Lockwood v. Noble

Grant, J. (after stating the facts). 1. The Equities. The equities are all with the complainant. The defend [421] ant has none. The proceedings in the suit by Ayres, Learned & Wiswall to set aside the conveyances to Howe et al. were regular as to all the defendants except Clark, Sr.; and, if there was any irregularity as to him, it was cured by his subsequent appearance and stipulation. Noble purchased with full knowledge of all the facts. He knew, and alleged in his answer to the foreclosure bill, that the title of Ayres, Learned & Wiswall was valid, and that the attempted conveyance by Donohue, and the mortgage back to him, were a fraud. He paid substantially nothing, either for the title conveyed by the assignee in bankruptcy or upon the foreclosure sale. He paid only $53 in all for lands which are worth many times that amount. From the time of his alleged purchase to the commencement of this suit, — a period of many years,— he did not attempt to exercise any act of ownership or possession over these lands, while complainant and his grantors were exercising open and notorious acts of ownership. If, therefore, Noble has any standing in a court of either law or equity, it is because courts are powerless to prevent the accomplishment of a gross wrong. This brings us to a discussion and determination of the defenses relied upon. 2. It is urged that the lis pendens did not take effect from the date of its record, but from the date of the completion of the service upon all the defendants; that service was not complete as to Clark, Sr., and therefore the record of the notice was of no validity as to subsequent purchasers and mortgagees. The question is not open to discussion in this State. The statute says, “To render the filing of a bill constructive notice,” etc., “it shall be the duty of the complainant to file for record,” etc. 2 How. Stat. § 6619. The filing of this notice was notice to the whole world of the claim made in the bill, and took effect from the date of filing. Alterauge v. Christiansen, 48 Mich. 60; Heim v. Ellis, 49 Mich. 241. It was therefore the duty of Davidson and Mason to examine the record. Had they done so, the notice of lis pendens would [422] have informed them that the mortgagors’ title was in dispute, and that, if the allegations' in the bill were true, they had no title to mortgage. 3. It is next urged that Davidson and Mason were bona fide purchasers of these notes, and are to be protected because the notes are negotiable. There are two answers to this contention which demonstrate its fallacy: (1) The law does not permit a party to execute a negotiable promissory note and a mortgage collateral thereto upon land to which he has no title, and make the security good in the hands of a purchaser of the negotiable paper before due, when the mortgagor had no title at the time in the land, and an examination of the record would have disclosed that fact; and (2), when Davidson and Mason purchased their notes, others were past due, there being six notes all told. Some had been paid, but one was dishonored and unpaid. Davidson and Mason therefore were not good-faith holders, but took subject to all the equities in the case. Abele v. McGuigan, 78 Mich. 415. 4. The assignee iii bankruptcy took only the title which his assignors had at the time they were adjudged bankrupt, and could convey only such title as his assignors had. This is a doctrine so sound and reasonable that it hardly needs the citation of authorities. We cite a few: Goss v. Coffin, 66 Me. 432 (22 Am. Rep. 585); Hardin v. Osborne, 94 Ill. 571; Ex parte Dalby, 1 Low. 431; Ex parte Rockford, etc., R. Co., Id. 345. It follows that the assignee, having nothing to convey, conveyed nothing. 5. It is insisted that $600 was unpaid upon the contract given by Donohue to Ayres, Learned & Wiswall, and that the defendant is entitled to this amount and interest. It is established that Donohue had no title to 240 acres, and that it was worth $3 per acre. Howe, Clark, Jr., and Clark, Sr., recognized the injustice of compelling Ayres, Learned & Wiswall to pay the balance of the purchase price for this reason, and therefore, by stipulation, [423] consented to a decree to that effect. There is no equity in requiring complainant to pay this amount. The decree of the court below was eminently just, and is affirmed, with costs. Long, C. J., Montgomery and Moore, JJ., concurred. Hooker, J., did not sit.