Skillman v. Teeple

1 N.J. Eq. 232

• Court: New Jersey Court of Chancery
• Decided: January 15, 1831
• Status: Published

Opinion

Atjlns term t.ho'following opinion was delivered by the court:

Drake, master.

In this case it appears that the defendant, William Tee pie, on the 29 th day of April, A. D. 1809, was seized in fee simple of a certain farm or tract of land, situate in the county of Somerset, and state of Ncw-Jersey, containing, by estimation, one hundred and fifty-nine acres and sixteen hundredths of an acre, which is particularly described in the complainants’ bill of complaint ; and, being so seized, did, on the same day, execute a mortgage in fee, on the said tract of land, to the defendant, Joanna Dumont, to secure to her the payment of the sum of two hundred and fifty dollars, or thereabouts; which said indenture of mortgage was, on the 8th day of May, A. D. 1809, duly recorded in the clerk’s office of the said county of Somerset.

It further appears, that one Isaac Cooper, of the county of Somerset, and the said William Tceple, on or about the 5th day of May, A. D. 181?’, executed and delivered to one George Tannest, their sealed bill, or promissory note, (it is not ascertained which,) bearing date that day, for two hundred and sixty dollars, payable with interest from date: and on or about tire 8th day of May, A. D. 1818, they executed and delivered to said Vannest their other sealed bill, or promissory note, bearing' date on that day,, for the farther sum of three hundred dollars, payable with interest from date : which said Vannest shortly afterwards departed this life; and by virtue of his last will and testamept, the said Ann Skillman, the complainant, (then Ann Stilwell.) became entitled to the said securities, so executed to George Vannest, as aforesaid, and to receive the monies due, and to become due, thereon. And that the said Ann afterwards, to wit, on the 31st day of December, A. D. 1821, claimed from the assignees of said Cooper, as due to her upon the said securities, the principal sums aforesaid, together with interest from the 1st day of May, A. D. 1819.

It further appears, that the said William Teeple, on or about the 1st day of April, A. D. 1816, by deed bearing date that day, sold and conveyed the said farm or tract of land, to the said Isaac Cooper, for the sum of five thousand three hundred and forty-three dollars and ninety-nine cents; part of which, was paid at the time, and to secure the residue, that is, the sum of three thousand five hundred and sixty-two dollars and sixty-six cents, to the said William Teeple, the said Isaac executed to him his two several bonds, conditioned for the payment of that sum, and, together with his wife, executed and delivered to the said Teeple their indenture of mortgage on the same tract of land and premises, bearing date the same day; which mortgage was duly recorded in the Somerset county registry of mortgages, on the 4th day of May, A. D. 1816. And that afterwards, to wit, on the 14th day of June, A. D. 1817, the debt intended to be secured by said mortgage not having been wholly paid, a judgment was entered in the inferior court of common pleas of the county of Somerset aforesaid, in favor of the said William Teeple, against the said Isaac Cooper, for the sum of one thousand six hundred and seventy-seven dollars and seventy-one cents debt, and four dollars and twenty-one cents costs of suit—the balance then remaining due on the said bonds ; on which judgment a writ of fieri facias de bonis et terris was issued, returnable to the term of April, A. D. 1818 ; by virtue of which, the sheriff of the said county duly levied on the said mortgaged premises, together with other property of the defendant.

It further appears, that the said William Teeple, on the 7th day of May, A. D. 1817, having' removed to the county of Seneca, in the state of New-York, by his letter of attorney, bearing date that day, duly sealed and executed by him, constituted and appointed the defendant, Andrew Howell, his true and lawful attorney, and duly authorized him, among other things, to collect all debts and demands due to him from the said Isaac Cooper, and every other person, and to sue for, receive, compound and agree for, and make acquittances for the same; and to do all other lawful acts in the premises as fully as he himself could do, if personally present. Which trust the said Andrew Howell took upon himself to execute and perform; and in pursuance thereof, on the 8th day of May, A. D. 1818, received from the said Isaac Cooper the sum of five hundred and sixty-one dollars, and gave to said Cooper a receipt for the same, in the words and figures following, to wit:—

“ Somerset Pleas.

“ William Teeple, ) vs. j> In debt, fi. fa. “ Isaac Cooper. )

“Received, May 11th, 1818, of Isaac Cooper, the defendant, five hundred and sixty-one dollars, to be credited on the above action, provided the said Cooper shall indemnify the said William Teeple on his surety for said Isaac to George Vannest for the same amount, on the first day of this May instant.

-- “ A. Howell, Att’y fact “$561. for Plaintiff.”

Which receipt (as stated in the answer of Andrew Howell) included the two sums of money got of Tannest, to wit, two hundred and sixty-one dollars got the 5th May, 1817, and three hundred dollars got the 8th day of May, 1818.

It further appears, that afterwards, to wit, on the 1st day of May, A. D. 1819, the said Isaac Cooper and Susannah his wife executed their mortgage in fee, bearing date that day, on the same tract of land and premises, to the said John Frelinghuy-sen, (as guardian of Jacob Cooper, an idiot, and agent for the widow Maria Cooper,) and the said defendant, John Baird, (as guardian of the children of Abraham Cooper, deceased,) to secure, in the first place, to the said John Frelinghuysen, a certain “bond of indemnity given and executed by Isaac Cooper, for securing the maintenance and support of Jacob Cooper, in the sum of three thousand dollars, to John Frelinghuysen, guardian of said idiot; and also to secure, after said bond of indemnity, the payment of a certain sealed bill to John Baird, guardian of the children of Abraham Cooper, deceased, in the sum of seven hundred and sixty dollars : bond of indemnity bearing even date with said mortgage—sealed bill dated January 13th, 1815:”—■ which mortgage was duly recorded, on the 15th day of May, 1819, in the Somerset county registry of mortgages. And that afterwards, to wit, on the 12th day of May, A. D. 1821, the said Isaac Cooper and Susannah his wife assigned and conveyed to the said John Frelinghuysen and Thomas A. Hartwell, esquires, all their real and personal estate, including the mortgaged premises, in trust, to pay the debts of said Cooper. And that the said complainant, then Ann Stilwell, on the 31st day of December, A. D. 1821, exhibited her demands, founded on the securities so as aforesaid given to George Yannest. for a dividend, to the said Frelinghuysen and Hartwell, assignees as aforesaid.

And it further appears, that on or about the 1st day of May, 1822, the said Andrew Howell, as attorney in fact for the said William Teeple, and the said John Frelinghuysen, as guardian of Jacob Cooper, entered into an agreement in writing, in the words and figures following, to wit:—

“ Somerset Pleas.

“William Teeple, ) Judgment and execution in sheriff’s hands, vs. > levy made. Sum due May 1st, 1822, “ Isaac Cooper. ) .$1749 65.

“ Whereas William Teeple hath the prior incumbrance on the real and personal estate of said Cooper, now assigned to Thomas A. Hartwell and John Frelinghuysen, as above stated, and no sale of said estate real can be made to satisfy the amount; and John Frelinghuysen, guardian of Jacob Cooper, an idiot, and John Baird, guardian of the children of Abraham Cooper, dec’d, now hold an after mortgage on said real estate; and an agreement having been this day made between said guardians and Andrew Howell, attorney for William Teeple, that the said John Frelinghuysen shall pay, in behalf of said idiot, the funds in his hands of said idiot, to obtain the priority of said Teeple’s in-cumbrance on said premises, to satisfy his and said Baird’s mortgage, according to its tenor. And the said attorney of William Teeple to transfer the bond and mortgage of said Teeple to him the said John Frelinghuysen, guardian for said idiot; that he may, by reason of said transfer, first secure the sum due in behalf of said idiot, then the sum due John Baird, guardian of children of Abraham Cooper, deceased, and then the sum of six hundred and seventy-eight dollars and eighty-one cents, principal and interest of a debt due estate of George Yannest, dec’d, now Ann Stilwell—said Teeple having held said debt in above judgment, according to a conditional writing with Cooper the defendant, by reason of his being surety therefor. Now as said transfer of said mortgage, bond and judgment hath been made, I, J. Frelinghuysen, agree to effect the payments aforesaid, at the death of Jacob Cooper, so far forth as the said estate will admit; if not before done by said Isaac Cooper by any payments he may be enabled to make, or by any sale that said Cooper’s assignees may make to satisfy said sums aforesaid. And further, in consideration of said transfer, I, John Frelinghuysen, agree that said bond and mortgage shall be held by J. Frelinghuysen for the use of Ann Stilwell, for the payment of her demand, to take effect after the several sums of said idiot and children of Abraham Cooper are fully satisfied, upon condition that she release the security, Wm. Teeple, therefrom; and if she will not release, to hold said mortgage as Teeple’s security. A certain mortgage given to Joanna Dumont, the first incumbrance, before omitted, is considered to be paid in the first instance.

“ May 1st, 1822. “John Fiielingiiuysen,

Guardian of Jacob Cooper.

“ A. Howell, Att’y

fact for Wm. Teeple.

“ To pay Widow Dumont $365 91, May, 1822.

“ Jacob Cooper, support.

“ Jno. Baird, guardian, $760 and int.

“ Ann Stilwell, $678 81, May, 1822.”

Annexed to which agreement is the following, entered into and signed by the said Ann Stihvcll, to wit:—

“I agree to the foregoing settlement, and do release William Teeple, the security for Isaac Cooper, by reason of my payment tobe made as stated, after widow Dumont, Jacob Cooper’s support, John Baird, as guardian, &c., and then my debt to be paid.

“May 16th, 1822. “Ann Stilwell.

“Witness,—John M. Schenck.”

Which several agreements, although bearing different dates, appear to have been finally entered into and executed at the same time, and in the month of May, 1822; after which, the said Ann Stilwell delivered the said two notes, or sealed bills, executed by said Teeple and Cooper to George Van nest, as aforesaid, to the said Andrew Howell, attorney in fact as aforesaid, who soon afterwards sent them to the said William Teeple in the state of New-York. And the said bonds and mortgage given by Cooper to Teeple, as aforesaid, and the judgment confessed thereon, were thereupon, in pursuance of said agreement, transferred and delivered over to the said John Frelinghuysen.

And it further appears, that the said Frelinghuysen and Hart-well, as assignees as aforesaid, soon after the making of the said agreements, advertised the said mortgaged premises for sale at public auction, and after repeated attempts to sell, and adjournments for want of buyers, the same were finally struck off to Andrew Howell, for the amount then due to the said Freling-huysen and Baird, guardians aforesaid—the said Howell having bid at the instance of the said John Frelinghuysen ; who in his answer filed in this cause saith, that it was not struck off “ with a view to hold the same for said sum, but that the said Ann, or any other creditor of the said Isaac, might, if they wished, take the property at the bid of said Howell; and that the same hath been repeatedly offered to the said Ann by this defendant, and who hath ever been, and still is, willing to do the same ; that no deed as yet has been made to the said Howell for said farm, but the same has remained in the possession of said Isaac Cooper, who keeps said idiot; and the proceeds of the said farm, not even keeping out of the same any part for necessary repairs or expenses, have by this defendant been applied to the payment of the mortgage of the said Joanna Dumont, that being the first incumbrance.”

*The foregoing facts are fully proved and established by the biU, answers, proofs and exhibits in this cause ; and the complainant, Ann Stilwell, on the ground of the foregoing facts, and others set forth in her bill of complaint, charges and insists that by virtue thereof, and especially of the payment of the sum of five hundred and sixt.y-one dollars by the said Isaac Cooper to Andrew Howell, attorney in fact for William Teeple, in manner aforesaid, and the agreement, of the parties at that time, and the receipt given for the same, she became entitled to an interest in the said judgment and mortgage, and to a lien upon the said mortgaged premises, to have the notes or bills so given to George Vannest, and bequeathed to her as aforesaid, secured and paid out of the same, prior to any other incumbrance except the previous mortgage of Joanna Dumont, before mentioned; and that she was mistaken and deceived in entering into the agreement so made and signed by her as aforesaid, dated the 16th day of May, 1822, and that she did the same under mistake, misapprehension, and misrepresentation of her rights ; and prayed for relief in the premises.

With respect to her lien on the mortgaged premises, it appears by the testimony of Aaron Longstreet, esquire, that at the timé that the money was procured from George Vannest, Teeple was not willing to be security, unless “ it was to be considered as no payment on the part of Cooper until the money was afterwards actually paid by Cooper to Vannest and it was so agreed. Andrew Howell’s answer is in accordance with this ; and the receipt then drawn, concluded, and proves the arrangement, After the receipt of this money, Teeple still held his bonds and mortgage, judgment, execution, anddevy on the mortgaged premises, as a security for the payment of all that was due to him, and also the notes or obligations given to Vannest. And this lien was perfect, not only against Cooper, but against all persons claiming under him—all having notice thereof, by the public nature of the securities in his hands, and no person being able to claim that the amount of the lien so spread upon the public records should be reduced by any payments, except according to the fair agreement of the parties. Teeple was under no obligations to .give an absolute credit on the bonds and mortgage, or judgment and execution, and neither he nor his attorney in fact bad any thing; to fear from the threats of the assignees of Cooper. Teeple f ° , having then in fact obtained these securities, that these notes or obligations of Vannest (now belonging to the complainants) should be satisfied, the complainant, Ann Sti!well, acquired an interest in that security, which a court of equity will enforce. This doctrine is fully recognized in the case of Moses v. Murgatroyd, 1 John. C. C. 129. The chancellor says, “ The plaintiffs,- as holders of the notes, are entitled to the benefit of this collateral security, given by their principal debtor to his surety ; and the case of Maure v. Harrison, 1 Eq. Ab. 93, is directly to this point. These collateral securities are, in fact, trusts created for the better protection of the debt, and it is the duty of the court to see that they fulfil their design. And whether the plaintiffs were apprized at the time of the creation of this security, is not material. The trust was created for their benefit, or for the better security of their debt, and when it came to their knowledge they were entitled to affirm the trust and to enforce its performance. This was the principle assumed in the case of Wilson v. Blight, 1 Johns. C. 205.” See also 2 Johns. C. R. 422.

The complainant, Ann Slilweli, then, at that time became entitled to have her demand of five hundred and sixty-one dollars paid out of the mortgaged premises, and her’s became the first entitled to be paid after the mortgage to Joanna Dumont. It was comprised in the same lien with that of her debtor, William Tee-ple; and if it should turn out that the property is not sufficient to pay the whole lien, there could be no propriety in this court ordering the complainant to share, in any propoition whatever, with William Teeple, and put her to a suit against him in the state of New-York, or his agent here, to recover the money back again. She is entitled to her whole demand, from the property or from Teeple ; and if the property is appropriated to pay the debt, he cannot complain, even if it should fall short of paying his demand.

Teeple had, before this time, removed out of this state into the western part of the state of New-York; and Cooper after-wards, to wit, on the 1st day of May, 1819, mortgaged the premises to Frelinghuysen and Baird, as aforesaid ; and on the 12th. day of May, 1821, assigned the mortgaged premises and other property to Frelinghuysen and Hartwell, in trust, for the payment of debts. This mortgage and this assignment were, of course, both subject to the previous liens, and could not disturb the equitable claim of the complainant to be first satisfied for her debt out of the mortgaged premises.

Under such circumstances, the parties came together, on the 16th day of May, 1822, and the agreements before stated were entered into.

The first obvious circumstance about this agreement is, that ton the part of the complainant, it was entered into without any consideration. The only apparent one, to wit, that she should have a lien on the mortgaged premises after those stated in the agreement, was delusive. The assignees had no right to prefer her to the general creditors, unless the property came into their hands subject to a lien in her favour; and if subject to it at all it must have had a preferable place to that assigned her by' the agreement. So she was induced to give up the personal security of Teeple, merely to take a posterior place in the list of incum-brances. This evinces at least ignorance and mistake of her rights. She charges that it was done under the fraudulent representations, advice and persuasion of Andrew Howell and John Frelinghuysen. This is denied by' them. Howell, in his answer, admits that in answer to some inquiries of the complainant, respecting the recovery of her claim from Teeple, in the state of New-York, he told her that said “Teeple was apprised of her intention so to proceed, and that he had prepared himself for such an event, by' giving or making a judgment to his own honest creditors in the county of Tompkins, state of New-York, for an amount equal to the full and fair value of his property, and that be had received that information from the said William Teeple.” John M. Schenck, who is the witness to the agreement, and who is alleged by' the defendants to have attended, when it was made, as the friend and adviser of Ann Stilwell, testifies, that “Mr. Frelinghuysen wrote to him, and requested him to bring Ann Stilwell, the complainant, there, on that day'; and witness took her there agreeably to Mr. Frelinghuysen’s request.” At this meeting, “ Ann Stilwell was advised by Judge Howell to give up her claim against Teeple, and to come into an alTanoement- which was then prepared. Mr. Frelinghuysen stated, if witness recollects right,, that lie thought by Ann Stil-well’s doing this, that is, coming into- this arrangement, it would be best for her. Judge Howell said to her, that if she were his own daughter he would advise her to do it. Mr. Frelinghuysen said, witness thinks, that if she would come into the arrangement, after the idiot’s money, he would be able to secure her by a sale of the property of Isaac Cooper. Witness was not acting as agent for Ann Stilwell; he merely brought her down pursuant to the request of Mr. Frelinghuysen.”

¡Nicholas Stilwell, (the father of the complainant,) testified that in June, 1824, Mr. Frelinghuysen told witness that “if Ann, the complainant, had not fell in with them in this agreement., she never would have received any thing; that it, was his advice to her to do. so, and he would have done so had it been his own child. He stated his reasons,” cAc.

Aaron Longstreet, esquire, testified, among other things, that be was in company with Howell and Frelinghuysen, when a conversation took place about this business, and Howell stated some reasons “why he had advised Ann Stilwell to close in with the settlement before spoken of, and that be saw nothing in the way to prevent Ann Stilwell recovering her money yet. After this conversation, old Mr. Stilwell said, I cannot see how it comes that Ann Stilwell is placed last in all this business. Mr. Frelinghuysen answered, because she never was first,”

It would appear from this testimony that the defendants, Andrew Howell and John Frelinghuysen, went further in advising and persuading Ann Stilwell to enter into this arrangement, than they now recollect to have done, and from their standing in society, knowledge of the law, and general acquaintance with business, she woidd be apt to be influenced by their opinions ; and there are good grounds from this evidence, and the other circumstances of the case, to believe that she ivas influenced by their advice to make lite arrangement which she did; and which would prove to be totally destructive of her claims, if binding upon her. This court has, in many eases, gone far in establishing a fraud from the want or inadequacy of consider atioft. “ Even when standing alone, if the inadequacy of the consideration be so strong, gross and manifest, that it must be impossible to state it to a man of common sense without an exclamation at the inequality of it; a court of equity will consider it a sufficient proof of fraud to set aside the purchase.” “ If there be such inadequacy as to show that the person did not understand the bargain he made, oi that he was so oppressed that he was glad to make it knowing its inadequacy, it will show a command over him which may amount to fraud.” Newland on Contracts, 359; 1 Bro. C. C. 9.

The defendants say that they acted conscientiously. It is not necessary that they should have acted intentionally wrong. They were acting as trustees for third persons, and there is reason to believe, from the evidence, that in their desire to prevent any loss being sustained by their respective cestui que trusts, they were too intent upon making an arrangement with the complainant favourable to their interests, and lost sight too much of hers. It cannot be supposed that they had, at that time, a full apprehension of the nature of her claim, or could have anticipated all the effects of the arrangement, as connected with lapse of time and depreciation of property, upon her interests; for they would not, with that knowledge, have taken any part in bringing about an arrangement so prejudicial to her. Yet when the circumstances of this case are considered in connection with the superior discernment, knowledge and influence of the defendants over the complainant, and their consequent obligations to a cautious, discreet and proper exercise of their influence, I am of opinion that if this be a case of mere mistake, this court should not find any impediment to the correction of it, arising out of the possibility, that it may expose the defendants to inconvenience or loss. And “ Equity, in rescinding contracts, does not confine itself to cases of fraud. Cases likewise of plain mistake, or misapprehension, though not the effect of fraud or contrivance, are entitled to the interference of this court.” Newland on Contracts, 432; 2 Ves. 126: 1 Vernon, 32; 1 Mosely, 364.

In this case, there can be no doubt that the complainant, Ann Stilweii, acted under a mistake and misapprehension of her rights. Under such mistake, she signed a parol agreement without any consideration, highly prejudicial to her interests. I am of opinion that that agreement should be set aside, and held void.

It is charged in the bill, that the sale of the mortgaged premises to Andrew Howell, was colourable, and that the premises were not bought by him in his own right, and for his own use, but for the ultimate benefit of the said John Frelinghuysen and Thomas A. Hartwell, or one of them. To this charge there is no answer made by Andrew Howell; and John Frelinghuysen, in his answer heretofore quoted, in substance admits that it was for the benefit of the creditors, and also admits his willingness still to consider it a trust for their benefit. I am of opinion that this sale should be set aside and considered void ; and that this honoura-ble court should decree accordingly.

George K. Drake,

Master in Chancery.

MINUTES FOR DECREE.

1. It appearing that the defendants, John Baird and Joanna Dumont, have been duly served with process of subpoena to answer, but have not appeared, plead, answered or demurred ; and •that the defendants, William Teeple and Thomas A. Hartwell, have appeared, but have not plead, answered or demurred, to the complainants’ bill of complaint: as to them, let the bill of complaint be taken as confessed.

2. That the agreement bearing date the 16th day of May, 1822, between Ann Stilwell, and John Frelinghuysen and Andrew Howell, and also their agreement entered into at the same time, be set aside and made void.

3. That the amount due to the complainants on their two notes or obligations, so given to George Yannest as aforesaid, be and remain a lien on the said mortgaged premises, to be first paid next after the bond and mortgage so given to Joanna Du-mont, as aforesaid.

4. That the said William Teeple restore and deliver back to the said complainants the two sealed bills or promissory notes so delivered over by Ann Stilwell to Andrew Howell, as aforesaid, and account to her for the principal and interest due on tbe same, and pay the same to her accordingly.

5. 1 hat the sale of the mortgaged premises, made by the assignees of Cooper to Andrew Howell, as aforesaid, be set aside, made void, and for nothing holden.

6- That a sale of the said mortgaged premises be made under the direction of-, one of the masters of this court, and the proceeds thereof paid into court, to be appropriated as it shall direct; and that the said William Teeple, Andrew Howell, John Frelinghuysen, and Thomas A. Hartwell, make all necessary releases and conveyances, to convey to the purchaser a good title in the same.

7. That the complainants pay their own costs, but no costs to the defendants.