White v. . Jones

Ruffin, J. Without reference to the order in which they occur, the principal questions presented in the two appeals seem to be: 1. Whether the bond, mentioned in the record as having been given by Joseph Gray to the defendant, Bledsoe, and his associate in the purchase of the land, W. P. Maxwell, on the 18th day of April, 1863, for $7,500, was solvable in Confederate money, and therefore liable to be scaled, as prescribed in the statute, as is contended for by the plaintiff. 2. Whether it was proper, as was done by the referee, to reduce the amount to be paid upon such bond to the sum at which the 'said defendant and Maxwell were able to settle the debt, of a similar character, which they owed to one Edwards. 3. Whether the sum due upon said bond for $7,500, and the other sums paid by said Bledsoe and Maxwell upon the purchase money for the land, which is the subject of controversy, were rightly treated as constituting liens upon the same, which the *177 plaintiff must discharge before be can be permitted to have the title assured to him. 4. Whether the sums due from the defendant, Bledsoe, for rents, during his occupation of the land, are to be appropriated to the satisfaction of the amount ascertained to be due him, or to the debt still due the estate of Mrs. Stokes for the balance of the purchase money thereof. As to -the first. The bond, though dated in 1863, was made payable four years thereafter, and for half that period its rate of interest was fixed at two per cent., and for the -other half at six, and it contains an express stipulation that specie was not to be exacted upon it. These circumstances would of themselves tend strongly to exclude the presumption, arising from its date, that its discharge in Confederate money was contemplated by the parties; and when to them we add the further fact, admitted to be true, that the obligor at the time, instead of giving the bond, tendered an immediate cash payment in Confederate money, and the same was declined, it would seem to be conclusive as to the point, and to show that it was not intended that the debt secured thereby should be paid in the then existing currency, already greatly depreciated and rapidly and constantly sinking in value. Second. The testimony of the defendant, Bledsoe, himself, is the only evidence which bears upon this point, and it is to be observed that the same was received without objection. From it, it appears that having borrowed from Edwards some portion of the money with which they made theif first cash payment for the land, and given him their bond therefor, Bledsoe and Maxwell desired to so shape and direct their debt upon Gray, contracted for the same land, as that it might afford them protection against the other, and that it was with this understanding and for this special purpose, that Gray was induced to change the form of his bond as originally given. With this view the two debts were made to correspond with one another, as to their amounts, their rates of interest, and their length of credit; and the conclusion seems irresistible, that it was the understanding *178 of the parties that what would pay the one should be taken in payment for the other. Third, the original sale, at which Bledsoe and Maxwell became the purchasers, was in January, 1863, professedly upon a credit of twelve months, though upon an understanding, in fact, that in order to secure its payment in Confederate money, it should be sooner paid. In March following they assigned their interest to Gray, taking from him a promise to pay the balance due the administrator, and his bond for a portion of the money they had themselves paid upon the land, which bond was in April following, surrendered and another taken, payable forty-five months after date; so that it is clear to be seen, that the intention and expectation of the parties were, that upon his paying to the estate the unpaid portion of the purchase money, Gray was to receive the title to the land, unencumbered with any liens in favor of his immediate vendors. Their assignment to him was an absolute and unconditional one, therefore, so far as it depended upon the intention of the parties and their contract; and in the same plight and condition he had a right to assign it, and did assign it; and in that condition it was acquired by the plaintiff; and we know of no principle of equity upon which, under such circumstances, he should be deprived*of the full benefit of his acquisition. The principle, so earnestly invoked for the defendant, that the purchaser of a-mere equitable estate takes it subject to all attaching equities, has no application to the case, but it is rather a conflict between equities, and the question to be determined is— whose equity, the plaintiff’s or the defendant’s, is the superior one. Ordinarily, in the case of such conflict, the rule of priority is the same as that which governs in the case of the transfer of legal estates, and preference would be given to that equity which was older in point of date. But as is said in Adams’ Equity, 148, where neither party has the legal title, but the one has a perfect equitable title by conveyance, while the other an imperfect *179 one by contract, then a new principle is introduced, and that equity which grows out of a contract in rem, will be considered superior to the other, and preference will be given to it, though junior in point of time. Applying this principle to the case in hand, there can be no longer any question between the parties as to whose equity the superiority attaches. The plaintiff derives his by a direct and unbroken line of conveyances, whereas the equity insisted on for the defendant, of postponing the plaintiff’s until the debt on Gray is satisfied, grows out of no contract, but rather, as we have seen, is in defiance of his contract, and depends upon the'supervening circumstance of Gray’s insolvency. Were Gray the plaintiff in the action, tendering the balance of the purchase money to the administrator, and seeking to have the title assured to him, then, the court might well, and doubtless would, withhold its aid until he had, as well, paid the debt due to his immediate assignor — and this, independently of any contract, and upon the principle that he who would have equity must first do equity. But no such principle can affect the conscience of the present plaintiff, who, by contract and for a valuable consideration, has acquired an equity to the' specific property, from one in whose power the defendant himself placed it freed from the lien of his debt, and whose equity is no matter of right growing out of a contract, but depends upon the mere benignity of the court. Our conclusion, therefore, is, and it seems to be fully supported by the reason given for the decision in Smith v. Brittain, 3 Ired. Eq., 347, that it was error in the court below to hold that the debt due from Gray to the defendant, Bledsoe, on the $7,500 bond of the 18th April, 1863, constituted a lien upon the land in question, to be discharged by the plaintiff before he could be permitted to acquire the legal title from the administrator, and to this extent the judgment of that court is reversed. As to the other sums paid by Bledsoe, to-wit: the $1,000 paid on the 2d March, 1871, and $140 on the 19th June, 1871, and *180 $269 paid June, 1871, they were paid after the plaintiff had acquired his equitable title, and were such as he himself must needs have paid before he could call for the legal estate; and, not having been officiously paid by the defendant, they constitute a clear equity against the plaintiff and until discharged operate as liens upon the land. See Bank v. Clapp, 76 N. C., 482, a case on all foiirs with the present, as to this particular point, and strongly resembling it in many other of its features. Fourth. The same reasoning, which secures for thq equity of the plaintiff its preference over that of the defendant, must necessarily determine the question as to the proper application of the amount due for rents and profits in favor of the plaintiff’. If the land be his, as we hold it to be, subject only to the debt due for the original purchase money, then it must follow that the rents are his; and no reason can be assigned why they should be appropriated to the satisfaction of a debt due the defendant, for which another, and not the true owner, is bound. Virtually, the relation subsisting between the plaintiff and the heirs-at-law of Mrs. Stokes, since his purchase.of the equitable interest, is that of mortgagor and mortgagee, and having by their action at law evicted him and put the defendant, Bled-soe, in possession, they are accountable to him for the rents, and must look to their tenant, Bledsoe, for the same. As to the values of the rents, composing the subject-matter of the fifth and sixth of the plaintiff's exceptions, we affirm the ruling of the court below, not that we feel sure that the estimate is as high as the weight of the testimony would warrant, but that in the conflict between the several witnesses in regard to the matter, we are unable to say, with certainty, that it was too low. Without determining the general question as to the right of a mortgagee, when called on to account for rents and profits received while in possession, to deduct for improvements put upon the premises, we feel constrained to affirm the judgment rejecting the claim for betterments in this particular case. The referee, in determining the question, seems to have been gov *181 erned solely by the costs of the improvements, and not the enhanced value of the land by reason thereof. This, according to well settled authorities, is not the correct rule. Wetherell v. Gorman, 74 N. C., 603; Smith v. Stewart, 83 N. C., 406. As the defendant wholly failed, so far as the case shows, to offer evidence as to any enhancement in the value of the land, by reason of his improvements, whereby the error of the referee might be corrected, there is nothing left for the court, except to do as His Honor below did, and reject the charge altogether — and this we are the more ready to do, because, upon looking into the evidence, we find that the alleged betterments for which remuneration is sought, consisted rather of reparations than of additional improvements, and from his estimate of the annual rents, the referee expressly deducted the costs of repairs. As to the sum due the defendant for the personal property re-sold to Gray, sought also to be made a charge upon the land, we deem it only necessary to say, that if the debt due for the land itself cannot follow it in the hands of the plaintiff, much less can that due for the personalty, which, so far as we can discover, never came to the plaintiffs possession, or was ever claimed by him. This court, therefore, sustains the 6th and 8th exceptions taken by the plaintiff, and doth declare that the land in controversy is subject to no lien in favor of the defendant, Bledsoe, for his debt, due from Gray upon the bond given the 18th of April, 1863, though it is subject to a lien in his favor for all other amounts paid by himself or Maxwell towards the purchase money thereof. It is also declared, that the plaintiff is entitled to credit upon the debt due the defendant, Neil, as the administrator of Mrs. Stokes, for the balance of the purchase money for the rents ascertained to have been received by the defendant, Bledsoe, and such as are in the hands of the receiver appointed by the court, and, subject to such credits, the said debt due the administrator is the first lien upon the land. *182 All other exceptions taken to the rulings of the judge below, whether by the plaintiff or defendant, are overruled. There will be a referee to the clerk of this court to reform the account in conformity with this opinion, and the judgment of the court below, so far as the same was not appealed from; and the plaintiff will recover of the defendant, Bledsoe, the costs of both appeals. Per Curiam. Judgment accordingly.