Sample v. Rowe

Gregory, J. Henry Rowe and John Bates sued the Cincinnati & Chicago Railroad Company and Thomas J. Sample, in the court below, for the possession of real estate, and to correct an alleged mistake in the description of a portion thereof, in a deed of conveyance from the latter to the Cincinnati, New Castle & Michigan Railroad Company. ■On the 20th of May, 1853, Sample conveyed by deed in fee, ■to the latter company, one-third of 'an acre of ground in the town of Muncie, together with the office adjoining, described by metes and bounds; and, on the 11th of August following, in like manner, the former conveyed to ■the latter, among other real estate, the east half of the north-east quarter of section 21, in township 20, north, of range 10, east. On the 1st of September, of that year, the railroad company executed a deed of trust, in the nature of a mortgage, by which she conveyed to Sample, and one Thomas Conoin, some forty-one different tracts of land, with an estimated value on each, to be held by them as trustees, to secure the payment of a loan of $75,000, with the interest thereon, for which the railroad company issued her bonds in the sum of $1000 each, with interest warrants attached. Among the real estate conveyed by this deed of trust, is the town property conveyed by Sample to the railroad company, and the following: “Also, the west half of the north-east quarter of section 21, in town 20, north, of range 10, east, containing eighty acres, and deeded by Thomas J. Sample to the company, appraised at $3200.” The east, and not the west half, was intended, but was, by mistake, described as the west half. The following stipulation is contained in the deed of trust: “And it is hereby expressly agreed and understood, — 211 — that the said party of the first part reserves the right to sell any portion of the property herein specified, at a price not less than the sum herein named as the appraised value thereof, and a proportionate price for any portion of any of the said several pieces of property; and whenever the said party of the first part, having made such sale, shall purchase and surrender to the said parties of the second part, or their successors in said trust, to be cancelled, an amount of the bonds herein specified and designated to be secured by this deed of trust, equal to the appraised value of any portion of said property, as herein specified, or of a proportionate part of the appraised value of any one of said several pieces of property, then the said party of the second part, or their successors in said trust, shall execute and deliver to such person or persons as the said party of the first part shall designate, a deed in fee simple for such portion of the said property.” The Cincinnati, New Castle & Michigan Railroad Company was afterward consolidated with the Cincinnati, Cambridge & Chicago Short Line Railway Company and the Cincinnati, Logansport and Chicago Railway Company, and the companies thus consolidating assumed the corporate name of the Cincinnati & Chicago Railroad Company. This company, afterward, having acquired the title to the eighty acres of land above described, by virtue of the consolidation, sold the same to Sample for $3200, which was paid by him by the surrender of three bonds, of $1000 each, secured by the deed of trust, and $200 to be credited to the company, on the claim of Sample for his compensation for services as trustee. "When the deed was being executed to Sample, the mistake in the description of the land was, for the first time, discovered. Under the impression that the legal title was still in the railroad company, and not in the trustees, the former, at the instance and request of the latter, on the 10th of January, 1857, conveyed to Charles P. Sample, (a son of the appellant,) who quit-claimed to his father, on the 22d of April, 1858. The deed of January — 212 — 10, 1857, was duly recorded in February, 1857, and the other in April, 1858. The bonds secured by the deed of trust bear date the 1st of September, 1853. On the 19th of May, 1853, the appellant submitted his proposition, in writing, to the railroad company, for -the sale of the property in Muncie, as follows: “I hereby propose to sell and convey to the Cincinnati, New Castle & Michigan Railroad Company, the following described real estate, to-wit: (here follows'the description), for the sum of-§1600, to be paid for in the capital stock of the company,'at par. And, if the board of directors of said company shall accept this proposition within ten days from this date, the'same shall be binding on me, and I agree to convey said, property to said company by a general warranty deed, clear and free from all incumbrances, so soon as a certificate of the stock is executed tonne; allowing me to retain-possession of said property, if I do not remote to Cambridge, until the railroad is completed to Wabash, if I see proper, and no interest allowed on the stock tintil I vacate it. And when I give possession, the company pays me interest at the rate of two shares Of stock per year. I am to have permission to take up and remove what-plants and ’shrubbery I choose, whilst I occupy it.” [Signed.] Thomas J. Sample. The'railroad company accepted this proposition, but, by mistake, these conditions were not incorporated into the deed, which was executed the next day. On the 14th of September, 1857, the • appellant filed in the Delaware Circuit Court, ■ his complaint against the Cincinnati & Chicago Railroad Company, to reform the' deed executed by him to the Cincinnati, New Castle & Michigan Railroad Company, in pursuance of the proposition. The -railroad company entered an appearance, waived process, and admitted the allegations in the complaint; and the court decreed that the deed be corrected so as to contain the matter omitted. — 213 — There was attached to each of the bonds issued by the railroad company, secured by the deed of trust, the following certificate: “We hereby certify that the Cincinnati, New Castle & Michigan Railroad Company have conveyed to us by deed, bearing date the 1st day of September, 1853, certain real estate in trust, for the use of the holders of their obligations of similar, tenor as the above, issued and to be issued, to an amount not exceeding $75000, and which we have caused to be recorded in the several counties in the state of Indiana in which the said real estate is situate; and we further certify that the above is one of the obligations referred to in, and secured by, said deed. [Signed.] T. J. Sample, \ T t Thos. Corwin, / The appellee Henry Roioe, on the 4th of June, 1857, filed his complaint in the Delaware Circuit Court, against the Cincinnati & Chicago Railroad Company, Thomas J. Sample and Thomas Corwin, alleging that he was the holder and owner of a certain amount of the bonds and interest warrants secured by the deed of trust, averring their nonpayment, and praying a foreclosure of the deed of trust as a mortgage. On the 13th of September, 1858, John Bates was made a co-plaintiff, by the consent of Rowe, alleging that he was the holder and owner of certain other of the bonds and interest warrants secured by the deed of trust, averring their non-payment, and praying a foreclosure. The railroad company answered the complaint; Sample did not answer. A trial was had, and the court found for the plaintiff" Rowe, $3,850 50, and for the plaintiff Bates, $12,050. The court further found specially, “that the several bonds mentioned by the plaintiff Henry Rowe, in his complaint, and the several bonds mentioned by the plaintiff John Bates, in his complaint, were executed by the defendant, the Cincinnati, New Castle & Michigan Rail — 214 — road Company, before the act of consolidation mentioned in the pleading, that the same were made and signed at Muncie, Indiana, where the office of the company was kept; that the same were taken to the city of New York, and offered for sale, but without success, and afterward were returned to, and sold at, the city of Cincinnati, in the state of Ohio, to JDe Graff, in payment for work done by him on defendant’s road, in the state of Indiana.” A decree of foreclosure was had against the defendants, excepting “ such lands as had been purchased with bonds secured by the deed of trust.” The eighty acre tract was mis-deseribed in the complaint, decree and sheriff’s advertisement, but the sheriff, on the day of sale, discovered the mistake, and sold and conveyed to the appellees the right tract. The town property deeded by Sample to the railroad company was sold under this decree to the appellees; and the second paragraph of the complaint is for the recovery of the possession thereof from the appellant. ■ There are no averments in the complaint in the foreclosure case, that could have formed the basis of a decree against Sample to set aside his purchase of the eighty acre tract of land of the railroad company. The appellees did not attempt to show what lands had been sold under the stipulation in the deed of trust, but contented themselves with protecting the rights of purchasers thereof, by excepting such sales from the operation of the decree of foreclosure, although they knew, when they filed their complaint, that Sample had made the purchase with the bonds secured by the mortgage. The decree of foreclosure was not rendered until some four years after Sample made his purchase, and the recording of the deeds under which he claims title. The record shows that the appellees became the purchasers at the sheriff’s sale, under their decree, of the entire real estate embraced in the deed of trust, worth some ninety thousand dollars, over and above .the eighty acre tract involved in the ease in judgment. — 215 — There were no outstanding unpaid bonds secured by the deed of trust, other than those owned and held by the appellees. Sample offered to prove, on the trial, that Rowe and Bates, at the time they became the holders of the bonds in suit, had notice of his claim to the possession of the house and lot in Muncie. The court below found for the appellees, and rendered judgment over a motion for a new trial. The evidence is in the record. We think the finding of the court, as to the house and lot in Muncie, is right. The appellees were not parties to the suit to reform the deed from Sample to the railroad company, and cannot be bound by the decree rendered therein. Under the facts disclosed by the record, Sample had no right, as against Rowe and Bates, to correct the mistake in his deed, by the incorporation therein of the omitted condition, that he was to retain the possession of the property until the road was completed to Wabash. The bonds held by the appellees had been passed by the railroad company, in good faith, in the usual course of business, to Be Graff, for work done by him on the road in Indiana, and their value could not be impaired by notice to a subsequent purchaser thereof, of an out-standing equity, in the hands of the trustee who had certified the title of the mortgage lands, for the purpose of giving them currency. The rule seems to be, that in all cases of mistake in written instruments, courts of equity will interfere as between the original parties, or those claiming under them in privity, such as personal representatives, heirs,, devisees, legatees, assignees, voluntary grantees, judgment creditors, or purchasers from them with notice of the facts. White et al. v. Wilson et al., 6 Blackf. 448, and the authorities there cited. Where more than one obligation is secured by a mortgage,, each is considered a separate mortgage, and the assignment of one or more of such obligations will carry with it so much of the mortgage. Crouse v. Coleman, 19 Ind. 30; — 216 — Murdock v. Ford, 17 id. 52; Harris v. Harlan, 14 id. 439. And such an assignee is regarded as a purchaser, and, if in good faith, without notice, he is protected from an out-standing equity. The possession of Sample was not, under the circumstances of this case, constructive notice to De Graff of his equity: De Graff had a right to rest upon Sample’s certificate. We think the finding of the court below, as to the eighty acre tract, is wrong. The power of sale reserved' by the railroad' company, is not the ordinary power of a trustee to deal with the property of the cestui qué trust. The clause for the protection of the holders of the bonds secured by the deed of trust was, that an amount of such bonds equal to the appraised value of the property sold should be surrendered and cancelled; when this was done, all was done in which the cestui que trust had any interest whatever. The omission of this was the only thing of which they had a right to complain; a sale for a greater sum than the appraised value would have inured to the benefit of the railroad company, and not to the bond-holders. It was a reservation of a right, as well as of a power. The railroad company had the uncontrolled power to sell to ■whom she pleased; she could sell to the tmstee as well as to .a stranger. The trustee, having the legal title, was the proper person to make the conveyance, but, in the case in judgment, the legal title was still in the railroad company, by reason of the mistake in the description of the land in question, with the right of having the mistake corrected in .a court of chancery. The mode adopted of making the ¡conveyance was a substantial compliance with the terms of the power. The trustees, and those claiming under them, ¡are estopped from claiming against the deed of the railroad ■company, and the bond-holders had no right to complain, because they got all that was stipulated in their favor, the ¡surrender and cancellation of the three §1000 bonds, and the payment of $200 of the expenses of the trust. But — 217 — it is objected that the two hundred dollars' was the private claim of the trustee, and that that made the sale to Sample void. We do not think so. Admitting, for the sake of argument, that this would render the sale voidable, yet the sale to NampZe could only be set aside by reimbursing him his money paid, interest and improvements, if any were made by him after his purchase. That question could not be settled in this collateral manner, but in a direct proceeding to set aside the sale, in which all the equitable considerations would arise, growing out of the fact that the appellees have ninety thousand dollars of the mortgage property to pay some sixteen thousand, and their acts of acquiescence for an unreasonable length of time. We think that there is no such reference to the deed of Sample to the railroad company, as to make the description of the land in question in that deed, a part of the description of the land in the deed from the railroad company to the trastees. The phrase, “ deeded by Thomas J. Sample to the company,” in the latter deed, is the statement of a fact, and not a reference to a deed for greater certainty, for it will be noticed, that in the description of each of the forty-one tracts of land contained in the deed of trust, it is stated by whom each was deeded, with the valuation thereof. Wo, however, do not consider this question of much importance in this case, as the sale of the land, and the surrender of the bonds, vested in Sample the equity in the land, which, under the code, would protect his possession. As the land was misdescribed in the decree of foreclosure, that decree cannot affect the rights of Sample; but independent of this, we think the saving clause in the decree sufficient to embrace the sale to him of the eighty acre tract in controversy. By statute, under the general denial, every defense, both legal and equitable, can bo given in evidence, therefore, the only question properly before us is, did the court below err in overruling the motion fora new trial? There are a — 218 — number of questions argued by counsel that we do not decide, because they are not properly in the record. W. March and T. J. Sample, for appellant. ./. Smith and Shipley § Kilgore, for appellees. The judgment of the court below, as to the east half of the north-east quarter of section 21, in township 20, north, of range 10, east, is reversed, and as to the residue of the real estate described in the complaint, is affirmed. The cause is remanded to said court for a new trial. Costs against the appellees.