Cooper v. Bigly

13 Mich. 463, 1865 Mich. LEXIS 45

• Court: Michigan Supreme Court
• Decided: October 17, 1865
• Status: Published

Opinion

Campbell J.:

This is a suit brought to obtain a marshalling of securities, and to enforce the application of certain mortgaged lots before recourse is had to a parcel of property covered by the same mortgage, but claimed to have been disposed of before the other premises, and, therefore, not liable until the other property has been exhausted.

John Bigly, July 12, 1853, mortgaged to David Cooper three parcels of land in Detroit — one on Woodward avenue, one on Fort street, and one on Detroit river. A question arises concerning the description of the Fort street lot, which will be referred ,to in its place. On the 29th day of April, 1856, he mortgaged the Woodward avenue lot to the Michigan Insurance Company. On the 10th day of September, 1857, he conveyed the river lot to Thomas B. Bigly in fee. On the 5th day of April, 1859, he mortgaged the Fort street and Wood-wood avenue lots to Francis E. Eldred. On the 20th of October, 1859, an execution was levied on the Fort street lot, in favor of one William H. Pattison, and January 11th, 1860, the lot was bid off at sheriff’s sale by Frank Vincent, who received a deed May 20, 1861.

May 31, 1860, Cooper and the Michigan Insurance Company released, a portion. of the Woodward avenue lot. August 8, 1860, the Insurance Company filed a bill to foreclose their mortgage, and the property was bid off by an agent, and conveyed back to the Michigan Insurance Bank, (a new corporation, succeeding to the rights of the old one,) December 1, 1862. December 10, J860, Cooper received a deed from John Bigly of the Woodward avenue and Fort street lots. The Insuranee Bank filed a bill, October 13, 1862, to compel Cooper to foreclose Ms mortgage, and sell the property in the inverse order of alienation. Cooper subsequently purchased the title of the Insurance Bank, and .filed a supplemental bill to foreclose Ms mortgage, claiming a sale in the same order of priority. The Court below granted the prayer so far as Cooper’s rights were concerned, but as between Thomas B. Bigly and Eldred and Vincent, required the river lot to be sold before the Fort street lot.

The first question which presents itself is, whether the Insurance Company, by its mortgage, obtained any priority over the other parties claiming by subsequent conveyance or incumbrance.

It has always been understood to be the settled law of this State that, where mortgaged premises are conveyed or incumbered in parcels, they are, upon a foreclosure, to be sold in the inverse order of such conveyances or incumbrances, unless the mortgagee will be prejudiced by having the property sold in parcels —a thing- which can never happen where the property, when mortgaged to him, was treated as separate. This doctrine was recognized in Mason v. Payne, Walker’s Ch. R., 459, and Caruthers v. Hall, 10 Mich. R., 40, in both of which cases the principal exception to the rule was referred to and enforced. The same principle was recognized and explained in James v. Brown, 11 Mich. R., 25. It rests cMefiy, perhaps, upon the grounds that where one who is bound to pay a mortgage, confers upon others rights in any portion of the property, retaining- other portions himself, it is unjust that they should be deprived of their rights, so long as he has property covered by the mortgage, out of which the debt can be made. In other words, his debts should be paid out of his own estate, instead of being charged on the estates of his grantees. Any other rule would be, in effect, to enable him' to enjoy for his own benefit that which he has once vested in- another, and, in a measure, to recall Ms own grant. The rule cannot, therefore, depend upon the existence or non-existence of covenants of warranty. It depends simply on the fact whether he has or has not seen fit, in making a 'disposition of a part. of his incumbered premises, to charge it primarily with the payment of the incumbrance. 'Whenever he so charges any part, the purchaser takes it subject to the burden, and the relative date of his purchase is immaterial. — See cases cited above; Welch v. Beers, 8 Allen's R., 151; Kilbourne v. Robbins, 8 Allen's R., 466. It has, indeed, in several cases cited at the bar, been held that the covenant of warranty was very important, in determining the intent of the mortgagor not to charge the mortgage on the property sold. But there is no satisfactory authority holding that, in the absence of such a warranty, no such intent could be presumed. On the contrary, wherever the doctrine of priority is respected at all, it has been enforced unless an opposite intent was made out. And such appears to us ¡the commonsense inference; for a man owing a debt, for which Ms own property remains liable, must naturally be supposed to expect to have it paid out of Ms own means, unless he has bargained to the contrary. And this equity, having arisen in favor of the first purchaser, must remain in Ms favor against any subsequent equities of other parties derived from his grantor.

There are some States in which all parcels of mortgaged land are hold liable ratably. — See cases collected in notes to Story's Eq. Jur. §§638, 635, 1233, a. — And it has been suggested by Judge Story, and was claimed on the argument, that a purchaser of one lot cannot be expected to search the record for the title of other lots, and, therefore, should not be subjected to equities attaching to them. But this reasoning entirely passes over .the well-settled rule, that where a person is obliged to take notice of a deed, he is hound by notice of all that it contains which can affect him. Having notice of a mortgage covering other lots besides his own, he is bound to ascertain whether those lots have been sold previously, in such a way as to throw any peculiar burden on the one he is purchasing, just as much as whether-that lot has been directly,' instead of indirectly, conveyed or charged prior to 'his purchase, by his grantor, or his predecessors, in the title. The registry laws furnish the means for one investigation as easily as for the other. And the construction put upon these laws is in accordance with this view. — Chapman v. West, 17 N. Y., 125; Chase v. Woodbury, 6 Cush., 143; Brown v. Simmons,, 44 N. H., 475. This latter case is a well considered! case, and collects the authorities quite fully upon the-whole subject, so that it will not be desirable to multiply the citations.

In the present case, the Michigan Insurance Company became mortgagees before any other rights intervened. They thus obtained a priority; and, having foreclosed their mortgage, and no surplus having arisen from the sale, there is nothing to embarrass their claim to have: all the other mortgaged premises sold first, unless the release made by them conjointly with Cooper of a. portion of the lot can have this effect. But inasmuch as they are not affected by subsequent conveyances of which they had no notice, and as the record is not constructive notice of such subsequent conveyances, neither they nor Cooper can be damnified by this release. It comes entirely within the rule of James v. Brown, above cited.

It is claimed, however, that the Fort street lot is not described in, and therefore is not covered by the Cooper-mortgage at all,, or, if at all, that the description is imperfect for purposes of registry; and it is therefore-insisted, by Eldi’ed and Vincent, that their titles are unaffected by that mortgage, no .actual notice having been brought home to them. The description in the mortgage is, “lot number one (1), in section twenty-eigM (28), on the Forsyth or Porter farm in said city, being on the southwest corner of Fort and Sixth streets.” The lot should have been described as in section eighteen (18), the other parts of the description being correct.

Inasmuch as in this description there are certain elements 'which are correct, and one which is incorrect, there could, under no circumstances, be any reason for doubting what property was really meant, unless there were two lots, to each of which a,part of the description might apply. If there were any section twenty-eight on the Forsyth farm, then the question would arise whether the description by block and lot, or by streets, was the «correct guide. But there is no inflexible rule of, law which will, in a case of this kind, prevent the parties from showing by other means which of the two is the erroneous demonstration.; and while we do not propose to decide a question not really before us, we shall at least require argument before we shall feel authorized to declare that, when a deed is on record, which may be intended for one lot as well as«for another, a party is not by such a' description put upon inquiry, to ascertain whether it is the one or the other that was conveyed In the present case, as it does not appear that there is any section twenty-eight on the farm, there could be no •ambiguity, and that element must be discarded; and the remainder of the description is sufficient, without any further help, to fully identify the premises. • It also appears affirmatively that John Bigly owned no other lot in that part of Detroit, and did own this. We perceive no difficulty in determining the lot intended by the mortgage. The case is plainer, if possible, than that of Anderson v. Baughman, 7 Mich. R., 69, where the same question was raised upon a similar error. We think, therefore, that the Insurance Bank title must be preferred to that of Eldred and Yincent. .

There is no doubt of the right of the Insurance Bank to- file a bill to protect their title. Although they would have a right to redeem, and then enforce the security in their own favor, yet inasmuch as the equity which they set up is that they should not be compelled to contribute at all, until the other lands are exhausted, and inasmuch as a sale .is the only usual means of enforcing a mortgage, the course resorted to is the most aiopropriate where the mortgage has actually become due, as in this case. In this State, at all events, there can be no question about it, as it has been settled that a bill to redeem may pray a sale of the premises, • and that no decree barring redemption without a sale shoujd be made, unless under special circumstances, if at all. — Baker v. Pierson, 6 Mich, R., 522; Graydon v. Church, 7 Mich. R., 36; Emerson v. Atwater, 12 Mich. R., 314.

Nor do we perceive any legal obstacle in the way of the present complainant. The doctrine is too familiar to need authorities, that a mortgage is not merged by a purchase of a partial or entire interest in. the equity of redemption, where Jihere are intermediate rights, or where the interests of the mortgagee require the titles to be kept separate. He could have filed an original bill to foreclose his mortgage, and to protect his rights of priority obtained from the Bank in the Woodward Avenue lot. The fact of his being a mortgagee does not deprive him of the right to purchase and enforce such priorities.— Chase v. Woodbury, 6 Cush., 143; Snyder v. Snyder, 6 Mich., 470; Kilbourne v. Robbins, 8 Allen, 466.

Having sold their entire interest, the Insurance Bank could not properly continue their proceedings, which became defective until their assignee should come in. But the suit did not entirely abate, so as to prevent its renewal and continuance by the assignee. He could file an original bill in the nature of a supplemental bill, to set up tbe change of title, and; to obtain the same relief which could have been had under the original bill.— Webster v. Hitchcock, 11 Mich. R., 56. This is what Mr. Cooper has done; and the relief he asks is the precise relief which would have been granted under the original bill, namely, a foreclosure by sale of the River and Fort street lots, in exoneration of the Woodward Avenue lots, and prior to those. We think the present suit is properly framed.

So far, then, as Cooper ‘is concerned, he was entitled to a decree requiring the mortgaged premises to be sold in such order that the Woodward avenue lot should be sold last. The priorities between the River and Fort street lots concern only the defendants. And the question next arises, whether the conveyance to Thomas B. Bigiy is to be preferred before' the rights of Eldred and Vincent..

That his deed is prima facie prior in equity to their-claims, is plain from the considerations already referred, to. But it is claimed that this deed contains a provision, which postpones it. The deed contains the usual clauses-of warranty; but the warranty and the covenant against, incumbrance, except “ a certain mortgage,” the date and amount whereof,. and the mortgagee’s name, are left ini blank. It was insisted • on the argument that this exception is void for uncertainty. In the absence of proof of any mortgage but Cooper’s, we are not disposed to regard it so. That is certain which can be made certain; and, until two mortgages appear, there is no ambiguity. The question, then, arises, whether, by this phraseology, the Cooper mortgage is chargeable primarily on this lot. .We do not think the language leads to this conclusion. It only protects the grantor from any liability over, in case this land should become necessary and be disposed of .to pay the mortgage. But it does not provide that this. lot shall he charged in preference to the Fort street property, still retained by him; and wé think it would be a strained construction to consider this deed as depriving the grantee of any advantage the priority of conveyance would afford him. If the Fort street lot should be insufficient, the warranty without the exception could not have saved this lot, but without the exception John Bigly would have been responsible on his covenants, had it been sold on the mortgage. By inserting this exception, he conveys the property subject to the risk that the remaining property yet unsold and unincumbered will not suffice to pay the debt, and no more. In other words, the deed is, so far as the Cooper mortgage goes, .a mere conveyance without warranty; but it is not a •conveyance upon condition, or subject to any specific duty or burden. It it quite as effectual as any deed without covenants, and in some respects more so, and the absence of covenants does not vitiate or change a title, or deprive it of priority.

It is claimed, however, that, as against Vincent and Eldred, this deed is void for want of consideration, and as designed to defraud creditors. We do not deem it necessary to examine into the proof of consideration. ‘There is nothing before us' which would show that John Bigly was not entitled to deal with the ¿R'operty as he pleased. It does not appear that, at that time, he owed unsecured debts, or was in embarrassed circumstances. But had he been so, it could not concern these parties. They - stand on the record simply as subsequent purchasers of other property, having full record notice of this deed, and at liberty to purchase or not, as they saw fit. They have no greater rights than John Bigly would have had if he had not conveyed to Eldred, or if his equity of redemption had not been purchased by Vincent. He could not have revoked his own deed, had it been without any consideration whatever. No one can assail snob a conveyance, except some creditor who bas taken the requisite steps to entitle him to resort to the land in payment of a debt, as against which it can be made out to bave been fraudulent. — Fox v. Willis, 1 Mich. R., 321. Eldred and Vincent, so far as the present case goes, stand in John Bigly’s shoes, and not in opposition to bis rights, as they remained after the' deed to Thomas.

"We think tbe Fort street lot should be sold before any resort is bad to tbe River lot.

Tbe decree below must be so modified as to subject -the Fort street lot to sale first, and tbe River lot second. In all other respects it is to be affirmed. Tbe costs of ■this Court to be paid by Yincent to tbe complainant.

Cooley and Christiancy JJ. concurred. Martin Cb. J. did not concur.