Loomis v. Davenport & St. P.R. Co.

• Decision Date: 01 January 1882
• Citation: 17 F. 301
• Parties: LOOMIS and others v. DAVENPORT & ST. P.R. CO. and others. PRICE v. SAME.
• Court: United States Circuit Court, District of Iowa

17 F. 301

LOOMIS and others v. DAVENPORT & ST. P.R. CO. and others.

PRICE v. SAME.

United States Circuit Court, D. Iowa.

January, 1882

McCRARY J.

The original action was brought to foreclose a mortgage upon the property and franchises of the Davenport & St. Paul Railroad Company, and, among others, the present complainant Hiram Price, was made a defendant; the bill alleging that he had or claimed some interest in the premises mortgaged. There was a decree of foreclosure on the twenty-third day of October, 1875, and a sale of the mortgaged property was ordered, subject, however, to the following reservation contained in said decree, to-wit:

'And said sale is to be made subject to any prior liens which may hereafter be established against said property in this court hereafter by any of the parties defendant claiming such lien.'

At the time this decree was rendered the said Price had not appeared and answered. At the November rules, 1879, the cause still being undisposed of, default was taken at rules against said Price, but the same was subsequently, upon a showing, set aside by the court, and he was permitted to file the cross-bill now under consideration. Prior to the order setting aside said default, the said Price had, with the leave of this court, commenced suit in the circuit court of Scott county, Iowa, to enforce his vendor's lien against the Davenport & Northwestern Railway Company v. Davenport &amp St. Paul Railway Company and John E. Henry, who had been by the court appointed receiver of the mortgaged property. In that suit there was service of process and an answer by the Davenport & Northwestern Railway Company, and by Henry as receiver. Upon permission being granted to said Price to appear and file his cross-bill in this case, he dismissed the proceeding in the state court without prejudice. The facts upon which the vendor's lien is claimed, as we find them from the evidence, are as follows:

(1) That in the summer of 1873 the said Davenport & St. Paul Railroad Company, being desirous of securing the right of way over the land in controversy, applied to said Price to procure it for them. The company desired that Mr. Price should obtain the right of way, because they believed he could contract for it at lower prices than would be demanded of the company, and for a less sum than would be assessed as damages if the right of way should be condemned.

(2) The said Price acceded to said request, and undertook to secure the right of way for the said railroad company as a matter of accommodation, and not with a view to any pecuniary reward of profit. He was to be paid for the land what it cost him.

(3) At that time the land through which the right of way was to be obtained belonged part to Andrew J. Preston, part to Price, Hornby & Kehoe, and part to a street railway company.

(4) For the purpose of carrying out the agreement, the said Price bought the necessary land from all these parties, and paid for it out of his individual funds the sum of $2,500. As a convenient mode of conveying title to the railroad company, he secured a conveyance from Preston and the street railway company to Price, Hornby & Kehoe, and from the latter to the railroad company.

(5) There was no agreement that Price should receive anything but cash, or its equivalent, in payment for his expenditures, nor that he should accept any collateral or other security.

(6) Afterwards Mr. French, president of said railroad company, gave Price as payment for said right of way a draft, as follows:

'$2,500.

DAVENPORT, IOWA, July 15, 1873.

'On January 1, 1874, pay to the order of George H. French, president, twenty-five hundred dollars, value received, and charge the same to account of

DAVENPORT & ST. PAUL R. CO.

'By GEORGE H. FRENCH, Pt.

'To Davenport Railway Construction Co., 57 Broadway, New York.

'Indorsed: 'Accepted;' payable at Gilman, Son & Co., New York.

'DVPT. RWY. Construc. CO.

'By B. T. SMITH, Pt.

It was customary at that time for the company to pay debts by drafts upon said construction company, and the parties understood that the draft was given and received as equivalent to cash, and as payment and not as security.

(7) Said draft not being paid at maturity, was several times renewed, and finally put in judgment against the construction company, but the judgment was never collected, and the construction company has become insolvent.

(8) In July, 1877, the said Price commenced suit in the circuit court of Scott county, Iowa, to foreclose his vendor's lien. Due service was made in the same month upon the defendants therein, the Davenport & Northwestern Railroad Company, the Davenport & St. Paul Railroad Company, and John E. Henry, receiver; and on the twenty-sixth day of November, 1877, the answer of the first-named company (the real party in interest) and of the receiver was filed. That suit remained pending until the order of this court was made allowing said Price to file his cross-bill herein.

(9) The suit was brought in the state court against the receiver by permission of this court, and the counsel for the railroad company in that case obtained the default in this court in order to set the same up as a bar to action there.

(10) Upon applying for leave to file his answer and cross-bill in this case, said Price offered to dismiss his case in the state court upon the granting of such leave, and accordingly did so.

Upon these facts, the counsel for the Chicago, Milwaukee & St. Paul Railway Company, the present owner of the railroad, submits an able and exhaustive argument, in which he insists that the said Price has not shown himself entitled to a vendor's lien. I will consider the propositions relied upon by the counsel in the order in which they are presented in the brief.

1. It is said that complainant was never the owner of said premises, and never sold or conveyed them to the railroad company. We think, however, that in equity he was the owner. He had certainly purchased the land and paid for it, and had a perfect right to a deed in his own name. If he chose to consummate his contract with the railroad company, with its assent, by causing the conveyance to be made direct to the company by the parties from whom he had purchased, it certainly cannot follow, as a matter of equity, that he thereby lost his right to a vendor's lien for the purchase money. No doubt the general rule is that the lien is given to the vendor,-- the person who owns the title and conveys it; but a court of equity must look to the substance, and not to the mere form, of the transaction.

We do not think that it is in all cases indispensable that the legal title shall have been vested in the party who claims the lien, nor that the deed or conveyance should have been actually executed by him. If he is the owner of the land in equity, and controls the legal title, and if he causes the conveyance to be made, and is entitled to the purchase money, he is entitled to the vendor's lien therefor. Carey v. Boyle, S.Ct. Wis. 1881, 21 Amer.Law Reg. 208; (S.C. 11 N.W. 47.)

2. It is insisted that complainant is not entitled to a vendor's lien, because he accepted the draft of the Davenport & St. Paul Railroad Company, drawn upon and accepted by the construction company for the amount of the consideration, and thereby waived his right to such lien.

It is true that a vendor's lien is defeated by any act upon the part of the vendor manifesting an intention not to rely upon the land for security; as, for example, accepting a distinct and separate security, such as a mortgage or a bond, or note, with security. 2 Washb.Real Prop.b. 1, p. 507; 1 Jones, Mortg.§ 207 et seq.; Boynton v. Champlin, 42 Ill. 57; Gilman v. Brown, 1 Mason, 190; Vail v. Foster, 4 N.Y. 312; Fish v. Howland, 1 Paige, Ch. 20; Kirkham v. Boston, 67 Ill. 599. The question in every case is whether the vendor intended to waive his right to a lien upon the land, and to rely upon other collateral or independent security. In this case, as already stated, we find that such was not the intention of the complainant. The draft was taken as payment. The complainant had not agreed to accept anything besides cash or its equivalent. The construction company held the funds out of which the railroad company undertook to make payment. The draft was given as a mode of payment, and not for the purpose of securing the payment of the debt. The complainant did not agree to, nor intend to, loan the purchase money to the railroad company.

3. It is insisted that a vendor's lien in this case cannot be sustained, because the conveyance of the lands to the Davenport & St. Paul Railroad Company brought the same under the mortgage foreclosed in this case, which thereupon became a valid and legal lien thereon prior and paramount to any claim for such vendor's line.

It is true that the mortgage covered after-acquired property, and it certainly attached to the land in question as soon as it was conveyed to the company; but whether such mortgage, as to this after-acquired property, became a lien prior and paramount to that of the complainant, for the purchase money is a question now to be considered. The vendor's lien exists to the extent of the purchase money, not only against the vendee and his heirs, but also against his privies in estate, and against subsequent purchasers who have notice of it, either actual or constructive. It also exists against those...