Whitfield v. Lyon

Mayes, Special Judge, delivered the opinion of the court.* This case presents two controversies, arising under the fifteenth article of the will of William Whitfield, who died in — 451 — 1854. See Whitfield v. Burke, 86 Miss. 435, 38 South. 550, 109 Am. St. Rep. 714. The lands in dispute were by that will devised to his two sons, William W. and John A., for terms of their natural lives, respectively, with remainders in each case to the surviving children of the testator, and after them to the. grandchildren. John A. died in 1863, without issue, and William W. and a sister, Lucy A., were his heirs. The fifteenth article of the will contained the following provisions: “Nevertheless, I hereby authorize my sons, if they desire, or if either of them are desirous, to sell the real estate devised to him for the purpose of purchasing other lands or other productive property, * * * to sell the real estate * * * for the reasons above given, and the title shall he good to the purchaser. The proceeds of the sale, however, is to be invested in other productive and valuable property, and is to be held under the limitations and conditions of all the property so held by them.” The facts out of which these controversies have developed are somewhat complicated, and are now, by lapse of time and the deaths of parties, quite obscure; but we shall endeavor to state them intelligibly so far as known. It seems that in February, 1873, Nathan W. Whitfield, one of the children of William W., and therefore one of the remaindermen under the will, borrowed from Theodoric C. Lyon the sum of $800, which was invested in a homestead for Nathan W., and for which he executed his promissory note, with his father, his brother, and his aunt as securities. In February, 1874, there were large amounts of taxes due on the Whitfield lands, and William W. and Lucy A. borrowed from Samuel Kline the sum of $3,375 to pay the same, having no other resources because of the low conditions of agriculture at that time, and apparently they applied the money to that use. They executed a trust deed to secure those moneys on certain lands, including three hundred and twenty acres of the land in controversy. On April 28, 1874, William W. Whitfield and Lucy A. — 452 — made a written agreement to sell to Theodoric O. Lyon, by description, one thousand and eighty acres of the Whitfield lands, including five hundred and sixty acres of the lands mortgaged to Kline, for an aggregate estimated sum of $17,393.50, to be-paid as follows: Lyon to pay four purchase notes, theretofore executed by William W. for his residence (the Gray Mount or Yates place) near Columbus, being “near six thousand dollars;”' Lyon to cancel the $800 note held by him, being for money invested in residence of Nathan W. as aforesaid; Lyon to convey to William W. and Lucy A. the iron front store in Columbus,, or other property of equal value if the store property could not be entailed; also Lyon to pay $4,000 to be invested in real estate according to the terms of William W. .Whitfield’s will — preferably in part payment for the Worley place, which place had been previously purchased by William W. Whitfield for $8,871 on credit from the Banks family. This written agreement was never recorded. A deed was executed by William W. Whitfield and Lucy A., which bears the same date as the agreement; but it was not acknowledged until the 12th of August following. There is no direct evidence to explain this apparent delay in the delivery of the deed. More'than thirty years have passed, and all of the .actors in these transactions are deceased. There is no testimony from any of them. At the April term, 1874, the Banks creditors recovered judgment against William W. Whitfield and his two sons on the debt above mentioned as purchase money of the Worley place in the sum of $8,832.50; and on July 9th following Lyon paid on that judgment the sum of $4,000. Some time prior to June 23,, 1874, Lyon paid off one of the four last $1,200 notes owing by William W. Whitfield for purchase of his residence, the Gray Mount place; and on that day he also executed to Whitfield a penal bond, with Yates himself as surety, in the sum of $5,000,. conditioned for the payment of the three remaining notes. On-August 11th a deed by Lyon to William W. and Lucy A. Whitfield, conveying the iron front store property, for the stated con — 453 — sidoration of $6,500, was executed and lodged for record. On the following day, the 12th, as shown above, the deed by the two Whitfields, conveying to Lyon lands contracted for, was acknowledged, and probably delivered. On the 13th the Whit-fields conveyed the iron front store to one Dillahunty for the' stated consideration of $5,500 paid; and on that same day the balance of $5,050, then owing on the Banks judgment for purchase money of the Worley place, was “fully satisfied and discharged by arrangements between the parties.” On the 6th day of January, 1875, Lyon sold six hundred and forty acres of the land conveyed to him by the Whitfields to his parents, Dr. J. A. Lyon and Mrs. Adelaide E. Lyon, for the stated consideration of $10,000 paid. This deed embraced three hundred and twenty acres which had been mortgaged to Kline, as stated above. To this point of time and events even this fragmentary and obscure record shows clearly that Theoderic C. Lyon had exactly fulfilled his assumptions by the agreement of purchase. The agreement itself was practically a satisfaction of the $800 note, and it disappears; he paid the $1,200 note of 1874 to Tates on the Gray Mount place, and the interest; he paid the $4,000 on the banks judgment for purchase money of the Worley place; he conveyed the iron, front store property; in all, he had paid about $13,000. It only remained for him to pay the thrée $1,200 notes and interest, executed to Tates for the Gray Mount place, falling due, respectively, on the 1st days of March, 1875, 1876, and 1877. He failed to pay the note of 1875. There is no testimony showing the reason for such failure. It is left to conjecture. It will now be recalled that, when the Whitfields conveyed the one thousand and eighty acres to Lyon by their warranty deed in 1874, part of the same, amounting to five hundred and sixty acres, was under mortgage to Kline. The Whit-fields did not make good their warranty, but failed to pay their note due February 1, 1875, and on April 13, 1875, the lands embraced in the Kline trust deed were accordingly sold because — 454 — of that default, were bought in by Kline, and were lost to Lyon. We may conjecture that these facts caused Lyon’s failure to pay the $1,200 of March 1, 1875. Then oñ May 24, 1875, Lyon having failed to pay that note and the whole debt thereby maturing by provision of the trust deed, the Gray Mount place was sold by the trustee to Dr. O. M. Vaiden for $4,800. On the same day, May 24th, Whitfield filed a bill against Yates, Lyon, the trustee, Leigh, and others, setting up the agreement of June 23, 1874, whereby Lyon gave bond, with Yates himself as surety, for the payment of. the three notes falling due in 1875, 1876, and 1877, alleging that by the execution of such bond these notes were all in effect discharged, and praying for an injunction of the proposed sale by the trustee. This bill did not stop the sale, which occurred notwithstanding, as stated above. Shortly afterwards the bill was dismissed by complainant, and then an action of debt was brought against Lyon and Yates in the circuit court. This suit is only shown by docket entries. The declaration is not in the record. Counsel here say in their brief that it was on the bond. There was a trial, and a judgment for the defense. Meanwhile, Kline brought an action of ejectment against Lyon to the April term, and recovered judgment at the November term following. In June, 1875, Lyon executed a second deed to his father and mother conveying certain other lands of those purchased by him from the Whitfields, in consideration of $200 paid and the failure of title to the three hundred and twenty acres of their lands so sold under the Kline trust deed. No other claim or demand seems ever to have been asserted by the Whitfields against Lyon because of his failure to pay the three Yates notes; and, unless this failure to, pay be taken for such, Yates never received any compensation, so far as this record shows, for the failure of title to the lands of his parents and himself so sold under the Kline trust deed. Miss Lucy A. Whitfield died childless in 1887. William W. Whitfield died January, 1903, leaving children, who are the ap — 455 — pellants on the first branch of this case. Rev. J. A. Lyon dir d in 1882, and Mrs. Lyon took his interest in the lands by sun vivorship, as their title was by the entirety. Later T. C. Lyon died childless, and his brothers and sisters released to their mother, Mrs. Lyon, in 1904. Mrs. Lyon filed this bill in 1905 against the children of William W. Whitfield and the heirs of Kline to remove clonds. The cause presented two controversies: .First, between Mrs. Lyon and the children of William W. "Whitfield about the lands conveyed to Theodoric C. Lyon in 1874, excluding those embraced in and lost by the Kline mortgage; and, secondly, between Mrs. Lyon and the Klines about those lands which were embraced in and lost by the Kline mortgage. The court below confirmed Mrs. Lyon’s title as against the Whit-fields and they have appealed. It decreed adversely to Mrs. Lyon as to the Klines, and she appealed on that branch of the casé. It is here contended by the Whitfields appellants, first, that Theoderic O. Lyon failed to pay for the lands conveyed to him as required', by his purchase contract; 'and, secondly, that William W. and Lucy A. conveyed in violation of their father’s will, and not for reinvestment, and that Theoderic <3. Lyon knew of and participated in their wrongdoing. Wherefore his mother cannot succeed; she being chargeable with notice, and there being no evidence that she was a bona fide purchaser for value. That Theoderic O. Lyon discharged his obligations under the agreement of purchase with the exception, possibly of the payment of the three notes of $1,200 each to Tates,, appears clear, as stated above. If he did not pay the three notes, the record shows what is apparently good and adequate reason, in that he seems to have failed to get five hundred and sixty acres of the land warranted to him. The record discloses no effort by the Whitfields to make their broken warranty good. It shows no claim asserted against Lyon or Mrs. Lyon for any liability during a period of thirty years. It is difficult to see how they can now claim that he was in default in that particular. — 456 — As to the second proposition, we find nothing in this record to show either that William W. or Lucy A. Whitfield designed in these transactions to defeat the provisions of their father’s will. It is true that the proceeds of the land sold to Lyon were used in discharging their liabilities;, but those liabilities were debts incurred in the purchase of other valuable lands, which stood there to represent the lands sold. We see no substantial difference between selling and applying the cash proceeds of the Lyon lands to the original purchase of other lands, on the one hand, and their application to the extinguishment of a purchase debt for such other lands, on the other hand. The substantial result is the same, and it is in effect the simple exchange of the one for the other. But it is urged that the lands so received by way of exchange were acquired with th’e fee in Whitfield, and with no limitations over in remainder to his children. That is true; but there is no evidence that, at the time of the sale to Lyon, Whitfield had any other intention than to comply literally with the terms of his father’s will, and settle a remainder on the parties entitled (who, it will be remembered, were his own children). The agreement with Lyon clearly expresses such an intention as to the greater part of the purchase price. However, even if it were shown that the arrangements made by William W. Whitfield and Lucy A. were intended to oust the remaindermen, there is no evidence that Lyon had knowledge of such purpose, or participated in it. Such knowledge and participation are imputed to him because of certain details; but those details are entirety consistent with fidelity at the time in the Whitfields to the obligations of the will. Subsequent events cannot be used against Lyon. His good faith and merit must be judged by things as they were rvhen he contracted. His action seems to have been free'from blame. The $800 note discharged was the obligation of two of the remaindermen. The four notes, of $1,200 each, with interest, held by Tates, which he undertook to pay, were the purchase — 457 — .money notes for a home for William W., the title to which was then in him; and Lyon is not shown to have had any reason whatever to believe that he intended to divert from the remaindermen, who were all his children, their natural inheritance, or to believe that he would fail to settle upon them a title in remainder, as he easily might have.done. As to the residue of 'the value to be paid by Lyon, the agreement expressly stipulated that.the limitations of the will should be observed. It is true that the residue of value was employed in paying off William W’s liabilities on the purchase money of the Worley place; but the agreement expressly mentioned that place as an investment to be made in accordance with the will, and Lyon had no reason to know or believe, so far as this record discloses, that William W. would fail to settle tire title accordingly. We turn now to the Kline branch of the case. It is claimed by Mrs. Lyon’s heirs that the Kline title was only an estate for the life of William W. Whitfield, and terminated with his death in 1903. It is claimed by them to have been only a life estate, because the will of William Whitfield only authorized a sale of the fee for reinvestment, and not a mortgage for borrowed money. Whatever force there may be in this position as a general proposition, we hold that it does not ápply in this instance. We decide this case on the special facts. The Kline answer averred, and McQuown’s deposition proves, that the ■money was borrowed in order to pay taxes on the AVhitfield lands, and that the Whitfields were without other resources to pay the taxes, and that moneys were so applied. In such case this expenditure was indispensably necessary to the preservation of the estates, both of the lands mortgaged and of the other lands. As to these and, all the lands, William W. and Lucy A. were trustees of the fee for the remaindermen; and to preserve the corpus of the estate against the paramount demand and lien for taxes, and against a forfeiture, we think they had power to mortgage a part of the lands for that purpose by necessity, in, • order to carry out the general expressed purpose of the will. It — 458 — gave them a further opportunity to pay what was obliged to be-paid. True, the primary obligation to pay these taxes was,, as between them and the remaindermen, on them; but as against, the demand of the taxing power the liability was against the-whole estate, and the lender could bargain for a straight mortgage on the fee or else lend, no money. Of course, a trustee,, dealing with the trust estate without previous leave of the-court, so deals at his peril, and his action will be closely scrutinized; but in this case it seems'to have been proper. We hold that the Kline mortgage and sale carried the fee, under the-special facts. The decree of the chancery court is affirmed on both appeals. Footnotes [*] Chief Justice Whitefield, being related to some of the parties, recused himself in this case, and Edwakd Mayes, Esq., a member of the supreme court bar, was appointed a special judge by the governor, and presided in this case in place of the Chief Justice.