Gunn v. Brantley

GOLDTHWAITE, J.- — -The facts which, upon the bill, answer and evidence, we consider as established beyond all controversy, are, that, on the 16th of October, 1837, Gunn, the plaintiff in error, and Brantley, the defendant in error, made a joint purchase from Dozier Thornton, of the north half of section twenty-nine and the south half of section twenty in township twentj^-one, and range twenty-seven, at the price of eleven dollars per acre; for which land said Thornton executed to them jointly his bond for titles; that about the time of this purchase, or soon after it, the parties agreed to divide the land, Gunn taking all south of Osenap-pa creek, containing four hundred and seventeen acres, and Brantley all north of the same creek, containing two hundred and twenty-three T§F acres; that this division was made; and Gunn took possession of his portion; that the lands taken by each were to be accounted for at eleven dollars per acre; that, at the time of the purchase, Thornton received from Gunn, in part payment of the purchase money, anote on Townes & O’Brien, for $4057, and for the balance of the purchase money Brantley executed his notes, one for $1000, due December 25, 1837, and the other'for $2075 70, due December 25, 1838, with Gunn as his security; that the — 643 — whole of tbe first note was paid, and on tbe second tbe amount of $700, in October, 1839; that, for tbe purpose of saving Grunn from any loss on account of bis securitysbip, he was permitted to retain tbe bond for titles, and that subsequently, on December 7, 1838, Brantley, for tbe same purpose, transferred to him, by writing under seal, all bis right, title and interest in said bond, until tbe balance due should be paid by him, and when paid, then, if G-unn bad obtained titles to the land, be was to convey to Brantley tbe portion to which be was entitled under tbe division; that a judgment was obtained against Grunn and Brantley, for tbe balance due on tbe second note, and tbe land which tbe latter was to take under tbe division was levied on, by tbe direction of G-unn, and sold under execution, he having before tbe sale obtained title from Thornton to tbe entire tract, and at tbe sale becoming tbe purchaser, for tbe price of seven hundred and sixty dollars. W think it clear, upon this state of facts, that G-unn, as soon as be obtained the legal title from Thornton, became tbe trustee for Brantley, as to tbe lands to which tbe latter was entitled under tbe division; and that by tbe agreement between them, as expressed in tbe instrument bearing date December 7, 1838, Gunn might look to that portion of tbe land, as a security against bis liability for Brantley; and tbe rules which govern relations of this character are applicable in tbe present case. Tbe mortgagee cannot sell the land, without first obtaining tbe decree of a court of equity upon a bill for a foreclosure; and as Gunn was, by tbe terms of tbe trust, only authorized to hold tbe interest of Brantley as a security, until the payment of tbe purchase money due by him, it would be in direct conflict with tbe well established principles of equity, to allow the trustee to deprive tbe cestui que trust of bis equity of redemption, by tbe sale of tbe land without a decree of foreclosure, and, by becoming himself tbe purchaser, to create an interest adverse to tbe person for whom be is a trustee. Prevost v. Gratz, Peters’ C. C. R., 364; Jenkins v. Eldridge, 3 Story’s R., 81; Powell v. Williams, 14 Ala., 476. It is true, that in tbe case of a purchase by tbe trustee, tbe cestui que trust will be required to do what is equitable, by tbe repayment of the money actually paid; — 644 — and it is necessary, that a bill, the object of which is to set aside a sale made to the trustee, should contain an offer, or what is equivalent to an offer, to do this. But in the present case, the bill alleges that the rents and profits of the land are sufficient to reimburse Gunn, in the amount paid by him, and if not sufficient, the complainant offers to abide the decree of the court, which is equivalent to an offer to pay what may be found due; and the objection to the bill, by way of demurrer, upon this ground, cannot, therefore, be sustained. Neither was it necessary that Thornton should have been 'made a party to the bill. He had made titles to the land to Gunn; had taken up his bond; and having thus divested himself of all interest in the subject matter of the suit, it was unnecessary for Brantley, who did not complain of his action in this respect, to bring him before the court as a party. In relation to the assignments of error based upon the admission of various portions of the testimony of the complainant below, it need only be observed, that although it appears that the objections were made before the commissioner, by the endorsement of the objection upon the interrogatories, yet there is nothing in the record which informs us that they were insisted on before the Chancellor. If objections to testimony were taken before the master, and were overruled by him, they could only be brought before the Chancellor by exceptions, and unless this was done they must be considered as waived. So, if overruled by the commissioner, the objections must be regarded as waived, unless brought to the notice of the Chancellor by exceptions filed, or motion to suppress. As to the statute of limitations the rule is, that in all cases of concurrent jurisdiction, statutes of this character are equally as obligatory in courts of equity as in the common law courts, 2 Story’s Equity, § 1520; Maury v. Maury, 8 Porter, 211; and in many cases, mere lapse of time and the staleness of the claim, in cases in which the statute does not apply, will in equity constitute a defence. In such cases, courts of equity, says Mr. Justice Story, “ act sometimes in analogy to the law, and. sometimes upon their own inherent doctrine of discouraging, for the peace of society, antiquated demands, — 645 — by refusing to interfere where there has been gross laches in prosecuting rights, or long or unreasonable acquiescence in the assertion of adverse claims.” 2 Story’s Equity, § 1520. In the case under consideration, the instrument which gave Gunn the right to hold the interest which Brantley had in the purchase was executed in December, 1838, and the bill was filed in November, 1847. The transfer is in reality an equitable mortgage, and the rule as between mortgagor and mortgagee allows the former to redeem, at any time within the period prescribed for the limitation of rights of entry and actions of ejectment. 2 Story’s Equity, §1028. Applying this rule in the present case, Brantley, under the analogies of the law as determined by the statute of limitations of this State, in relation to rights of entry and actions for the recovery of lands, (Clay’s Digest, 327, § 83, 329, § 93,) would have had a clear right to redeem at the filing of his bill. In relation to fraud: The bill charges that the two hundred and twenty-three acres of land were worth about twenty-five hundred dollars; that it only sold for seven hundred and sixty dollars at the sheriff’s sale; that Gunn became the purchaser, and that it was in consequence of his fraudulent conduct and representations that it did not bring its value. The answer, however, positively and unequivocally denies the charge of fraud, and the testimony of the witness Griggs is the only evidence which is direct upon this point. This witness states, that he sold the land, that Gunn was present and took a deep interest in the sale, and that while Thornton was bidding he said to him, "that he need not run the lands, as his money was sure to him, and that all he, Gunn, wanted was, a title to the land.” If the answer was not impeached, this evidence would not be sufficient to outweigh it. But we do not regard the answer as entitled to full credit; it is equivocal and evasive, in response to the original bill, in relation to the transfer of the bond, which, the complainant there charges, was made solely for the purpose of securing Gunn as the surety of Brantley; and in the answer to the amended bill, it is insisted "that the transfer was absolute, and the interest of the complainant in the land by said transfer extinguished." This is equivalent to a denial that the transfer was other than an absolute one, and is contradicted by the terms of the in — 646 — strument itself, which, was in the possession of Gunn for a long period. The rule is, that an answer contradicted in a material point loses its weight as evidence. Pharis v. Leachman, 20 Ala., 662, and cases there cited. The fact that the land was levied on by the direction of Grunn, and purchased by him at a price considerably under its real value, must also be taken into consideration, in connection with the evidence of the witness Griggs; and these circumstances, united with the impeachment of the answer in relation to the transfer, and the evidence of the witness referred to, are sufficient to establish the allegation of fraud, as charged in the bill. The complainant is clearly entitled to a decree; but as the agreement between the parties was, that Gunn should be entitled to hold the lands, to indemnify him against his suretyship for Brantley, a decree could not properly be rendered, which would have the effect of changing the contract which the parties themselves have made. To give the land to Gunn, and .require him to pay Brantley the amount of the purchase money which be has paid, would be to create a new contract. Brantley is entitled to the portion of the land which he was to take upon the division, all lying north of Osenapjja creek, on the repayment of the amount which Gunn has paid. He is entitled to the rents and ¡arofits actually received during the time the latter has been in possession, as well as those which he might have realized by reasonable care and prudence, or by ordinarily good husbandry; and he is also entitled to full indemnification for the injury which the land has sustained bjr the unauthorized act of the trustee in possession. Gunn is not entitled to compensation for improvements made by him, under a title procured by fraud. Van Horne v. Fonda, 5 Johns. Chan., 388, 416. The decree of the Chancellor must be reversed; and an account must be taken by the master, of the rents and profits of the two hundred and twenty-three acres from the first of January, 1841, with interest on the same each year, and also the consequential damages which have been done to the land by the plaintiff in error, by clearing the same ; and the defendant in error, Brantley, must be charged with the amounts paid by Gunn, as security for the amount due from him for the purchase money of the two hundred and twenty-three — 647 — acres, and the costs of the suit at law, and interest upon such amounts from the time of payment by the plaintiff in error; also, the sum of three hundred and eighty-five TVo- dollars, with interest from December 7, 1838; and if such rents and profits, with the interest and damages, exceed the charge against the defendant in error, a decree must be rendered against the plaintiff in error for the excess, and the title to the two hundred and twenty acres decreed to Brantley. Anri if the charges against Brantley exceed the amount of the rents and profits and damages taken on such account, a decree must be rendered, that he pay the same within a short day, or that the two hundred and twenty acres of land be sold, and the proceeds applied to the payment of the same, with interest, and that he be forever barred by such sale of all interest or equity in the premises. As to the costs in this court, we do not think the defendant in error without fault. He failed to make the payments which he agreed to make; he involved his security and subjected him to the inconvenience of making the payments which he should have made; and he has been anything but diligent in the prosecution of his rights. He must pay the costs of this court.