Title Guar. & Trust Co. v. Bushnell

• Decision Date: 09 March 1921
• Citation: 228 S.W. 699,143 Tenn. 681
• Parties: TITLE GUARANTY & TRUST CO. v. BUSHNELL ET AL.
• Court: Tennessee Supreme Court

228 S.W. 699

143 Tenn. 681

TITLE GUARANTY & TRUST CO. v. BUSHNELL ET AL.

Supreme Court of Tennessee.

March 9, 1921

Appeal from Chancery Court, Hamilton County; W. B. Garvin Chancellor.

Bill by the Title Guaranty & Trust Company against Herbert Bushnell and others. Decree of dismissal, and complainant appeals. Reversed and remanded, with directions.

HALL J.

This bill was filed by complainant against the defendants, Herbert Bushnell, Citizens' National Bank, and Garnett Andrews seeking a decree against the defendants Bushnell and Citizens' National Bank on a certain note for $2,200 executed by G. H. Allen and wife, Mary E. Allen, to one Fred Robinson, which note, the bill alleged, was owned by the complainant. Andrews was made a party defendant to the bill for the purpose of enjoining him from paying out or disbursing certain funds which, the bill alleged, belonged to the defendant Bushnell, and which Bushnell held as trustee under some sort of trust conveyance or power of attorney.

The bill alleged that on May 13, 1912, G. H. Allen and wife executed a note, payable to Fred Robinson, for the sum of $2,200, to secure the payment of which they executed a mortgage on certain real estate described in the bill; that said note was transferred to complainant by Robinson for a valuable consideration after its maturity, and that it was the owner of the same; that on May 12, 1912, the day before the execution of the note and mortgage above referred to Allen and wife conveyed the lot covered by said mortgage to George S. McCarty and wife, the consideration for said conveyance being an exchange of property and the assumption of the mortgage debt of $2,200 owing by the vendors to Robinson; that on June 19, 1912, McCarty and wife conveyed the same property to E. Y. Chapin, trustee, to secure an indebtedness of $2,500; and on December 31, 1913, McCarty and wife conveyed said property to R. T. Wright, trustee, the conveyance reciting that it was expressly subject to the two proceeding deeds of trust hereinbefore referred to.

It was further alleged that, default having been made in the payment of the indebtedness secured by the deed of trust to Chapin, the property was sold at a trustee's sale on December 5, 1914, and was bid in by the defendant Herbert Bushnell, as trustee, to whom a conveyance was made by E. Y. Chapin, trustee, under said deed of trust; that this deed of trust from Chapin, trustee, to Bushnell, trustee, recites the execution of the note and deed of trust to Chapin, and that default had been made in the payment of the indebtedness secured, and that the trustee had thereupon advertised the property for sale as required by the terms of said deed of trust; and that, at said sale, notice was given of the prior mortgage given to secure the $2,200 note sued on, and that the interest thereon up to the date of said foreclosure sale amounted to $74.81; that it was also announced at said sale that the equity of the owners in said real estate, after the satisfaction of the two mortgages above mentioned, had been conveyed to R. T. Wright, trustee, who claimed the right to receive any surplus of the proceeds of said sale "above that necessary to cancel said first and second encumbrances above recited"; and further recited that Herbert Bushnell, trustee, was the highest and best bidder at said foreclosure sale, and that the property was bid in by him for the sum of $5,000, of which sum, $2,274.81 were paid by the assumption by the grantee of the first lien upon said real estate, and that the remainder of the $5,000 was paid to the trustee in cash, and was applied by him to the payment of the indebtedness due under the second mortgage or deed of trust, interest, costs, and certain paving assessments against the property, and the balance, after satisfying the second mortgage debt, being the sum of $378.54, was paid to R. T. Wright, trustee, in accordance with the conveyance to him by the said George S. McCarty and wife; and that, in consideration of said recitals, the said E. Y. Chapin, as trustee under said deed of trust, conveyed the property described therein to the said Herbert Bushnell, trustee, reciting that the said Chapin, as trustee, transferred to the said Bushnell, as trustee, "all the covenants of warranty and seizen made to him as trustee in the deed of trust above recited, but making this conveyance as trustee under the recitals of said deed of trust and not otherwise."

The deed from Chapin, trustee, to Bushnell, trustee, is filed as Exhibit B to the bill, and is made a part thereof.

The bill further alleges that on September 22, 1915, the said Herbert Bushnell, as trustee, conveyed said property to W. F. Bowling, reciting a consideration of $1 and other good and valuable considerations; that in this deed the said Bushnell, as trustee, transferred to the said Bowling "all the covenants of warranty and seizen made to him as trustee in a certain deed of trust of E. Y. Chapin, trustee, dated December 5, 1914"; that the defendant Citizens' National Bank joined in the execution of the deed from Bushnell, trustee, to W. F. Bowling, which, the bill alleges, contained the following recital:

"The Citizens' National Bank hereby joins in this deed (the deed above recited having been made to the said Herbert Bushnell, trustee, for the use and benefit of the Citizens' National Bank, and the said Citizens' National Bank being the sole beneficiary under said trust) and acknowledges that it has received full consideration for this conveyance from said trustee and hereby conveys to the said W. F. Bowling all of its interest, legal or equitable in and to the real estate above described; but the said Herbert Bushnell conveys as trustee only and not otherwise."

The bill further alleged that by virtue of the recitals in the conveyance from E. Y. Chapin, trustee, to Herbert Bushnell, trustee, and the recitals in the deed from Herbert Bushnell and the Citizens' National Bank to W. F. Bowling, the said Bushnell and the bank are jointly and severally liable for the payment of the note secured by the first mortgage on said property, having expressly assumed the payment of same, and the bill prays for a decree against them accordingly.

To this bill the defendants Bushnell and Citizens' National Bank first filed a motion to require the complainant to elect whether it would maintain its suit against Bushnell personally, or against the bank as his principal.

This motion was overruled by the chancellor without prejudice to the right of the defendants to renew the same later.

Thereupon the defendants filed a demurrer to the bill upon various grounds, all of which were overruled except the third, which was to the effect that the facts alleged in the bill showed that there was no consideration to support any assumption of liability by either Bushnell, trustee, or the bank for the first mortgage debt on said property. This ground of the demurrer was sustained by the chancellor, and complainant's bill was dismissed. From this decree it has appealed to this court, and has assigned the action of the chancellor for error.

It appears from the opinion of the chancellor, which is made a part of the record, that he sustained the third ground of defendants' demurrer on the ground that it appeared from the bill and the recitals in the deed filed as Exhibit B thereto, that the assumption by the defendant Bushnell, trustee, was not made for the benefit of complainant, but was only a mode of stating that Bushnell purchased the property at the price of $2,725.19, incumbered with the prior mortgage lien of $2,274.81, and took the property subject to that lien.

We do not think this conclusion was warranted by either the recitals in deed exhibit "B", or by the allegations of the bill, In the deed it is expressly recited that the property was sold to the defendant Bushnell, trustee, "for the price of five thousand ($5,000) dollars, of which $2,274.81 were paid by the assumption by the grantee herein of the first lien upon said real estate; and $2,725.19 were paid in cash," etc.

The bill contains the following allegation:

"Complainant would now show unto your honor that as part of the

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