Cushing v. Smith

6 F. Cas. 1055, 3 Story 556

• Court: U.S. Circuit Court for the District of New Hampshire
• Decided: October 15, 1844
• Status: Published

Opinion

STORY, Circuit Justice.

This case is extremely complicated in its actual presentation, and has been rendered much more so by some of the irregularities and imperfections, which have occurred in its progress. The history of the principal transactions may be thus summarily stated. On the 13th of April, 1829, Jacob Cutter, by indenture, conveyed and assigned to Clement Storer, James Shapley, and Charles W. Cutter, all his property in trust for the payment of his debts, due to his creditors, stated in an accompanying schedule. At the time when the indenture was executed, a large debt was due from Messrs. Folsom and McOulloli of Hnyü, to Jacob Cutter, and was among the assigned property. The trustees brought an action to recover the amount from the debtors, in September, 1S29, and recovered judgment against Folsom for $4650, and costs; and the sheriff, on that execution, in October, 1S34, levied and sold the equity of redemption of Folsom in a certain tract of land in Newington in New Hampshire (the same being then subject to a mortgage to Nathaniel Gilman, made in October, 1825; and after-wards conveyed to and held by the Granite Bank — a bank incorporated in New Hampshire), for the sum of $2500. One of the allegations in the bill is that the purchase was made and the property bought in by the assignee of Jacob Cutter, for the benefit of the creditors; and that a deed thereof was made by the sheriff to Shapley, Cush-ing, and Charles W. Cutter, for and on account of the creditors. In point of fact, no original deed from the sheriff can now be found; and, as we shall presently see, Charles W. Cutter insists, that the deed was made to him alone, and that he purchased the premises upon his own account On the 7th of July, 1835, Charles W. Cutter sold and conveyed the equity of redemption so pm-chased to Samuel Smith (senior), in fee, and Smith, on the 16th of May, 1S36, sold and conveyed the same to his son James Smith, Jr., (the defendant), in fee, for the sum of $2500. On the 2nd of December, 1836, James Smith, Jr., executed a deed of mortgage to Charles W. Cutter, to secure to him the purchase money under the original purchase, made from Cutter, for which certain notes were given by Smith, senior. On the 9th of January, 183S, Charles IV. Cutter conveyed the said mortgage to Robert liice, administrator (the defendant) with two of the notes which then were unpaid by Smith, junior, on account of a debt due by the said Charles W. Cutter to one Goddard, of whom Rice was administrator. The Granite Bank, having become the owners of the mortgage, made by Folsom to Gilman in July, 1S35, afterwards, on the 13th of July, 1836, conveyed the same to James Smith, Jr., for the sum then due on the mortgage, viz. $2988.47. Smith, Jr., in his answer, asserts, that before the conveyance by the Granite Bank to him. to wit, on the 2Sth of September, 1835, the Granite Bank entered into forcible possession of the premises for condition broken, and held peaceable possession thereof, for the purpose of foreclosing the mortgage, until the conveyance thereof to him, Smith, who then entered and held possession thereof until the 17th of September, 1839, and that the mortgage has never been redeemed by Folsom, or any other person.

The present bill w’as brought by the plaintiff, who is one of the creditors of Jacob Cutter, and one of the assignees named in the deed of assignment of Jacob Cutter, to obtain an account and settlement from the other assignees of the trust property; and mainly to have the Folsom farm brought into and accounted for as a part of the assets under the assignment The accounts as between the assignees and the plaintiff were referred to a master, who made a report satisfactory to the-parties; and nothing now remains for consideration, except what relates to the Folsom farm. Now, under these circumstances, the remaining and main subject of the bill is to enable the assignees of Jacob Cutter, as against Smith, Jr., and the heirs of Smith, senior, to obtain a decree, for the redemption of the Folsom farm, under the title, which they insist that they acquired under the sheriff’s sale and conveyance by him to Shapley, Cushing and Cutter for the assignees; and as against Rice, to obtain a surrender of the mortgage and notes, held by him under the conveyance by Charles W. Cutter to him. Smith, Jr., insists upon various grounds of defence, the most prominent of which are; First, that he is a bona fide purchaser of the premises, without knowledge, or notice of any equity of the assignees. Secondly, that his title to the premises has been completely established by the foreclosure of the Gilman mortgage by the acts of the Granite Bank, and his own possession under the bank, according to the requirements of the statutes of New Hampshire. Rice insists upon various grounds of defence, and among others, upon the two grounds above insisted on by Smith, Jr. If either of these grounds is maintainable, it will not be necessary to proceed farther in the examination of the other points made in the case. If they are not supported, then the court must proceed to examine the validity of the other points.

In respect to the first point, the case is not without its difficulties from the loose and inartificial manner, in which the pleadings are drawn, and the incompleteness and unsatisfactory statements in the evidence taken in the cause. This has most probably arisen from bills in equity being of rare occurrence in this district, and, therefore, the parties have not derived the full benefit of the skill and experience of the bar, in the arrangement and management of the proceedings. It appears to me, that the present defendant, James Smith, Jr. must be now treated as the sole purchaser in the case, his father being but a mere nominal party, and having, in truth, no substantial interest in the premises. I shall, therefore, drop all consideration of the supposed claim of the father, and deal solely with that of the son. The latter is beyond all question a bona fide purchaser of the mortgage held by the Granite Bank in the premises. So far his title seems unexceptionable. In respect to his purchase of the equity of redemption, under the sheriff’s sale, the case stands thus. The sheriff sold the equity of redemption, and in his return on the execution dated the 29th' of October, 1834, be states that the highest bidder and purchasers were James Shapley, {since deceased,) Charles Cushing (the plaintiff,) and Charles W. Cutter (the defendant,) three of the assignees under the indenture already referred to, for the sum of 2500 dollars, and that he made a deed to them accordingly. Now, no such deed is produced in the case; there is a copy of a deed, taken from the registry of deeds of Rockingham county, where the lands lie, which was recorded therein on the 17th of November, 1S34, which deed purports to be dated on the 20th of October, 1834, and to be a conveyance to Charles W. Cutter (the defendant) alone as the purchaser at the sale. No original deed to Charles W. Cutter from the sheriff is produced either by Charles W. Cutter, or by the other assignees; nor is the- absence of the original deed in any manner whatsoever accounted for. I say in any manner whatsoever; for neither Charles W. Cutter, nor either of the other assignees, pretends to account for the same. The witnesses to the deed, and the magistrate, who took the acknowledgment, do not pretend to state, from their own present knowledge or remembrance, to whom the original deed was made, whether to Charles W. Cutter, or to him and Shapley, and Cushing. The sheriff asserts little more than his belief, that the facts were as stated in his return; and his testimony is otherwise as vague and inconclusive as can well be imagined; and he does not seem to have any definite recollections on the subject. He presumes, but he does not know, that he carried the original levy of the execution to be recorded. No other deed under the levy appears to have been recorded in the registry than that to Charles W. Cutter. There Is also a memorandum in the case, copied from a memorandum book of th?. late Samuel Shapley, which is introduced as evidence in the case, which purports to have been made by him on the 20th of October, 1834, and to state, that he was present at the sale, and that the premises were bid off by him as the highest bidder for $2500; and that he directed the sheriff “to place the bid to Charles Cushing, C. W. Cutter and himself, Shapley, assignees of Jacob Cutter.” But if Shapley were now living, he would not be permitted to give testimony of the facts, so. stated, since he is a party in the trust; and therefore this memorandum cannot, in any possible view, be evidence. The same suggestion applies to a letter, addressed by Charles Cushing to Shap-ley on the same day. It is not competent evidence in the cause to support his interest. On the other hand, Charles W. Cutter utterly denies that the purchase was made on account of the assignees, or of any body but himself; but he gives no account whatsoever of the original deed of the sheriff, or what has become of it.

Now, it is under these obscure, and indeterminate, and doubtful circumstances, that the court is called upon to decide this important question, by whom, and on whose account the purchase at the sheriff’s sale was made, — whether by the three assignees, or by Charles W. Cutter alone. If the return on the execution is to be trusted, the purchase was made by Shapley, Cushing, and Cutter, not as assignees, for it is no where suggested in that return, that they were the purchasers, as assignees, but simply, that they were personally the purchasers. On the other hand, the recorded deed shows, that the sale was to Charles W. Cutter alone;' and the said Cutter, (as has been already ■ suggested), insists that the purchase was upon his own sole account. In this state of the case, the onus probandi is on the plaintiff to overcome the denials of Cutter’s answer by the testimony of two witnesses, or of one witness and of other decisive corroborative facts. The most, that can be said, is, that the whole transaction is involved in great mystery, as much on the part of Cutter, as of the other assignees, and that a cloud rests upon it, which it is equally difficult to disperse, or to penetrate. It may be, that as between Cutter and the other assignees, the case ought to be treated as one, in which the deed was made to him alone, for the benefit of all the assignees, as such. But that he denies, and neither the deed to him, nor the sheriff’s return, states, that the sale was for or on their account, as assignees; and the deed alludes to no purchaser, but Cutter. And it is quite consistent with the other presumptions in the case (I do not say the facts), that the assignees, even if the purchase was originally made on their account, finally acquiesced in Cutter’s talcing it to himself. How are we otherwise to account for their total silence and acquiescence in Cutter’s assuming the whole control of the property, without objection, and above all, never interfering to redeem the equity, notwithstanding the notoriety of the publication in the newspapers, that it was in the course of a foreclosure? The truth is, that there has been apparently gross laches on the part of the assignees, in relation to the whole matter; the sale of the equity; the giving of the deed by the sheriff; and the subsequent entire non-resistance of the adverse claims of the Granite Bank and Smith, Jr., (the defendant). And I do exceedingly doubt, whether, under the existing evidence, there is enough to show, that Cutter can now be treated by the other assignees, as a trustee for them, upon a bill filed by them, whatever might be the fact as to the rights of the other creditors, included in the indenture of assignment. But supposing Cutter to have been a trustee for the assignees of the equity of redemption, under the sheriff’s sale, that will advance the case of the plaintiff but a little way, unless it can be shown, that Smith. Jr., at the time of his purchase from Cutter, had full knowledge, •or was pat apon fall inquiry, as to Carter's being a trastee for the assignees as snch. Smith, Jr., ntterly denies having nad any *aeh knowledge, antil long after his parchase from Carter; and, indeed, (as it shoald seem), antil shortly before the sait was brought. Nor was Smith, Jr., ever put upon inquiry by any facts stated in the deed of the sheriff to Cutter. That deed treats Cutter (as has been already suggested), as the sole purchaser of the premises at the «ale. It no where alludes to the other assignees. It is true, that the deed refers to the judgment and execution, on which the sale was made; and it may be said, that Smith, Jr., must be presumed to have search-ed, and was bound to search the records of the court in order to ascertain the validity •of the levy at his peril. Be it so. But the judgment, and execution, and return, would only have informed him, at most, that the sale was made to Shapley,- Cushing, and Cutter, not as assignees, but personally; and the deed from the sheriff would have told him, that the sale was to Cutter alone, and on his own account Under such circumstances, he could have had a full right to presume, that the return was made by a mistake, and that the deed contained the name of the true purchaser, or that Shapley and Cushing had relinquished their own claims to Cutter, and clothed him with all the full rights of a sole proprietor. In either view, Smith could not be affected with any implied notice of any trust; and in fact, as he in his answer states, Cutter asserted himself to be the sole owner, and Smith purchased under him, upon the belief, and in the confidence, that this was true. It may not be immaterial to state, that although by the statutes of New Hampshire in force at the time when the present levy was made, upon a levy and setting off of real estate unincumbered, it was required, that the execution should be recorded in the registry of deeds, — Act July 4, 1829 (St N. H. 1830, p. 101, c. 6), — yet, upon a levy of an execution on an equity of redemption, no such registry was required, — Act July 3, 1822 (St. N. H. 1830, pp. 104, 105, c. 7.)

It may be suggested, that the defendant (Smith, Jr.,) has not paid the purchase money; but he sets up two claims, either of which, if well founded, would -amount to a complete answer; that is to say, a set-off of a claim against Cutter, and a liability to pay the notes to Rice the administrator of Goddard. At all events, the latter ground seems to have a strong foundation, for Goddard took the notes and draft of Smith, Jr., from Cutter in payment of a debt, due to him from Cutter, to a larger amount, without any knowledge of the trust, or that they were not Cutter’s own property; and the subsequent transfer of the mortgage to secure the notes by Cutter to Rice, is precisely what a court of equity would have decreed, as the mortgage was but an appendage to the debt due on the notes and draft Rice, as administrator of Goddard, stands in the predicament, so far as the plaintiff is concerned, of a bona fide holder of the notes and draft, without being affected by any trust for the assignees; and, so far as I have been able to see from the evidence, Smith, Jr., has shown no valid de-fence against the payment thereof to Rice. In truth, the plaintiff, to sustain nis claim, must make out a clear and indispensable title, both against Smith, Jr., and against Rice, as affected with a clear trust in favor of the assignees, as such. It does not seem to me that such a trust has been sufficiently established, either as against Cutter, or as against Smith or Rice; but if against Cutter, it is certainly not against Smith or Rice. The only possible drawback from this conclusion, seems to be the exceedingly rash, and inconsiderate statements of Smith in his newspaper letter of October 27th, 1840, addressed to Cutter; a letter, by whosoever advised, as impolitic as it was improper, and which has done more to damage the case of Smith than all the other evidence put together. Absurd as it is in some of its suggestions, it does not overcome the other just inferences from the evidence in the case.

. Then as to the other point, as to the foreclosure of the mortgage by the Granite Bank, and by Smith, under the title of the bank. First, it is said, that the foreclosure was opened by the payment of $2,000 by Folsom, or by Smith, on the 20th of June, 1836. Now, there is no evidence to show, that the payment was made by Folsom; and indeed it would seem clearly to have been made by Smith, as a part of his purchase money for the debt then due to the bank. But, if it were otherwise, the payment would not have opened the foreclosure, as the argument supposes; for the foreclosure was not then complete under the statute of New Hampshire, then in force, the entry to foreclose having been made on the 28th of September, 1835, and the notice of foreclosure having been first given in the newspapers on the 5th of March, 3836; so that the right of redemption was then running; and of course, like any other payment, only repelled the notion, that the right of redemption was then gone. Then, secondly, it is said, that the conveyance from the bank to Smith, conveys the lands, subject to the condition in the mortgage. This is true; but this in no respect varies the rights of Smith; but leaves the right of redemption as it stood before.

Again, it is said, that the statute foreclosure is not established, because the publication in the newspapers is not established by any copy of the newspapers; but only by the evidence of Burley and Gilman. But it seems to me, that the plaintiff has waived any objection on this head, by his omission to take the objection at an earlier period, when the depositions were taken; and, at all events, he might have disproved the prima facie evidence on the part of these witnesses, if he had any contradictory evidence. If, however, there were any real difficulty on this point, I would now order the newspapers to be brought into court, and verified on oath, for the satisfaction of the court But, as I understand the argument, it is not pretended, that the objection is anything more than formal, or that the newspapers would not support the statements of the witnesses. The subsequent advertisement of Smith (senior), on the 12th of October, 1841, for a foreclosure, would not vary his rights or those of Smith, Jr. (the defendant), if the former foreclosure were complete. It might have been done ex majori cautela, if the former foreclosure should be held, from any unsuspected cause, inoperative, or insufficient; but it was not a waiver of it.

Let us then see, whether the original foreclosure be or be not complete and conclusive, under the act of New Hampshire of the 4th of July, 1834, c. 165. That act provides, “that, hereafter, no possession of any lands, or tenements, by any mortgagee, or his assigns, shall operate to bar or foreclose the right to redeem said mortgaged premises, or against any person but the mortgagor and his heirs, unless the mortgagee, or other person so in possession, for the purpose of foreclosing the right to redeem, shall, at least, six months before such right to redeem would be foreclosed by the law now in force, give notice in some public newspaper, printed in the county where such premises are situated, or if no newspaper be printed in such county, then in some newspaper printed in Concord, in the county of Merrimack, which notice shall state at what time such possession for condition broken commenced, with the name of the mortgagor and mortgagee, and date of the mortgage, and shall give such description of the premises, as the same are generally known by, and shall be published three weeks successively.’* By the act of the 29th of July, 1829 (St. N. H. 1830, p. 4S6, tit. 105). then in force, one year was allowed for redemption, after an entry by the mortgagee for condition broken. It seems to me, that the published notice, set forth in the record, fully complies with all the requisites prescribed by this act; and no effort having been made to redeem the premises until several years afterwards, the foreclosure became complete at the expiration of the year; and Smith, Jr., as assignee of the bank, is entitled to the full benefit thereof, -as the absolute owner, both of the equity and of the mortgage.

Upon the whole, my opinion is, that the bill ought to be dismissed, without prejudice. But I think, that it is not a case for costs generally, for any of the parties. The clerk’s fees, and the costs of printing the record being for the benefit of all parties ultimately interested, ought to be apportioned among them: and I accordingly direct, that the plaintiff pay one-third thereof; the defendant James Smith, Jr., one-third thereof; and the defendant Charles W. Cutter, one-third thereof; to be taxed by the clerk of this court. I do not think, that any of the other defendants ought, under all the circumstances, to bear any portion of these costs. And I further decree, that, except as to the clerk’s fee, and the costs of printing the record, all the parties in the case ought to bear their-own costs. A decree will be entered accordingly.