Conover v. Warren

The Opinion of the Court was delivered by Treat, J. The bill in this cause was filed in July, 1843, and sets forth substantially the following facts. In February, 1840, the complainant sold and conveyed a tract of land to '¡Thomas Warren for the consideration of two thousand dollars. Warren gave her in payment two promissory notes, one for one thousand three hundred and seventy five dollars, dated April 1st, 1839, drawn by John F. Darby, as President of the Missouri Silk Company, in favor of Warren, and by him indorsed; the other for six hundred dollars, dated November 15th, 1839, drawn by John B. Fairbanks in favor of Warren, and by him indorsed. The bill then charges, that the complainant received the notes in payment, on the representations of Warren that the same were good, and would be paid at maturity; and not as collateral security, and in discharge of her equitable lien on the land; that the notes were worthless, and have never been paid in whole or in part. The bill further charges, that George E. Warren, in December, 1841, with full knowledge of the foregoing facts, purchased the land of Thomas Warren and received a conveyance therefor. The bill makes the Warrens defendants, and concludes with the prayer that they may be compelled to pay the notes, and in default thereof, that the land may be sold, and the proceeds applied to the payment of the purchase money. The defendants demurred to the bill. The Circuit Court sustained the demurrer, and dismissed the hill. To reverse that decision, this writ of error is prosecuted. The only point in the case is, whether the hill on its face shows that the complainant has a lien on the land, for the payment of the purchase money. In the decision of this question, we do not deem it necessary to review the various decisions on the subject of the equitable lien of the vendor of real estate. The doctrine properly deducible from the leading authorities is, that the seller waives the lien, whenever he takes distinct security for the payment of the purchase money. The mere taking of the bond, bill or note of the vendee, is not of itself regarded as an act of waiver, for such instruments are only the evidence of the debt. But the taking the bond, hill or note of the purchaser with security is evidence that the vendor does not rely on the lien, but on the security, and extinguishes the lien. The lien is also discharged by the taking of any independent security, such as a deposit of stock, a pledge of goods, a mortgage on real or personal estate, or the responsibility of a third person. 4 Kent’s Com. 153; 2 Story’s Eq. Jur. 475, note 2; 2 Sugden on Vendors, 59; Brown v. Gilman, 4 Wheaton, 255; Fish v. Howland, 1 Paige, 20; Williams v. Roberts, 5 Ohio, 18, On the principle of these authorities, we are clearly of the opinion, that the complainant is not entitled to the relief she claims by her bill. It is evident from the facts disclosed in the bill, that she waived her lien by receiving and relying on other security for the payment of the purchase money. She conveyed the land, and received in payment the promissory-notes of third persons, payable at a future day, indorsed by the vendee. In so doing, she relied on, as security for payment, the responsibility of the makers of the notes, and the contingent liability of the purchaser, as the assignor of the notes. If she had taken, as security for the payment of the purchase money, the responsibility "of the makers of the notes, her lien would have been extinguished. The fact that the responsibility of the vendee was superadded, makes it the more manifest that she relied on the notes, and not on the land for security. These facts of themselves fully discharged the lien, unless there was at the time an express reservation of it. Again, she permitted more than three years to elapse before she made any attempt to assert a lien on the land. This long delay, wholly unaccounted for, furnishes a strong presumption, that the lien was considered as waived. It is true, the bill alleges that she did not intend to discharge the lien, but the facts stated in the bill are inconsistent with the truth of this allegation. The, further allegation, that the notes were received on the representations of Warren that they were good, when in fact they were worthless, does not change the character of the case. This allegation may be true, and yet the complainant may have entirely renounced her equitable lien. Whether the security was valueless or not, she nevertheless at the time relied on it, and not on the land. She does not charge that Warren acted in bad faith, in making the representations. If he had made them with a fraudulent intent, and thereby injured her, another question might arise. These equitable liens on real estate are generally unknown to the world, and frequently operate injuriously on the rights of creditors and purchasers, and ought not to be enforced but in cases, where the right is clearly and distinctly made out. On the whole case, we are fully satisfied with the decision of the Circuit Court, and its decree is affirmed with costs. Decree affirmed.