Bradley v. Luce

Mr. Justice Craig delivered the opinion of the Court: The record contains some evidence tending to prove that the original arrangement to trade the Irving Park property for the Luce farm, personal property, and Darby notes, was consummated; but the decided preponderance of the evidence is, that the proposition to trade the Irving Park property was abandoned, for the reason Bradley was unable to make a title, and that the consideration agreed to be given for the farm, personal property and the Darby notes, was, cash $3000, the St. Louis and Wisconsin River Lumber Company stock, and the notes secured by mortgage on the Michigan lands, and the assumption of the Wells mortgage on the farm by" Bradley, amounting to $3000. The court, in its decree, found that Bradley obtained a conveyance of the farm from Luce by fraud, and the deed of ¡November 14, 1872, was set aside. It is apparent, from the evidence, that Bradley represented the lumber company stock to be worth eighty-five cents on the dollar; that the company owned extensive lands on the Wisconsin river, mills, booms for logs; that it controlled Wisconsin river trade, etc.; that the notes secured by mortgage on the Michigan land were given by wealthy men, (Allen and Walters) in Chicago; that he had sold the 100 acres of land for $20,000; that the purchase money had all been paid except the notes; that the makers of the notes were well able to meet them at maturity. Luce relied upon the truth of these representations, and acted upon them in making the trade with Bradley, without investigation in regard to their truth. ¡ It is clear, from the evidence, that the representations in regard to the lumber company stock, were entirely false, — that the company was insolvent and the stock worthless. As regards Allen and Walters, who were represented as wealthy men in Chicago, it turned out that while they were honest, they were both poor men, working as hostlers in livery si.'.bles in Chicago; that they had paid nothing on the land purchased, and were wholly unable to pay anything on the mortgages; that the land embraced in the mortgages, instead of being worth $20,000, was not worth more than $2000 to $2500. It is apparent, from the evidence, that the representation!s in regard to this lumber stock and the notes secured by mortgage on the Michigan land were false, and known to be so when made. In so far, then, as the finding of the court is concerned, that the transfer of the property from Luce to Bradley was obtained by false representations and fraud, we think it is fully sustained by the evidence in the record. But it is contended, that although the sale from Luce to Bradley may be impeached for fraud, yet as Barker, who took a mortgage on the ‘property, was an innocent purchaser, he and those claiming title by virtue of the sale under his trust deed are entitled to be protected. On the 28th day of November, 1872, the time when Bradley made the trust deed to Pease, to secure the $6000 loan from Barker, the title to the property appeared by the record to be in Bradley, and there was nothing to apprise Barker, or Pease, his agent, that Luce had any interest in the land whatever. The circumstances under which Bradley acquired the title to the land were unknown to Barker, and so far as he is concerned, having loaned the money and received the deed of trust in good faith, without notice of Luce’s equities, he of course would be entitled to protection. Henry M. Wells purchased the notes secured by the deed of trust of Hiram Barker, in 1874, foreclosed the deed of trust, and at the trustee’s sale, May 26, 1874, bid in the property in his own name, and received a deed from the trustee, and it is contended that under the deed thus acquired he was entitled to hold the property, or transfer the title to others, who would be entitled to hold it as against all claims of the complainant in the bill. Had Wells become a purchaser at the sale under the trust deed without any understanding, arrangement or agreement between him and the complainant Luce, doubtless he might hold the title to the property. But such was not the case. On the other hand, it appears, from the evidence, that Wells agreed with Luce to purchase the notes secured by deed of trust from Hiram Barker, foreclose the deed of trust, and convey the title acquired to Luce upon the payment by Luce of the money Wells should advance on the purchase of the deed of trust, and such other sums of money as were then due and owing from Luce to Wells. • If Wells acquired the title to the property under such an agreement, he then held it in trust for Luce, and he could not in equity appropriate the property to himself, or convey it to another who had notice of the rights of Luce. Wells was a mere trustee, and when Luce was ready and willing to pay the amounts agreed upon, he was bound to convey to Luce the title he had acquired under the agreement. When Wells acquired the title to the property, under a special agreement entered into between him and Luce, equity requires him to abide by and perform his contract. It is next urged that the court erred in setting aside the deed from Henry M. Wells to Chas. B. McCoy, by which 300 acres of the land were conveyed to him. This conveyance was made in pursuance of an arrangement made between Wells and Mrs. Bradley, under which she dismissed her suit which was brought to set aside the sale under the Barker deed of trust, and Wells was to have 200 acres of the land, and she was to have the balance. It appears, from the evidence, that McCoy & Pratt had a claim against M. E. Bradley for services rendered and for money advanced, amounting to $1500 or $2000. This claim was assumed by Mrs. Bradley. McCoy & Pratt also had an account against Mrs. Bradley. In order to secure these claims the property was deeded to Chas.JB. McCoy, in trust, who was to make sale of the property, and pay first, McCoy & Pratt, and the balance was to be paid over to Mrs. Bradley. If McCoy & Pratt, at the time Wells executed and delivered the deed, had notice of the equities of complainant Luce in the premises, they would not be entitled to protection. But such was not the case. The testimony fails to show that they had any knowledge whatever of the existence of the contract between Wells and Luce, under which Wells had agreed to convey to Luce the premises upon payment of the amount that was due from the former to the latter. Wells, upon buying the land at the trustee’s sale, leased it to Orrin Luce, who occupied it as his tenant from that time down to the date of the conveyance from Wells to McCoy. It is true, the complainant Luce was also living on the land, but the testimony shows that he occupied under Orrin Luce, and hence was a tenant of Wells. Under such circumstances, his occupancy of the land was no notice that he claimed title to the premises. It is also true that Luce had a bill in equity pending against Bradley, to set aside the deed he had made to him for the land, but the pendency of that bill could not affect the purchase made by McCoy, for the reason the bill did not seek to set aside the title Wells had obtained under the Barker deed of trust, — its object was only to vacate the deed made to Bradley. Again, it will be remembered that Wells purchased the Barker deed of trust, and had the land sold under it, and bid it in at the instance and request of Luce, who was present at the sale and interposed no objection. Under such circumstances he is estopped from denying the validity of the sale. The doctrine of lis pendens can have no application to the facts of this case. The deed of trust to Barker was given by Bradley for money loaned, while the record showed a perfect title to the lands standing in his name. Luce had not then instituted his suit against Bradley. Under such circumstances, while Luce might in the end set aside the deed made by him to Bradley, he could only do so subject to the rights of all subsequent purchasers or incumbrancers who had acquired liens on the land in good faith. Such was the Barker deed of trust. Now, when the deed was made to McCoy by Wells, he and those for whose benefit the deed was made were bound to take notice of the scope and effect of Luce’s bill, which was then pending; but as the bill could not reach a title acquired under the deed of trust, and as the title Wells held was derived from a sale under that deed of trust, they could safely acquire title from Wells. It is true, that after McCoy obtained a deed from Wells, complainant Luce amended his bill, and set up the contract between him and Wells in regard to the land. But this amendment could only be notice or binding as a lis pendens from the time it was made, — it could not relate back to the time of filing the original bill. Freeman on Judgments, sec. 199. The original bill would be notice of every fact contained in the pleadings, but this amendment was new matter, disconnected in any manner with the original bill, and could not be a binding lis pendens until it was filed and allowed as an amendment to the original bill by the court. It was in effect a new bill, and can only be regarded as notice to purchasers from the time it was incorporated in the original bill. We are, therefore, of opinion that the deed to McCoy should be sustained, in so far as the claims of McCoy & Pratt are concerned. But as the balance of the proceeds of the land, after the payment of McCoy & Pratt, were to be paid over to Mrs. Bradley, this may be reached, as there is no evidence that she is a purchaser in good faith without notice. The conveyance of all the land December 14, 1872, from Bradley to Lincoln, and on the same day from Lincoln to Mrs. Bradley, was doubtless without consideration, and done to shift the title to the property from the husband to the wife. It is also insisted, that the court erred in finding only the sum of $10,423.46 in favor of Henry M. Wells. This error is well assigned. The complainant, in his supplemental bill, alleged: “ That soon after Mr. Bradley commenced suit to set aside said sale, Wells called upon Benj. C. Luce, and proposed to him that if your orators would allow their suit, commenced December 5, 1872, to remain undisposed of till suit off Mrs. Bradley against Wells and Pease should be tried, so that no question should be decided in said cause as to validity of said trust deed, that if said sale was sustained and Wells successful he would convey said lands, and his interest acquired under said sale, to Benj. C. Luce, your orator, Benj. C. Luce paying him the amount of indebtedness due from your orator to him, and such sum as he had paid for said trust deed, so ■ as to give to your orator the benefit of any right which he should acquire in said suit, or had acquired under said trust deed sale, your orator paying such indebtedness. Tour orator, after consultation with his solicitor, and because of insolvency of said Bradley and expenses of litigating said suit, they being already very great, your orator’s means being limited, and that the title of record appeared in M. E. Bradley at time of making said trust deed (orator’s said bill not having then been filed), and expense necessary to show that Pease had knowledge of fraud of Bradley in getting said title from your orators, and his understanding with said Wells before purchase of said indebtedness secured by said trust deed, consented to the proposition of said Wells, and has permitted his said cause to be continued- from time to time, and in addition thereto your orator, Benj. C. Luce, has, from time to time during the pendency of said suit, assisted said Wells in his said defence, believing if Wells was successful that your orators, through him, under said agreement, could regain title to said lands cheaper than to go on with orator’s said suit.” This allegation is followed by proof that shows that Wells Avas to be paid the mortgage debt, and also such other amount as Luce then owed him, before he should be required to convey the land to Luce. This agreement was made between Luce and Wells before the property was sold on the deed of trust. It was the contract under which Wells purchased the land, and he can not be deprived of the title to the lands until he is paid the amount paid for the Barker note and deed of trust, and interest thereon, together with the amount of the other indebtedness due from Luce to him at the time the arrangement was made. This last indebtedness consists of four notes, one from Luce to Wells, Avhich, on May 26, 1874, amounted, as the evidence shows, to $4520. No part of this was taken into account by the court in fixing the amount that should be paid to Wells, but the court decided merely that Wells should be paid the amount Avhich he had paid for the Barker note, and interest, amounting, at date of decree, to $10,423.46. This was error. In addition to that amount, the four notes, and such interest as had accrued, computing the same from the time interest commenced running to date of decree, should have been allowed. Wells purchased the Barker note at tl^ instance and request of Luce, and made the sale and bid in the property with his approbation and consent, on the understanding that he should hold the property until he was paid the advance made and a debt due from Wells to him. Under such circumstances, although Wells’ subsequent conduct in relation to the property was not altogether commendable, yet equity will not aid Luce in obtaining the title to the property from Wells without a compliance on his part with the spirit of the contract under which Wells obtained it. But as Wells has conveyed a portion of the land to McCoy, in violation of his agreement’ with Luce, he must account for the value of the land conveyed. We are, therefore, of opinion that Wells should be required to account for so much of the land conveyed as shall'be necessary' to pay the claim of McCoy & Pratt, and if, on another hearing, it turns out that McCoy has sold all of the land deeded to him by Wells, to a purchaser who bought in good faith, without notice of the equities of Luce under the contract made between him and Wells, then Wells should account for the value of all the land he conveyed, less so much as may be found in the hands, of the trustee, and received from him. . It is- also claimed, that the court erred in setting aside the deed from the sheriff of Lake county to Ellen E. Ball, conveying the premises to her. This deed was made in pursuance of a sale of the premises by the sheriff of Lake county, on an execution issued on a judgment rendered in 1875, in favor of Turner & Bay, against Luce. Ellen E. Ball came in and filed an intervening petition, in which she set up that she was the owner of the premises under the sheriff’s deed. It appears that the court set the deed aside, on the ground that the premises, at the time of the sale, were the homestead of Luce, and, as such, were not liable to levy and sale. We shall not stop to determine whether the reason assigned by the court for setting aside thé deed was the correct one or not. It will be sufficient if the court did not err in setting aside the sale. The land sold was worth from $25,000 to $30,000, and consisted of over 500 acres, and was sold in gross, and bid off for the sum of $704. How, while inadequacy of price alone, on an execution sale, may not be ground for equitable relief, yet where, in addition to inadequacy of price, irregularities in the sale occur, such as selling several tracts or lots of land in gross, without first offering them separately, equity will interfere and vacate the sale. Morris v. Robey, 73 Ill. 462. Here the land was capable of division, and had a small portion been offered it might have brought the debt; but whether it would or not, it was the duty of the officer to offer the land in parcels, and a sale of so large a tract for so small a sum of money, where no effort has been made to sell in parcels, can not be sustained. . The decree of the circuit court will be reversed, and the cause remanded for further proceedings in conformity to this opinion. Decree reversed.