Frink v. Branch

16 Conn. 260

• Court: Supreme Court of Connecticut
• Decided: June 15, 1844
• Status: Published

Opinion

Church, J.

It was once supposed, that, upon a bill to foreclose a mortgage, the title of the mortgagee would not be investigated; and that the parties, in such case, would be left to litigate that matter in an action at law. Broome v. Beers, 6 Conn. R. 198. Palmer v. Mead, 7 Conn. R. 149. It is not often, in proceedings of foreclosure, that the title of the mortgagee is directly put in issue, or constitutes the principal subject of controversy; although the entire purpose of the plaintiff, is, in default of payment, to make perfect a title, which before was qualified; and the ground of his application is, that he has a mortgage title; and without an averment of facts constituting such title, his bill would be defective. It may not be necessary either to allege or prove the precise condition of the title; whether it be in fee or in tail—for life or for years; but it seems to us, as the right of the plaintiff to ask the interference of the court, depends upon some title in himself to the land mortgaged, either legal or equitable, that it is incumbent upon him to establish it, at least prima facie; and of course, the defendant must have a corresponding right to attack it. A decree in favour of a party, without interest in the subject to be affected, would be useless; and to call upon a court of justice to act, in such a case, at a venture, would be trifling with judicial proceedings. The decision of this court, in the case of Woodruff v. Cowles, 8 Conn. R. 35., as we suppose, warrants us in these remarks, as well as in the expression of the opinion, that upon a process of foreclosure, the title of the mortgagee may become the subject of inquiry and decision. And although the judge who drew up the opinion of the court in that case, confines himself ostensibly to the question, whether usury could be proved in defence; yet it is obvious, that even that question involved the principle we have now advanced, and that the court so understood and intended to consider it.

The defendants in this case, who claim under Simon Branchy the original mortgagor, and who was the owner of the whole premises, relying upon their right to look into the title of the plaintiff to the mortgaged property, now claim, that the premises which Branch pretended to mortgage to the plaintiff, by his deed of July 11th, 1837, and which now constitutes the only subject of controversy, was copartnership estate, when that deed was executed, belonging to the firm of Landon, Branch & Co.; and that Branch, being insolvent and indebted to the firm in a sum equal in value to the mortgaged estate, had in equity no interest in it, and had no right to mortgage it to secure a private debt of his own.

It appears from the finding of the committee, that Branch was the sole owner of the property; and that, on the 5th day of May, 1836, contemplating a copartnership connexion in manufacturing business with Frederick A. Sterling, he conveyed to him the one undivided half of the estate, for a consideration moving entirely from Sterling, in his individual capacity. And although a copartnership was then, or about that time, formed between them, and the property in question was subsequently improved for copartnership purposes; yet this circumstance did not change the state of their respective titles, nor the nature of their tenancy. The deed from Branch to Sterling constituted them tenants in common; and so they remained, notwithstanding the copartnership, and the improvement of the property for its use and accommodation.

If the property now in controversy was copartnership stock, when it was mortgaged by Branch to the plaintiff, and the plaintiff can be charged with notice of that fact; or if he was reasonably put upon inquiry regarding it; then the solvent partners have a lien upon it for the payment of debts due from the company, as well as for the balance due to the firm from Branch as copartner. West v. Skip, 1 Ves. 142. Coll. on Part. 65.

There is not entire harmony in the decisions regarding the nature of real estate, purchased and improved for partnership purposes, or with partnership funds. The later cases advance beyond the earlier ones in treating such property as personal estate, subject to the purposes and responsibilities of the copartnership. But we suppose our law, so far as it is necessary for us to look into it, in the present case, was settled, by this court, in the case of Sigourney v. Munn, 7 Conn. R. 11. The doctrine of that case is, if real estate be acquired with partnership funds, for partnership purposes, or was originally put into the company as stock, by agreement, then it will be considered as partnership stock. The same principle has been recognized in more recent cases. Frereday v. Wightwick, 4 Cond. Eng. Ch. 317. Philips v. Philips, 7 Id. 208. Broome v. Broome, 9 Id. 118. Randall v. Randall, 10 Id. 52. Crawshay v. Maule, 1 Swanst. 495. Edgar v. Donnally, 2 Munf. 387. McDermot v. Lawrance, 7 Serg. & Rawle, 438. Greene v. Greene, 1 Hammond, 535. Forde v. Herron, 4 Munf. 316. Coll. on Part. 76. 3 Kent’s Com. 15.

If the facts of this case be brought to the test of this principle, it will appear quite plain, we think, that the parties,—joint owners of this property when this mortgage was executed,—remained tenants in common of it, as of real estate. Branch was its sole owner, and had been, long before he contemplated any connexion in business with F. A. Sterling. Sterling's half of it was purchased with his own funds, and the deed was taken by him in his own name, and for his own use, and without any intimation, expressed in the deed or elsewhere, that any copartnership had been formed, or was in contemplation, between the parties to it. This property was not purchased with common funds; nor was any common capital withdrawn from the power of creditors to make the purchase; nor was there any agreement, that the property thus owned in common, should become partnership stock, or constitute any part of the capital of the company. It was agreed by parol only, that this property should be improved, by the company, in the prosecution of its business; but this agreement extended only to its temporary use. It did not, nor could it, affect the title to the land, even as between the parties, much less as the rights of others might be involved.

Subsequently to the purchase by F. A. Sterling, and before the execution of the plaintiff’s mortgage, several other copartnerships were formed and dissolved, by which this property continued to be used, and of which Branch continued to be a member; and the conveyances of this estate by retiring partners, all treated it as real estate holden in common. On the 14th of June, 1837, the copartnership, consisting of Simon Branch and others, under the name of Landon, Branch & Co., was formed, by written articles, and was the same which existed when this mortgage was made. These articles refer to this property as real estate, owned by the parties in common, the said Branch owning one half, and the other partners the other half; and this was only one month before the execution of the mortgage, and probably after all the improvements and additions had been made to the factory, which are referred to in the report of the committee. During all this time, the legal title appeared truly upon the public records—a tenancy in common; and there was no agreement, either in or out of the articles of copartnership, that it should be otherwise considered. The plaintiff, in giving credit to Branch, acted upon the faith of the public records; and nothing had occurred to cause a suspicion that the equitable and legal title to the land mortgaged did not correspond; nor that Branch was insolvent, or was indebted to the company. It is true, that Frink resided near the factory, and was informed of the existence of the several copartnerships; but that he knew, or had any means of knowing, the state of their affairs, is not pretended. These facts fall far short of creating an equity in favour of these defendants, which should disturb the title of the plaintiff.

Reliance is placed upon the fact, that the several succeeding owners of this property made improvements upon it, and additions to it, from the avails of the partnership business. To what extent this was done, does not appear. But as we have suggested, nearly all, if not all, these improvements, were made before the existence of the copartnership of June 14th, 1837. And the written articles constituting that company, refer to this property as real estate, of which the respective copartners were tenants in common in the several proportions therein mentioned. And it does not appear, that any such improvements were made between the commencement of this copartnership and the execution of the plaintiff’s mortgage. But if it was so, we do not see how this circumstance could operate to change the nature of the principal estate, to which these improvements were only incidental. They may have enhanced the value of the factory property; they could not alter its character, as the defendants claim, nor affect the title.

Buildings, even if erected as permanent, under some circumstances, may be considered as personal estate; and they have been so treated. Benedict v. Benedict, 5 Day, 464. 20 American Jurist, 485. Wells v. Banister, 4 Mass. R. 514. Doty v. Gorham & al. 5 Pick. 487. But the law generally, and with but few excepted cases, treats lands and fixed buildings as real estate. Our statute prescribing the essential qualities of deeds of conveyance, makes no difference between them. The common law has always regarded them as identical. “Terra, land,” says Lord Coke, “legally includeth all castles, houses and other buildings; for castles, houses, &c. consist upon two things, viz. land or ground, as the foundation, or [and the] structure thereupon; so as passing the land or ground, the structure or building thereupon passeth therewith.” Co. Litt. 4 a.

This mortgage deed clearly conveyed the factory as real estate, as no severance was contemplated. The privileges and appurtenances, by the terms of the deed, as well as by necessary intendment, passed with it; and these, if nothing more, were privileges of water, the right of passage, &c.

But the defendants now insist, if the factory or building described in the plaintiff’s mortgage, is to be here considered as real estate, and as parcel of the land upon which it stands, and of which Branch and others were tenants in common, that the mortgage deed from Branch to the plaintiff, conveyed no title, but is void; because it purported to convey an undivided interest in a distinct and separate part of a larger parcel thus held in common. Mitchell v. Hazen, 4 Conn. R. 495.

The report states, that the property owned in common, by Branch and F. A. Sterling, was the factory in question, the land on which it stands, together with tools, water privileges, &c., and also some land adjoining the same, as described in the deed from Branch to Sterling. By reference to this deed, it will be seen, that there is a small piece of land connected with the factory and water privilege,—the same which was formerly occupied by Branch, in connexion with his clothing works. The precise quantity can only be determined by calculation.

That the mortgage deed conveyed the interest of Branch, not only in the factory building, but also in the land on which it stands, as well as the water privileges appurtenant, we think, is certain. Dutton v. Tracy, 4 Conn. R. 80. Wetmore v. White, 2 Caines’ Ca. Err. 87. Allen v. Scott, 21 Pick. 25. Bacon v. Bowdoin, 22 Pick. 401. So also, we think, the adjoining land, or some part of it, may have passed by the deed; but to what extent, the whole parcel, or only a part of it, the facts stated in the report do not enable us to determine. If the interest of Branch in the entire parcel was conveyed, then this objection fails. And whether it was so conveyed, and passed, by virtue of the deed, to the plaintiff, must depend upon its extent, the purposes for which it was used, and other circumstances, of which we are not informed. The property described in the deed is, “the one half of a satinet factory, together with the one half of all the machinery and other appurtenances thereunto belonging.” The habendum is in the usual form of warranty deeds, “with the appurtenances thereof,” &c. By the ordinary use of the word appurtenances in the habendum, land will not pass as an appurtenant to land; yet technical or other language is often used and understood in an enlarged sense beyond its technical or ordinary use. A question of construction or intention, then, arises. Lord Coke says, that by the grant of a messuage or house, the curtilage, garden and orchard do pass, though not land at a distance. And so an acre or more may pass, by the name of a house. Co. Litt. 215. b. note 35. A distinction between the word messuage and the word house, was, in one case, recognized. Keilway 57. But this was not followed afterwards. And in Doe d. Clements v. Roberts, 2 Term R. 498, Ashhurst, J. says, “the distinction between messuage and house is too subtle to be relied on, at this time. What will pass by the one, will pass by the other.” And in that case, it was determined, that a bequest of “the house and garden I live in,” carried to the devisee the stables and coal-pen occupied together with the house, all being in one enclosure. In Higham v. Baker, Cro. Eliz. 16. it was said, by Anderson, Ch. J., that “land shall pass as pertaining to a house, which hath been occupied with it, by the space of ten or twelve years; for by that time, it hath gained the name of parcel or belonging; and shall pass with the house by that name, by will or deed.” In Smith v. Martin, 2 Wms. Saund. 400. it was holden, that a garden may be said to be parcel of the house, and will pass by that name. Vide notes to the case. So in the case of Buck v. Norton, 1 Bos. & Pull. 53. it was decided, that though lands will not pass under the word appurtenances, taken in its strict technical sense, yet they will pass, if it appears that a larger sense was intended to be given to it. And Mr. Chitty says, it has been holden, that under a devise of a messuage with appurtenances, not only the house passes, but also land occupied with the same, and highly convenient for the use of it. 1 Chitty’s Gen. Pr. 158. Plowd. 171. 3 Leon. 214. Litt. Rep. 6. Hearne v. Allen, Cro. Car. 57. Hutton, 55. Shep. Touch. 94. Gulliver v. Poyntz, 3 Wilson, 141. 2 Bla. Rep. 726. 1148. 21 Pick. 30. 22 Id. 400. 3 Mason, 280.

In view of this evidence of the common law, we are of opinion, that other land, more than that covered by the building, passed by the mortgage in question. The factory was appropriated to the manufacture of satinet cloths, with a privilege of water appurtenant, as well as rights of way, and to which the improvement of adjacent land, to some extent, was a necessary incident. But whether the whole parcel described in the deed from Branch to Sterling, had been used with the factory, or was necessary, or convenient for its use, we cannot determine from the facts before us, and therefore cannot determine whether this deed falls within this objection of the defendants. We cannot tell whether Branch mortgaged to the plaintiff a part of a larger parcel holden in common, or the whole of it.

Another objection taken to the validity of the plaintiff’s mortgage, is, that the condition does not, with reasonable certainty, give the amount of the debt now claimed by the plaintiff, to be secured by it: that the condition describes a penal note; whereas the note produced is one without penalty. If the scrivener intended to use the words “penal sum,” in the sense commonly conveyed, when a condition is attached to an obligation; yet, as the whole sum of the penalty may be due, and third persons are put upon reasonable enquiry, there is nothing in this objection. Crane v. Deming, 7 Conn. R. 387. Booth v. Barnum, 9 Conn. R. 285. North v. Belden, 13 Conn. R. 376. Chester v. Wheelwright, 15 Conn. R. 562. A penalty is intended to enforce the performance of a condition, or some collateral act; but as none such is here referred to, we can understand these words as mere expletives, or as intended to render the language more emphatical.

We believe, upon the facts disclosed by the report, the plaintiff is entitled to a decree in his favour; but questions are made regarding the amount to be paid, by the defendants, upon redemption. The interest upon the note secured by the last mortgage, is indorsed upon it, as having been paid up to the 9th day of March, 1839; but the report discloses the fact, that this interest was in no other way paid, than by giving a new note for it, which new note has not been paid. The substitution of one simple contract for another, is not a payment: the same debt continues in a different form. The interest upon this note, therefore, has never been paid. The plaintiff is justly entitled to it; and no reason exists why it should not be paid, by the defendants, who are subsequent incumbrancers. They have not been misled; no false lights have been held out; the public record informed them that this mortgage was given to secure the actual payment of the note and the interest. The case of Bolles v. Chauncey, 8 Conn. R. 390. is conclusive upon this point. The decree therefore, must be made up as if no such indorsement of interest had been made.

The bill calls for the payment or foreclosure of two mortgages, made by Branch to the plaintiff, of separate parcels of land; one executed on the 9th day of March, 1835, to secure a note of thirteen hundred dollars, and the other to secure the note of seven hundred and eighty-seven dollars, and thirty-nine cents. The plaintiff claims an entire decree; so that the defendants shall be foreclosed of all right to redeem either mortgage, upon failure to pay both. And in support of this claim, he refers us to the doctrine of the case of Phelps v. Ellsworth, 3 Day, 397. That case was treated as if it had been between the original parties to the mortgage; and we notice another distinction between that case and the present: there, the land first mortgaged was included in the second mortgage deed, showing, as the plaintiffs claimed, that the whole land should stand as security for both debts. Without intending now to review the doctrine of that case, we think the distinctions we have noticed, warrant us in the opinion, that the principle there recognized will not apply here, against such of the defendants at least, as are subsequent incumbrancers, who are, in our judgment, entitled to redeem one of these mortgages, without the other.

We shall advise the superior court in conformity with the views expressed in this opinion.

The other Judges concurred.

Modified decree for plaintiff.