Lyon v. McDonald
| Decision Date | 10 October 1883 |
| Court | Michigan Supreme Court |
| Parties | LYON v. McDONALD and others. |
A foreclosure suit, depending upon the question whether or not the mortgage debt had been settled, was determined in complainant's favor, upon evidence that complainant had always claimed it as an existing obligation, and that defendant fully understood that this claim was made; that neither note nor mortgage had been surrendered, and no steps had ever been taken to procure their cancellation or release that the mortgagor had assured complainant that he had fully informed a second mortgagee of the existence of the prior mortgage, and of the reasons why complainant insisted on his right to hold it; and that defendant had made an agreement with complainant in which he set out the existence of a debt including the mortgage, as securing part of it, and as belonging to complainant.
The burden of showing that the amount due on a mortgage under foreclosure is less than complainant claims, is on the defendant.
A foreclosure decree was given for the amount of a proposed compromise, which had never amounted to more than an offer on either side, where the court considered the amount a sufficient approximation to the debt to fairly represent it at the time the compromise was proposed.
Appeal from Iosco.
Chas R. Henry and Hatch & Cooley, for defendants.
Complainant filed his bill to foreclose a mortgage dated July 25, 1873, for $5,239, payable in one year, with interest at 10 per cent. The bill was filed June 24, 1882, when the note had become outlawed, unless kept alive by payments, as there was no proof of such a new promise as would satisfy the statute. Complainant only relies on the land. The answer, which was unsworn, sets up the statute of limitations as against personal liability, and averred payment, but without any particulars of time or manner. It also claimed, in the form of the common counts, a set-off, without particulars. The defense chiefly relied on was payment by a transaction in 1874. On the same day when the note was given, July 25, 1873, an agreement was made between Donald A. McDonald and complainant whereby McDonald agreed to cut and deliver on or before July 18, 1874, 1,500,000 feet of white pine timber, cut the full length of the tree, and averaging not less than 650 feet to the stick, at nine dollars a thousand, to be properly marked and sealed by L.B. Wheeler at Detroit or Toledo; the logs to be cut on lands of Lyon, specified. The agreement set out that McDonald was indebted on two notes (of which one was the note in question) to the amount of $9,000. It was agreed that if McDonald faithfully carried out the contract, and delivered the 1,500,000 feet of long pine timber on or before July 15, 1874, Lyon would cancel the debts, and assign to any one whom McDonald should select, the securities held for the same, and pay any further balance, if there should be any. In addition to the mortgage in suit, the remaining note was also secured by collaterals.
It is not claimed that this contract was carried out according to its terms. The lumber furnished was not all white pine, but partly Norway. It did not come up to the required average in size. It was also discovered that a part of it was cut on land in which McDonald was not interested, instead of on the specified lands in which he was equitably interested.
The contract, therefore, being unfulfilled, would not by the imperfect fulfillment operate as a payment, unless by some arrangement and settlement. Upon this the parties are at variance. McDonald claims that a certain deduction was agreed on, and the matter closed, so as at any rate to cancel the debts referred to. Complainant testifies to the contrary, and that the mortgage was never understood to be canceled, and was kept alive through their subsequent dealings, and that he never received such sums or payments as to either pay it, or balance it by counter-claims or set-offs. In this conflict we are obliged to consider the subsequent treatment of it between the parties.
The record shows abundantly that complainant always claimed it as an existing obligation, and that McDonald fully understood that this claim was made. It also appears that no surrender was made of either note or mortgage, and no steps were ever taken to procure a cancellation or release. It is not claimed, and there is nothing which goes to make it probable, that if not settled in 1874, under the timber contract, it was ever settled at all.
In November, 1874, after that transaction was ended, some controversy arose with a Mr. Morse, to whom McDonald had given a subsequent mortgage, and who claimed to have been ignorant of the mortgage in suit. On this occasion McDonald wrote two letters assuring complainant that he had fully informed Morse of the existence of the mortgage, and of the reasons why complainant insisted on his right to hold it; and on the seventeenth day of November, 1874, McDonald signed and delivered to complainant and E.G. Merick a new agreement to cut and supply timber, in which he distinctly sets out the existence of a debt of $7,500, including this mortgage as securing a part of it and as belonging to complainant. This document he disputes, but in our opinion the testimony establishes its genuineness, and his understanding of it, beyond serious question. If this is so, it is very certain the mortgage was not paid, and the defense of payment is not made out. Complainant is entitled either to the whole amount secured, or to so much at any rate as remained unpaid on balance of accounts. And as the burden of reducing it is on defendants, we must allow it, except as shown to require reduction.
The defendants have not in their case or agreement thrown much light on any of the subsequent arrangements in such a way as to make out any specific balance or set-off. But in July, 1882, McDonald offered to close up a proposed compromise of $3,500, offered in January, 1880. This was not done, and it was a mere offer on either side. But we are inclined to think that this amount may be fairly regarded as a sufficient approximation to represent the debt in January, 1880, and we think the decree below should be reversed, with costs, and a decree entered for complainant, with interest from January 7, 1880, at 10 per cent.
The bill in this case is filed to foreclose a mortgage given on the twenty-fifth day of July, 1873, by the defendant Donald A. McDonald, to the plaintiff, to secure payment of the sum of $5,239.09, with interest at 10 per cent., in one year from the date thereof, according to the condition of a certain note bearing same date, for same amount, and payable at the same time.
The bill alleges that the defendants John C. McDonald and Bernard Rich claim some interest in the premises as subsequent purchasers, tenants, or incumbrancers, but claim no rights in opposition to the mortgage. The defendants made their joint and several answer, wherein they all say and aver that the said note and mortgage were fully paid and satisfied by the defendant Donald A. McDonald, and that the maker thereof did not owe anything thereon at the time the bill was filed. They further claim in their answer that said complainant was indebted to the defendant Donald A. McDonald, at the time this suit was commenced, under all the common counts in assumpsit, in an amount greater than the amount claimed to be due upon this note and mortgage, and asks that the same, or as much thereof as may be necessary for the purpose, be set off against any claim made to appear upon the note and mortgage against D.A. McDonald. The defendants also aver that the complainant's action for any claim upon the note is barred by the statute of limitations. To this answer the complainant filed a general replication. The case was heard on pleadings and proofs, and a decree was rendered therein by the circuit judge dismissing the bill, with costs to the defendants, and complainant appeals.
The principal question in the case is, have the note and mortgage been paid?
At the time the note and mortgage were made, the defendant Donald A. McDonald was indebted to the plaintiff in the sum of about $9,000, and owned the property mentioned in the mortgage in this suit, and an interest in a large tract of pine lands, known as the Talbot lands, in township 25 N., of range 8 E., and also had a large amount of personal property, consisting of horses, sleds, harness, and camp equipments for lumbering; and it appears that, up to that time, he had always had great confidence in the complainant, and, in return, enjoyed his confidence. In order to secure the payment of the balance of his indebtedness to the plaintiff, not covered by the mortgage, he gave a bill of sale of his personal property to the complainant, and complainant thus having under his control all the defendant Donald A. McDonald's property from which the money was to be made to satisfy the complainant's claims, the latter entered into the following contract with said defendant:
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Lyon v. McDonald
...51 Mich. 43516 N.W. 800LYONv.McDONALD and others.Supreme Court of MichiganFiled October 10, A foreclosure suit, depending upon the question whether or not the mortgage debt had been settled, was determined in complainant's favor, upon evidence that complainant had always claimed it as an ex......