Case ID: sc-eq_8/html/0382-01.html
Source: Caselaw Access Project
Author: {"author": "Johnson, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Simon Magwood v. Henry W. Lubbock, S. J. Magson, and A. M’Gregor.
    A party holding a mortgage of a steam boat, executed by the two joint owners, to indemnify him against certain liabilities incurred by him for them, made further advances to one of the joint owners. The original, liabilities having been discharged, held, that the mortgagee was not intiÜed to a lien on the steam boat for the subsequent advances, without proof of an agreement, that the mortgage should stand as a security for such advances.
    Where a discovery is sought by the bill, the answer stands for proof, unless rebutted by preponderating evidence : and although the testimony of a single witness, if corroborated by circumstances, is sufficient to disprove an answer, yet it is for the Chancellor to judge of the weight of the evidence ; and his decision against the evidence, to contradict the, answer, will not be interfered with, especially where the same facts are sworn to by two defendants in their several answers.
    Equity will not relieve against a purchaser for valuable consideration, without notice, who is in possession, in favor of a party claiming a lien by an equitable mortgage.
    Heard by De Saussure, Chancellor, at Charleston, January, 1830.
    This was a bill to subject the steam boat Macon to the payment of a debt, due to the complainant by one of the defendants, by virtue of an alleged lien by mortgage.
    ' The defendants, Magson, and Lubbock, were joint owners of the steam boat Macon, "which they mortgaged to the complainant, Magwood, to indemnify him against his indorsement of certain notes amounting to $7,500. Before this mortgage was satisfied, the defendant, Lubbock, purchased from a mercantile house, with which the complainant was connected, 500 sacks of salt, amounting to $1,012.50, for payment of which he gave his note indorsed by the complainant. The bill charged, that the complainant in. dorsed this note at the request of both Magson, and Lubbock, who stated that the salt was bought on account of the boat, it being difficult to obtain freight for her ; and that both of the said defendants expressly agreed, that the mortgage, previously given, should stand as a security, to indemnify the complainant against this note also. Some time afterwards, the notes for $7,500, for which the mortgage was originally given, were taken up by Magson and Lub. bock, who soon afterwards sold the boat to their co-defendant, M’Gregor, for her full value. The note for $1,012.50, was not paid, and the complainant was compelled to take it up; and Lub. bock being unable to pay, he applied to Magson, and to M’Gregor, who both denied, that either they, or the boat, were liable for the debt. The bill charged, that the defendant M’Gregor knew, at the time of his purchase, that the boat was pledged for the note of $1,012.50, and that it was not paid ; and prayed that he and the other defendants might answer the bill, and that they might be compelled to pay the debt, or that the steam boat Macon should be sold for payment.
    The defendants, Magson, and Lubbock, answered separately, but both denied, that the salt was purchased on account of the boat, or that they had agreed, that the boat should be mortgaged for pay. ment of the note. The defendant, Magson, admitted that he applied to purchase the salt, but alleged that it was for his own ac. count; and as cash was required, which it was not convenient for him to advance, he was under the necessity of abandoning the purchase ; and always supposed, that it was well understood between the complainant and Lubbock, that the purchase by the latter was bn his own account, as in fact it was. The defendant, Lubbock, ‘alleged that the salt was purchased by him for his own account, ánd that the complainant agreed to indorse his note to enable him to make the purchase, upon his promise to remit the proceeds from Augusta, as soon as the salt was sold there ; a promise, which this defendant was disabled from fulfilling by the urgency of other creditors.
    The defendant, M’Gregor, denied, if, in fact, there was any mortgage, or lien of any sort, on the boat, for the note of $1,012.50, that he, the defendant, had the slightest notice of it. He admitted, that he knew of the mortgage for the notes for $7,500, and had insisted that those notes should be taken up before he purchased ; but he knew of no other lien, or he would not have purchased, un- , til it was removed He claimed to be protected as a purchaser for valuable consideration, without notice.
    At the hearing, Mr. Charles Magwood, one of the mercantile house from whom the salt was purchased, and a son of the complainant, was examined as a witness. He testified, that Magson first applied for the purchase of the salt, but as cash was required, he did not make the purchase: that Lubbock applied subsequently, on the same day, and on being refused credit, said that the salt was wanted for the boat, as freight could not be procured ; and that if complainant’s father would indorse a note, the mortgage which he then held might stand as a security for this note also. Witness referred him to his father, but was not present, when the agreement between them was made. The bill for the salt was made out in the name of Lubbock, who was also the maker of the note. After the return of the boat from Augusta, Magson said, in presence of the witness, that Lubbock had acted shamefully in not remitting the proceeds of the salt from Augusta, but that the boat was liable.
    
    It was admitted, that at the time of the transaction, the defendant, M’Gregor, was employed by Magson, and Lubbock, in business appertaining to the boat, and had the means of knowing all the business transactions done in relation to her management.
    The Chancellor was of opinion, that the evidence was not suffi. cient to outweigh the effect of the answers ; and that these, if true, destroyed the complainant’s title to relief. Bill dismissed with costs.
    The complainant appealed, and now moved to reverse the Chancellor’s decree.
    Lance, for the motion.
    There can be no doubt, but that where a mortgage creditor makes further advances to his debtor, they will be covered by the mortgage, upon any sort of proof that they were made upon that security ; and this although the mortgage be in itself equitable merely, as upon a deposit of title deeds. Ex parte, Langston, 17 Ves. 227. But the cases go much further where there is a legal lien ; and it has again and again been held, that future advances will be protected by the lien, without proof of an express agreement. Demainbray v. Metcalfe, Prec. Ch. 419. 2 Vern. 691, 698. S. C. Anonymous, lb. 177. Ex parte, Deeze, 1 Atk. 299. Ex parte, Ockenden, lb. 236; Hendricks v. Robinson, 2 Johns. C; R. 283. Chirras v. Craig, 7 Cranch, 34. The doctrine is in the highest degree reasonable. If the creditor has required, and the debtor has given, a security for the first advances, much more is it to be supposed, that it would be required, and given, when additional advances are made; and, therefore, it may always be properly inferred, that, when a mortgage creditor makes such advances, he does so upon the security of the mortgage. The rule is just and equitable, and as a bona fide purchaser for valuable consideration, without notice, can never be affected, no one can be injured but those who are participators, or abettors of fraud. Equitable liens are favored by the Court. At first some objection was made to them ; but the objections have worn away, and the doctrine is now in favor. This may be seen by all the cases, and our own Courts have gone in the same direction. Tunno v. Bethune, 2 Desaus. 285. Read v. Gaillard, lb. 552. Menude v. Delaire, lb. 564. Executor of Polony v. Keenan, 3 Desaus. 74. Caborne v. Godfrey, lb. 534. Coleman v. Shelton, 2 M’C. Ch. 126. And see the English cases collected in a note to 2 Desaus. 509, 518.
    There could be no doubt then, but that the complainant would have a lien on the Macon, for the note of $1,012.50, if Lubbock had been the sole owner; and there can be as little doubt, that the complainant is intitled to his lien, if either the salt was bought for the boat, or Magson assented to the mortgage. In the former case, Lubbock as part owner, and having charge of the boat, was competent to mortgage her for what was bought on account of the owners ; and in the latter case, Magson’s assent would render Lubbock his agent. Now it is true, that both of these facts are expressly denied by the answers of the defendants ; but it is equally true, that both are distinctly proved by the testimony of Mr. Charles Mag-wood. It is said, however, that the testimony of one witness is not sufficient to outweigh the answers of the two defendants. Certainly an answer is not to be contradicted by the oath of a single witness ; but the oath of a single witness is sufficient, if it is corroborated by circumstances, 2 Mad. Ch. 443, Biddulph v. St. John, 2 Schr. & Lefr. 532: and it is quite immaterial, how many defendants, one, or a dozen, there are to be contradicted. The circumstances of this case are conclusive of the correctness of Mr. Mag-wood’s testimony. Magson admits that he wished to purchase the salt, himself, and that he offered to do so; but like Lubbock, it was for his own account. The proof, however, was abundant to shew, that the salt was wanted for the boat, because freight could not be procured ; and neither Lubbock, nor Magson, wanted the salt, except for the boat. Is it credible, that one joint owner should undertake a speculation, merely to benefit the joint concern, and not even invite the other joint owner to bear his share of the burden ? Is it no(; utterly incredible, that both should intend the same thing, and set about carrying it into effect, going to the same place to make the purchase, on the same day, and not happen, even by accident, to meet, and explain their views, and unite in the enterprize 1 What credit then can be given to the answers of the defendants, under these circumstances, when directly contradicted by the testimony of Mr. Charles Magwood.
    As to M’Gregor, it was proved, that he was a sort of clerk to the boat, and must have been cognizant of the whole transaction. His answer is not intitled to the slightest credit; and indeed, it is palpable, that his purchase was made with the view to defeat the lien of the complainant.
    King, contra, was stopped by the Court.
   Johnson, J.,

delivered the opinion of the Court.

The satisfaction of the written mortgage has divested the complainant of the legal interest, which it gave him, in the steam boat Macon; and to give him a lien on her for the amount of the salt sold to Lubbock, it was incumbent on him, to have proved an agreement to that effect. Both Lubbock and Magson have positively denied the existence of such an agreement; and whatever suspicions the evidence of Charles Magwood may raise about the truth of their answers, it is a well settled rule in equity, that when a discovery is sought, the answer must stand for proof, unless rebutted by preponderating evidence. In this case there were two oaths against one, and that was intitled to weight: but it belonged to the Chancellor to judge between them, and to weigh the circumstances which corroborated the testimony of the witness ; and this Court will not interfere with his decision.

But assuming that the fact of the agreement is proved, M’Gregor stands on still higher ground. He positively denies notice of such an agreement, and the circumstances relied on, to shew that he had, are entirely too slight, to weigh against his answer: and he is a-purchaser for valuable consideration, and in possession. As a purchaser, without notice, his equity is at least equal to that of the complainant, supposing the existence of the agreement to have been fully proved ; and being in possession he must be protected.

The motion must therefore be dismissed, and the decree of the Chancellor affirmed.

O’Neael, J., and Harper, J., concurred.

Decree affirmed.