Curtis v. Buckley

The opinion of the court was delivered by Valentine, J.: This was an action on a promissory note, and to foreclose a certain supposed equitable lien on certain real estate. The principal question involved in the case is, whether any such lien has any actual existence. Some other questions however are suggested by counsel which we shall also consider. I. Upon the point made by counsel for plaintiff in error [455] (defendant below) that, there were two causes of action attempted to be stated in. the petition of the plaintiff below, while only one was in fact stated, and that the court below erred in overruling a motion of the plaintiff in error to strike out the second supposed cause of action, and also erred in overruling a demurrer of the plaintiff in error to said second count, see Andrews v. Alcorn, 13 Kas., 351. That case was a much stronger case‘for reversal upon such a point than this, but still we held in that case, as we must hold in this, that no substantial error was committed by the court below. II. The main question in the case is, do the facts of this case constitute an equitable lien upon said real estate ? The facts are substantially as follows: The Missouri Biver, Fort Scott & Gulf Bailroad Company sold a certain piece of land to Benjamin Kerchner. The purchase-money was not all paid down, and no deed of conveyance was executed, but the parties reduced to writing the nature and character of their transaction; both parties signed said writing, and the instrument embodying the same was then placed in the possession of said Kerchner. The instrument provided for Kerchner taking possession of the land, cultivating it, making improvements thereon, paying the- deferred payments for the land, and the company making a deed of conveyance to him or his assignee. Afterward Kerchner sold said land to Leander Curtis, plaintiff in error, received a portion of the purchase-money down, and took a promissory note for the balance. Kerchner himself, having no deed for the land, merely assigned his contract with the railroad company -to Curtis. It was suggested that Kerchner should take a mortgage on the land from Curtis to secure the payment of said promissory 'note, but the parties in lieu thereof finally agreed to deposit said written instrument which Kerchner had received from the railroad company with a third person, to be held by such third person until Curtis should pay said promissory note, and then to be delivered (with the assignment thereon) to Curtis. The parties understood that said written instrument was to be held by said third person as a security for the pay [456] ment of said promissory note, and to answer the purposes of a mortgage. Afterward Kerchner - sold and assigned said promissory note to Robert R. Buckley, defendant in error. This note was not paid at maturity, was protested, etc., and then Buckley commenced this action against both Kerchner and Curtis, asking for a judgment on the note for the amount thereof with interest, protest fees and damages, and also asked to have said land sold to satisfy said judgment. Kerchner was not served with summons, and the trial proceeded against Curtis alone. Judgment was rendered by the court below against Curtis, as asked for by Buckley, and Curtis now asks to have that portion of the judgment reversed which ordered the land to be sold, and which gave to Buckley protest fees and damages. It seems to be admitted that the railroad company had a good title to said land at the time they sold it to Kerchner; but it is claimed by the plaintiff in error that neither Kerchner nor Curtis ever had any title, legal or equitable. 'Whether,either of them ever had any such title or not, we do not think it is necessary now to decide. Kerchner had a legal and valid contract with the railroad company whereby he could obtain title, both legal and equitable, merely by fulfilling his contract. When he complied with all the conditions of said contract he would surely have the equitable title; and having the equitable title, he- could surely compel the railroad company to convey to him the legal title. Whatever Kerchner’s interest in the land may have been, he had the power at his own option to obtain a complete and absolute title. This interest he transferred to Curtis, reserving merely a lien. thereon for the payment of said promissory note. This lien of course does not amount in law to any estate or title, either legal or-equitable; for even a mortgage in this state does not amount to any estate or title, either legal or equitable; (Chick v. Willetts, 2 Kas., 385;) and an equitable lien of this kind is probably of no higher character than a mortgage. It is claimed by counsel for plaintiff in error, substantially, that an equitable lien on real estate, where it has [457] •any real existence, is an interest in land, and cannot be created merely by parol; that the statute of frauds, (Gen. Stat., 505, § 5,) prohibitsJsuch a thing. All of this we agree to; but still the statute of frauds does not attempt to prohibit the creation of equitable liens by operation of law, nor does any other statute. Stevens v. Chadwick, 10 Kas., 406. Such a lien should of course be in accordance with the contract and understanding of the parties affected "by it, but still it may sometimes result by operation of law from the transactions of the parties almost wholly independent of the contract that may be made between them. It results however from the whole transaction, including all the contracts, agreements, and understandings of the parties, parol or otherwise. The lien in the present case was not created merely by parol. It resulted by operation of law from the whole transaction between the parties. It can hardly be said however to have been created at all when Kerchner sold his interest in the land to Curtis. It was more properly reserved by Kerchner at that time as a .part of the interest which he already had. III. The evidence shows that the note was protested for non-payment by authority of Buckley, the owner thereof. This was sufficient. But the evidence does not show that any notice of the demand of payment, or the failure to pay, was ever given to Kerchner, the indorser of the note. Indeed, there was no legal evidence even tending to prove this offered to be introduced. While the statute provides, that “A notarial protest shall be evidence of a demand and refusal to pay a bond, promissory note, or bill of exchange, at the time and in the manner stated in such protest, until the contrary is shown,” (Gen. Stat., 117, §18,) yet no statute provides that such protest shall be'any evidence that'the indorser ever received any notice of such demand and refusal. And in the absence of such a statute no mere statement of the notary, in his notarial protest, that he gave the required notice, can be any evidence of such fact, or indeed of any fact material to the case. And where no such notice has been given, and thejndorser through want of such [458] notice has not been made liable on the note, no protest damages can be allowed. (Noyes v. White, 9 Kas., 640.) The court below in this case allowed protest damages, and for this error the judgment must be reversed and new trial ordered, unless the plaintiff below will remit the protest damages. If the plaintiff below shall remit protest damages, then the judgment will be affirmed. The costs of this court will be equally divided between the parties. All the Justices concurring.