McGinn v. Tobey

• Decision Date: 01 July 1886
• Citation: 28 N.W. 818,62 Mich. 252
• Court: Michigan Supreme Court
• Parties: MCGINN v. TOBEY and others.

28 N.W. 818

62 Mich. 252

MCGINN v. TOBEY and others.

Supreme Court of Michigan

July 1, 1886

Appeal from Lenawee.

Bean & Underwood and C.R. Miller, for defendants.

MORSE, J.

The bill of complaint in this cause was filed to set aside a deed purporting to have been executed by complainant to Thomas J Navin, of certain premises in the county of Lenawee, being a lot and store building thereon, in the city of Adrian, and a farm in the township of Hudson; and also to release a mortgage upon the same premises, executed by said Navin to Sylvester B. Smith and Thomas J. Tobey while he held the apparent record title to said premises, and to have the same decreed and declared to have no force or validity as a mortgage lien upon the lands. Sylvester B. Smith and Thomas J. Tobey were copartners in the banking business at the time the mortgage was taken, and Smith was made a defendant to the bill. During the taking of proofs he died, and the suit proceeds against Tobey as survivor. At the time of the execution of this deed the defendant Navin was a member of the law firm of Merritt & Navin, in Adrian, and mayor of that city. He had the confidence and respect of all classes, and was very popular. The complainant, a man about 60 years of age, intrusted some of his business to Navin, and had implicit faith in his honesty and professed friendship. The proofs show that in the spring of 1881 Navin negotiated with complainant for the rent of his store, and a bargain was entered into between them by which Navin was to lease the store for three years at the rate of $450 per year, payable in monthly installments. Navin was to draw the lease in duplicate, each party to hold a copy. On the thirtieth of April, Navin informed complainant that he had the papers drawn, and McGinn went to his office to execute the lease. The copy which complainant took away was read to him by Navin, and he also read it himself, and, after the suggestion of some little change in the instrument, which was made, he signed it. The apparent duplicate lay upon the table, but was not read to or by McGinn. After he signed his copy he signed the other, supposing it to be an exact counterpart of his own, and left him it in Navin's possession. At the time McGinn was in the office to execute the lease Navin did not say to him that the other paper was a copy; but he laid the two documents together upon the table for McGinn to sign, and complainant supposed it to be the copy from the previous talk that two copies, one for each were to be made. The paper signed and left was upon a blank of about the same character and size of the lease, and partly printed and written, as was his copy. Navin paid the rent regularly, monthly in advance, up to February 1, 1882. About six months after the execution of the lease Navin told complaint that he had lost his copy, and wanted his to make out another one for himself. Complainant let have it, but he did not return it and afterwards, when rent was paid, Navin would take the lease from his safe, and McGinn would make the indorsement upon it, and hand it back to Navin, who would return it to the safe. Some time in February, 1882, Navin became involved in numerous forgeries and criminal speculations, and fled the country. It was then soon discovered that he had put upon record a deed from McGinn to him of the store, lot, and the farm, dated June 2, 1881, the words "June 2nd" being written over an erasure. September 29, 1881, Navin executed to Smith & Tobey a mortgage upon the premises described in the deed, which, upon its face, purported to be given as security for the payment of a certain promissory note for $6,000, payable one year from date with interest at 8 per cent., but in reality executed, as the testimony shows, as collateral security for advances made, and to be made, by the bank of Smith & Tobey to Navin; they holding, at the same time, other collateral security for the same purpose, All the time from the execution of the lease to the flight of Navin, McGinn was in possession of the farm by a tenant. When Smith & Tobey took the mortgage, they knew of the previous ownership of the farm and store by complainant. They relied upon an abstract of the title from the records of Lenawee county, which showed title in Navin, and had no converse with McGinn about it. The day Navin left the county he drew $750 from the bank, and about that time his mother deeded to Smith & Tobey a house and lot in Adrian, worth about $8,000, the title being in her, as further security for Navin's indebtedness to them. This lot was purchased by Navin, and he had nearly completed the house upon it, probably with his own means, or that of persons whom he had swindled. About a month thereafter, Smith & Tobey, for some reason, deeded these premises back to Mrs. Navin, the mother of Thomas J.

The counsel for defendant Tobey contend that the bank was innocent of any complicity in the fraud of Navin upon complainant by which the deed was obtained; that it invested its money in good faith upon the security of the mortgage believing the title to the lands to be in Navin, as it so appeared from the records; and that, under the equitable rule that, when one of two innocent parties must suffer loss, the one must bear the loss who, by his careless or negligent conduct, has made it possible that either should suffer, the mortgage must be considered a valid and subsisting lien upon the premises, and the complainant...