Honore's v. Bakewell

Chief Justice Ewing delivered the opinion of the Court, In 1826, John A. Honoré sold and conveyed to Bell and Barbaroux, two lots in Louisville, for $12,500, payable in twelve years, with interest on said sum at the rate of six per cent, per annum, payable quarter yearly. The consideration and terms of payment were expressed on the face of the deed. In 1828, Barbaroux sold and con — 68 — veyed his interest in the purchase to Bell, and Bell after-wards, in 1828, sold and conveyed a designated parcel of said lots to Wm. G. Bakewell, for $4,500, payable in five annual instalments, with interest. The deed made by Bell to Bakewell, recites the terms of sale, and that Honoré held a lien on the property, and contains three alternative stipulations: First, That Bakewell, if he elects to do so, for his indemnification, may pay to Honoré the consideration of his purchase, provided he procures from Honoré an acquittance to said Bell, for the amount. 2nd. That he may pay to *Bell, relying upon his warranty, if he desires to stop the accruing interest. 3rd. If Honoré will not receive the pay and release said ground from the lien, that Bakewell, for his indemnity, shall have the privilege of withholding the principal until his title can be secured, paying interest on the amount semi-annually, to said Bell. Bakewell elected to make payment to Honoré, and executed his note or notes to him for the amount, and Honoré executed his acquittance to Bell, crediting the amount on his demand against him. The note or notes of Bakewell to Honoré, were renewed from time to time, until the amount, by payments, was reduced to $2,400, and a note for that balance was executed by Bakewell to Honoré on the 28th December, 1841, payable four months after date. On one occasion, prior to the execution of this last note, Bakewell paid, in cash, about one half of the amount then due, and gave a check to the Bank for the residue, which Honoré retained a few days without presenting it to the Bank for payment, and returned it to Bakewell, and the check, by mutual consent, was cancelled, and Bakewell’s note given for the amount, which by renewals, produced the note in question. In 1842, Bakewell being much embarrassed and about to fail, executed a mortgage deed .to A. & 0. Hite, on the parcel of ground sold to him, and on other real and personal estate, to secure them a debt which he owed them, and to indemnify and secure them as his sureties and accommodation endorsers to the Bank of Kentucky, the Northern Bank and other Banks in and out of the — 69 — State. Honoré filed his bill, which after his death was revived in the name of his executor, asserting his lien upon the parcel of ground for the amount of the note as the unpaid consideration. A. & 0. Hite answered, making their answer a cross bill against the complainants, Bakewell and the Banks, resisting the lien, and praying a foreclosure and sale' of the mortgaged estate in payment of their debts and in discharge of their liabilities. Decree of the Chancellor. A vendor taking the assumpsit & note of a purchaser of part of a lot sold in discharge of so much of the price agreed to be given by the first vendee, has in equity a lien on the part pur. chased by the sub-purchaser to the extent of such assumpsit. The Chancellor disallowed Honore’s lien and dismissed his bill, and decreed upon the cross bill a foreclosure and sale of the mortgaged estate as prayed for, and Honore’s executor has appealed to this Court. It is contended, 1st. That Honoré, by his acquittance to Bell, discharged his lien upon the parcel of ground in question, springing out of the sale to Bell and Barbaroux, and that the law implied no lien in his favor for the consideration of Bakewell’s purchase. 2nd. That if a lien would be implied in his favor, that that lien was waived and lost forever by the receipt of the check which was afterwards surrendered and cancelled. ' And 3rd. That if the lien was not waived, that A. & 0. Hite had no notice of it, nor the means to acquire notice. 1st. There is no question that Honoré, by his acquittance to Bell, surrendered his lien to the. extent of his acquittance on his original sale to Bell and Barbaroux; but we are clearly of opinion that upon the sale by Bell to Bakewell, and the election on the part of the latter of the alternative stipulation in the deed, to pay Honoré the consideration of his purchase, and his assumpsit to pay and the acquiescence in the arrangement, by Honoré, and his acceptance of Bakewell’s assumpsit and acquittance of Bell from the amount, a lien on the parcel purchased by Bakewell, was raised in his favor for the amount of the consideration so assumed to be paid to him. Had Bell received Bakewell’s notes for the consideration, a lien would be implied in his favor; and had those notes been assigned to Honoré as payment of so much and an acquittance for the amount executed to him, as assignee of Bell, Honoré would certainly have held a lien on Bakewell’s purchase for their payment; and had these assigned notes been lifted and other notes, in the form of — 70 — renewals executed in their stead, though such renewal might have had the effect to discharge Bell from his liability on the assignment, they could not have had the effect to discharge Bakewell or bis purchase from that responsibility to which he and it were before subject, The debt which was the consideration of his purchase, was not paid or satisfied by the renewal of notes, which amounted to no more than the renewal of the evidence of a debt which, as the unpaid consideration of the sale and purchase, operated as a lien upon the parcel of ground, sold and purchased. If by the assignment of Bakewell’s notes to Honoré, the latter would hold a lien upon the ground^ sold for their payment, and even by a renewal of those notes by Bakewell, Honoré would not be deprived of his lien, we cannot perceive the propriety of depriving him of his lien under the arrangement, which was consummated between the parties in this case. Bell has sold and conveyed to Bakewell, stipulating on the face of the deed, that Bakewell instead of paying the consideration to him, might pay it to Honoré. Bakewell assumes to pay it to Honoré, and Honoré accepted his assumpsit, and acquits Bell from the amount. If a lien would have been implied in favor of Bell, had the notes for the consideration been made to him, and the lien thus implied in his favor would have passed to Honoré by the assignment of the notes to the latter, we can perceive no good reason why Bell might not sell to Bakewell, stipulating on the face of the deed, that he might pay to Honoré the consideration, and why his direct assumpsit to Honoré for the payment of the consideration, would not raise a lien on the property sold, as well in favor of Honoré for the payment, as in favor of Bell. If Bell, the vendor, could create a lien in favor of Honoré by the assignment of Bakewell’s notes, may he not, by express stipulation requiring or authorizing the payment or as. sumpsit to him, create a lien in his favor, provided he accepts the terms and undertaking on the part of Bake-well? Had Honoré, by way of discharging his lien on the lots sold to Bell and Barbaroux, joined in the deed to Bakewell, and the consideration had been made payable to him, he certainly, as virtually a vendor and holder — 71 — of the notes for the consideration, would have held a lien on the ground sold for its payment. Though he does not join in the deed, he sanctions what is done, accepts Bake-well’s assumpsit for the consideration, acquits Bell from the amount, and thereby surrenders his original incumbrance on the property sold. Though in the latter case he is not nominally a vendor, by joining in the deed, he is virtually and to all practical purposes, as much a vendor as-if 'he had joined in the deed. The lien of venN dor for purchase money, is not confined to him it may pass to third persons to whom the note for the considertion has been assigned, or to whom the vendee has assumed its payment. / Nor is ther,e any evidence, that by the sanction which ! he gave to the transaction, and acceptance of Bakewell’s / assumpsit, that he intended to waive all lien upon the / ground, and look to Bakewell’s personal responsibility } alone for payment. Nor are there grounds for the implication of such an intention. Prima facie, a lien is implied in his favor, as the holder of the notes for the con-1"!' sideration, under the arrangement which was made, and ) the presumption can scarcely be indulged, that he would have released his original lien upon the ground, and personal claim upon Bell & Barbaroux, on his original sale, without looking as well to the lien which attached to the consideration of Bell’s sale, made payable to him, as to Bakewell’s personal reponsibility. The presumption may be fairly indulged, or at least the contrary'has not been shown, that he intended to occupy the place of Bell, in all respects, in his claim uponBakewell and the ground sold for payment of the consideration, and as such, may assert such lien as Bell could have asserted, had the notes been executed to and held by him. It is true that it has been stated that this lien is confined to vendor and vendee, and will not be raised in favor of a third person. And from this general text laid down in the elementary books, the conclusion might be deduced, that no other than the vendor and general grantor could assert this lien. But this principle has been deduced from the cases of Coppin vs Coppin, (2 P. Williams, 496,) and the dictum of Lord Hardwick, in the case of Pollexfen vs Moore, (3 Atkyns, 272.) By referference to these cases, it will be perceived that the principle is merely asserted, that in marshaling assets a legatee will not be substituted to the lien of the vendor, who — 72 — ¡-¡as exhausted the personalty in the payment of the consideration due him, instead of enforcing his lien upon the land; but by no means asserts the principle that a third person, to whom the note for the consideration has been assigned, or a third person to whom the consideration, by the terms of the sale, is made payable, has not a lien which he may assert against the land sold for its payment. And even the principle as to the right of a legatee to be substituted to the lien of the vendor against the heir in the case put, has been controverted by later decisions, (Powell on Mortgages, late edition, 3d vol. 1062, note 1st;) (Coot on Mortgages, 254-259;) Turner vs Baignes, (9 Ves. 209;) Austin vs Halsey, (6 Ves. 475;) Macreth vs Simmons, (15 Ves. 337;) (2 P. Williams, 295;) (1 Maddox Chy. 615.) a lien for the land sold, is not Temptingl0Stba fí^YheAmount which is not paid, but returned to the drawer and note taken. The modem doebYnofexohanget oonsfderaüoiYof land sold,'unless erofthe lien of the ren’ewaTo/a BWeration6 °any waiver ot ven-' 2d. We are equally clear that Honoré has not waived or surrendered his lien, by the acceptance of a check on the Bank, which was never presented or paid. By the subsequent surrender and cancelment of the check by the rautual consent of Bakewell and himself, who were at (he time the only interested parties, it must be under- , , TT . , , . stood that Honoie was intended to be placed in statu ^%Q ¡n rela(jon (0 his demand. The check was no payment, bula means or mode by which Honoré might obtain payment. It was no more a payment than the execution or renewal of a bond or note or bill of exchange, for the consideration, which is aceepted but not paid, which was formerly regarded as payment, or rather as a surrender ot the lien, but which by later and more enlightened decisions, has been determinec^ otherwise;' 1 The lien is a lien to secure the payment of the consideration, and prima facie it continues until payment is made, or it is waived or abandoned by some overt act on the part of the claimant, indicating an intention to do so, as taking and looking to other security for the payment, or until it has been lost by the transfer of the land to an innocent purchaser for a valuable consideration, without notice, or the means of notice. The bond, note, bill of exchange or check, is but the evidence of the amount due, and the means by which payment may be obtained or coerced, and may be changed orre — 73 — slewed from time to time, without actual payment. And from, such change or renewal, the presumption cannot rationally be indulged that the vendor intended to surrender his lien, more than that he intended to surrender his debt. By any fair interpretation of the transaction, it must be understood that the parties intended by the surrender and cancelrnent of the check, and the execution of a note for the amount, anti-dating the same to the date of the check, that their rights should stand as if the check had not been given. What had been done, was undone before payment in fact had been consummated on the check. It would be a strange and unnatural interpretation of the acts of the parties, to construe the surrender and cancelment of the check as an inteded loan of money, rather than an intention to undo what had been done. Such a construction would carry the acts of the parties beyond their rational import, and would have the effect to subject Honoré to a release of his lien upon a strained presumption against him, when his acts, by fair interpretation, manifested no such intention. a purchaser caninnotmt1 ^uí chaser without notice of lien, who byreasonashouia^íno^ol ^fien^aprevious owner, Pirtle, and Morehead fy Reed for appellant -..Duncan and Guthrie for appellees. 3d. A. & O. Hite are not innocent purchasers, without notice, or the means of notice. By reference to the deeds from Honoré to Bell and Barbaroux, and from Bell . ... . to Bakewell, through which they derived title, they might have learned that Honoré had not received the considerafion, but had sold on a credit of twelve years, and that Bell ■had not received the consideration of his sale, but had also sold on a credit, giving to Bakewell the privilege of making payment to Honoré. With the information thus afforded, it was their duty to enquire of Bell, Bakewell and Honoré, to whom Bakewell bad assumed payment, whether payment had been in fact made. Upon such inquiry they could not have failed to arrive at. the truth, and failing to make it, they have been guilty of such negligence as precludes them from occupying the condition of innocent purchasers wiihouf notice. The decree of the Chancellor is therefore reversed, and cause remanded, that the lien of Honoré may be allowed and enforced.