McKinney v. Miller

• Decision Date: 05 October 1869
• Citation: 19 Mich. 142
• Court: Michigan Supreme Court
• Parties: Ira McKinney, Administrator, v. Albert Miller et al

19 Mich. 142

Ira McKinney, Administrator, v. Albert Miller et al

Supreme Court of Michigan

October 5, 1869

Heard July 10, 1869 [Syllabus Material]

Appeal in Chancery from Genesee Circuit.

Bill to foreclose a mortgage executed by Albert Miller to Cornelius L. Russell, to secure the payment of three promissory notes amounting to $ 3,000, upon blocks 19, 20, 22, 24, 25, 34 to 39, inclusive, 41, 57 to 60, inclusive, 65 to 68, inclusive and parts of 26 and 27, in the village of Portsmouth, in Bay County. The bill avers that the mortgagee sold the notes and mortgage to David Russell for $ 2,000;--that David Russell had since died, and that the complainant was his administrator. The mortgagor, Albert Miller, the mortgagee Cornelius L. Russell, Mary Ann Miller and Albert Miller (second), are made parties defendants.

Defense:--By Albert Miller--That he and the mortgagee, C. L. Russell, and one Crowl, were partners; that the notes and mortgage were made to be negotiated to raise money for the partnership, but that they were not so negotiated;--That on the dissolution of the partnership, the notes and mortgage still being in the possession of C. L. Russell, he (Miller) agreed to convey blocks 19 and 20 to Russell and to relinquish all his interest in the personal property of the partnership, and Russell agreed to pay all its debts;--That he did convey blocks 19 and 20, according to his agreement:--That if Cornelius L. Russell ever assigned the notes and mortgage to David Russell, it was in fraud of his rights:--That Cornelius L., not surrendering the notes and mortgage, he (Miller) filed a bill against him in the Saginaw Chancery Circuit, and obtained a decree against him that the notes and mortgage should be delivered up to be cancelled. He alleges that the facts were known to David Russell in his lifetime:--That the notes are barred by the statute of limitations:--That the complainant had sold and conveyed blocks 19 and 20 to "the other Albert Miller," for $ 11,500:--That Cornelius L. Russell is the son and sole heir-at-law of David Russell, and that the suit is prosecuted in his interest.

By Mary Ann Miller--denying the existence of the mortgage--insisting upon the decree that the mortgage be delivered up to be cancelled, as stated in the answer of Albert Miller; denying the good faith of the transfer of the mortgage to David Russell, and claiming to be a purchaser in good faith for a valuable consideration of the mortgaged premises.

By Albert Miller (second)--denying that the complainant was legally the administrator of David Russell, and the good faith of the transaction between Cornelius L. and David Russell; insisting upon the decree of the Saginaw Chancery Circuit that the mortgage should be cancelled; and that he had purchased of the complainant Blocks 19 and 20 in good faith, for a valuable consideration, the purchase being intended to include the title which the complainant had acquired through sundry mesne conveyance from Albert Miller, the mortgagor, as well as the interest he held, if any, as the administrator of David Russell:--That the blocks so purchased were the first sold by Albert Miller after the execution of the mortgage. And he claimed that in case the Court shall find that the lien of the mortgage remains, that they should be last resorted to for the payment of the mortgage indebtedness.

The cause was transferred under the statute to the Genesee Chancery Circuit, and upon the hearing a decree was entered dismissing the bill; from which the complainant appeals to this Court.

Complainant recover costs of both Courts, and cause remanded for the execution of this decree.

Isaac Marston and John Moore, for complainant.

W. L. Webber, for defendants (Judge) Albert Miller, and Mary Ann Miller.

OPINION

Cooley, Ch. J.

The bill in this cause was filed in 1866, to foreclose a mortgage, given April 23, 1851, by Judge Albert Miller to Cornelius L. Russell, to secure the payment of three promissory notes of one thousand dollars each, falling due respectively in one, two and three years from the first day of May, 1851. The mortgage covers blocks nineteen and twenty, and also a number of other blocks, and parts of blocks, in the village of Portsmouth, according to the recorded plat thereof, and was duly acknowledged and recorded, but appears not to have been under seal. The complainant alleges that the notes and mortgage were sold by Cornelius L. Russell to David Russell, on or about the first day of December, 1851, and that a written assignment thereof was executed April 24, 1852, which, however, was not acknowledged or recorded until April 26, 1862. David Russell appears to have deceased soon after the last mentioned date, and McKinney was appointed administrator of his estate in Bay County, Michigan, March 28, 1863, and he claims the whole amount of the notes and mortgage to be now unpaid and owing to him as such administrator.

At the time this mortgage was given, it is agreed on all sides that Judge Albert Miller, Cornelius L. Russell, and one Lyman Crowl, were in partnership in the business of manufacturing and selling lumber; the manufacture being carried on at Portsmouth, under the supervision of Miller and Crowl, and the sale at Cleveland, Ohio, where Russell resided and took charge. It is also agreed that the partnership was then greatly in need of money; and at Russell's request this mortgage was made by Miller, covering land to which he had, or claimed to have, the legal title, but in which his partners had,--as we think the evidence shows,--an equitable interest, and at the same time, another mortgage was made by Miller and Crowl for fifteen hundred dollars, and the two were sent to Russell to be negotiated to raise money for the partnership. The parties are not agreed whether they actually were negotiated or not. Russell testifies that after keeping them in his hands for some time, and making ineffectual attempts to dispose of them, he finally, in December, 1851, sold the two mortgages with the accompanying notes to David Russell, his father, who resided in the State of New York, for the sum of two thousand five hundred dollars, and that he informed Miller and Crowl of the sale, and that they expressed satisfaction with it. All this is denied by Miller, who says he never heard of any such sale, and that on the contrary C. L. Russell, in May, 1852, informed him the mortgages had not been sold, and were then at Cleveland, and agreed to surrender them up to be cancelled. At the time last mentioned the parties agreed that the partnership was dissolved by consent; C. L. Russell taking the bulk of partnership property, and agreeing to pay the partnership debts. At the same time, and as a part of the arrangement of dissolution, Judge Miller deeded to C. L. Russell blocks nineteen and twenty, covenanting in the deed that the title was "clear, free and unincumbered by any act of the grantor, except as known by the parties" thereto. Complainant produces some evidence to establish the fact that at this time it was understood between Judge Miller and C. L. Russell, that the former was to pay off one-half of this mortgage, but Miller denies this, and gives us to understand that he expected the surrender of the mortgage, and that failing to obtain it according to agreement, he, finally, in March, 1854, filed his bill in Chancery against C. L. Russell, and obtained decree by default, declaring the mortgage and notes null and void. He also claims that it was some years after this decree before he heard of any claim on behalf of David Russell.

This case does not require us to determine the matters in controversy between Judge Miller and C. L. Russell, or to decide whether the latter has at all times dealt honorably and fairly by the former. We are only required to find upon the evidence whether David Russell had become the owner of an interest in this mortgage prior to the dissolution of the partnership of Miller, Crowl and Russell, and if so, what the extent of that interest was, and whether it was in any way affected by the agreement at the time of the dissolution. It is not claimed that any distinct act was ever done by David Russell himself, that would have affected his interest, if he had any; but the defendants insist that the assignment to him was only colorable, and that even if it was in good faith, the mortgage was discharged by the arrangement which Judge Miller claims to have made with C. L. Russell, in ignorance of any such assignment.

Upon this portion of the case the evidence is exceedingly unsatisfactory, and we cannot feel, in any conclusion we may adopt, that entire assurance of correctness that a Court will always desire to make the foundation of its judgments. The evidence of Judge Miller, it is agreed, derives strong confirmation from the fact that David Russell, though shown to have been in embarrassed circumstances, took no steps towards enforcing payment of the mortgage, as he would have been likely to do had he been the actual owner; and this argument is certainly not without considerable force. When we consider, however, that one of the parties against whose property the mortgage would be enforced was his son, who was also in embarrassed circumstances, there is nothing in the delay of legal proceeding so strange or so out of the ordinary course as to cast suspicion upon the evidence that tends to establish the ownership in David Russell. We think there is a preponderance of evidence that this mortgage, with the accompanying notes, was transferred to David Russell at about the time stated in the bill; that he paid to C. L. Russell on such transfer, the sum of twenty-five hundred dollars, and that C. L. Russell informed his partners thereof previous to the dissolution of the...