Neely v. Williams

• Decision Date: 16 October 1906
• Docket Number: 2,355.
• Parties: NEELY v. WILLIAMS et al.
• Court: U.S. Court of Appeals — Eighth Circuit

149 F. 60

NEELY v. WILLIAMS et al.

No. 2,355.

United States Court of Appeals, Eighth Circuit.

October 16, 1906

William Baird and E. S. Durment, for appellant.

J. H Broady, Sr. (J. H. Broady, Jr., on the brief), for appellees.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

ADAMS Circuit Judge.

This was a bill in equity instituted by Joseph A. Williams and his wife, Annie Williams, to enjoin the prosecution of an action at law brought by the defendant and appellant, Richard M Neely, to enforce the payment of a promissory note made by the former and held by the latter for $3,500. The note was given by complainants as part payment for a quarter section of land purchased by Mr. Williams from Annie H. Neely, joint residuary legatee with one Richard S. Malony, Jr., under the will of their father Richard S. Malony, Sr. The grantor made a warranty deed to complainant Joseph A. Williams covenanting that the premises were free from incumbrances. That covenant was broken as soon as made because the land was subject to the lien of two annuities created by the devisor in his last will, one in favor of Hannah Blake for $200 and the other in favor of Sarah Foss for $100. After suit was instituted against complainants to recover the balance of the purchase money represented by the note of $3,500 they brought their bill in equity to enjoin the suit until the present worth of the annuities should be ascertained and provision made for their satisfaction. On a former appeal the equities of the case were considered and settled by this court. See Williams v. Neely, 134 F. 1, 67 C.C.A. 171, 69 L.R.A. 232, to which reference is made for a more full statement of many incidental facts not necessary now to be specified. The conclusions then reached became the law of this case and must now be recognized as controlling. Guaranty Co. of North America v. Phenix Ins. Co., 59 C.C.A. 376, 124 F. 170, 174. They may be briefly summarized as follows: First, that the remedy in equity as invoked by complainants was available to them; second, that Richard M Neely, the defendant and appellant, who was payee of the note and who took it by some arrangement satisfactory to himself and Annie H. Neely, his mother, the grantor in the deed, took it subject to any defenses which could have been urged against it in the hands of the grantor-- in other words, that Richard, for the purposes of this case, stood in the shoes of his mother--third, that a grantee in a deed containing a covenant against incumbrances who has not paid the purchase price in full has a choice of two remedies for breach of the warranty, either to pay the balance due and sue the grantor on the covenant against incumbrances or reduce the grantor's recovery for the balance due by the amount of the diminution of the value of the title occasioned by existing incumbrances; fourth, that in a suit by the grantor on a promissory note given for unpaid purchase price of the land which he has covenanted to be free from incumbrances the grantee may plead a defect of title as a failure of consideration of the note in whole or in part.

After reaching and announcing the foregoing conclusions, and as the result of an intimation made at the argument, to the effect that complainants had paid and secured releases of the liens upon their land, this court by Sanborn, Circuit Judge, speaking for it, said:

'In case it shall appear, as counsel have intimated, that since the final hearing below the complainants have paid and secured releases of these liens, the court should reduce the amount of the recovery in the action at law upon the note by the amount not exceeding the value of the annuities at the time such payments were made which the complainants have necessarily expended in paying the liens of the annuities upon their lands and in defending their title against them.'

The decree of the lower court was then reversed, with instructions to proceed in conformity with the opinion.

In the light of the law of the case thus declared, the only remaining question for our consideration as conceded by counsel for defendant relates to the amount of credit to which complainants are entitled on their note. This question must be answered by ascertaining how much they necessarily paid to secure a release of their land from the lien of the annuities. There is no substantial doubt that complainants necessarily paid $3,500 for that purpose. An allegation to that effect is made in the supplemental bill filed by complainants after the case was remanded to the court below, to which defendant filed a plea and answer. The plea does not relate to that allegation, and the answer by not denying admits it to be true. Moreover, the proof satisfactorily establishes its truth. We might, therefore, by giving a literal construction to the law of the case as laid down in the former appeal and to the pleadings and undisputed proof now before us, properly affirm the decree below without any further consideration, but some other questions have been ably discussed by counsel to which we feel constrained to give attention. These questions arise out of the following facts: The lien of the annuities in question attached alike to two other quarter sections of land besides the quarter section purchased by Williams from Annie H. Neely. The father of Mrs. Neely died seised of these three quarter sections, and by his will devised them to Annie H. Neely and Richard S. Malony, Jr., creating a charge upon all of them for the payment of the annuities in question. Shortly after his death the devisee, Mrs. Neely, either jointly with Richard S. Malony, Jr., or alone after she had acquired his interest, conveyed the three quarter sections in the following order as to time: First, one to Stanley B. Wilson; second, one to Wenzel Herdlichtka; and, third and last, one to Joseph A. Williams, complainant in this case, executing to each a warranty deed covenanting, amongst other things, against all incumbrances.

The consideration for each of the conveyances was $6,000. Wilson and Herdlichtka each paid that sum in cash on the delivery of their deeds to them, respectively. Williams paid $2,500 in cash and he and his wife gave their note for $3,500, maturing five years after date, and secured the payment thereof by mortgage upon the quarter section purchased, for the balance of the purchase price. The lien of the annuities attaching as between the annuitants and the successive purchasers to the three quarter sections alike, it was impossible for Williams to release his own without necessarily releasing the land of Wilson and Herdlichtka from the same lien.

The contention is that, because the three quarter sections sold, respectively, to Wilson, Herdlichtka, and Williams were of equal value and equally chargeable with the incumbrance created by the annuities, the complainants were entitled to credit for only one-third of the amount paid in satisfying the annuities, and that the learned trial court should not have charged defendant with that portion of the money paid by complainants which was properly chargeable against the quarter sections of Wilson and Herdlichtka. And the further contention is that on the payment by Williams of the annuities he had a right of contribution from Wilson and Herdlichtka each in the sum of one-third of what he had necessarily paid, on the ground that he had paid off and satisfied a joint obligation imposed upon the three alike, and that, if he did not recover from them, it was his own fault, the consequences of which not being chargeable against Neely.

There are two satisfactory reasons why neither of these contentions are sound:

First. Williams, being the last in point of time to take a conveyance from Mrs. Neely, took title so far as the prior successive purchasers were concerned charged with the payment of the entire debt secured by the lien. The question as to the liability of mortgaged property acquired by successive purchasers of different parcels for the payment of the mortgage debt as between themselves has been the subject of much discussion and of somewhat divergent views. Some of the leading cases holding to liability in the inverse order of alienation are Clowes v. Dickenson, 5 Johns.Ch. (N.Y.) 235; State v. Titus et al., 17 Wis. 241; Root v. Collins, 34 Vt. 173; Deavitt v. Judevine Co., 60 Vt. 695, 17 A. 410; Crosby v. Farmers' Bank, 107 Mo. 436, 17 S.W. 1004; Sager v. Tupper, 35 Mich. 134; Cushing v. Ayer, 25 Me. 383; Aiken v. Milwaukee & St. Paul Railway Co., 37 Wis. 469; Mahagan v. Mead, 63 N.H. 570, 3 A. 919; Mount v. Potts, 23 N.J.Eq. 188; Brown v. Simons, 44 N.H. 475; Hills' Administrator v. McCarter, 27 N.J.Eq. 41. In an exhaustive note to the leading case of Aldrich v. Cooper, White & T. Lead. Cas. Eq. vol. 2, pt. 1, pp. 228, 293, it is said, citing many authorities in support:

'It is well settled in conformity with these decisions that, where land which is subject to the lien of a mortgage or other permanent incumbrance is sold in parcels successively to different persons the buyers are prima facie chargeable in the inverse order of alienation. Such is the established rule in New York and Pennsylvania, and it prevails throughout the greater part of the United States.' Jones

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