Richardson v. Traver

• Decision Date: 08 December 1884
• Citation: 112 U.S. 423,5 S.Ct. 201,28 L.Ed. 804
• Parties: RICHARDSON v. TRAVER
• Court: U.S. Supreme Court

112 U.S. 423

5 S.Ct. 201

28 L.Ed. 804

RICHARDSON v. TRAVER.

December 8, 1884.

F. C. Ingalls, for appellant.

A. McCoy, for appellee.

WAITE, C. J.

The facts, as shown by the testimony in this case, are these: On or about the nineteenth of December, 1870, Henry J. Traver, the appellee, and Michael Traver, his brother, bought of John Dickson a tract of land in the city of Chicago, containing about 16 acres. They paid to Dickson at the time a small part of the purchase money in cash, and for the balance gave their four joint notes, each for the sum of $5,373.67 1/2, payable respectively in two, three, four, and five years from date, with interest semiannually at the rate of 8 per cent. per annum. The notes were secured by a deed of trust of the property to Enos Ayres, trustee. After the purchase they laid the property off into blocks and lots, making three blocks, numbered 1, 2, and 3, respectively, and subdividing each block into lots. Previous to September, 1872, Michael Traver, who lived in Chicago and had the immediate charge of the property, sold some of the lots, partly for cash and partly on credit. On the fifth of September, 1872, an oral agreement was entered into between the two Travers by which Michael was to take all the cash and notes that had been received from sales, and all the unsold parts of block 2, and all but eight lots of those unsold in block 3, pay the debt to Dickson, and give Henry all of block 1, and eight lots in block 3, clear of the incumbrance of the trust deed to Ayres. In part execution of this agreement Michael at the time conveyed to Henry his interest in block 1 and in the eight lots in block 3. Henry did not convey to Michael until December 20, 1872. On that day, for the consideration of $100 as expressed in the deed, he remised, released, sold, conveyed, and quitclaimed to Michael, in fee-simple, all his 'right, title, interest, claim, and demand' in the unsold lots in block 2 and in block 3, except the eight which had been conveyed to him by Michael, and at the same time transferred to Michael all his interest in the moneys and securities which had been received for the lots sold. In his deed making the conveyance he covenanted that he had 'not made, done, committed, executed, or suffered any act or acts, thing or things, whatsoever, whereby, or by means whereof, the above-mentioned premises, or any part or parcel thereof, now are, or at any time hereafter may be, impeached, charged, or incumbered in any way or manner whatever.' Michael, finding himself unable to pay the note to Dickson which fell due in December, 1872, and the interest on the other notes, entered into an oral agreement with James C. Hyde by which Hyde was to take the property off his hands as he took it from Henry, and pay the debt to Dickson, and relieve the premises conveyed to Henry from the lien of the trust deed to Ayres. Under this agreement Michael conveyed the part of the property to which he held the title to Hyde by deed, with full covenants of warranty expressing a consideration of $16,000, and transferred to him all debts due for lots sold. This deed was dated December 28, 1872, but the transaction was not finally ended until some days after that date. Hyde at the same time assumed orally the payment of the Dickson debt, that being the only consideration for the transfer. At the time of this transfer Hyde borrowed from Richardson, the appellant, through Hammond & Bogue, his agents in Chicago, $10,000, for which he executed two notes, payable three years from date, one for six thousand and the other for four thousand dollars, and secured them by two deeds of trust to Hammond as trustee, each upon different parts of block 2. Together these deeds covered the whole of the block. Hammond & Bogue were only authorized to make loans for Richardson on unincumbered property. They knew at the time they paid the money over to Hyde that block 2 was incumbered by the deed of trust to Ayres, but Hyde promised to pay the past-due note and the past-due interest to Dickson out of the money he borrowed, and obtain a release from Ayres of that block. Hyde did pay the note and the interest past due, and also the note falling due in December, 1873, but, instead of getting a release from Ayres of block 2, he, without the knowledge of Hammond & Bogue, took one of block 3, thus leaving block 2 still under the incumbrance of a lien prior to that for the benefit of Richardson to the extent of the two notes to Dickson falling due four and five years from date.

When the note maturing in December, 1874, fell due, Hyde was unable to meet it, but in January, 1875, he sold 19 lots in block 2, for which he received $6,000 in cash. With this and other moneys advanced by Hammond & Bogue, Bogue went to the bankers to whom both the remaining Dickson notes had been sent for collection, and paid the money for them and took them away uncanceled, they having been previously indorsed in blank by Dickson; that falling due in 1875 being 'without recourse.' One payment of $6,000 was made on the fifteenth of January, and the other, being $5,641.87, on the 29th. On the day the last payment was made, and after the notes had been taken up, Bogue went to Ayres with them and requested him to release block 2 from the lien of the trust deed to him. He stated to Ayres that he was the owner of the notes, and thereupon Ayres executed a release of block 2, which Bogue signed and acknowledged with him. In this release Bogue is described as the 'legal holder of the unpaid notes.' After this Hyde paid Hammond & Bogue the money they had advanced to take up the notes from the bank. Hammond, also, at different times, released a part of the lots in block 2 from the lien of the deed of trust to him for the security of Richardson. The 19 lots which had been sold, and from the proceeds of which the $6,000 came that was paid to the bank upon the notes on the fifteenth of January, were released when that sale was made. The other releases were executed when the advances of Hammond & Bogue were repaid by Hyde.

Henry J. Traver first heard of the release of the lien on block 2 under the trust in favor of Dickson a short time before the fifth of April, 1875, and at that date he brought suit in the circuit court of Cook county against Michael Traver, Hyde, Bogue, Ayres, Hammond, and others who had become interested in the property, not, however, including Richardson, to obtain a release of block 1 from the lien under the Ayres trust deed, on the ground that the Dickson notes had been paid. In this suit he obtained a preliminary injunction restraining Hyde, Bogue, and Ayres from enforcing the trust deed, or selling or disposing of the two Dickson notes. On the thirtieth of June, 1875, while this suit was pending, Hammond & Bogue sent Richardson, in Boston, where he resided, a draft for $400 'in paym't of coupon of James C. Hyde due 28th inst. to 1st prox.' In their letter to Richardson inclosing the remittance, Hammond & Bogue made no mention of any change in the form of his securities, or of the suit which had been begun by Henry J. Traver. On the seventh of October, 1875, Hyde and Hammond & Bogue answered the bill of Traver, and on the 8th Ayres filed his answer. In the answer of Hammond & Bogue they state that 'on or about the time when the first of said two Dickson notes became due, the said Hyde requested these defendants to allow him to pay up said notes for $6,000 and $4,000 then held by said Richardson, and to purchase the said two Dickson notes. And these defendants, acting as the agents of said Richardson, at the request of said Hyde, agreed to and did receive payment of said $6,000 and $4,000 notes, secured by the deeds of trust to this defendant Hammond on said block 2, and this defendant Hammond released the greater portion of said block 2 from the lien of said trust deeds, made to this defendant Hammond as trustee, there being about 10 lots yet remaining not formally released, but this defendant Hammond was and is ready to release the same at any time at request...