Michigan Insurance Company of Detroit v. Brown

• Citation: 11 Mich. 265
• Court: Supreme Court of Michigan
• Decision Date: 12 May 1863
• Parties: The Michigan Insurance Company of Detroit v. Henry H. Brown and others

11 Mich. 265

The Michigan Insurance Company of Detroit v. Henry H. Brown and others

Supreme Court of Michigan

May 12, 1863

Heard April 18, 1863; April 21, 1863 [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal from the Oakland Circuit, in Chancery.

The bill was filed against Henry H. Brown as mortgagor, and Kirkland C. Barker and John Windiate as subsequent purchasers or incumbrancers, to foreclose a mortgage given November 29th, 1847, by Brown to complainants, and conditioned for the payment by him of "all sums now due or hereafter to become due," but without specifying any amount. The indebtedness alleged was a bond, dated November 15th, 1847, conditioned for the payment of $ 11,200 on the first day of December following. Windiate did not defend, and Barker having been once defaulted, was after-wards allowed to file an answer; and his proofs, to show the facts attending his purchase, were taken under a stipulation extending the time for the purpose of allowing him to make proof of those facts. The other facts are sufficiently stated in the opinion. The court below dismissed the bill, with costs, and complainants appealed.

Decree dismissing the bill reversed. Decree entered in the usual form requiring defendants within sixty days to pay the sum of $ 3,050, with interest from October 1st, 1849, at seven per cent per annum, and with costs of both courts.

S. D. Miller, for complainants:

The bill should not have been dismissed as to Brown. The statute of limitations does not affect the right of complainants so far as the mortgage security is concerned: 25 Vt. 324; 19 Pick. 535; 8 Met. 19; 4 Cush. 559; 2 Conn. 161; 6 Conn. 246; 18 Conn. 257; 2 B. & Ald., 413; 8 Geo. 325; 1 Bland Ch., 281; 1 Ala. 744; 2 S. & M., 696; 11 Conn. 160.

The bill should not have been dismissed as to Barker. The proof does not show him to be a bona fide purchaser, and, if it did, the mortgage is still a valid lien upon his title. Such an instrument is not void so long as its terms are sufficiently explicit to admit of application by evidence aliunde: 11 Ohio St., 232; Ibid., 240; 12 Ohio St., 38; 3 Grat. 148.

Whether a court will enforce the lien as against subsequent purchasers or incumbrancers depends upon the question of notice to them of the existence of the lien.

For the purposes of this case the general rule laid down by Chancellor Kent may be adopted as correct; the record is sufficient if it "give all requisite information as to the extent and certainty of the contract, so that the junior incumbrancer might, by inspection of the record, and by common prudence and ordinary diligence, have ascertained the extent of the incumbrance."

Can the defendant be permitted to protect himself by a narrow application of the registry laws? The parties were accessible; the facts were of such a character as to depend on no contingency; they only required a single inquiry; the evidence was simple--its effect readily comprehended: 31 Vt. 131; 9 Conn. 286; 5 Conn. 442; 3 Conn. 150; 7 Conn. 387; 6 Watts 57; 2 Sand. Ch., 78.

The policy of the registry laws is, so far to divest titles of secrecy that a person may readily ascertain the general facts surrounding and affecting the ownership of lands. It is not their purpose to require that every instrument relating to such titles shall fully set forth to the world the entire transactions of which they are evidence.

Although in some of the earlier Connecticut and New York cases there may be found some reason for the objection raised to the present mortgage, no principle can be deduced from them which will invalidate the security. And the later authorities fully sustain us: 3 Cranch 73; 7 Cranch 34; 1 Pet. 386; 23 How. 14; 16 Vt. 300; 31 Vt. 112; 31 Vt. 142; 13 Ill. 254; 17 Ohio 382; 15 Ohio 253; 20 Conn. 427; 17 Pick. 407; 24 Pick. 270; 7 J. J. Marsh., 401; 3 Sumn. 488; 29 Mo. 301; 10 B. Monr., 98; 11 N. H., 251; 2 Seld. 147; 15 N. Y., 354; 22 N. Y., 380; 15 Ala. 472.

D. B. Duffield, for defendants:

There is no proof in the case of any indebtedness by Brown. The only evidence offered is the bond, which ceased to be of any legal effect two years before the filing of the bill. Whenever a bar has been fixed to the legal remedy, the remedy in a court of equity has in analogous cases been confined to the like period: 2 Story Eq. Juris., § 1520 and notes. But even this evidence is not in the case, it not having been filed in or considered by the court below.

The mortgage is invalid as to Barker.

I admit that mortgages may be made to secure future advances or liabilities, where no intervening equities exist; but it will, I think, be seen from a review of all the cases sustaining this class of mortgages, either,

1st. That they secure some actual debt, specified and stated in the instrument itself, and then provide for future advances in addition; or,

2d. That all such future advances are, by the terms of the mortgage, specified at or restricted to a certain sum; or

3d. That their limitation and extent can be readily ascertained, as in the case of liabilities on official bonds, where the penal sum is always given.

It will also be seen from several of the cases, that where mortgages of this sort are given, and a subsisting debt exists in the hands of the mortgagee against the mortgagor this should always be described in the mortgage, and that mortgages which refer to no subject matter and are limited to no amount, and to no time of payment, are, as against creditors and bona fide purchasers, unsustained by the courts.

Uncertainty in the condition of a mortgage throws the creditor on the statement of his debtor, who may barricade himself behind any amount of fictitious demands, acting collusively with his mortgagee.

The early cases, especially in Connecticut and New York, will be found very rigid in the construction of instruments of this character: 4 Conn. 158 ; 5 Ibid. 448, 449; 6 Ibid. 37; 8 Ibid. 215; 9 Ibid. 288; 10 Ibid. 50; 13 Ibid. 380; 14 Ibid. 77.

The later cases in this State settle this question so far, that future liability mortgages, wherein a specific sum is given as a limitation, are held good: 18 Conn. 217; 20 Ibid. 427; 28 Ibid. 123; 24 Ibid. 1. See also the following New York cases: 18 Johns. 544; 1 Johns. Ch., 288; 2 Ibid. 182; 6 Ibid. 417; 7 Ibid. 14.

In Young v. Wilson, 24 Barb. 510, it was held that "a subsequent incumbrancer is entitled, from the record, to all the information which the parties to the mortgage can reasonably impart."

In Bank of Utica v. Finch, 3 Barb. 293. the necessity is affirmed of a specified sum when future advances are sought to be secured.

In Truscott v. King, 2 Seld. 160, pertinent comments on this subject are made by Jewett J., 161, and Edmonds J., 166. Vide also 6 Barb. 346; also, 14 Barb. 242.

Later New York cases have relaxed somewhat the original rule of severe construction, but I think none of them will be found justifying or upholding mortgages such as the one under consideration.

In Massachusetts, mortgages containing a clause securing future advances, which is additional to one securing an existing specific demand, have been sustained: 1 Pick. 398.

Also a mortgage of this character was sustained where a note was given as collateral; 24 Pick. 274.

Other cases where mortgages of this sort have been upheld, might be cited from different States, but all of them seem to have secured a specific debt also, or to have been in some manner limited in amount, or time of payment, or period within which the security should operate: 1 Pet. 448; 7 Rich. Eq., 283; 10 B. Monr., 98; 13 Ill. 254; 36 Me. 477 ; 24 Barb. 510.

Campbell, J. Martin, Ch. J. and Christiancy, J. concurred. Manning, J. did not sit in this case.

OPINION

Campbell J.:

The bill in this cause was filed to foreclose a mortgage made by Henry H. Brown and wife to complainants, in November, 1847, conditioned for the payment of "all sums of money now due or hereafter to become due." The bill averred a bond of previous date, conditioned for the payment of $ 11,200, and interest. The bill was filed July 20th, 1859. To this bill Brown interposed the statute of limitations as a defense, and Barker averred in his answer that, on the 21st day of July, 1859, the day after the bill was filed, he purchased the premises from Brown for a valuable consideration (the amount of which was not set forth) without notice of the mortgage, which was, however, on record. He claimed that the mortgage was invalid because not for a sum certain set forth on its face.

The mortgage and bond set forth in the bill were proved as exhibits before the commissioner, and are returned as a part of the record. But defendants claim they should be excluded, on the allegation that they were excluded in the court below, as not filed in season. Affidavits are filed on both sides.

We have no doubt the proofs are properly in the case They appear distinctly to have been regularly taken on proper notice, and if they were not filed earlier than is alleged, the court could not on that account regard them as nullities. Had the case presented any grounds for supposing surprise, that would have afforded some reason below for allowing the cause to stand open for further proofs. But the party is bound to know what proof his adversary takes at the time and place appointed, and, if not seeing fit to attend, he may still ascertain it at any time from the commissioner; and the court will always be liberal in relieving against accident or surprise. In the case before us there is no reason to believe any surprise possible. The testimony consists entirely of documents set out in the bill verbatim, and the proof of their execution. Under rule 56 the mortgage, not being denied by the answers, might have been...