Case ID: ill_5/html/0013-01.html
Source: Caselaw Access Project
Author: {"author": "CATON, Justice,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

James W. Willis et al. v. Archibald R. Henderson.
    
      Appeal from Fulton.
    
    1. Mistake — equity jurisdiction. It is competent for a court of chancery to correct mistakes in instruments of writing of all kinds, and, upon a proper case, in the same suit, to grant relief upon the instrument, when so corrected, in the same manner as if it had been made perfect in the first instance, 
    
    2. Mortgage — liability of vendee. Where land is purchased with notice of an outstanding mortgage, it is liable to be charged with its payment, in the same manner that it would have been, had the legal title remained in the vendor.
    3. Trustee for creditors — not purchaser for value. It may be admitted, that where A, without notice of aprior incumbrance, purchases a tractof land of B, who has such notice, for a valuable consideration, that A’s title shall not be defeated because he derives it through a contaminated channel; but a trustee for the benefit of creditors is not a purchaser for a valuable consideration, nor are such creditors to be entitled to protection against such outstanding incumbrance, 
    
    4. Purchaser — bona fide. Semble, That where lands are purchased for a valuable consideration, and the title is taken in the name of a third person, the purchaser will be protected in the same manner that he would have been, if the title had been taken in his name.
    5. Parties to action — in chancery. It is a general rule in chancery, that all persons interested in the subject matter of the litigation, whether it be a legal or equitable interest, should be made parties, so that the court may settle all of their rights at once, and thus prevent a multiplicity of suits. To this rule there are necessarily many exceptions. One general rule, however, governs all of these exceptions, and that is, “ that as the object of the rule is to accomplish the purposes of justice, between all of the parties, and as it is a rule founded in some sort upon public convenience and policy, rather than upon positive principles of municipal or general jurisprudence, courts of equity will not suffer it to be applied so as to defeat the very purposes oí justice, if they can dispose of the merits of the case before them, without prejudice to the rights or interests of other persons who are not parties ; or, if the circumstances of the case render the application of the rule impracticable, and if the persons thus interested are unknown to the complainant, he need not make them parties.” Another exception is where the persons collaterally interested are exceedingly numerous, and it would be impracticable to join them without great delays and other inconveniences, 
    
    6. Same — foreclostire of mortgage. Where a bill in chanceiy is filed to foreclose a mortgage, and the mortgagor has conveyed the estate to a trustee for the benefit of creditors, and .the trustee is made a defendant, it is unnecessary to make the creditors parlies.
    7. Practice — office of answer in chancery. An answer in chancery not sworn to is not evidence in the cause, for any purpose; it performs the office of a plea only, 
    
    
      8.Same — interests of persons not parties. Semble, That where it is made to [* 14] appear that there are interests involved in the cause, which are not before the court, a decree will not be rendered affecting those interests, until they are brought before it in a proper manner.
    ON the 21st of April, 1841, Archibald R. Henderson filed his bill in chancery in the Fulton circuit court, against James W. Willis, Franklin P. Offield, James S. Turner, and Lewis Howell.
    The bill charges that James W. Willis on the first day of June, 1886, executed and delivered to the complainant, a mortgage deed for the following property, to wit: 60 acres off of the west line of the N. W. qr. of S. 2. T. 7 N., R. 4 E.; also 50 acres out of the N. E. corner of said quarter section, to secure the sum of $300, and interest at 12 per cent., in one year. That at the time of the execution of the mortgage, "Willis was seized in fee of part of the N. W. qr. of S. 2, T. 6 N., R. 4 E., and that at the time it was well understood between Willis and the complainant, that said Willis was to mortgage 110 acres off of tlie N. W. qr. of S. 2, T. 6 N., R. 4 E., instead of the land mortgaged, and that both parties supposed, at the time, that the land described was in township 6, and that it was by mere mistake and oversight, that it was described as in township 7, instead of 6, and that said Willis did not own the land in township 7. The bill further alleges that the complainant, supposing the lands mortgaged were the N. W. qr. of S. 2, T. 6 N., É. 4 E., after the mortgage became absolute, sued out scire facias and recovered judgment upon the mortgage, and had the premises described therein sold, and the complainant bought them in for the amount of his debt, supposing the land was that intended to be mortgaged.
    The bill then charges, that after the making of the mortgage, the said Willis sold and conveyed said land to Franklin P. Offield, or to said Offield and James S. Turner, jointly; that if the same was purchased in the name of Offield, it was purchased with the means of Turner and Offield, said Turner having the same interest in equity that Offield had. The bill then charges that Offield afterwards sold his interest to Turner, and that Turner conveyed to Howell, as assignee of Turner, and for the benefit of the creditors of Turner and Offield. That before the said Offield or Turner and Offield purchased said land, they, or the said Offield, had notice of the mortgage, and were informed by Willis and divers other persons, of the existence of said intended mortgage. That the mistake in said mortgage was not discovered at that time, nor till long after. That the said Offield bargained for and purchased said land, with the expectation and belief that it was charged with the payment of said mortgage. The bill charges that the complainant cannot state the manner in which Offield, Turner, and Howell acquired or hold the same, but calls on them to discover who are the owners, etc.
    The bill then prays that the judgment on scire facias may be vacated; that Willis be compelled to correct the [* 15] mistake ; and that the mortgage be foreclosed, etc.
    The answer of James S. Turner admits that Willis, at the time of giving the mortgage, was seized, etc., but of the existence of the said mortgage he alleges that he knew nothing, except as informed by the bill, and that he knew nothing of the agreement and understanding between complainant and Willis. The answer further states, that on the 81st of October, 1836, he purchased from Willis the land in question, and that, by deed of that date, duly executed, for good consideration paid by him, Willis conveyed said land to Offield and Turner; that the said land was paid for in goods owned by Turner and Offield. Turner admits that Offield, on the 24th of December, 1886, sold said land to him, but denies that at the time he purchased from Willis and from Offield, he had any knowledge or notice of the existence of the mortgage. He avers that be purchased the same believing it to be free from incumbrance, and for a good consideration between him and Offield; and that at the time he purchased of Offield, he knew nothing of the mortgage. Turner then states that he assigned said land to Howell, for the use of his creditors, and the creditors of Turner and Offield. Turner then shows conveyances made since he purchased, and that the undivided half of said land is now in one Cushing, who has not been made a party to the bill, and that at' the time of said several conveyances he knew nothing of complainant’s mortgage, except when he assigned to Howell. Turner then sets up a tax title to 20 acres of said, land, acquired subsequently to the mortgage.
    Howell, in his answer, denies any knowledge of the existence of a mortgage ; admits that he is seized for the creditors of Turner and Offield ; and avers that he knew nothing of the mistake, and had no notice at the time of the assignment.
    The bill was taken pro confesso, as to Willis and Offield.
    The complainant then proved, by
    Robert N. Baker. That he was employed as clerk of Turner and Offield, in the spring of 1836, at Canton; that they were trading as merchants at Canton and Peoria; that he knew of Turner, and Offield’s purchasing one farm, and paying for it out of the store and money. This farm was bought of Joseph C. Smith.
    JOHN C. Culton. That he was acquainted with the land in township 6 ; that in the summer of 1836, he heard Willis say that he had mortgaged to Henderson said land, and a short time before he heard Willis say he wished to borrow money of Henderson, and would give a mortgage on said land; that in the year 1836, he heard Offield say that he and Turner tho'ught of purchasing said land of Willis, and enquired if Henderson held a mortgage on it, and was informed he did, and wished to [* 16] know if Henderson would not take goods for the mortgage; and late in the fall of 1836, heard said Offield say that he and Turner had purchased said land.
    Joseph M. Kelso. That he was acquainted with the land; that in the fall of 1836, he heard Willis say that he was about to sell said land to Offield and Turner; that Henderson had a mortgage on the land, and Willis was much out of humor because Henderson would not release said mortgage; that in the fall of 1836, Offield enquired if Henderson had a mortgage on said land, i and was informed he had. Offield then informed witness that he and Turner talked of buying said land of Willis. Afterwards Offield asked witness if he and McPheters had not lifted said mortgage, and was informed they had not.
    Joel Caykendall. That he was acquainted with the land ; that Willis told him that he had given a mortgage to Henderson. In 1839, Willis said that when lie made the mortgage, he supposed that it was on the land in township 6, and that he had made a mistake.
    James McPheters. That he was acquainted with the land: that Willis told him that he had given a mortgage to Henderson for $300, and wanted to sell the land to Offield and Turner, and wished witness to go his security for the purpose of lifting the mortgage. Afterward Willi's wished Henderson to take other lands, which he refused to do. This was late in the fall of 1836.
    ALEXANDER McPheters. That he is acquainted with the land; that sometime between the first and middle of October, 1836, Willis told him that he had mortgaged said land to Henderson ; that Willis said that he had an opportunity to sell said land to Turner and Offield for $22 per acre, provided he could lift the mortgage, and that he wished Kelso and McPheters to go his security for the amount of the mortgage, and take it up, so that he could sell it to Turner and Offield.
    John Rockhold. That in the summer of 1837 he asked Of-field if he had any land to sell. He said he had. Witness then asked him if he did not own a piece east of town ; and he said he did; but that there was a mortgage on it in favor of Henderson, and if he and Turner did not lift it, that Henderson would hold the land. Offield then said that he and Turner had contracted fifty acres to a man in the east, who was to pay him $500 for the fifty acres, which would enable them to lift the mortgage. After-wards, in 1838, I asked Offield if the man had come on, and he said no. Witness then proposed to buy, and advance $400 to lift the mortgage. Offield then replied that Turner had been to Lewiston, and discovered that there was no mortgage on record on said land. He knew the land to be the same.
    Robert C. Culton. That he is acquainted with the land. That he had a conversation with Offield on the 25th of November, 1836, at which conversation Willis was in the [* 17] store, but took no part in the same. Offield asked him if he did not wish to buy the land, then describing it so that he knew it to be the same. Offield said the land was encumbered by a mortgage fromWillis to Henderson. They, Turner and Of-field, knew that the mortgage was held by Henderson, at the time they purchased it. Willis had promised to lift the same by giving Henderson personal security, büt he feared they would fail to do so. Offield said the mortgage was for $300, and wished to sell witness the land subject to the mortgage. Offield said they paid $20 per acre out of the store of Turner and Offield, but that he would sell it for $10 per acre, subject to the mortgage. He had a conversation with Willis in December, 1836, and he said he had sold the land to Offield and Turner, on which Henderson held the mortgage for $300, and he wanted to borrow money ®£ him to lift the mortgage, and would give personal security; the land is the same.
    The court then decreed that the mistake in the mortgage be corrected; that judgment on seire facias be annulled; and that the mortgage be foreclosed, etc.
    The cause was heard in the court below, at the March term, 1842, before the Hon. StepheN A. Douglass. The defendants, Turner and Howell, appealed to this court, and. assigned for error the decree of the court below.
    E. N. Powell, for the appellants:
    Actual notice must be given by a person interested in the property, and in the course of treaty for the purchase. -Vague rumors from persons not interested is not notice. Sug. Vend. 780.
    A purchaser without notice, from a purchaser with notice, is not affected with the fraud. Bumpus v. Bay et al., 1 Johns. Ch. R. 213; Jackson, ex. dem. Bartlett et al. v. Henry, 10 Johns. 185.
    Where real estate is purchased by partners, the partners hold it as tenants in common. Collyer on Partn. 69, note 1; Story on Partn. 127.
    The law merchant does not extend to speculations in the purchase and sale of lands. Pitts v. Waugh, 4 Mass. 424.
    The admissions of an agent, at the time of a transaction, are admissible; but what he says at another time, and of his own authority, aré inadmissible in evidence. 2 Stark. Ev. 24.
    The power of one partner to bind the firm, by admissions, only extends to partnership transactions.- Collyer on Partn. 233 ; Gow on Partn. 194.
    If the answer to a bill discloses an interest in a third person who is interested in the subject matter of the suit, he should be made a party ; and courts will take notice of the omission, pi8] though no demurrer be interposed. 1 Scam. 569.
    
      Oestuis que trust ought to be made parties to a bill to foreclose, as well as- the trustee. Story’s' Eq. Plead. 177-182, § 197.
    O. Peters, for the appellee.
    
      
       Cases Citing Text. Chancery may .in one suit rectify mistake in insurance policy and give judgment for amount due on such policy as rectified. Mercantile Ins. Co. v. Jaynes, 87 Ill. 199, 205.
    
    
      
       Assignee for benefit of creditors takes as volunteer, and at least where lease reserves to landlord lien on tenant’s goods to secure rent, tenant’s assignee for benefit of creditors takes subject to landlord’s lien, and distress warrant levied after assignment holds goods. O’Hara v. Jones, 46 III. 288, 293.
      Assignee for benefit of creditors takes not as bona fide purchaser, but as volunteer, subject to all liens, claims and equities, good against assignor. Hardin v. Osborne, 94 Ill. 571, 574.
    
    
      
      
         In general all persons interested in subject of chancery suit should be made parties, but where persons interested to have right in dispute enforced, are numerous and in part unknown, e. g. are members of religious society, suit may be by some on behalf of all. Whitney v. Mayo, 15 Ill. 251, 254.
      In order to preserve priority of mechanic’s lien over trust deed to secure payment of notes, both trustee and cestui que trust must be made parties within periods fixed by statute for beginning proceedings. Bayard v. McGraw, I Bradw. 134, 144; McGraw v. Bayard, 66 Ill. 146, 153.
    
    
      
      
         Unsworn answer is not evidence. Ferguson ¶. Sutphen, 3 Gilm. 547, 572.
      Chancery plea should not be supported by answer unless bill confesses and avoids plea. State Bank v. Wilson, 4 Gilm. 57, 63-
      It is proper to set cause for hearing on bill, answer and depositions, where oath to answer is waived, although no ■ replication is filed. Chambers v. Rowe, 36 Ill. 171, 173.
      Complainant need not prove averments, which are admitted by answer, although unsworn, but such admissions may be overcome by evidence conflicting with them. Miller v. Payne, 4 Bradw. 112, 117.
    
   CATON, Justice,

delivered the opinion of the court: This bill was filed by Henderson, for the purpose of rectifying a mistake in, and foreclosing a mortgage. It appears that Willis gave to Henderson a mortgage dated the first of June, 1836, to secure the payment of $300 and interest. The land described in the mortgage is situated in township seven (7), in range four (4) east, in Fulton county. I think it is satisfactorily established by the testimony of J. J. Culton, Kelso, Caykendall, J. McPheters, A. R. McPheters, Rockhold, and C. R. Culton, so far as it is possible to establish that fact, from the declaration of all the parties, that a mistake was made in the description of the land, in drawing up the mortgage, and that the land really intended to be encumbered was situate in township six (6), instead of township seven (7). It has been fully settled, at the present term of this court., in the case of Ballance v. Underhill et al. 8 Scam. 450, that it is competent for a court of chancery to correct mistakes in instruments of writing of all kinds, and upon a proper case, in the same suit, to grant relief upon the instrument, when so corrected, in the same manner as if it had been made perfect in the first instance. I shall, therefore, hereafter consider the mistake as corrected, and treat the mortgage the same as .if it described the land mortgaged as situate in- township six (6), according to the real intention of the parties at the time the mortgage ivas executed.

The next enquiry is whether Offield and'Turner, at the time they purchased the land of Willis, had notice of Henderson’s mortgage on the premises. It appears that the land was purchased by Turner, in the fall of 1836, for himself and Offield, and paid for with goods out of their partnership store. Offield has filed no answer, and Turner’s answer is not sworn to, so that the question of notice must be determined by the depositions alone;, and I am satisfied, beyond a doubt, that the testimony sufficiently establishes that Turner and Offield both knew of the existence of this mortgage, at the time they made the purchase, and that they purchased with the expectation and belief, that they took it subject to this mortgage; no person having at the time discovered the mistake, but all parties then believing that the land was truly described in the mortgage. It is true that Offield states in his deposition, that at time the purchase was made, he did not know of the existence of the mortgage on this land; but he is distinctly contradicted by several [*19] witnesses. É. O. Guitón testifies" that in November, 1836, Offield told him that he and Turner both knew that Henderson had a mortgage on the land at the time they purchased it of Willis. Rockhold swears that in 1837 Offield told him that Henderson had a mortgage on the land, but‘in 1838 he said that Turner had been and examined the records, and found that Henderson’s mortgage did not cover it. Kelso states that in the fall of 1836 Offield said that he and Turner were about purchasing the land of Willis, and inquired of witness whether Henderson had a mortgage on it, and witness told him that he had. If these witnesses all sweat to the truth, it certainly requires no great stretch of credulity to believe, that at the time of their-purchase, both Offield and Turner knew of the existence of this mortgage, and supposed and believed that it covered this land, and purchased it subject to that incumbrance. Especially when; we also take into consideration many strong corroborating circumstances, tending to the same conclusion; and if I am correct in this determination, it is liable to be charged in their hands, in the same manner that it would have been, had the legal title still remained in Willis.

We will next inquire whether the legal title which Howell holds to a part of this land changes in any manner the equitable rights of the parties. It appears that after Turner discovered the mistake in the mortgage, he made a voluntary conveyance of an undivided half of the premises to Howell, for the benefit of the creditors of Turner and of Offield and Turner ; and because no notice is brought home to him of this incumbrance, it is insisted that he, at least, must be considered as a bona fide purchaser without nptice. It may be admitted that if he had purchased the land for a valuable consideration, and was not chargeable with notice, that his title should not be defeated, because he derived it through'a contaminated channel. But thisisnothis case. So far as he is concerned, his conveyance is entirely voluntary, and under.it he could acquire no rights to the prejudice of the equitable interests of the complainant. Nor, in fact, does he claim any personal rights under this conveyance; but all that he does claim is to hold the legal title for the use of the creditors of Offield and Turner. Nor have these creditors, in consequence of this conveyance to Howell, for their use, acquired any interest which can affect the rights of the complainant. Had they.purchased the land for a valuable consideration, and taken the deed in the name of Howell, withoutnotice of the complainant’s equity, their rights might have'been protected to the same extent they would have been if the deed had been taken in their own names. But such appears not to have been their case. They made no purchase of the land; nor were they strictly parties to the transaction ; nor does it appear that they knew anything of it. [* 20] We will next examine the objection that was taken, that these creditors should have been made parties to this proceeding. It is a general rule in chancery that all persons interested in the subject matter of the litigation, whether it be a legal or an equitable interest, should be made parties, so that the court may settle all of their rights at once, and thus prevent the necessity of a multiplicity of suits.

To this rule there are necessarily many exceptions, and we find it modified in a great many instances. One general rule, however, governs all of these exceptions, and that is, “ that as the object of the rule is to accomplish the purposes of justice, between all of the parties, andas it is a rule founded in some sort upon public convenience and policy, rather than upon positive principles of municipal or general jurisprudence, courts of equity will nob suffer it to be applied so as to defeat the very purposes of justice, if they can dispose of the merits of the case before them without prejudice to the rights or interest of other persons who are not parties; or, if the circumstances of the case render the application of the rule impracticable, (Story.’sEq. Plead, 7,8,) and if the persons thus interested are unknown to the complainant, lie need not make them parties. (Story’s Eq. Plead. 92.) And another exception is where the persons collaterally interested are exceedingly numerous, and it would be impracticable to join them without great delays and other inconveniences. (Story’s Eq. Plead. 94.) In this case, who these creditors are, or how many there are of them, we are left entirely uninformed; and I am of opinion that, under the circumstances, it was unnecessary that they should be made parties.

The answer of Turner also states that one Cusliing holds the legal title to an' undivided half of these premises, and it is objected that he should have been made a party to this suit. It is a sufficient answer to this objection to observe, that there is no evidence in the cause showing that Cushing has any interest in the land. It has been already remarked that the answer of Turner is not sworn to, the oath having been waived under the statute. An answer put in Avithout oath isnotforany purpose evidence in'the cause, but performs the office of pleading alone. It proves nothing which it alleges, and the only purpose which it serves is to assist in making up the issues. The complainant then should not be compelled to incur the delay and expense of making new parties to the suit, upon a mere statement in an answer not sworn to, that other persons are interested in the subject matter of the suit. In order to make him do this, it must appear satisfactorily, from something that is evidence in the cause, that there are other interests which are not before the court. When this is thus made to appear, the court will not render a decree affecting those interests, until they are brought before it in a proper manner.

Upon the Avhole case, then, we are satisfied that the [* 21] decree of the court below ivas proper, and it is therefore affirmed with costs.

Decree affirmed.

Note. As to construction of statutes regulating interest, see Beaird v. Foreman, I Scam. 40 ; Madison Co. v. Bartlett, Ibid. 67 ; Tindall v. Meeker, Ibid. 137 ; Murry v. Crocker, Ibid. 212 ; Prevo v. Lathrop, Ibid. 305 ; Pearsons v. Hamilton, Ibid, 415 ; Lurton v. Gilliam et al., Ibid. 577 ; Hamilton v. Wright, Ibid. 582 ; McConnel v. Thomas, 2 Scam. 314 ; JRaplee v. Morgan, 2 Ibid. 562 ; Hancock et al. v. Hodgson, 3 Scam. 333 ; Conkling v. Underhill, 3 Ibid. 388. 
      
       Lockwood, Justice, was not present on the argument of this cause, and gave no opinion.