19,659 mortgage, pursuant to the agreement between plaintiff and the defendant Joseph M. Lindley...
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