Sessions v. Sherwood , 78 Mich. 234 ( 1889 )

Morse, J.

This is an action of ejectment. Plaintiff claims title to 120 acres of land in Gratiot county by virtue of certain mortgage foreclosures by advertisement. The case was tried before Hon. Henry Hart, circuit judge, without a jury, who made findings of fact and law, and gave judgment for plaintiff.

The judge finds that the defendant came into possession of these premises March 2, 1865, by a warranty deed from one George, who was then the owner in fee, deriving his title through mesne conveyances from the United States. February 13, 1867, the defendant executed a mortgage, in which his wife did not join, upon 80 acres of this land, the E. % of the S. E. J of section 2, township 11 north, of range 3 west, and other lands not involved in this suit, to his brother, Warren A. Sherwood. When this mortgage was made Warren A. Sherwood was not present. It was made in his absence, and taken to the register’s office, and put upon record by the defendant. The mortgage Avas made to protect the defendant and his property from litigation, in which defendant Avas fearful he might get involved through a partner of his, who was having a lawsuit; in other words, the mortgage Avas made and put upon record to prevent creditors, or persons who might in this litigation be adjudged creditors, from levying on this land. This mortgage was found in the register’s office by A. G-. Russell, administrator of the estate of Warren A. Sherwood, appointed by the probate court for the county of Ionia, Michigan. Warren A. Sherwood died March 27, 1876, at St. Louis, Missouri. This mortgage, containing the usual poAver of sale, was regularly foreclosed by advertisement under the statute, and the land purchased by William Reynolds, administrator of Warren A. Sherwood’s estate, succeeding Russell. A sheriff’s deed was made upon such sale to Reynolds. The premises were not redeemed, and the deed became absolute.

The court further finds that December 20, 1870, the defendant, William C. B. Sherwood, with his wife, executed a mortgage to Warren A. Sherwood for $2,000 upon the 120 acres involved in this suit, containing the usual power of sale, which mortgage was recorded December 23, 1870. ' This mortgage was also regularly foreclosed by advertisement after the death of said Warren A. Sherwood, and purchased by his administrator, Reynolds. Sheriff’s deed was executed on this sale, and, for want of redemption of the premises, became absolute. Reynolds was appointed administrator of Warren A. Sherwood by the probate court of Ionia county, Michigan, and February 14, 1885, he petitioned said court for license to sell the lands in question. He was granted such license, and October 6, 1885, the premises Avere sold to plaintiff for $2,600, and he received a deed of the same.

The proceedings on foreclosure and in the probate court are not attacked, but are conceded to be regular; but it is claimed that these mortgages were without consideration, and invalid. The circuit judge finds as to the $2,000 mortgage, Warren A. Sherwood was present when it was executed; but, while they were talking it over, it was found that the wife of defendant had objections to signing it, as it covered the homestead. It was then agreed to lay it aside, and, instead of the mortgage, to make a deed of the north 80 acres of the land, which was done, and the deed delivered to Warren A. Sherwood, which deed was understood and intended to be taken in the place of the mortgage, which was not intended to be delivered, although it was handed to Warren A. Sherwood, who looked it over.

It does not appear in the record how this mortgage came to be recorded three days after it was made, or by whom, or for what purpose, it was recorded, or how it came into the hands of Warren A. Sherwood’s administrator. It is rather singular that a mortgage, not intended to be delivered by the parties, and superseded by a deed made in its stead, should have so soon found its way to the register’s office, unless taken there by one of the parties, or that it should have been recorded at all unless some purpose was to be subserved by such record. But the secret of this transaction is also found in an intent to defraud or hinder and delay creditors. The judge finds that the agreement not to use the mortgage, and to make the deed instead, was done after Mr. Hayes, an attorney, had advised them that the 40 acres they lived upon was exempt from levy an,d sale on execution. He also finds that there was no money 'paid, that day, and defendant was not indebted to Warren, except for $300, which he had collected for, but had not paid over to, Warren, and another mortgage was afterwards given to secure this amount. This mortgage of $2,000 was given because there was an execution against defendant, and in favor of William Stanley, to assist defendant in avoiding payment of such execution.

The foreclosure sales under these mortgages took place December 24, 1880. A bill in chancery was filed September 8; 1881, in the circuit court for the county of Gratiot by the defendant in this suit, William C. B. Sherwood, against William H. Reynolds, administrator, and the heirs of Warren A. Sherwood, deceased, in which said William set up that the first mortgage of $600 was never delivered to Warren, and that it was made to provide against a possible result of litigation in which his partner was engaged, and in which he was threatened to be involved also, but that it was not made or recorded with any design of defrauding, hindering, or delaying any creditors of William. In relation to the $2,000 mortgage, he alleged the same facts as found by the circuit judge in the present suit, and, further, that the mortgage was taken into the possession of Warren, and by him caused to be recorded, without his knowledge or assent, and contrary to the understanding between the parties. He also alleged that there was no consideration for or delivery of either of these mortgages; that he was in the possession of the premises, but that he had temporai’ily parted with the legal title to the same upon certain trusts and charges, which were then completely and fully ended; and that he was entitled to, and soon would be re-invested with, such legal title.

The administrator and heirs of Warren answered, denying the allegations of William, and averring the delivery and full validity of both mortgages; and, at the close of the answer, by way of demurrer, set up that complainant had no right to bring his suit, for the reason that his bill showed he had no legal title to the land, and it did not appear in said bill that he had any equitable title to the premises. Proofs were taken by both parties bearing on the validity of the mortgages, as well as upon the matter of abatement, and the case was argued on the merits. October 5, 1883, the court, the same circuit judge who tried the case at bar, filed the following opinion, and dismissed complainant's bill:

“In this case I do not think the complainant can recover, and the bill should be dismissed, with costs. I do not think the complainant has such a title as will enable him to maintain this suit in his own name, and I think the issue is sufficiently raised by the answ;er in the clause denying either legal or equitable title, in answer to that clause of the bill which shows the title claimed by the complainant. Henry Hart, Circuit Judge.”

The decree was dated as of the date of the hearing, September 14, 1883, and the dismissal of the bill was absolute. The defendant in this case and complainant in that case made a motion for rehearing, which was denied June 14, 1884. No further steps were ever taken by the defendant, William C. B. Sherwood, to attack the validity of these mortgages, or the foreclosure of the same, until he defended the present suit. He and his wife, however, have occupied and remained in possession of the premises ever since; the homestead being on the S. E. ¿ of the S. E. ¿ of section 2, township 11 north, of range 3 west. There are about TO acres of land improved, upon which is a dwelling-house and barn.

It is contended by defendant's counsel that under the findings of fact by the circuit judge, there was no delivery of either of these mortgages, or any consideration for them, and that the chancery suit was not a bar to the right of the defendant now, and in this suit, to question their validity, and that, therefore, the judgment upon the findings of fact should have been for the defendant. The counsel also claim that the wife of Sherwood should have been made a party.

I am inclined to hold that the chancery suit was not determined on the merits, but on the fact that Sherwood’s title, as shown by his bill and the proofs in the case, was not such as enabled him to ask for the relief prayed. This is shown by the opinion filed in the case, and made a part of the judge’s finding in this case. But the bill was dismissed absolutely, and, had not this opinion been filed by the circuit judge, stating his reasons for so doing, such dismissal would have been, without doubt, a bar to any further proceedings to test the validity of these mortgages, or any future defense against them on the ground that they were not delivered and were without consideration. As to the bearing of this decree of absolute dismissal upon the present case, I shall speak hereafter. I am satisfied, however, that the plaintiff is entitled to a judgment, beyond any question, as far as the defendant’s interest is concerned, outside of the homestead, in the lands covered by the $600 mortgage, which would be the N E. of the S. E. ^ of section 2, township No. 11 north, of range 3 west. Plaintiff is entitled to this 40. And I am also of the opinion that he is entitled, under the findings of fact, to a judgment for the whole premises, or would have been if the wife had been made a party defendant.

The circuit judge finds, in effect, that the first mortgage was made for the purpose of providing against the seizure of the land therein described for some judgment that might be obtained in litigation then pending against the defendían t’s partner in business, and in which defendant expected to be involved. He put it upon record himself. Not only that, he allowed it to remain in the register’s office from 1867 until after Warren Sherwood’s death, in 1876, nearly, if not quite, 10 years, and then informed the administrator where it was, who went and got it without any protest from defendant appearing from the findings of fact. All the finding there is as to delivery is simply that it was taken by the mortgagor and put on record, and made in the absence of Warren. The judge does not find that there was no consideration for it, or that it was not accepted by Warren; and, it being put on record, and permitted to stand on the record as a mortgage, and assumed to be a mortgage by all concerned, the fact that it was originally made without the knowledge of Warren, and that there never was a manual delivery of it, is of no importance. Jackson v. Cleveland, 15 Mich. 94. This putting of the mortgage on record, in the absence of any testimony or finding to the contrary, was presumptively a delivery. Patrick v. Howard, 47 Mich. 40-45 (10 N. W. Rep. 71); Stevens v. Castel, 63 Id. 116, 117 (29 N. W. Rep. 828), and cases cited; Gage v. Gage, 36 Id. 229; Jones, Mortg. § 539; Jackson v. Cleveland, 15 Mich. 94. Especially is the recording of a deed considered presumptively a delivery of it, as between grantor and grantee, when the object of the record, as in this case, is to defraud, hinder, or delay creditors. Gage v. Gage, 36 Mich. 229; Moore v. Giles, 49 Conn. 570.

In the case of Stevens v. Castel, supra, there was an evident intent, expressed at the time of recording, not to deliver the deed. In this case the action of William C. B. SherAvood after the mortgage was recorded is in support of the presumption of delivery afforded by the fact of record; and the defendant cannot now be heard to say that there was no consideration for this mortgage, because it was given to stave off or defraud creditors. Such a defense Avill not be permitted. Jackson v. Cleveland, 15 Mich. 94; Gage v. Gage, 36 Id. 229; Hess v. Final, 32 Id. 515; Gunderman v. Gunnison, 39 Id. 313, 317; Cool v. Snover, 38 Id. 562, 565.

And as to the other mortgage of $2,000, it was given in the first place, and executed by the wii;e as well as the husband, to prevent the levy upon the premises of an execution already issued and out against the defendant. This mortgage, though not delivered, as found by the circuit judge, was recorded by somebody December 23, 1870. It remained on record until Warren Sherwood’s -death, in 1876, presumably with the knowledge of the defendant, and was found among Warren’s papers at his death. The length of time it was on record, and the purpose for which it was executed, with the fact that ,it was in Warren’s possession at the time of his death, is quite conclusive to my mind that the defendant either put it upon record himself or consented that Warren should record it. Hess v. Final, 32 Mich. 515.

Under all these facts and. circumstances, what- is the position that the parties occupy? The defendant, for the purposes of hindering or defrauding creditors, executed two mortgages to his brother, Warren A. Sherwood. One remains of record nine years; the other, six years and upwards. One he places on record himself, as he probably does the other. His brother dies in 1876. One mortgage is found in the register’s office, the place of its deposit being pointed out by the defendant; the other is found among the papers of the deceased. These mortgages are held by the administrator of Warren until 1880, when they are foreclosed by advertisement, and bid in for the estate, December 24, 1880. Ten years in one case, and' thirteen in the other, have passed, and yet the defendant makes no sign of dissent as to their validity. .In September, 1881, after he has voluntarily parted with the legal title to these lands, he files his bill in chancery, ■attacking for’ the first time the liens of these mortgages, which liens he himself placed upon the premises, and for the purpose of having them appear as valid and subsisting liens. In 1883, after proofs taken, and a full argument upon the merits of his claim, his bill is dismissed absolutely. After making a motion for a rehearing, which was denied in 1884, the. defendant rests, and the decree stands. .In 1885, by regular proceedings in the proper probate court, the lands were sold as the property of Warren A Sherwood's estate to the plaintiff.

The plaintiff, attending the probate sale, finds these two mortgages regularly executed and recorded for the length of time above stated. He finds that the defendant in 1881 attacked their validity in chancery, and that, after a full investigation upon the merits, the court dismissed his bill absolutely, from which decree there has been no appeal. The opinion filed by the court was no part of the record, and the plaintiff might well understand that, by buying the premises at the probate sale, he was acquiring all the title that William O. B. Sherwood had at the date of both mortgages, and all the interest the wife had at the time of the execution of the second mortgage. The plaintiff pays $2,600 in cash, supposing, as he had a right to suppose, under the appearances, for which the defendant is responsible, that he was purchasing a good title to these lands. Under these circumstances, is not the defendant now estopped from coming into a court of law, and claiming that these mortgages were never delivered, and were without consideration, being executed between him and his brother to preserve the premises from the claims of defendant's creditors? It is plain to my mind that he is, and that, if any one must lose by the defendant’s transactions with his brother, it must be himself, and not the plaintiff, who in good faith has parted with his money upon the appearances of the record title, which appearances have been made by the acts and conduct of tbe defendant alone, as far as can be discovered from the facts before us in this case.

But as far' as the homestead is concerned, — the S. E. £ of the S. E. J of section 2, township 11 north, of range 3 west, — the wife, under our decisions, should have been made a party. Hodson v. Van Fossen, 26 Mich. 68; Cleaver v. Bigelow, 61 Id. 47 (27 N. W. Rep. 851); Davis Sewing Machine Co. v. Whitney, Id. 518 (28 N. W. Rep. 674).

As to the other 80 ‘acres, the judgment should be affirmed. Judgment for the homestead 40 for defendant, with costs of this Court to him; costs of lower court to plaintiff. The record will be remanded for further proceedings, if desired.

Sherwood, C. J., Champlin and Long, JJ., concurred with Morse, J.