Mailhouse v. Frazier

Bowie, J., delivered the opinion of this Court: The final decree in this case required the defendants, now appellants, to pay or bring into Court, the sum of $3000 (with interest from the 20th of April, 1859, and costs of suit,) in default whereof, on or before the 3rd of June, 1863, then the •premises mentioned in the bill and proceedings were decreed to be sold. The money being unpaid, the property ,was sold by the trustee for $2500, which being reduced by •commis-sions, costs and expenses, left due the complainant the sum of $1463.54, for which he prayed a writ of fieri facias might be issued, which was ordered, and the defendants afterwards prayed an appeal from the decree against them and filed •their bond. The appellants’ solicitors do not controvert the right of the complainant to a sale of the premises, but deny simply his right to a personal decree against them, and claim a ¿reversal of so much of the decree: 1st. Because there was no evidence of fraud or combination between the defendants to mislead the complainant. 2nd. Because the original contract between the defendant, Mailhouse, and the complainant was abandoned and Michelis '.■substituted in the place of Mailhouse, whereby the latter was released and discharged from all liability for the property in -question. The final decree was passed upon the .return of a commistsion issued after'interlocutory decrees for want of answers .against both respondents. The evidence filed under this commission consists solely -of three promissory notes of Michelis, dated the 20th of April, 1859, at one, two and three years respectively, for •.$1000 each, with the notarial protest of the first of said -notes. Neither of the complainant’s exhibits, the orignal ¿contract marked A, or the substituted contract marked B, were filed with, or proved before the Court, but as they [103] have been treated by the counsel as evidence in the case, they will be considered by this Court as in, without exception, particularly as the whole controversy turns upon the relation which these agreements bear to each other. ExhibitA, filed with the complainant’s bill and referred to therein as a part thereof, is a bond of conveyance dated the 20th of April, 1859, from James Frazier, the complainant, to Joseph T. Madhouse, one of the defendants and appellants, reciting that the complainant had sold and agreed to convey to Madhouse or his personal representatives, certain leasehold property therein described, in consideration of the sum of $3500, $500 of which had been paid in cash and the Residue secured by three promissory notes of Madhouse of even date therewith, each for the sum of $1000, bearing interest, and payable at one, two and three years, with a condition that upon payment of the résidue of the purchase' money and interest, and all taxes and ground rent thereafter' to become due by said Madhouse, the complainant would transfer and convey the same to Madhouse clear and discharged of all incumbrances by the said Frazier or his representatives, and until default made in payment of the same, would permit Madhouse to hold, possess and enjoy the-same. Exhibit B is a deed dated the 23rd of January, 1860, signed by Joseph T. Madhouse, Julius Michelis and James Frazier, the complainant, reciting the execution of the foregoing bond of conveyance by Frazier to Madhouse; and “ whereas, the said Joseph T. Madhouse has for a valuable consideration, sold to the above named Julius Michelis, all his, the said Madhouse’s equitable interest, right and title acquired under the said contract or bond of conveyance; and whereas, the said Michelis has agreed to assume the payment of the balance of the purchase money and interest remaining due and unpaid; in consideration whereof, the104 said James Frazier liatli agreed to surrender to tlie said Madhouse the three promissory notes now in his possession, as security for the payment of said purchase money and interest, and to accept in lieu thereof, the three promissory notes of said Michelis, to be drawn as of the same date for the same amounts, and payable at the same periods, as the three notes so surrendered as aforesaid.” In consideration of the premises and one dollar, the said Madhouse transferred and assigned to the said Michelis, all the interest and estate, etc., of the said Madhouse in and to all the lots mentioned and described in the bond of conveyance aforesaid. The notes of Michelis filed under the commission, bear date the 20th of April, 1859, although executed, in fact, on or after the indenture of the 23rd January, 1860. The complainant, after alleging the execution of the aforesaid instruments, and the facts recited therein, avers that he joined in the deed to signify his assent to the transfer, at the request of, and to accommodate Madhouse, agreeing-'to return to him the three notes he had received from him, as security for the unpaid purchase money, and in lieu thereof to receive the notes of Michelis drawn by him of the same date for same amounts, and payable at the same periods as the notes so returned' as aforesaid, but in returning said notes to Madhouse he had no intention to release him from his responsibility therefor under his said contract of purchase, for the payment of said purchase money, but still regarded him as responsible therefor. He charges combination between Madhouse and Michelis, to substitute the latter, who was worth nothing, for the former, who was responsible, and thus avoid the personal liability altogether. There being no evidence of fraud, or other facts except those above mentioned, we are loft to infer the intention of the parties from tlieir acts. [105] if tlie suit was at law, instead, of in equity, against Mailliouse, for the balance of the purchase money, it would be left to the jury to find whether, in accepting the notes of liielielis for those of Mailhouse, under the circumstances, the former contract was abandoned. In Yates vs. Donaldson, it was held to be well settled, that the acceptance of a security or undertaking of equal degree, does not extinguish the former debt, unless it be received in satisfaction, or be intended as an abandonment of the remedy on the first contract. Tlie same doctrine was announced in Berry vs. Griffith, et al., 10 Md. Rep., 31. One of the instructions in the former case, which this Court said should have been granted was, the plaintiff was entitled to recover, " unless they (the-jury) should believe that the giving and taking of the notes was intended by and between the parties as an abandonment by Yates of Ms original claim against the defendants jointly.” 5 Md. Rep.., 391. It was held by this Court, in the ease of Creager vs. Link, that where a new note, with collateral security, was deposited by the defendant with the witness, in satisfaction of a note’ held by the plaintiffs, to be delivered by the witness to the plaintiffs upon surrender of tlie old note, pursuant to a previous Agreement between tlie defendant and plaintiffs, and the plaintiffs afterwards offered to surrender the old note,' but the witness then refused to give him the new note, because his authority had been in the meantime countermanded. The plaintiffs could not recover on the old note,' but had his remedy in trover for the new security — the former’ being satisfied. 7 Md. Rep., 260. In this ease, it seems to' us, the surrender of the security given by .Madhouse was a surrender of the debt represented by it, and the acceptance' of the notes of Miehelis was a substitution of one purchaser’ lor another. One-sixth of the purchase money having bees? [106] paid by Madhouse, Erazier might wed have relied on hfe vendor’s lien as security for the balance» (Decided June 15th, 1866.) The transaction is, upon any other hypothesis, inexplicable^- and without motive or mutuality, unless the first purchaser' was discharged thereby. The first purchaser parts with his interest and control over the property — can no longer insist upon the conveyance of it to himself j loses- all advantage of prospective enhancement, all means of indemnity against loss, and yet remains primarily liable. Such a construction, would be contrary to all principles of equity» It results, from our view of these facts, that the appellant, Madhouse, was not liable for any part of the purchase money after the compliance of the parties with the agreement set out in their deed of the 23rd January, 1860. The decree being against Madhouse and Miehelis jointly was therefore erroneous, and must be reversed as against the former. Although the bill was filed before all the notes of Miehelis matured, yet, as in case of a mortgage, to secure a debt payable in instalments, the decree upon the- forfeiture by non-payment of the first, may be made to stand, as security for the residue in case of subsequent defaults; so here, the whole money having since become due,- the decree will not be modified in that respect, but the case will be remanded for such proceedings as may be necessary to conform to the opinion of this Court. Decree below reversed,, with costs of this Court to the appellants, and cause remanded for further proceedings. Decree reversed? with eosts in this Court to the appellants, and canse remanded»