Parmelee v. Lawrence

• Decision Date: 30 April 1867
• Parties: FRANKLIN PARMELEE et al.v.DANIEL LAWRENCE.
• Court: Illinois Supreme Court

44 Ill. 405

1867 WL 5174 (Ill.)

FRANKLIN PARMELEE et al.

v.DANIEL LAWRENCE.

Supreme Court of Illinois.

April Term, 1867.

APPEAL from the Superior Court of the city of Chicago.

The facts are sufficiently stated in the opinion of the court.

Messrs. MCALLISTER, JEWETT & JACKSON, C. BECKWITH, SIDNEY SMITH and Messrs. GOODRICH, FARWELL & SMITH, for the appellants.

Mr. CHARLES A. GREGORY and Mr. ISAAC N. ARNOLD, for the appellee. Mr. JUSTICE LAWRENCE delivered the opinion of the Court

On the 15th of September, 1856, Parmelee, Gage, Johnson and Bigelow, partners, doing business in Chicago under the name of F. Parmelee & Co., borrowed of Daniel Lawrence, of Medford, Massachusetts, the sum of $50,000. To secure its payment in five annual installments, with ten per cent interest, they conveyed to Lawrence certain real estate situate in the city of Chicago, a part of which was held by them under a long lease, and a part under a contract of purchase. Their deed to Lawrence refers to these instruments, and binds the grantors to pay the rent and the unpaid purchase money, and the grantors covenant that the premises are free from all incumbrances, “except the said lease and articles of agreement.” The deed also contains a covenant for quiet enjoyment. Contemporaneously with the execution of this deed, a contract was executed by and between the same parties which was, in form, a contract of sale for the same premises, and by the provisions of which Parmelee & Co. agreed to pay the $50,000 in five annual installments, with ten per cent interest, and Lawrence covenanted, upon such payment, to convey to them the premises free from all incumbrances, by good and sufficient deed. Parmelee & Co. also executed a separate instrument by which they agreed to pay an additional interest of two per cent per annum as long as the debt should remain unpaid. They paid the interest at twelve per cent to April, 1861, but none of the principal. From that date they ceased to pay. On the 4th of August, 1864, Parmelee, Gage, and Bigelow, filed their bill in chancery against Lawrence, in which, concealing the true nature of the transaction, claiming that they were purchasers from Lawrence, and suppressing the fact that they had conveyed to him, they set out the contract, aver their readiness to pay, but also aver that Lawrence was unable to convey to them a perfect title according to his covenants in the contract, as he had not the fee in the premises, but was nevertheless threatening to take legal steps to collect the money and to evict them from the premises. The bill was sworn to by one of the complainants, and prayed an injunction, which was granted. Johnson did not join in this bill, as the other partners had purchased his interest.

Lawrence answered, and also filed a cross-bill, setting forth the true nature of the transaction, bringing before the court the deed from Parmelee and his co-complainants to him, and claiming that the entire transaction amounted merely to a loan of money and a mortgage to secure its payment. He prayed a decree that the debt be paid or the premises sold. On the 24th of September, 1864, Bigelow, Gage & Parmelee filed their supplemental bill, wherein they set up that, on the 12th day of August, 1864, at Boston, Mass., Bigelow had a settlement with Lawrence, of the moneys due Lawrence under the articles, and that Bigelow paid Lawrence $22,557, in full satisfaction of Bigelow's share, and that Lawrence then and there, without the knowledge or consent of the appellants, executed, under his hand and seal, and delivered to Bigelow, the following instrument:

“Received, Boston, August 12th, 1864, twenty-two thousand five hundred and fifty-seven dollars, of Liberty Bigelow, in full payment of his portion of all money due me on articles of agreement between myself, him (said B.), F. Parmelee, D. A. Gage and W. S. Johnson, dated September 15, 1856, and recorded in the recorder's office of Cook county, Illinois, October 17th, same year, in book 171 of deeds, page 71; and I release and discharge said Bigelow, his property and estate, from all claims on account of the same.

If the property mentioned in the above articles has to be sold under any order of the court at Chicago, the interest of said Bigelow in it is to be protected according to this settlement. Nothing herein contained shall in anywise affect my rights or demand against said Parmelee, Gage or Johnson, or their interest in said property.

DANIEL LAWRENCE.” [Seal.]

[U. S. Rev. stamp.]

They claimed that, since their covenants in the articles were joint covenants, therefore this agreement and receipt to Bigelow was a satisfaction, in law and in fact, of all the moneys due Lawrence. They prayed the relief prayed in their original bill, and further, that their covenants in the articles be decreed to be discharged, and that they might be decreed discharged from all claims of Lawrence for money upon the articles, and that Lawrence reconvey and discharge all lien of record.

They also filed an additional answer to the cross-bill, setting up this release. Lawrence answered the supplemental bill setting up that he had been induced to execute the release by the fraudulent representations of Bigelow. Replications were filed to the various answers and proofs taken, and on the final hearing the Superior Court held that the release obtained by Bigelow did not discharge his co-obligors, and decreed the payment of the amount due Lawrence, allowing him to retain the twelve per cent interest paid, but giving him only six per cent from the date of the last payment. Parmelee, Johnson and Gage appealed to this court.

It is at once apparent, that this case turns upon the effect to be given to the release. The pretext upon which the original bill was based--that Lawrence had sold and covenanted to convey to the complainants a perfect title in fee simple, which he was not able to do--vanishes the moment the true character of the transaction is brought to light. As has been often decided by this and other courts, the deed from the appellants to Lawrence, and the contemporaneous agreement by which they covenanted to repay a certain sum of money at that time borrowed, and Lawrence covenanted upon such payment to reconvey to them the premises, constituted but a mortgage. The covenant of Lawrence that he would reconvey the premises free from incumbrances, and by good and sufficient deed, must of course be understood as referring to the same title that he had received from them. That title he was bound to give back to them free from any incumbrance done or suffered by him. They had themselves, in their own deed to him, covenanted that the premises were free from incumbrances and for quiet enjoyment, and that they would themselves pay the rent of the leasehold property, and the unpaid purchase money upon that portion of the premises held under a contract of sale. In the face of these covenants, and in view of the fact that Lawrence merely held these premises as security for the repayment of a loan, to construe his contract to reconvey as binding him to convert the imperfect title he had received into an estate in fee simple is impossible. Such a construction would utterly pervert the intention of the parties.

The difficult question in this case relates to the effect to be given to the instrument executed by Lawrence to Bigelow. If it is to be regarded as an absolute and unconditional release of Bigelow, it must also operate as a discharge of his co-obligors, and the mere fact that, when a release is executed, the parties are ignorant that such will be its legal effect, will not prevent its so operating, if executed and delivered unconditionally and without reference to its bearing upon other parties. But a release, like every other written instrument, must be so construed as to carry out the intention of the parties. This intention is to be sought in the language of the instrument itself when read in the light of the circumstances which surrounded the transaction. The court which interprets must place itself as nearly as possible in the position of the parties when they acted. There is also another rule of construction which applies in the present case. If A receives a contract or other instrument from B, knowing that it was designed by B to bear a particular interpretation and to be used only for a specific purpose, then A has no right to give it a different interpretion, or to use it for a different purpose, though such new purpose may be consistent with the language of the instrument. To permit A to pervert the instrument from the purpose for which he knew it was intended by B, would be to permit him to commit a fraud. This rule is founded upon the plainest dictates of natural justice.

Now, for what purpose, and with what limitations, did Bigelow know this instrument to be executed by Lawrence and delivered to himself? The answer admits of no doubt, when we recur to the language of the instrument and to the circumstances attending its execution as detailed in the evidence. Bigelow was in Boston for the purpose of procuring a release, and there was with him his attorney from Chicago with whom he was in consultation during his negotiations with Lawrence, though the attorney and Lawrence seem to have been studiously kept apart. The attorney first drew what he terms a straight release. When Bigelow presented this to Lawrence, the latter refused to sign it, from the apprehension that...