Rice v. Rice

• Decision Date: 12 December 1888
• Citation: 36 F. 858
• Parties: RICE v. RICE et al. [1]
• Court: U.S. District Court — District of Delaware

36 F. 858

RICE v. RICE et al. ^[1]

United States Circuit Court, D. Delaware.

December 12, 1888

George H. Bates and Edward G. Bradford, for complainant.

Wm. C Spruance and Anthony Higgins, for defendant.

WALES J.

This suit is brought to establish and enforce a vendor's lien on certain lands, with an iron foundry erected thereon, in the city of Wilmington, now owned by the defendant Morris. James H. Rice, the complainant, and John V. Rice, one of the defendants, on the 10th of September, 1864, were copartners in the business of iron founders at the foundry aforesaid and seized in fee of said lands; and on that day James H Rice and John V. Rice, by an agreement and indenture in writing under their hands and seals, dissolved their partnership, and James sold to John the undivided part and share of James 'in the joint trade and of all the property, goods, wares, merchandise, money, debts, and effects thereto belonging, or in anywise appertaining, or in which the said James H. Rice has any right, title, or interest by virtue of said copartnership, and all the right title, and use of James H. Rice of, in, and to the said capital, joint stock, property, effects, money, and debts, and any and every part thereof, and all the profits, gains, and proceeds thereof. ' By the agreement James appointed John his attorney to wind up the business, and covenanted not to interfere with John therein; and in consideration thereof John covenanted to pay James $600 in each year for 10 years from said date, if James should so long live, in semi-annual payments of $300 each; and $5,000 at the end of the said 10 years if James were then living, but, if he were then dead, to pay to the personal representatives of James the $5,000, less the sum of $300 for each year after the date of said agreement until the death of James. In conclusion, John covenanted to pay all the partnership debts, and to indemnify James from all liability on account of them. On the same day, September 10, 1864, John gave to James the joint note of himself and Theodore Hyatt, of which the following is a copy

'WEST CHESTER, September 10th, 1864.

'Ten years after date we promise to pay to James H. Rice five thousand dollars, without defalcation, for value received, subject, however, to the conditions expressed in the article of agreement between James H. Rice and John V. Rice, bearing this date.

'$5,000.00. (Signed) J. V. RICE,

'THEO. HYATT.'

Seven months afterwards, on the 10th of April, 1865, James conveyed the said real estate to John, by a deed of bargain and sale, for the consideration of $5,000, the receipt of which sum is duly acknowledged. The complainant says that this deed was prepared for execution at the time of making the agreement of dissolution of partnership, and as part of that transaction, but was not in fact executed until the day of its date. Within less than two years and a half after the execution and delivery of this deed, the defendant John V. Rice borrowed from the defendant Morris several sums of money, to secure the payment of which he gave to Morris three several mortgages on the foundry property, as follows: one dated February 6, 1866, for $12,000; one dated September 22, 1866, for $3,000; and a third, dated September 2, 1867, for $10,000, all of which mortgages were duly recorded. On this last mortgage Morris recovered a judgment, on a writ of scire facias, in the superior court of Delaware, for New Castle county, at the November term, 1875, against John V. Rice and wife, and under a writ of levari facias to the May term, 1876, on said judgment, the sheriff sold the property described in the mortgage to the defendant Morris, for $3,100, subject to the first two mortgages. The sale was confirmed by the court, and the sheriff, by deed, dated June 6, 1876, conveyed the property to Morris, who still owns it. The complainant alleges that Morris accepted the three the complainant had conveyed the property to John V. Rice, had never been paid, and therefore took and holds the property subject to an equitable lien in favor of the complainant for the unpaid purchase money and interest; that John V. Rice is insolvent, and the complainant without remedy, except by enforcing said lien. The bill does not allege that the vendor's lien was expressly reserved, but claims that it exists by the operation of law, from the fact that John V. Rice, the vendee, did not pay the consideration money, and that Morris knew this fact when he loaned the money, and also when he bought the property. Morris denies that he took the mortgages, or purchased the property, with any knowledge or notice that the complainant had not been paid the $5,000. He also denies that any such lien can exist, because (1) the complainant took for the purchase money the promissory note of John V. Rice, with Theodore Hyatt; (3) that when Morris took the mortgages from John V. Rice, the latter assured him that the property was free and clear from all liens and incumbrances, and this was verified by searches made by Morris' counsel; (4) that the right of a vendor of real estate to an equitable lien thereon for the unpaid purchase money, has never been recognized or adopted by the courts of Delaware, and no such right exists under the laws of that state.

The English doctrine of the vendor's equitable lien for unpaid purchase money, upon an absolute conveyance of land is adopted in some of the states, rejected in some, and remains undecided or doubtful in others. It is conceded that unless this doctrine is in force in Delaware this court cannot recognize and apply it in the present case. It is also admitted on the part of the complainant that, so far as judicial decisions have gone in Delaware, the question is an open one. In Budd v. Busti, 1 Har. (Del.) 69, the question of the existence of the lien was directly made to the court of appeals, and appears to have been the only one argued by the able and learned counsel who took part in the discussion. The whole law relating to the subject was brought under review, and, after a full consideration, a majority of the court were disinclined to accept the doctrine as a part of the law of Delaware. The court below had decidedly refused to recognize it....