Stout v. Shew , 1 Pin. 438 ( 1844 )

Dunn, C. J.

This is an appeal from a decree of foreclosure of mortgage, in favor of the appellee against the appellant, made by the district court of Milwaukee county, sitting as a court of chancery at the last March term thereof.

That the opinion which the court is called upon to give in this cause may be properly understood it is necessary to premise that, on the 2d day of February, 1842, the appellee, as complainant, filed his bill in the said district court against the appellant, as defendant, to foreclose a mortgage theretofore executed and delivered by defendant to one Marsh, and by said Marsh assigned to complainant. On the same day the defendant was personally served with subpoena. On the 2d June, upon application, a rule was entered by the judge of said court, at chambers, against the defendant, to plead, answer or demur to complainant’s bill on or before the 22d of that month. The defendant in due time responded to this rule by filing his demurrer to complainant’s bill, and at the December term of said court the demurrer was overruled and the defendant ruled to answer in ten days. Within the rule the defendant filed his answer, to which the complainant filed his replication, on the 7th February, 1843. At the June term thereafter, on motion of defendant, the court, by order referred the cause to a master, to take testimony therein on the part of defendant. On the 21st August defendant filed his affidavit and moved the court to continue the cause. The motion was sustained and the cause continued. Afterward, on the 23d September, the defendant moved the court for leave to amend his answer herein, and the motion was overruled by the court.

At the November term of said court the defendant presented his petition, praying leave of the court to file a supplement to his answer heretofore filed herein, and thereupon submitted a motion for leave to file a supplemental answer, pursuant to the prayer of the said petition. The petition was sworn to and accompanied by an affidavit of one of defendant’s counsel. The motion based upon the petition was overruled by the court. At the said March term the cause came on to be heard, and, after reference to a master and coming in of his report, a decree of foreclosure and sale of the mortgaged premises to satisfy the debt of the complainant, was entered, from which decree an appeal is prosecuted to this court by the defendant Shew.

It is insisted by the counsel for the appellant, in the review of this cause., that injustice has been done to appellant by the opinion and order of the district court, made at the November term, refusing him leave to file his supplemental answer, on the petition and motion referred to. In reviewing this opinion of the district court it will be necessary to consider the time of the application for leave, and the nature, as well of the answer as of the supplement sought to be introduced. In the history of the progress of this cause, from its commencement to the time of the opinion and order complained of, it must be apparent to every one who will examine carefully the rules governing chancery practice and the reasons of their adoption, that the application was ill-timed. In June, 1842, in answer to a rule, the defendant had demurred; in December the demurrer was overruled ; in ten days thereafter his answer was filed ; on the 7th of February, 1843, the complainant replied ; at the June term thereafter, the defendant obtained a reference to a master to take testimony on his behalf; on the 21st of August the defendant, on his motion and affidavit filed, obtained a continuance of the cause to procure the attendance of a witness before the master. On the 23d of September he moved for leave to amend his answer, and the motion was overruled; and so late as the November term, 1843, about eleven months after the filing of his answer, he moves the court for leave to file the supplement. Thus he permits the cause to be put at issue upon his answer, asks and obtains a reference to take his testimony, asks and obtains a continuance to procure the attendance of a witness lbefore the master, and after all this, and the intervention of many special and regular terms of the court, with the privilege of applying to the judge at chambers for any interlocutory order', at this late day, he applies for leave to file a supplemental answer. We understand that in chancery practice, the duties of complainant and defendant are reciprocal. The complainant must speed his cause by all proper and permissible rules and orders, to bring it to a final hearing at the earliest period allowed by the practice in such cases, and it is equally incumbent on the defendant to answer fully and promptly all rules against him, and when the cause is at issue, to take his testimony preparatory to a speedy and final hearing. It would be certainly a palpable violation of these wholesome rules, laid down and enforced by reasoning in every approved work on chancery practice, to permit the defendant in a cause, to occupy the attention of the court and of the complainant with an answer solemnly filed under oath, for some eleven months, during which time many special and regular terms intervene, and important steps are taken by complainant and defendant to place their cause at issue, and take testimony for final hearing, and then for the first time, to come in and file a supplemental answer, which would necessarily compel the parties to retrace their steps in all which had been done after the filing of the original answer. The time of the application would alone justify the district court for refusing the leave asked; but a more forcible reason for the court’s opinion may be found in the inconsistency apparent in the original and supplemental answers. The court will not suffer itself to be taken by surprise, and under color of correcting an error, allow a defendant by supplemental answer, to make a new defense inconsistent with his former answer. 1 Turner & Yenable’s Ch. 556 ; 2 Yes. & Bea. 167. And it is further settled in law and equity practice, that a default in law will only be set aside to admit a plea to the merits and the plea of limitation, usury, etc., cannot be interposed. So in equity, the courts will not permit a supplemental answer setting up as a defense, a penal law by which the complainant’s right is to be affected. The supplement must contain a meritorious defense, and be consistent with, and in explanation of the answer.

Defendants are permitted to amend by supplement according to chancery practice, as now well settled, in the following particulars: First, in small and immaterial matters. Bunbury, 248. Secondly, where a mistake had crept into the engrossment. 2 P. Wms. 426. Thirdly, where new matter has been discovered since the original answer put in. 10 Ves. 491. Fourth, in case of surprise. 1 Eq. Cases Abr. 29. Fifth, in mistakes of names. 11 Yes. 63. But where the defendant mistook, first, the law. Pearce v. Grove, 3 Atk. 522; Amb. 65, S. C. ; secondly, where the defendant had unintentionally perjured himself, and an indictment was suspended over him ; and, thirdly, where from the circumstance, that at the time of the answer put in, the defendant had not set forth his defense from an inability to state it with precision (2 Anstr. 363) the court has refused him the indulgence of amending.

Let us apply these principles to the defendant’s original answer filed, and the supplement offered. The original answer admits the execution of the notes and mortgage, as alleged in complainant’s bill. It avers, that on the 1st of February, 1838, the defendant and wife, and William Shew and wife, made and executed to Lemuel W. Weeks a mortgage upon the same premises mentioned in complainant’s bill, to secure the payment of the sum of $900 by installments, according to the obligation of three promissory notes in the mortgage mentioned; that the premises then were the property of the United States and the defendant in occupation as settler or squatter ; that the mortgagors covenanted and agreed to obtain the title thereto, by pre-emption, public sale, private entry or otherwise; that, if default was made in the payment of the money mentioned in the said mortgage, at the times stipulated, or any part thereof, the mortgagee had right to sell the mortgaged premises at public auction, to keep and retain the principal and interest due him, rendering the surplus, if any, to the mortgagors. That said mortgage was duly acknowledged and recorded in the office of register of deeds of Milwaukee county. The' answer further avers, that afterward the said Weeks transferred said notes and mortgage to Joseph W. Marsh, the same person mentioned in complainant’s bill, as defendant believes ; that in the month of June, 1839, the defendant purchased the said premises from the Territory of Wisconsin, at public sale, for the sum of $400, paying and securing to be paid to the Territory the said purchase money; that the said premises were part and parcel of the land granted by the United States to the Territory, to aid in the construction of the Michigan and Rock river canal, and by the terms of the act of congress making the grant, it is provided, that all the land not otherwise appropriated or disposed of in those sections and fractional sections which are numbered with odd numbers on. the plats of the'public surveys, within the breadth of five full sections taken in north and south or east and west tiers, on each side of the main route of said canal, from one end thereof to the other, are granted to the Territory, and reserving the even numbered sections and fractional sections, taken as above, to the United States. These lands are subject to the disposal of the legislature of the Territory, for canal purposes. And, further answering, the defendant avers, that he is informed and believes that the main route of the canal has been so changed from its location that the said mortgaged premises are more than the breadth of five full sections from the main route of said canal, and that the sale of said premises to him by the Territory of Wisconsin is void. The defendant, in conclusion of his answer, avers, that after the sale of said premises to him by the Territory, and after the transfer of said notes and mortgage by Weeks to Marsh, at the request and instance of Marsh or his agent or attorney, the defendant executed the notes and mortgage mentioned in the complainant’s bill, for the same cause of indebtedness, and in lieu of the said notes and mortgage to Weeks, and that upon such execution and delivery as aforesaid, it was expressly understood and agreed that the said Weeks or his assigns should cause the said mortgage to Weeks to be canceled and discharged, in a reasonable time, upon the records in the register’s office for the county of Milwaukee, and that such execution and delivery was upon that express condition, which defendant avers has not been complied with, but that said mortgage now stands upon said records, uncanceled and undischarged, as by their inspection is apparent. These are the entire averments in the defendant’s answer, with the usual conclusion.

The supplemental answer offered by the defendant, on his motion for leave to file a supplement, sets up, substantially, that William Shew was, in 1836, and before the 4th day of July, the occupant of the land and premises mentioned in said complainant’s bill, and that the same belonged to the United States at the time; that on or about the said 4th he entered into an agreement, under seal, with one Jonathan W. Balch, by which he agreed and bound himself, his heirs, etc., to convey to said Balch, his heirs and assigns, by good and sufficient deed with warranty, one-third part of the said tract of land, wheh the title should be obtained by the said "William Shew, at the land sales then expected to take place for the Milwaukee land district, by which agreement the said Balch was to, and did, pay to said William- $200, in the first place, for his claim; and was to furnish, at said land sales, one-third of the money required to purchase said land from the United States, which last sum the said Balch never furnished. The said defendant also became the purchaser of one-third of said tract of land, previous to said 4th of July, of the said William Shew, for the like consideration of $200; that William Shew, Balch and himself, about the same time, entered into an agreement to erect a saw mill, on a mill privilege, on said land, at their joint expense. At the same time, defendant and William Shew agreed with Balch to build a mill dam at the said-mill seat, across the river Kinnikinick; the dam to be built after the description contained in the agreement, the said Balch paying to said William and defendant, at the rate of $2 per foot for one-third of the dam and bulkhead; that the dam and bulkhead were completed according to agreement, and the construction of the mill proceeded until some $1,400 were expended, when a settlement took place between defendant, Balch, and William Shew; Balch was in arrears some $240, and defendant and William Shew demanded of him to make good and pay such sum, which he refused and neglected to do. The defendant avers the respective amounts advanced and expended by him self, William Shew and Balch, up to the settlement; it then proceeds and avers that about the 21st day of November, 1886, Balch assigned the contract with William Shew, and the agreement with William Shew and himself, to Lemuel W. Weeks; denies that any consideration passed from Weeks to Balch, or if any thing, a very small amount; that William Shew and defendant remained ignorant of the transfer or assignment to Weeks, until about the 2d December, 1836, when Weeks informed said William of the fact, who afterward informed the defendant. At the time Weeks gave this information, he paid said William $175, in part payment of the balance due from said Balch, for expenses on said mill, leaving Balch in arrears some $65.62-J. The receipt given for the money acknowledged Weeks as assignee of Balch. Defendant avers that no part of said payment ever came to his nse ; that William Shew and defendant completed the mill dam, etc., about the 1st January, 1837, at the further expense of $133.90, without any further contribution by said Weeks. From the said last-mentioned day, until about the 21st February, 1838, the defendant and William Shew occupied the said tract of land, the said Weeks, during all that time, failing to make any further advances. At the day last mentioned, the defendant and William Shew purchased all the right, title and interest, either in law or equity, of said Weeks, assignee of said Balch, in the land and premises aforesaid, the same still being the property of the United States, and executed to said Weeks, a mortgage on said premises to secure the payment of the balance of the purchase money. The only claim of said Weeks, against the defendant and William Shew, at the time of the purchase, grew out of the assignment from Balch before referred to. A receipt given by Weeks at the time, is referred- to as evidence of the true consideration of the notes and mortgage then given to Weeks. The defendant, about the 1st April, 1838, purchased out the interest of William Shew, in the said premises, for the sum of $1,100. On or about the 18th June, 1838, the said tract of land, or premises vested in the Territory of Wisconsin, by virtue of the grant referred to in defendant’s original answer. Afterward, about the day of June, 1839, the defendant became the purchaser of said tract of land from the Territory, as averred in the original answer. The defendant further avers, that about the 17th April, 1840, the said Weeks, from circumstances of embarrassment, procured the said Marsh, named in complainant’s bill, to become his secret trustee, to hold his property, effects and credits, in his, the said trustee’s name. The said Marsh, being in this fraudulent relation to Weeks, about the day last mentioned, by urgent solicitations, induced the defendant to execute to him a new mortgage and notes in lieu of the mortgage and notes to Weeks, as averred in the original answer. The defendant avers that this transaction was with design, on part of Weeks and Marsh, to defraud Weeks’ creditors. The defendant denies that the execution of the notes and mortgage to Marsh, was to secure the payment of any sum due by him to Marsh, as he did not then, and never did, owe Marsh any thing. Upon the execution of the mortgage and notes to Marsh, the said Weeks delivered up to defendant the mortgage and notes given by defendant and William Shew to him, Weeks, which are lost and cannot be produced in court; and, in conclusion of the supplement, the defendant avers that the giving of the said mortgage and notes to the said Marsh, as alleged in complainant’s bill, was without any good consideration, and void, of which the said Marsh had notice at the time of their execution, of all which the said complainant, by his agent or attorney, had due notice at the time of the assignment to him. The defendant avers generally, that inasmuch as the various transactions recited in the answer and supplement, were done and performed while the said land and premises belonged to the United States, of which all the parties named had full notice, the said agreement, assignment, notes and mortgages, founded thereon, were contrary to public policy and the laws of the United States, and void and without any legal consideration.

Thus we have presented in contrast the substantial parts of the defendant’s answer and supplemental answer offered, and it is too obvious to require elucidation or comment, that the supplement is not in aid or explanation of the answer, but assumes entirely new and distinct grounds of defense, and one too resting upon a penal statute of the congress of the United States, bringing the supplement in direct conflict with long settled principles in England and America, in regard to this kind of answer, which, in practice, has entirely superseded an amended answer.

It is true that the defendant as a salvo to this supplement, and to force it within the rules laid down, has in his petition for leave to file it, sworn that he intended to swear to the original answer, in the sense in which he wished to be permitted to swear to his supplement. This oath embraces the rule as laid down in the authorities, but it is at war with the facts stated, and grounds of defense assumed in the supplemental answer ; they being in their material parts, totally distinct and different from, and inconsistent with the original answer. The court might go further, and question, whether the defense set up in the supplemental answer, is permissible at all, under the circumstances in this case, to defeat the complainant’s right to foreclose his mortgage, but is unnecessary to settle this question here. In support of the view taken by the court of the latter branch of this subject, we refer to 4 Johns. Ch. 375; 8 Ves. 79; 4 Simmons, 54-61; 1 Ves. & Beames, 149; 2 id. 255; Mit. Plead. 324; 2 Mad. Ch. 375; 1 Barb. Ch. 361.

We are of opinion that the district court decided correctly in overruling the motion for leave to defendant to file a supplemental answer herein, and therefore affirm the decree of the district court, with damages at the rate of seven per centum per annum on the amount of money decreed to complainant from the date of said decree, with costs, and order that it be so certified to said court.