Smith v. Austin

• Citation: 9 Mich. 465
• Court: Supreme Court of Michigan
• Decision Date: 15 January 1862
• Parties: Simeon Smith v. Calvin P. Austin and others

9 Mich. 465

Simeon Smith v. Calvin P. Austin and others

Supreme Court of Michigan

January 15, 1862

Heard November 13, 1861 [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material] [Syllabus Material]

Appeal from Sanilac circuit in chancery.

Complainant filed his bill against Roswell Reed, Calvin P. Austin, William Warner, Frederick S. Ayers and Charles G. Learned, setting forth,

That on March 5, 1855, William A. Howard, who was then owner of certain tracts of land, known as the Port Austin property containing about nine thousand acres, gave a mortgage thereof to Almet Reed, to secure the payment of $ 15,000, with interest, which mortgage was assigned to Roswell Reed, December 4, 1855.

That on November 10, 1853, Rollin C. Smith, Alfred A. Dwight and William A. Howard, who were then owners of said Port Austin property, gave another mortgage thereon to Calvin P. Austin, to secure the payment of $ 30,000, with interest.

That "on the first day of November, 1856, your orator became and was interested in said real estate by contract, and then and there, and for a long time thereafter was and continued to be in the actual possession of all of said premises, and that while your orator was so in possession of said premises, claiming and holding the same, that is to say, on the eighteenth day of March, 1857, the said Roswell Reed, as assignee of the said Almet Reed, filed his certain bill in chancery, in the circuit court for the county of Sanilac; that your orator, with the said William A. Howard and his wife, William Warner and his wife, Thomas B. Rose, the Detroit Locomotive Works and William L. Carpenter, were made parties defendants thereto, said bill claiming and setting up the said mortgage of William A. Howard and wife to Almet Reed, and praying for the foreclosure and sale of said premises to satisfy the sum due upon said mortgage, and also charging that the said defendants named therein, including your orator, had and claimed rights and interests in said mortgaged premises, as subsequent purchasers and incumbrancers."

That to this bill Calvin P. Austin was not made a party; that decree was rendered thereon, under which the premises were sold and conveyed to Roswell Reed.

That to protect and secure the rights of complainant in the lands, and his possession and control of the same, and to provide for the payment of the Austin mortgage, complainant, on December 28, 1857, by his son and agent, William F. Smith, as party of the first part, entered into an agreement or covenant and declaration of trust with said Warner, as trustee to said Austin, as party of the second part, which agreement is attached to said bill as exhibit B, and the material portions of which are as follows:

"Whereas, on the tenth day of November, 1853, Rollin C. Smith, Alfred A. Dwight, and William A. Howard, made and executed to Calvin P. Austin a certain mortgage," describing it, "and the premises so mortgaged are now claimed by Simeon Smith, subject to and after the execution of a trust-deed made by said Wm. Warner and his wife, to one Thomas B. Rose, as trustee." "And it being provided by said deed of trust to said Rose, that said Simeon Smith and his agents might manage and operate the said real estate and the steam sawmill thereon, with the fixtures and appurtenances thereunto belonging, for the purpose, amongst other things, of paying the debt secured by said mortgage, and as a further security to that end this instrument is made. Now, therefore, the party of the first part covenants to and with the party of the second part, that he will proceed with all reasonable diligence and dispatch to cause to be cut, felled and got out on said premises, a stock and sufficient number of pine saw logs to supply the mill thereon during the season of the year 1858, for the manufacture of lumber, boards, lath and shingles, and for this purpose to furnish the necessary funds, means, materials and help for that purpose; and to cause all of said logs, when so got out, to be placed convenient to said mill for use, as soon as practicable to move said logs for that purpose, and in the manufacture of said logs into lumber, lath and shingles."

The agreement then further provides that for the purpose of applying said logs, lumber, lath and shingles to the payment of the Austin mortgage, said Smith thereby made over to said Warner, trustee, all the logs then on the premises, got out since July 1, 1857, and all that should be got out the then present winter and the next spring and summer, and also all the lumber, shingles and lath manufactured therefrom, on the following trusts and conditions: First, that Smith should manufacture the logs into lumber, lath and shingles, and before any disposition should be made thereof, should pay to Warner for the use of Austin, $ 2 stumpage for each thousand feet. Second, that Smith should pay from the proceeds of said lumber, etc., all taxes and assessments on the said lands.

The agreement then gives Warner a general oversight of the business of manufacturing the lumber; requires Smith to pay Warner's charges in the execution of the trust; stipulates that if Smith conducts the business and performs the conditions on his part to the satisfaction of Warner, he may continue in the possession and control of the business, and operate the same without hinderance; otherwise Warner was empowered to enter and take possession of the mill, logs, lumber, etc., and have full control thereof, and might proceed to manage the same, and manufacture the logs into lumber, and sell the same, and generally do in relation to the business whatever Austin might have done had the instrument not been made, so far as necessary to pay and discharge the moneys secured by the instrument, and the charges; and if there should be any surplus of logs, money and materials, then the same should be delivered to Smith, or whoever might be entitled thereto. And one-fourth the amount to be paid to Austin was to be paid by the first day of June then next, and one-fourth on the first day of each month thereafter until the whole sum should be paid. ^[*]

This instrument was signed by Smith, and a written acceptance of the trust attached thereto, signed by Warner.

The bill further states, that on December 28, 1857, and as a part of the same transaction, Roswell Reed entered into an agreement with complainant, which is attached as exhibit C to the bill, and which complainant prays may be made and taken, with all its averments, as part and parcel of the bill. This agreement recites that, whereas Smith had become the purchaser of the lands on which are the Austin and Reed mortgages, and to pay and discharge the first of the same has executed and delivered to Warner a deed or declaration of trust, by which it is contemplated that the logs permitted to be cut on the premises are to be converted into lumber, and that there will be realized from the avails thereof about $ 8,000 during June, July, August and September, 1858, which is to be paid on the Austin mortgage; and the balance thereof is to be paid, one-eighth on each and every first day of June, July, August and September, 1859 and 1860; and that Smith was to pay all taxes; the condition of said agreement was, that if Smith should pay and account to Warner for the stumpage at $ 2 per thousand for all logs cut on said premises, and from the avails of the logs pay on the Austin mortgage $ 8,000, during the months of June, July, August and September, 1858, and one-eighth of the balance on each and every first day of June, July, August and September, 1859 and 1860, and should, by a similar deed of trust or otherwise, satisfactorily secure the payment of such balance, and should pay in equal proportions during the months of August, September and October, 1858, all the interest unpaid on the mortgage to Reed, up to October 25, 1856, with interest thereon--for which payment the deed of trust to Warner should stand as security--and should pay the balance of the interest and principal of the Reed mortgage in a manner particularly agreed upon and specified, and on the expiration of the Warner deed of trust should, by like deed of trust or otherwise, as Reed should require, secure the payment of the balance of said Reed mortgage, then said Reed agreed to extend the time for the payment of his mortgage to the times specified in said agreement. This agreement was signed by Reed alone.

The bill further alleges that Reed, for the purposes of this arrangement, made Warner his trustee and agent, to receive his interest and control said premises; that there was payable to Austin and Reed during 1858, $ 10,468.32, and for taxes and expenses $ 1,924.87, making in all $ 12,393.19; that complainant paid Warner $ 8,327.28 in cash, and lumber to the amount of $ 4,617.30, making in all $ 12,944.58, fully satisfying the requirements of the trusts for 1858, and had besides property to the amount of $ 6,001.50 on the premises, which Warner had the right to take and sell on default of payment. That for 1859, $ 15,500 was to be paid, and $ 2,000 for taxes and expenses; that he paid in cash and otherwise $ 13,710.85 up to the middle of the year; more than was then due; that about the last of July, 1859, Warner, wrongfully pretending complainant had not complied with his agreements, seized and took into his possession the lumber, shingles, etc., amounting to $ 12,747.11, which sum complainant claims should be applied on the mortgages, inasmuch as it was taken by Warner for the use and benefit of Reed and Austin.

The bill further states that in July, 1859, the defendants Learned and Ayers negotiated with complainant a contract of purchase of an undivided half of said premises, for the sum of $ 50,000,...