Sheldon v. Holmes

• Citation: 58 Mich. 138,24 N.W. 795
• Court: Supreme Court of Michigan
• Decision Date: 29 September 1885
• Parties: SHELDON v. HOLMES. [1]

24 N.W. 795

58 Mich. 138

SHELDON v. HOLMES. ^[1]

Supreme Court of Michigan

September 29, 1885

Appeal from Calhoun.

A.M Culver, for complainant.

Frank G. Holmes, for defendant and appellant.

COOLEY, C.J.

This is a suit in equity. The purpose of the suit is to obtain a decree vacating a discharge of mortgage which was entered upon the record by inadvertence or error, and also a foreclosure of the mortgage as against a party to whom the mortgagor had conveyed the land after the discharge had been entered, but with notice, as the bill avers, that the mortgage had not been paid. The facts, as they are disclosed by the evidence, we find to be the following:

Thomas Holmes, the mortgagor, borrowed of complainant, on May 29 1860, the sum of fourteen hundred dollars, and gave him a mortgage in consideration thereof for the sum of fifteen hundred dollars, payable in five years from that date, with interest at the rate of 10 per cent. per annum, payable semi-annually. In the spring of 1870, the whole principal sum of this mortgage remained unpaid, and also the interest except about a hundred and seventy dollars which had been paid at different times, and complainant began foreclosure. The matter was, however, arranged between the parties by the mortgagor giving to complainant a new mortgage for the sum of $3,700, which is the mortgage now in suit. The sum was made up by compounding the interest at 10 per cent semi-annually, and adding thereto certain items of costs, expenses, etc., amounting to $253.62. There was no authority of law for thus compounding the interest, and the amount was increased more than a thousand dollars thereby. There is reason to believe, also, that the items of costs and expenses which were charged were extravagant; but no legal duress is shown or claimed, and we shall enter here upon no inquiry whether the mortgagor could have made defense to any part of the mortgage. It is not to be supposed, however, that such a mortgage would have been given except under the pressure of some great necessity.

On November 25, 1872, the mortgagee went to the office of the register of deeds, where the mortgage was recorded, and in his presence entered on the margin of the record a full discharge of the mortgage. Up to that time only $200 had been paid upon it, and nobody is able to make any explanation how this discharge came to be made. It is suggested that it was made by mistake when the discharge of a different mortgage was intended; but no evidence is given to that effect, and the discharge, therefore, remains unexplained and unaccountable. The mortgagor was not aware of it for two years or more thereafter, and when it came to his knowledge, he said nothing about it, but made further payments; the whole, up to March 3, 1877, amounting to $943.39. It seems evident that up to that time the mortgagor had formed no purpose to take advantage of the inadvertent or erroneous discharge.

On March 14, 1879, however, the mortgagor, with his wife, executed to his son Abiram Holmes, then resident in Chicago, a warranty deed of the land mortgaged for the nominal consideration of $6,000, receiving, as the parties to the transaction claimed, $1,500 in cash and prior indebtedness, and taking back from the grantee a mortgage of $4,500. There were circumstances attending this trade indicating great haste, and it is not disputed now that Thomas Holmes had a purpose to take advantage of the discharge and get rid of paying the mortgage. This he justified to himself by the extortion which the complainant had practiced upon him in taking the mortgage, and in the terms exacted. When the papers were presented for record the register of deeds suspected something wrong, and immediately notified complainant, who lost no time in instituting this suit.

The chief contention in the suit was over the question whether Abiram Holmes was aware, when he took the deed from his father, that the mortgage had not been paid, and must have been discharged by inadvertence. The circuit judge found that he was, and gave decree of foreclosure for $9,080.19, and charged the defendants Thomas and Abiram Holmes personally with all costs. Abiram Holmes alone appealed.

There is no direct evidence that Abiram Holmes was aware, when he received the deed from his father, that his father was not in justice and equity entitled to make a conveyance free of liens. The indirect evidence, however, is strongly relied upon, and is thought to be conclusive.

1. It is said there was gross inadequacy in the price which Abiram Holmes was to pay for the land. Complainant produced a number of witnesses whose testimony went to show that the land was worth from $8,000 to $10,000, whereas Abiram Holmes was to pay but $6,000. A consideration of all the evidence does not, however, make out such a case of gross inadequacy as would be evidence of fraudulent purpose; and in a transaction between father and son, especially when the father was considerably advanced in years, as was the case here, and was expected to remain upon the land, as also appears, the fact of low selling price would scarcely excite remark, unless it appeared that some other party might be wronged thereby. But in this case the question in dispute is whether the son knew that any other person was in position to be wronged thereby; and it cannot well be claimed that the mere fact that his father was willing to sell to him at a low price would charge him with notice of an intended fraud. On the contrary, he had a right to suppose his father's purposes were honest, and that if the father made any concessions in the matter of price, he did so from proper motives. Large farms are not readily sold at the value the owners and their neighbors place upon them, and when one finds a purchaser in his own family he is more likely to accept a low price than if he were to sell to a stranger, and quite justifiable in doing so; and probably the price Abiram was to pay in this case was as large as at a forced sale could have been realized.

Then it is mentioned as a suspicious circumstance that Abiram Holmes procured an abstract of the title to the land, which showed this mortgage to have been discharged. This is charged to have been done for appearance merely, and in order that he might be able to make a showing that he was relying upon a clear record. And why, it is asked, should the son, when dealing with his father, go to the record to ascertain what the title was, when, presumptively, the father would have truthfully told him its exact state? This is a pertinent question, but Abiram Holmes, if he was honest in the transaction, could easily make sufficient answer to it. It is only when we assume that he was dishonest in taking the deed that the procuring of an abstract becomes a suspicious circumstance. Lands, as every lawyer in Michigan knows, were at an early day bought and sold very carelessly, and with little investigation of title; and it often happened, after many years' possession and cultivation, that a party found, to his astonishment, that he had no title to land he had bought and long occupied. Experience and observation inculcated prudence; and the reasons for being particular to know what was shown by the record applied as well when one was dealing with his father as when buying of a stranger. There would be a lack of common business caution if he were not thus particular; and common business caution can never, by itself, afford ground of suspicion. Much less can it be proof of intended fraud.

It is further said that for many years Thomas Holmes had been an unthrifty man, and Abiram Holmes had had no reason for believing that he had paid off the mortgage in question; that it is morally certain, in fact, that he must have known his father had never been able to pay it. The argument drawn from this is that when he found by the abstract from the records that the mortgage appeared to be discharged he was bound to infer, even if his father had not told him, that a discharge of the mortgage had from some cause been entered without payment and under circumstances which still left the mortgage in force. To strengthen the argument on this branch of the case, complainant produced evidence tending to show that Thomas Holmes had for many years been tardy in meeting his obligations for farm and family expenses, and that in 1870, when Abiram went out into the world to act and operate in his own behalf, his father, as he subsequently informed a witness, "told Abiram he had better go if he wanted ever to do anything for himself, to start out now. 'Start out for yourself,' says he; 'I aint in a situation to do anything for you. I can't help you to a dollar, and you will have to start out. You might just as well go now as at any time and begin for yourself.' "

There is nothing in all this that brings home to Abiram a knowledge that his father in 1879 had an unpaid mortgage on his farm, or that fairly charges him with notice that such was probably the case. At most it would only apprise him that his father did not feel that, in addition to supporting his family and meeting his own obligations, he could spare anything to aid his son in getting started in the world. But the son, if he knew of the mortgage, might well refer this inability to the necessity he felt of paying it off. He might well agree with the father that such payment would be the father's first duty. And we find nothing in this record which fairly tends to show that when Abiram Holmes found the mortgage discharged of record, he was notified, either directly or by the circumstances, that the discharge was not made in consideration of payment, as it professed to be.

On the argument much stress was laid on the relationship between Thomas and Abiram, as raising a...