Bass v. Lucas

The opinion of the Court was delivered by

One of the leading objects of the complaint was to charge certain lands, in the hands of the defendant, Edwards, with certain equities, in favor of the representatives of the estate of Charles Lucas, deceased, a lunatic. They claim, in substance, that Edwards acquired such lands through G. W. Lucas, the committee of the person and estate of Charles Lucas, with notice of the fact *124that Charles Lucas had an equitable claim to said lands, and, accordingly, subject to such equity.

The defendant, Edwards, purchased all but one hundred and ninety-eight acres of the land in question, at a sale under a decree of foreclosure under a mortgage, which he claims to have given him a legal title, and an equity superior to the equity alleged by the plaintiffs, as it regards the whole tract so purchased.

It is necessary to look into the rights of the original mortgagee in order to see what those rights were at their inception, and whether capable of being affected by any equity arising out of the relations of the committee to Charles Lucas, while in the hands of such original mortgagee, or in the hands of J. F. Parrott, his assignee, who foreclosed the mortgage.

It will then be necessary to inquire whether the purchaser of the lands under foreclosure, Edwards, was affected by knowledge of any circumstances tending to preclude him from acquiring that interest in the lands which the mortgage, by its terms, assumed to create.

What, then, was the nature and extent of the interest acquired by the original mortgagee? This inquiry is affected by a claim advanced by the plaintiffs that the mortgage, at the time of foreclosure, did not cover that part of the tract purchased by Edwards, and which is claimed by the plaintiffs. This objection depends upon the force and effect of the mortgage at the time it was created. The mortgage wa,s taken by the Commissioner in Equity in behalf of the distributees of Benjamin Lucas from a purchaser of lands of the estate of Benjamin Lucas, sold under a decree for partition, as security for the purchase money of said lands. The purchaser was G. W. Lucas, and the lands embraced those purchased by Edwards under foreclosure proceedings, already referred to. The sale was made prior to February 11,1862. G. W. Lucas and Charles Lucas were brothers, sons of Benjamin Lucas, and both entitled to distributive shares of the estate of their father. The mortgage was, therefore, in the hands of the Commissioner acting for the distributees of Benjamin Lucas, a purchase money mortgage, unaffected by any legal or equitable claim that might exist against G. W. Lucas, the purchaser and mortgagor.

The next question is as to the effect and operation of the mortgage as it regards the right of the mortgagee to have satisfaction out of the land. The land covered by the mortgage was sold in two separate parcels, each bringing a distinct price, and both were pur*125chased by G. W. Lucas. Two bonds were given by G. W. Lucas, the one covering the price of one of the lots, and the other bond the price of the other lot of land. „ A single mortgage was made by the purchaser, covering both lots of land, and conditioned for the payment of both these bonds.

The smaller of these bonds, together with the mortgage, was transferred by the Commissioner to J. F. Parrott, on account of the share of his wife in the estate, under whom the defendant Edwards claims, June 3, 1863. On or before the 11th day of February, 1862, the date of the sale to him, G. W. Lucas was appointed committee of Charles. The precise date of this appointment is in dispute, but need not be more accurately fixed.

On or about January 16th, 1863, the larger of the two bonds was transferred to G. W. Lucas as part of a settlement under which he received his individual share of the estate, and, as committee of Charles, the share of the latter in the estate. The transfer must be regarded as payment of this bond and an extinguishment pro tanto of the mortgage debt.

The facts that Parrott foreclosed this mortgage on account of the bond transferred to him and sold, and that Edwards purchased, have already been stated.

The question here arises, did the mortgage bind the two parcels of land included in it as security for the payment of both bonds, or is it to be regarded, as contended for by the plaintiff, as intended to secure each of these bonds separately on the respective lots in respect to which they were given? There is nothing to prevent a mortgage from operating at one and the same time on several distinct parcels of land so that all are bound for the mortgage debt. Nor is there any reason why two or more distinct obligations may not be secured by a mortgage. Whether such securities are convenient is a question for those who make them, and not for those who enforce them. That -was the character of the present mortgage as far as its nature is disclosed by the record before us. The Circuit Judge concludes that the mortgage was several and as to each part of the mortgage debts a security for the corresponding lot of land, on grounds too dependent for their force on conjecture to have weight against the tenor of the mortgage. That a person dealing with the mortgage might, when affected by peculiar equities, be held to that principle in enforcing the mortgage is conceivable, but that result would not grow out of the proper construction of the *126mortgage, but out of the nature of attending circumstances. It is clear that the mortgage in the hands of the Commissioner was a security covering both bonds by a lien on the two parcels of land, considered as a single fund. The extinguishment of one of these bonds by its redelivery to the obligor as part of a settlement of his and Charles’s interest in the estate did not in any way afíéct the validity of the mortgage as a security for the bond that remained unpaid.

Was the mortgage in the hands of the Commissioner charged with any equity in behalf of Charles Lucas? The Commissioner was merely the hand of the Court; the mortgage money belonged to those entitled to take the estate of Benjamin Lucas, and the security was theirs. The interpolation of the name of the Commissioner changed none of the substantial rights of the parties. If, then, the bonds, had they been taken and secured in the names of the real parties in interest, would have been unaffected by any equity in behalf of Charles Lucas, then the title of the Commissioner is equally unaffected.

It is contended that G. W. Lucas, in purchasing the parcels of land, intended to make provision for an investment of the share of Charles coming from the estate. It is not pretended that he actually purchased in the name of Charles. The parcel of land in question was purchased with G. W. Lucas’s bond, excepting a small amount of cash to cover costs and expenses. It does not appear that at the time of such purchase G. W. Lucas held any property or funds belonging to Charles. He had nothing in his hands to invest. This of itself is strong ground for holding that the original purchase of the tract was not intended as an investment in behalf of Charles. The Circuit Judge has, however, arrived at a contrary conclusion, but we do not find that that view has sufficient support from the evidence to overcome the conclusions that may arise from the form of the transaction and the circumstances and situation of the parties.

But assuming that it was the intention of G. W. Lucas, in purchasing the property in question, to place in the form of an investment for Charles one of these parcels of land, still such an intention was, at the time of the purchase, a mere unexecuted purpose. There was then no estate in his hands for any such investment. What might be the condition of things, when Charles’s estate should actually come into his hands, could not be certainly known then. *127It might happen that when that payment was made circumstances would render proper or expedient some different mode of investment for the estate of Charles. This lot, as it stood in the hands of G. W. Lucas previous to the payment to him of Charles’s share of the estate, certainly was not charged with any equity in favor of Charles. The elements of such an equity are wanting. It was not purchased with Charles’s money, for no funds of that character was in his hands. On the contrary, it was purchased with the money and credit of G. W. Lucas, and that established in him the beneficial interest to support his legal title.

This was the position of things when the mortgage was taken for the distributees of Benjamin Lucas’s estate, and there can be no doubt that such mortgage was unaffected by any intention that G. W. Lucas may have had as to the future use he should make of the property. .In fact, Charles Lucas was himself a distributee unsatisfied as to his share at the time the mortgage was taken, for it was part of the fund to which he looked for the payment of his share of the estate; and so far from his interest being with the mortgagor, it was altogether with the mortgagee.

Was any change effected by the subsequent transfer of the larger bond to G. W. Lucas? We will assume the view most favorable for the plaintiffs in looking at the question, and that was that the bond in question was received by G. W. Lucas as part of the share of Charles; the actual fact, in this respect, need not be determined. Among the distributable assets were two bonds secured by the mortgage. Charles takes one of these bonds and the other distributees the other. Had the bond been specifically assigned to Charles, it would not have affected in the slightest degree the liability of the whole land for the bond that still remained in the other distributees. The fact that it was indirectly assigned to Charles, though in form to G. W. Lucas, assuming it so to have been, would not produce any greater effect than a direct assignment to Charles.

The consequence was, that when Parrott took the bond, as representing one of the distributees, he took it with all the rights of those from whom he received it, and had full power to foreclose and sell both parcels of land, if that became necessary, and the purchaser, under such mortgage, unless affected by some equity collateral to and independent of the mortgage, would hold the land under a title as full as that of Benjamin Lucas during his lifetime.

*128Pursuing the assumption that the bond assigned to G. W. Lucas was really the property of Charles, it either became paid by operation of law'in the hands of G. W. Lucas, by reason of his being the committee of Charles, or it did not. If it was paid, then it became cash in G. W. Lucas’s hands, and the land, although to that extent discharged, from that bond, still remained held under that transferred to Parrott. Equity would not, without stronger reasons than the case presents, have considered that cash as invested in a tract of land mortgaged to a third person to secure the debt of the committee. Nor would it have been proper, while the mortgage was unsatisfied, for the committee to have placed Charles’s interest in such shape that, in case of the default of the committee to pay the mortgage money, it might be destroyed through the operation of the mortgage. It was then the interest of Charles, as things stood, that the funds should be regarded as cash in the hands of G. "W. Lucas for investment, secured by his bond as committee. But suppose that the bond was not to be considered as paid, in equity, but as a good obligation against G. W. Lucas belonging to Charles, and capable of being enforced against the laud, through the mortgage in Parrott’s hands, equity would, in that case, hold Parrott as a trustee for Charles, so far as his right to hold the mortgage security was affected by a part of the mortgage debt being outstanding in a third person. If Parrott chose to foreclose for the satisfaction of his bond, he could do so; but if it should happen that there was not a fund sufficient to pay'both debts, and the whole land had been sold, then Charles would be permitted to come in for his share of the money realized on the sales of the property. In either case the purchaser under the mortgage would take a title as good as that of the mortgagee.

A purchaser under such a sale on foreclosure could safely purchase with full knowledge of all the transactions disclosed by the case before us, and yet obtain good title. Assuming Edwards to have had the fullest information, there was nothing to prevent him from obtaining full title to the lands purchased by him under the foreclosure of the Parrott mortgage. If all that is charged in respect to the defendant, Edwards, be true, he was still in the position of one purchasing from another who had acquii’ed a legal title, without notice of an equity, and that was sufficient, without regard to what knowledge he possessed of the transactions.

*129It is clear that Edwards’s title to the land purchased under the Parrott mortgage is unimpeachable on any legal or equitable ground presented by the case before us.

It only remains to consider the title of Edwards as it regards the one hundred and ninety-eight acres. This tract was embraced in the original mortgage given by, G. W. Lucas to the Commissioner, yet it was not sold upon the foreclosure of that mortgage. Shortly after G. W. Lucas purchased from the Commissioner, in February, 1862, he sold this one hundred and ninety-eight aere tract to Kirven,-who gave him a mortgage for the purchase money. This mortgage was afterwards assigned to Edwards, and while in his hands was foreclosed, and Edwards became the purchaser.

If Kirven’s title was good and unaffected by any equity existing in favor of Charles Lucas, then the title of Edwards is equally good. Kirven purchased and gave his mortgage previously to the settlement under which Charles’s share must be regarded as paid into the hands of his committee. There were then no funds in the hands of the committee belonging to Charles to invest, and accordingly no investment can be regarded as having been made.

As has already been said with reference to the other mortgage, the land purchased by G. W. Lucas could not be regarded as an investment in behalf of Charles, for it was purchased wholly on G. W. Lucas’s credit, and was covered by a mortgage for the whole purchase money on the sale of the two tracts. It does not appear that there was any clear value in this land, at that time, over and above the amount for which it stood mortgaged.

An attempt was made to prove that Kirven was informed at the time of his purchase that the purchase by G. W. Lucas was intended by him to form an investment for Charles. There is a conflict of testimony on this point, which the Circuit Judge has passed upon, holding Kirven subject to notice. But there is a fundamental difficulty in the way of affecting Kirven’s title by the fact, even if G. W. Lucas made the statements attributed to him. It could amount to no more than a declaration of his intentions, at some future time, to place a part of the purchased land in the position of an investment for Charles. It was not in such a position at that time, for, as we must assume, it was mortgaged for all it was worth to pay G. W. Lucas’s bonds; besides, G. W. Lucas did not hold at that time any part of the estate of Charles capable of investment. But whatever he may have understood, if is *130evident, from the testimony, that he did not regard the 198 acres as .included in that portion of the land which was intended as an investment for Charles. There is no evidence to charge Kirven with notice of any equity affecting his title to the 198 acres, and accordingly Edwards’s legal title cannot be impeached on the ground of any equity in favor of Charles.

There is nothing in the case to show that at the time Edwards purchased such a state of facts existed as would have induced a Court of equity to decree that the land in question should constitute an investment for Charles. We must assume that the committee’s bond for the faithful discharge of his office formed a better security than the land at that time. Assuming that equity might have set up the bond delivered to G. W. Lucas as the property of Charles, still that would not affect Edwards, who claims against that bond and not through it.

As Edwards purchased from parties having legal title, and unaffected by any equity, it is unnecessary to consider that portion of the evidence tending to show his knowledge of the state of relation's between Charles and his committee.

It is equally unnecessary to consider the effect of the mortgage made by G. W. Lucas to Parker and Kelly, as it cannot affect the title derived by Edwards through the other mortgages covering the whole tract, and it does not appear that Edwards acquired anything under that mortgage that would not, under the circumstances, have passed into his hands under the mortgages already considered.

The judgment must be set aside and the cause remanded to the Circuit Court for a decree establishing the foregoing conclusions.