298
" FEDERAL· REPORTER,
McMANNEs8 et
al.
11. PAXSON
et w:.
(OWcuit Oourt, W;
n..lfi880Uri, 0. D.
January 14, 1889.)
L
VENDOR AND VENDEE-PAROL CONTRACT-EvIDENCE-SUFFICIENCY. A father purchased land in Missouri With the avowed purpose of ,:tlving"
to his two sons, and, after living on it for two years, returned to his home in Ohio. . He left the defendant. one of' his sons, In possession of part of it, orally promising defeudant,as the latter alleged. to give him the land if he would move on it. After returning to Ohio. the father became embarrassed, and needed the proceeds of the land. whereupon he gave his son notice to leave the land, which he did without objection, and returned to Ohio, where he remained nine years. In the mean time the father conveyed the land to plaintiffs' assignor. subject to certain trusts. with power to sell. Afterwards said assignor sold the land to defendant. taking a mortgage for the purchase money. The deed to defendant referred to the trust under which the mort· gagee the land. and defenul\nt never set up any claim to the land under the oral cont"act with his father until five years later, when plaintiffs sued to foreclose the mortgage. Held. that the alleged oral contract was not estab· lished by the evidence. A defendant mort,:tag-ee in foreclosure of a mortgage containing covenants of seisin and special warranty cannot set up a prior and paramount equita· ble title in himself. .
S.
:MORTGAG;ES-FORECLOSURE-EsTOPPEIr-To DENY TITLE.
In Equity. .On .bill of foreclosure. Bill bY41muel McManness a.nd Maris Paxson, assignees of M. O. Whitely, to foreclose a mortgage executed by defendants Henry Paxson and Maria. Paxson, his. wife, on lands in Morgan county, Mo· .. Draffen <to ,williams, for complainants· . Dan. E;" 'wray, for defendants. PHILIPS, J. . This is a bill in equity, to foreclose a mortgage executed by the defendants Henry Paxson, and Maria, his wife. The mortgage grew out of about the following state of facts: One Eli Paxson, the father oj defendant Henry, resided in the state of Ohio. In .the year 1868 he came to Morgan county, Mo., with the view of making the purchase of some lands.. ' He purchased between five and six hundred acres, for which hepaid:$7,OOO, and received a deed therefor in the fore part of 1869. Be came to this land with the defendant Henry and his other son, Maris, the plaintiff herein, and lived upon it for about two years, when he returned to the state of Ohio. He was then some 70 odd years old. At that time he had other money in bank at his Ohio home. This bank failing in 1878 left him in very straightened circumstances, rendering it necessary for him to make some disposition of this Missouri land to obtain th,e means of support. There was litigation in the courts of Missouri affecting the title to this land. In his he applied to one M. C. Whitely, who was an attorney at law, and an old friend, for assistance. After many suggestions and negotiations it was agreed and ar,ranged between them that Mr. Paxson should convey to Mr. Whitely the said land in Missouri, and thereupon, on the 15th day of March, 1879, Mr. Whitely and Mr. Paxson executed a trust instrument, by which H
M'MANNESS V. PAXSON.
297
was declared that Mr. Whitely should take thi8 land ,for the purpose of looking after the same, paying the taxes, and furnishing the necessary money for defending and perfecting the title thereto; renting and making sale thereof, if necessary, to raise means for the support oi said Paxson and wife. By this declaration of trust, Mr. Whitely was authorized to make sale of the land at his discretion, on the best terms attainable; and out of the proceeds to pay the taxes and expenses of said litigation, and to reimburse Whitely for his services,etc., in the premises; and, after the death of said Paxson and wife, he was furthermore authorized and empowered to make division of the proceeds of said land, or the land in kind, among the children of said Paxson. The old man Paxson died April 1, 1879; his wife surviving him till 1884. In the mean time the litigation in Missouri affecting the land had terminated in favor of Paxson. In March, 1871, Henry, on notice from his father, had surrendered possession of the land to him or his agent, and shortly thereafter returned to. the state of Ohio. Whitely, not being able to obtain a purchaser for said land, concluded a sale of the portion covered by the mortgage,-the subject of this litigation,-to the defendant Henry Paxson, for the sum of $3,000, $600 of which was then paid, and for the residue of the purchase money the defendant executed five several promissory notes, payable in two, three, four, five, and six years after date, for the sum of $480 each, to secure the payment of which the defendant executed to. said Whitely the deed of mortgage herein sued on. In the settlement of the trusteeship of Whitely, part of the land undispos.ed of by Whitely was conveyed to the plaintiff Maris Paxson, as also threeo! the notes, as his distributive share of the estate, and as a compensation for his services in taking care of his mother after the death of his father; and the last of said notes was cancelled and delivered up to the defendant Henry as his distributive share of the estate. The second of said notes was transferrQd to Bennett Paxson, another of ,said heirs, in satisfaction of his distributive share, who, on the 18th day of March', 1884, assigned the same for value received to the plaintiff McManness. Immediately after the purchase of said land by the defendant from Whitely,he returned to Missouri. and Whitely put him in possession of the land, which he has ever since held. The defense set up to this bill of foreclosure in substance is that the defendant did not know at the time he took the deed from and executed the notes and mortgage to Whitely that Whitely held the title to the land under the trust arrangement between him and Eli Paxson; and that, if he had Knqwn the facts, he would not have made such purchase, and executed said notes and mortgage; that he. supposed,Whitely had bought from his father as an ordinary purchaser for value received. The answer does 'not charge, terms, that Whitely, in making the sale, was guilty of any positive· fraud or misrepresentation to mislead or deceive him ll,S to the existence of such trust. The answer further sets up that nenrY's father induced him to come with him from the state of Ohio on the promise to give this land; that accordingly he did so come and take of the same on the faith of such promise, and that he so occupied and held the
FEDERAL REPORTER.
land up to·the titne., ,his father gave him notice to quit; that by reason thereof be became j and, waaat the tiine he took the deed ,from Whitely, the equitable 'owner- of the' land. Without stopping; ,here: to consider the evidenc.e in detail adduced at the trial" it occurs ito me that there are certain fixed. principles of law lying at the 'lfery threshold of this controversy, which greatly embarrass the de£enseiilterposed to this action. The deed of mortgage, after the habendum clause, contains this covenant provision: " And the said Henry Paxson and Maria Paxson do for themselves and their heirs, executors; aUdadministrators coveIlsnt with the said Machias C. Whitely, that at the timeot signing these they were jointly his heirs and and well seised of the above-described ,Pre1Dises as.a good and indefeasible estate in fee-simple. and ha'v.e good right to bargain, sell, or incumber the same; and that they will warrant and defend the said premises, with 'the appurtenances' unto the same belonging. to the said Machias C, Whitely, his heirs and aSSigns. forever; against all acts done or suffered by them or either of. them." ; The,authorities that this affirmative covenantoJlerates as an effectnal estoppel agaiqst. the mortgagor to assert against the mortorassjgIlee, that he did, the title or the right to make the mortgage ,.911 at tqe ,'of its execution. 2 Jones Mortg. § 1483; says: '.. , . '., . ;'4. mqrtgagQriS estopped tp.deny his title. He cannot set up as a defense for himse.lf· aga:inst' the JIlOrtg\\$ee that the property so mortgaged is trust property, whiclihe had no rigutto mortgage. He cannot claim adversely to b.is deed. but ill estopped by it.'" '" At the present time, and especially where a merely a lien and not a title, this estoppel must be re,as arising only, from a covenant for title, express or implied." :W'hile Itultty be conceaed that perhaps the modern doctrine'is that the l'eliltioll between lllortgagor and mortgagee is not so similar to that Of landlords.ndtenant as to the mortgagor from setting up an !()utstandingtitre or a' newly-acquired title, it does not apply where the deed contains an express covenant, as does this. . Buah v. White, 85 Mo. 357, 358.. It also,a:ri established principle that in the action the. I1l.ortgagee's title under mort,of foreclosure gage cannot be questioned' by the mortgagor lU defense to the bill, ex,cept perhaps on the score of. nsury and the like, in those jurisdictions 'where such usury avoids the contract. The title can only be irivestigated 'at law, and notin a chancery foreclosure. 2 Jones Mortg.§ 1482. "It is rule that a mortgagor, and those claiming nnder him, are estopped 'from saying that no was conveyed to the mortgllgee. In executing the instrument they hold forth that they have title 01' author,ity to convey. and that title, whether good or bad, the mortgagee is en, titled tool' Bailey v. 1irtwtees, .12 Mo. 177. So 1 Jones Mortg. § 682, says: 'nA mortgagor, by a the usual covenants of seisin and warranty, is estopped to deny ttl.a title of the mortgagee. "' '" The mortgagor in such case Will not 'be heard to say in contradiction of his covenantof wananty that he had not title at the date of the conveyance, or that it did not pass' to· the mortgagee by virtue of his deed."
M.'MAliNESS
v.
PAXSON.
It would be a contradictioidn terms bf the cOVenarit ;01 seisiri and. !War"" 1'l1Dty for :the mortgagor to. either say .that he had not title, or that what-' ever title he did hate did not pass to the m:Cniiga.p;eeunder his mortgage deed.' CrOBS v. Robinaon, 2100nn. 379.. .An executor, who takes a deed as,such,and ,gives back a mortgage as such,is bound thereby, andes-· topped to deny his appointment and authority. .van Dyck v. McQuade,' 18 Hun, 376. It was the English law that the title is not brought in issue in a petition for foreclosure. BJIllv. Meloney, 27· Conn., 563'; 564. This rule is very fully and aptly expressed in Ander8O'f.Liv Batter,. 4 Or. HO;as follows: "Formerly a mortgage of real property was regarded as a conveyance of the legal title. sijbject, of cOllrse.to be defeated by the performance of a condition, and.t:his doctrine. still prevails to some extent. Courts pf equity, hpw-: ever, have always 'regarded a mortgage as a mere security for adeb,t, and ,the, foreclosure . a proceeding to satisfy the debt and courts of law ,as well as courts of equity, in many of the states,. have taken the same view; that· is, that a mortgage was a mere lien or pledge, .and. that the' general ti tie to the mortgaged property was in the mortgagor,··· In' the language of one oftheauthoritles, ·the mortgagee has neither ajusirn 1'8 norad rem, but a: ,specifiC lien, similar in character to a general lien. cl;'eatelt·by judgment upon the land of the judgment debtor,' Denio, 232. However this may be, as, a matter of strict that a suit to foreclose a mortgage is not for the determinatlonof,anytlghtor claim to or interest in real property, but a proceooing to have the mortgaged' property adjudged to 00 soldtp.satisfy thE.' debt secured thereby; In such a.' suit the title to the lJ}ortgaged pr.emises is in nowise drawnioquelltion.. The, adjudicatiop isml'rely as to the fact of the execution of amount due tliereon,and the sale of the property to satisfy. it,he seCl.. ·. It is the mere collection of a debt charged upon specitic pro'per'tyi;>y ng' to the property as a means of satisfying it. If it were a suit to divest a PIUtY. oftiUe, OJ, to :establish SOme right regarding the title to real' pr0Pettyi It' would stand upon a different footing; but, the mortgage being in equity:only: a cholle in actjon. a SJlit to foreclose it is more analogoul! to an action upon a sealed instrument." . Applying these principles to this case, what difference can it maRe whether or not the. defendant acquired an equitable title under ,hisal.." leged contra.ctwithhis father? No matter whenoo comes his tiUe,he covenanted with the mortgagee that he had and tIle, rigbt:to gage; and he is estopped to deny that whatever title. he has passed to the' mortgagee as a security for the notes, subject totne :conditi0I1a,expressed in the mortgage·. , The mere fact, without more, that defendant did not! know, ..when he the notes and mortgage, that Whitely.heldthe gal title to the land subject to the declaration of trust, orthlit.defendant:.would not have taken deed from'Whitely, and executed the notes and . mortgage,ha;d he been so informed, is not sufficient to destroy·thevalid-, ity ot the J}otes ! and, ·mortgage. The conveyance from Whiteh!' \ wherebyi he obtained the legal title toaod possession of tbeland, ! tute a validcollsideration. The defendant knew then as well &.S1jlow.'of;' his claim and rights under the imputed contract with his Thereis scarcely ,any ground of pretense. that Whitely, by any trick lind , tion or, representation, practiced any .fraud upon
300
equity or law would avoid the notes. I,eaving out of view the testimony of Wbitely, that defendant knew all about the declaration of trust and the purpose .for which the land was beinK conveyed by him to defendant, and accepting as true the defendant's own statement, there was no conduct on the part of Whitely upon which any imputation of fraud could be based. The substance of the defendant's statement is that Whitely did not inform him of the trust, but said he held the title with full authority to convey. ,All of which, in fact and law, was true. There is no failure of title in the deed from Whitely to defendant, and no breach of any covenant. The defendant was sui juris. He was not OO'ij compos mentis. If he made an improvident bargain, and bought land which in equity already belonged to him, he has no one to blame but hiillself. He is not an imbecile, that he should call upon the court for protection. . looking further into the equities of this case, the defense is without merit. The whole transaction. between defendant and his father, upon which he predicates his equitable title to the land, prior to the deed from Whitely,· rests in pais. There was no writ,ten memorandum to take case out of the operation of the statute of frauds. It requiresno ci1;1ttioD.ofauthorities to support the proposition that the proof of a parol agreement in such case should beao clear and persuasive as to leayeno reasonable doubt in the of the chancellor as to its precise terms. OutsideQf the deposition of the delEmdant, there is no evidence of any meeting and agreement between defendant and his father respecting the terms of the alleged gift. The defendant is clearly an incompetent witness to speak Qfthis contract thIs controversy. Chapman v. Daugherty, 81 Mo. 617, . Whatever doubt existed on this subject is now removed 'the late amendatory statute of Missouri. Laws Mo. 1887, p. 287. See,also, section 858, Rev. ,st. U. S. It is true that defendant shows by other witnesses that on or about the time Eli Paxson was in Missouri, purchasing this' land, he stated he was buying it for his two sons, Henry· and Maris, and that he intended to give it to them. And it may be conceded to defendant that if in consideration of said promise he removed with his family :from the state ·ofOhio to Missouri. and took possession ·of said land, and occupied and improved it in expectation of the fulfillment of said promise, ahd' had not voluntarily abandoI'led the same, he would have been entitled, as agaiust his father and those in privity with him, to a specific perform!\nce. Halsa v. Balsa, 8 Mo. 303; Rumbolds' v.Parr, 51 'Mo. 592. But the subsequent conduct of the defendant strips hirn" in contemplation of equity, of every vestige of such right as defense to this action. .As evidence that the father did not regard the existence of such obligation, after living less than two years upon this land with his soni he returned to the state of Ohio, and gave written notice to defendant to quit and surrender the possession to his son-in-law. Thereupon the defendant left the premises, in March, 1871, without one word of objection or protest; and shortly thereafter returned himself to Ohio, living near his father, seeing him frequently; and from that day to the date. 01 taking the deed from Whitely it does not appear that he
8,
M'MANNESS fl. PAXSON.
801
ever asserted or set up any claim wqatever to this land. It is incredible to believe that if he entertained in his own mind even the thought or belief that he had any equitable right to this land, he would enter upon negotiations with Whitely for the purchase thereof, without suggesting the rignt he now sets up. Mr. Whitely deposes that the defendant was fully informed, prior to any negotiations leading to the sale of the land and the execution of the mortgage, of the existence of said declaration of trust, and the precise circumstances under which Whitely held the same; and that defendant frequently advised and consulted with him as to the best means of managing and disposing of the property to accomplish the purposes of the trust. ' We can discover nothing in the character of Mr. Whitely, or in his relations to this case, to justify the court in discrediting his testimony. He was acting throughout as the trusted friend and trustee of the father, Eli Paxson, to aid and provide for him in the adversity of old age. He had no personal interests or ends to subserve in the matter; and as proof confirmatory of his testimony, the defendant took from him n, quitclaim deed, in which deed direct reference was made to the trust, as testified to by Whitely. Defendant must be presumed to have known the contents of the deed under which he took title. Orrick v. Durham,79 Mo. 178. As said by ATWATER, J., in Dat/{}hadayv. Paine, 6 .Minn. 452, (Gil. 304:) "It is contrary to reason and good sense that It party should be excused from knowing the contents, and the whole contents, of his title deeds.'" Not only this,but the defendant obtained possession of the land under the Whitely deed after having been 'out of possession for nine years; :and after he was readmitted he remained silent for five years more, until this foreclosure suit W!lS brought. During this time he permitted, without notice of claim or protest, the trustee Whitely to settle up his trusteeship, and the proceeds of the sale of this land in pursuance of the trust; a'Ctually taking himself one of the notes from the trustee as his distributive sha,re of the estate, and tacitly suffered the plaintiff Mr. McMannessto become the purchaser of one of the notes in suit at its full value, as shown by the This condnct is wholly inconsistent with his defense. He has not exhibited the willingness, eagerness, and promptness required to entitle him to a standing in a court of equity as for a specific performance. Decree for complainants.
302 SHmLDs etaZ.
McAm,EY etaZ.
(OiJrcuif Oourt, llTo D. Pefl/1tsllZ'Dania. December, 24, 1888.)
1.
WILLS-T!tUSTS-PRIVATE UNDERSTANDING WITH DEVISEE.
It is a settled principle that if a testator make a devise'in terms absolute, but upon a private had with his devisee, whether by the lat· te1"!! express promise or his a!lsent implied from his' silence, that he will apply the devised estate to some purpose designated by. the testator, a trust arises which a court of equity will enforce, unless unlawful in itself.
2.
SAME""""-BEQUESTS TO CUARITIES. :
8
Mary McAu)eydied seised of a house and lot on Duquesne Way, J>ittsburgh, which she had acquired under the will of her brot;her,James; and also possessed of a large personal estate. As respects the laUer, she died intestate, but she left an instrumen t of writing signed by her, and which has been admitted to probate as her will. in. the words following: "By request of my dear brother my house on Duquesne Way is to be sold at my death, and the proceeds to be divided between the Home of the Friendless and the Home for Protestant Destitute Women. MARY McAuLEY." Hetd, that said instrument was operative asa validlleclaration of tbe terms of a trust upon which Mary McAuley held said ,property. and therefore it, was not affected by tbe act of assembly of April 26, 1855; which avoids beqtiests, devises, or conveyances for charitable usesun)essmade by deed or will, attested by two witnesses, at,least one calendar month before the death of the testator or alienor. AND DISTRIBUTION-NEXT OF KIN-COUSINS. '
'
In the distribution of the peTsona} e'state of a decedent under the intestate laws of Pennsylvania. as between, first cousins and second cousins, the former take to the exclusion of the latter.
In Equity. Suit to val$dity of a will for administration of estate of decedent. ,¥noz & Reed, for com plainants., Thomas for devisees.... . . . D. F. Patter8O'fl, and John W. Donnan, for fhst cousins. V, . 11. WatBon and S. Schoyer,' Jr., .lor second cousins. Before McKENNAN and ACHESON, p. . PF,Jt CURIAM. 1. James McAuley, who died on the 9th day of January, 1871, by his will dated and Noveloher 26, 1870, made large heQ;1.lests to his sisters .and Mary, and also; devised to them .a,. house and lot on Duquesne Way, in the city of Pittsburgh. Margaret died in 1871, a few months after her brother, and thereupon her interest in said property passed to her sister Mary, who died January 6, 1886, seised of said real eslate, and leaving also a large personal estate. As respects the latter, she died intestate, but she left an instrument of writing, signed by her, (the body thereof being also in her hand-writing,) of which the following is a jJopy: "By request of my dear brother, my house on Duqul'sne Way is to be sold at my death. and proceeds to be di videu bet ween the Home of the Friendless and the Home for Protestant Destitute Women. MARY McAULEY." On January 12, 1886, this instrument was admitted to probate as the will of Mary McAuley. The two named beneficiaries are corporations of the state of Pennsylvania, and charitable institutions, within the