Frazier v. Hendren

80 Va. 265, 1885 Va. LEXIS 64

• Court: Supreme Court of Virginia
• Decided: March 12, 1885
• Status: Published

Opinions

. Lewis, P.,

delivered the opinion of the court.

This case is before us on the petitions, respectively, of C. E. Mason, James Campbell’s administrator, Orson Adams, receiver, and others, for a rehearing of the decree of this court, entered on'the 11th of October, 1883, on the former appeal in this case, under the style of Frazier v. Frazier et als., and also on appeal allowed James A. Frazier from two decrees of the circuit court of Augusta county, rendered after the case was removed to that court.

The main facts connected with the history of this protracted litigation, are set forth in the opinion of the court on the former appeal, reported in 77 Va. 775, and need not be again adverted to, further than is necessary for a correct understanding of the questions now before the court.

On the former appeal certain questions, affecting the rights of parties other than the principal parties to that appeal, were not brought to the attention of the court in the arguments of counsel, and certain parts of the record pertaining to those questions were then wanting, which are now supplied. Those questions are important, and have been ably discussed by counsel, and carefully considered by the court.

AVe will first dispose of the question as to the liability of (J. K. Mason, as purchaser of the Roekbridge Alum Springs property, at the sale thereof in June, 1880. It appears, that at a former sale of the property, under a decree of the court, in September, 1868, James A. Frazier became the purchaser, at the price of §236,000, with M. (1. Harman as his surety. After-wards Harman withdrew as surety, when Mason, for the accommodation of Frazier, became his surety in Harman’s place. Frazier, however, being unable to make the deferred payments as they fell due, a decree directing a re-sale was entered at the November term, 1870. And Mason having thus become bound as surety, and being anxious to protect himself, if possible, against loss on that account, entered into agreements, prior to the day of sale, with' certain persons who were part owners of the property, or the holders of liens thereon, to unite with him in the formation of a joint-stock company for its purchase, he agreeing to take stock in the company to the amount of §7,500, to be paid for in cash. These agreements were reduced to writing, and were afterwards filed as exhibits with the report of sale.

It appears from these exhibits: 1. That Mason agreed to buy the property at the then advertised sale, provided it could be bought at a price not exceeding §135,000; 2. That Mason was thereafter to obtain a charter of incorporation for the proposed company, to be known as the Rockbridge Alum Springs Company; 3. That certain of the parties agreed to accept, and that Mason agreed to cause to be issued to them paid up shares of stock in full discharge of their claims on the property; and 4. That to secure the payment of other claims, payable out of the proceeds of sale, a deed of trust should he executed on the property by the company when organized, and that bonds secured thereby should be issued in two classes, the first to discharge the vendor’s lien in favor of James Campbell’s administrator, and the second to be used in paying off other claims against the property, or the fond to ha realized from its sale. The administrator and distributees of Campbell’s estate acceded to this arrangement, as did other creditors who were not formal parties thereto.

At the sale, the property was knocked off to Mason, as the highest bidder, at the price of $134,000, and soon thereafter the agreements aforesaid were fully carried out on his part. The company was duly chartered and organized, and stock and bonds issued as stipulated. The terms of the agreements between the parties Avere made knoAvn to the commissioners of sale, AA'ho accordingly dealt Avith Mason as a mere agent or trustee, and so reported to the court, filing Avith their report the agreements as exhibits. “ From these exhibits,” they said, “it AA'ill be seen that C. It. Mason really purchased the property as trustee for the parties to Avhom over one-half of the §131,298.32 due upon the property, as of June 16th, 1880, is payable, and that parties entitled to OA'er $47,000 of the residue of the fund have agreed to accept the mortgage bonds to be issued as proA’ided for in the contract * * * in discharge of their respective claims against the property and the fund as they stood on the day of sale.” And in its decree of July 3rd, 1880, confirming the sale, and in the subsequent decree of November 30th, 1880, Mason Avas treated by the court as a trustee for the parties, and the Rockbridge Alum Springs Company as tlie real purchaser, to which the property was afterwards conveyed, by a special commissioner under the direction of “the court.

It will thus be seen that Mason has fully performed the agreement on his part, and has acted and been dealt with throughout as an agent merely. It is plain, therefore, that he can be regarded in no other light than as a nominal purchaser, liable in no aspect of the case to any of the parties to this suit, and that the circuit court properly so held. Indeed, the question was in effect decided by this court on the former appeal, in decreeing, as it did, directly against the company in favor of the appellant, for the sum ascertained to be due him.

The next question relates to the statu* of the Campbell lien. It appears that in 1851, James Campbell sold the Rockbridge Alum Springs property to Booth, Anderson and Christian, and retained the legal title as security for the payment of the purchase money. In the following year, the property was sold by Booth, Anderson and Christian to John W. Frazier, who after-wards sold a fourth interest therein to John T. Randolph and "William Frazier, respectively. In 1860, after the death of James Campbell, his heirs at law by deed, deposited as an escrow, conveyed the legal title to -lames A. Frazier, tlie appellant here, as the sole heir at law of John W. Frazier, who in the meantime had died, the deed to be delivered upon the payment in full of the balance of purchase money due to Campbell’s estate. After the purchase of the property by Mason, for the Rockbridge Alum Springs Company, and the confirmation of that sale, the mortgage bonds of the company to the amount of the unsatisfied vendor’s lien, were accepted and receipted for by the administrator of Campbell, in full satisfaction of the lien, and thereupon the deed of the Campbell heirs to -lames A. Frazier, was by the decree of November 80th, 1880, ordered to be delivered to the company as the purchaser of the property.

By the decree of this court, of the 11th of October, 188-3, it was adjudged that out of the proceeds of the sale James A. Frazier was entitled to be paid the sum of §57,629.41 as of October 1st, 1880. This sum was declared to be a -lien on the property, and accordingly the deed of the special commissioner to the company was set aside and annulled; and it was further decreed and ordered, that unless the company should pay to Frazier, within a specified time, the sum thus ascertained to be due him, the property should be re-sold to pay the same.

In this state of things, it is now insisted by Campbell’s administrator that inasmuch as the bonds of the company were accepted by him in discharge of the vendor’s lien, in the belief that the deed of trust to secure their payment constituted the first lien on the property, paramount to the claims of all other persons — which expectation has been disappointed — the vendor’s lien ought to be restored, or at least that Frazier’s lien ought to he postponed to that in favor of the Campbell estate.

It is undoubtedly true that a court of equity will never compel a vendor to part with the legal title until the purchase-money has been paid, or the lien therefor has been waived or extinguished. It has been said to be a natural equity,-that when land is sold it should stand charged with the unpaid purchase-money, and that a court of equity considers a debt as never discharged until it is paid to the pi-oper person and by the proper person. 2 Min. Insts., 190; Watts v. Kinney, 3 Leigh, 272; Knisely v. Williams, 3 Gratt., 253; Yancey v. Mauck, 15 Id., 300: Coles v. Withers, 33 Id., 186.

But, as was justly observed by the learned judge who beard this case in the circuit court, persons bolding liens may surrender and lose them by their own voluntary act; and that the vendor’s lien in the present case has been waived and extinguished there can be no doubt. This is shown by the agreement of the administrator to accept the mortgage bonds of the company in satisfaction of the lien, his subsequent acceptance of the bonds, and bis receipt in full, and by the decree, entered .without objection, directing the deed of the Campbell heirs to be delivered to the purchaser.

It is contended, however, that the relation of the parties having been disturbed by the decree of this court, the vendor’s lien ought to be kept alive to prevent injustice to those whose claims prior to that decree were superior to those of James A. Frazier.

This argument in a court of ecpiity would be irresistible if the cutirse and conduct of the parties in changing their original position had been in any way influenced by him. But in truth it was not. On the contrary he said nothing and did nothing by which directly or indirectly the parties were induced to act, or by which he ought to be held estopped from controverting their claim to a lien paramount to his own. It is true he was originally a debtor of the Campbell estate for the unpaid purchase-money, and that after the sale in September, 1868, when he became the purchaser of the property, he became the debtor of all the parties interested in the property or in the proceeds of sale. But this relation was changed when, at the last sale, in June, 1880, the Rockbridge Alum Springs Company became the purchaser, for a sum equal to that due by him on account of the first sale. Then it was, as determined by the decree of this court, that the company became the debtor, and he a creditor of the fund to an amount exceeding 857,000. It is also true that when the vendor’s lien -was released, he was supposed to be entitled to no interest in the property, nor to any part of the proceeds of sale. But it is equally true that the parties acted with knowledge of his legal right to appeal from the decrees of the circuit court, and therefore took upon themselves the risk of an appeal and its consequences. And having thus acted freely and voluntarily, with'their eyes open, and without fraud or imposition or influence of any kind on the part of James A. Frazier, they are not now entitled as against him to be released from their own voluntary contracts, because, in the light of subsequent events, those contracts were incautiously and injudiciously entered into.

The same considerations apply with equal force to the position of Orson Adams, receiver, a judgment creditor of John T. Randolph, and with greater force to that of Randolph himself. The former agreed to accept the bonds of the Rockbridge Alum Springs Company, in satisfaction of his claims, which were duly delivered to him, whereupon he executed a receipt in full, and assigned his claims, without recourse, to the company. The latter became one of the incorporators in the company, pursuant to his agreement to receive its stock in satisfaction of his claims, which were accordingly transferred by him to the company..

It is true, that in the opinion of this court, on the former appeal, it was said that the charge on the property in favor of the appellant would be second in dignity to the Campbell lien only, and of equal dignity with the Randolph debt. But no such provision is contained in the decree. The truth is, the controversy was virtually between the appellant, on the one hand, and the appellee, William Frazier, on the other; and the question was not discussed, nor even alluded to, in the arguments of counsel. Moreover, the record, as it then was, while it pointed to the agreements between the parties to surrender their lieus for the bonds and stock of the Rockbridge Alum Springs Company, did not contain, as it now does, the report of the commissioners of sale, and the accompanying exhibits, showing those agreements in detail, and the acts and receipts of the parties in pursuance thereof. It is not strange, therefore, that the question as to the relative priorities of the liens, should'not have received the mature consideration of the court. Now. however, the facts very fully appear in the record, and in the light of all the facts, as they now appear, we are constrained to conclude that the lien of the appellant is paramount to all other’s; and that it is so: 1. Because, as we have seen, the vendor's lien has been relinquished by the voluntary act of the parties themselves; and 2. Because, as was held by the circuit court, “ the liens of Randolph and others, in like case, with him are gone, lost and merged in their new attitude of share-holdei’s in the Rockbridge Alum Springs Company,” which is now the debtor no less of James A. Frazier than of Campbell’s administrator. The latter proposition would seem to be self-evident.

The next question was raised by the company. It contends that its contract was to pay, not in money, but in the claims of various parties on the property, and that it cannot therefore be compelled to pay in money any part of the price for which it became the purchaser. But this position is not well taken. The decree of resale directed the property to be sold for money, on the terms of ten per cent, of the purchase money to be paid in cash, the residue in equal installments at one, two, three, four and five years, respectively, from the day of sale, and the purchaser to execute bonds for the deferred payments, with good persona] security. These terms were duly advertised, and at the sale, with the exception of a small tract of mountain land of comparatively little value, the property, which in 1868 was knocked off to James A. Frazier for $236,000, was sold to Mason, as agent, for $134,000. To the arrangement between the company and those having claims against the property, the court, though informed of it, was in no sense a party. And hence it is clear that the obligation of the company was to pay in money, and could not, therefore, be discharged, without the sanction of the court, otherwise than by a payment in money, as against any creditor of the fund without his consent.

In this connection, the case of Harman v. Jordan, is referred to by counsel. That case was decided by this court in 1872, but was never reported, nor is the opinion to be found among the records of the court. The facts in this case were substantially these: Harman was decreed to be entitled to a debt amounting to $10,000, which constituted the first lien on certain property of which he afterwards became the purchaser under a decree of tbe same court. After tbe sale it was determined that be was entitled to one-third only of tbe -debt in question. .Thereupon, claiming to have been induced by tbe first decree to buy the property, and to bid therefor a higher price than it would otherwise have brought,' he insisted that he ought to be released from his bargain. But the circuit court held otherwise, and on appeal the decree was reversed; this court holding that the appellant, the purchaser, ought to have the option of having the sale to him confirmed or set aside, and a new sale ordered, which option was accordingly tendered him.

It is obvious that the principle on winch that case was decided has but little application to the case in hand. Here nothing was adjudicated in favor of the Rockbridge Alum -Springs Company, except to confirm to it the sale that had been made. The price at which it obtained the property ivas reported to be ■a fair one, though greatly less than the sum bid for it at the previous sale. And if, in the discharge of its obligations, the claims of certain persons supposed to be good were used as cash, such claims were assigned and accepted, subject to the rights of the appellant, who, being no party to the arrangement, could not he bound thereby.

The next question arises on the present appeal from the decree of July 3, 1884, in respect to the Ilendren judgment. It appears that these judgments were recovered against James A. Frazier and William Frazier on cei’tain negotiable notes, drawn by the former, and endorsed as surety by the latter. They were paid off by Heudren, trustee, in a certain trust deed for the benefit of William Frazier’s creditors, and now inure to the benefit of the Rockbridge Alum Springs Company. They ■were not embraced in the accounts between the parties, and consequently were not and could not have been passed on by this court on the former appeal. The main controversy then related to the transactions of William Frazier in respect to the purchase and management of the springs property, and as guardian and administrator. .The decree of this court ascertained the balance due the appellant on account of those transactions, and directed a resale of the property in default of its payment.

After the case went back to the circuit court, the judgments in question were brought in by petition as evidence of payment j>ro tanto of the sum decreed against the company, and were allowed as such. So far as the record discloses, no objection was raised by the appellant as to their validity or binding force and effect,, but the objection to their allowance as a credit seems to have been based on the sole ground that the circuit court was charged with the mere ministerial duty of entering the decree of this court, and nothing more. Under these circumstances, therefore, the validity of the judgments and their assignment not being disputed, they were properly allowed in favor of the company. The property of the company was ordered to be sold only in the event it should fail to pay off the lien of the appellant within a specified time; and it appearing to the court that to the extent of the undisputed judgments that lien had been discharged, it was proper that the company should be credited accordingly. And in so decreeing, the circuit court did not. depart from the terms of the mandate of this court, but proceeded in accordance therewith.

It is true the decree of this court settled the rights of the parties as to the sum due the appellant, and left nothing on that subject, to be adjudicated by the circuit court. But it cannot be contended that if, after the entry of that decree, the company had fully paid the appellant’s lien in lawful money, it would not have been entitled to show that fact to the circuit court as evidence that the decree had been satisfied. And if not, why should it not be entitled to the benefit of undisputed offsets as equivalent to payment in part? There is no distinction in principle between the two cases, and the decree of the circuit court is therefore plainly right.

The appellant, however, now contends that at the time the judgments were recovered, and afterwards when they were paid off by Hendren, trustee, William Fi’azier was indebted to him in a sum in excess of the aggregate amount of the judgments, apart from the sum decreed in his favor against William Frazier by this court, and that the fact is apparent from the record as it was on the former appeal. On the other hand, it is contended that by reason of a clerical error in the accounts as they appear in the record, amounting to the principal sum of $1,000, and other credits to which those representing by assignment the interest of William Frazier are entitled, the balance so decreed is in excess of the correct amount due the appellant.

In the opinion of the court on the former appeal, it was said, that a sum exceeding $57,629.41 was due the appellant, but for reasons then stated the sum decreed in his favor ivas limited to that sum. We are of opinion that by that decree substantial justice has been done the parties, and that there is no reason for altering it, except in respect to the payment of costs. The controversy, as before said, was between the appellant, on the one hand, and William Frazier, and those claiming under him, on the other. The decree, however, imposed costs on the ap-pellees generally, thus doing injustice to those of the appellees who were not contesting the claims of the appellant. It will, therefore, be amended in this particular, and the costs will be decreed against William Frazier and Hendren, trustee.

Objection is also made to the last of the decrees appealed from in respect to the appointment of commissioners of sale. The appellant complains that a majority of the commissioners are counsel in the cause, representing interests hostile to his own. But this objection is not well founded, in view of the number of parties having separate and distinct interests, and the further fact that of the five commissioners two are the counsel of the appellant.

We are, therefore, of opinion to amend the decree of this court in the particular indicated, and to affirm the decrees of the circuit court.

Fauetleroy, J., and EichardsoN, J., concurred.