Case ID: dc_12/html/0107-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Chief-Justice CaRTTER,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Capitol Hill Building Association No. 2. vs. Samuel N. Hilton.
    In Equity.
    No. 6290.
    Decided March 21, 1881.
    The Chief Justice and Justices Hasneb and James sitting.
    1. A piece of ground encumbered with a deed of trust to secure an indebtedness to a building association, was sold at public auction, subject to the trust. The secretary of the association acted _ as auctioneer, and announced that the indebtedness to the association amounted to a given sum.
    
      Held, That as between the purchaser and the association the sum so mentioned must be considered as the real indebtedness.
    2. The fact that a piece of property is purchased subject to the lien of a building association for advances to a stockholder, which lien the purchaser agrees to discharge by monthly payments equal in amount to that agreed to be paid by the stockholder, does not entitle the association to credit these monthly payments in the same manner that might have been done had they been made by the stockholder. Such a purchaser is to be chargeable only with the purchase money and six per cent, interest until paid.
    STATEMENT OE THE CASE.
    A piece of property, consisting of a lot of ground in Washington city, was subject to a deed of trust, in which the defendant and another were the trustees. The trust had been given to secure the performance of the condition of a bond executed by William Dolsen, the owner of the lot, in favor of the Capitol Hill Building Association No: 2. The bond, after acknowledging the obligor to be bound in the sum of $2,000, recited, in substánce and by way of defeasance, that whereas the said William Dolsen, a stockholder to the extent of twenty shares in said association, has, by virtue of and in accordance with the provisions of the constitution of the said association, received from the said association, the sum of two thousand dollars: Now, if the said Dolsen, his heirs, &c., shall well and truly pay to the treasurer of the association the sum of $2 per month upon each of the shares of stock held by him, and all hues and forfeitures which may be imposed upon or incurred by the said Dolsen by virtue of the provisions of the constitution, until the close of the association, or the return of the money advanced to him, th.en this obligation to be void, else to remain in full force.
    Subject to this trust the property was sold at public auction, the secretary of the building association acting as auctioneer. At the sale it was announced by him that the amount clue the association was $1,800, and that the purchaser could have the option of paying in either of two ways: First, by paying $500 cash, and the balance in three equal instalments at six, twelve and eighteen months; or, second,, by paying monthly instalments of $40 per month till the whole amount should be paid. The defendant Hilton became the purchaser, and chose the latter mode of payment. Accordingly he paid into the treasury of the association $49 per month for forty-eight months, making $1,920, or $120' more than the amount alleged at the sale to be due.
    The plaintiff’s bill alleged that the amount actually advanced bjr it to Dolsen, the obligor in the bond, was in fact $2,850 instead of $2,000 as recited therein, and that at the time of the sale of the property the amount due was several hundred dollars in excess of $1,800, and that a considerable part of the original advance to Dolsen was due and unpaid even after the defendant had paid the $1,920 to plaintiff. The bill sought to have Hilton removed as trustee, a new trustee substituted, and the property sold to satisfy the demands of plaintiff for the balance alleged to be due.
    The decree below was in accordance with the prayers of the bill from which decree defendant appealed.
    Hiñe & Thomas for defendant:
    1. The plaintiff, having taken the bond from Dolsen in which $2,000 was expressed as the amount advanced to him by plaintiff, and having placed on record the deed of trust referring to the bond and the amount therein specified as advanced, is estopped as against defendant, an innocent purchaser without knowledge of the true state of the account between plaintiff and Dolsen, and without convenient or available means of acquiring such information, to say that a larger sum was advanced.
    2. The purchase by defendant of the property, subject to the lien of the association, which he agreed to discharge by making monthly payments of the same amount originally agreed to be paid by Dolsen, the obligor in the bond and a stockholder in the association, does not make defendant a stockholder in the association, and subject him to a liability to pay the monthly instalments until the close of the association as provided in the bond of Dolseu.
    J. T. Cull, for plaintiff:
    The state of the pleadings did not'admit of the defense set up by the defendant. The allegation in the bill that the trust in question was given to secure an advance of $2,350, and that said amount was secured upon the property in question by said deed of trust, was admitted without qualification by the defendant in his answer. The defendant’s plea is not a plea of a bona fi.de purchase without notice, for he should have denied notice, and every circumstance from which it could have been inferred. Danl. Ch. Pr., vol. 1, 679; 20 Wall., 14. There is no plea of estoppel by the record, nor is it even suggested that defendant was misled by the record. If he had had such a defense he should have set it up distinctly in his pleadings. 10 Pet., 343.
   Mr. Chief-Justice CaRTTER,

delivered the opinion of the court.

The defendant Hilton was brought into court in this case by a bill in chancery to respond to an indebtedness on account of the purchase of a lot upon which the Capital Hill Building Association had a deed of trust. He became the purchaser of the equity of redemption at a sale of the property, September 2,1872.

The only question in the case is as to his responsibility; to what extent and how it is qualified by the relations of the trust to the building association. We do not see fit in this case to determine the validity or invalidity of the inter 'partes relation of the stockholders to the building association. If they have mutually agreed upon terms' of association and accountability to each other, and the' disposition of their property, and that agreement is not against public policy, they have a right to do it. It is not a subject that is involved in the investigation, and we do not see lit to take it into account in deciding this case.

Hilton never was engrafted into the association. He is to be treated upon the outside and as the purchaser of a piece of property liable to discharge a given indebtedness to the association, agreed to have been $1,809, at the time of the purchase, September 2, 1872, which he was to pay off in monthly instalments of $40 each. The association exercised the right, as they supposed, to treat him as the original debtor, i. e., credit one-half of his monthly payments to account of “ dues ” on stock, and the other half toward the liquidation of the indebtedness, according to the building association method of .accounting.

We think that, inasmuch as Hilton was a buyer of the property, and agreed to pay $1,800, the amount of the indebtedness that subsisted and was a lien upon it at the time of the purchase, we should treat him as a debtor chargeable with the payment of that sum with six per cent, interest. We cannot engraft him into this association as a stockholder. We have only power to give effect to that which he has done himself, or agreed to do.

The decree in this case will be the reversal of the decree below with directions to refer the case to the auditor to make a statement of the indebtedness upon the basis of $1,800, as the debt against the property at the time of the purchase by Hilton in 1872, charging him with the payment of that amount and interest to the time this suit began, less the amount paid by him from time to time as payments were made.

The case is remanded for that purpose.