Case ID: tenn_80/html/0667-01.html
Source: Caselaw Access Project
Author: {"author": "Cooke, Sp. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

G. W. Layne, Ex'r. v. W. T. Bone et al.
    
    Moetgagb. Relinquishment. Effect. Fraud. Bone executed a mortgage on house and lot to Layne, -which was registered. Afterwards he sold the property mortgaged to D. & H. at its full value, and executed a deed in fee simple. D. & H. had no actual notice of the mortgage. Being indignant at the fraud, D. & H. prepared and filed an attachment bill attaching other property of B. To prevent the attachment, Layne, at request of B, relinquished his mortgage and took- another mortgage on property which D. & H. were about to attach. D. & IT. dismissed their bill. Layne files a bill to set aside relinquishment of first mortgage on the ground that • same was procured by fraudulent representations of B., and seeking to set up the first mortgage, alleging he repudiated the second mortgage as soon as he discovered the fraud of B. Held, he could not succeed, though induced to relinquish by B.; D. & II. not participating in or having any knowledge of the fraud.
    PROM WILSON-.
    Appeal from the Chancery Court at Lebanon. Geo. E. Seay, Ch.
    Martin & Beard for complainant.
    Stokes & Son and W. S. Gribble for defendants.
   Cooke, Sp. J.,

delivered the opinion of the Court.

On January 12, 1876, Bone executed a mortgage to complainant, Layne, upon a house and lot to secure an indebtedness of $800, which was duly registered , and on May 7, 1877, he sold and conveyed the same property to Dodson & Harper, in consideration of $1,870, which was the full value of the lot, and executed to them a deed in fee simple therefor, with covenants of seizin and genera] warranty. At the time of this purchase and conveyance Dodson & Harper had no actual knowledge of the existence of said mortgage, though of course were affected with constructive notice by the registration of it, and as a matter of law took their deed subject to it as a prior encumbrance. Upon obtaining actual knowledge of the existence and prior registration of this mortgage, Dodson & Harper were indignant at the deception that had been practiced upon them by Bone, and were proceeding to file an attachment and injunction bill against him, by which to attach some personal property which belonged to him individually, and his interest in a large amount of partnership property which he owned jointly with one Dodson, consisting of horses, mules, vagons, farming implements, and crops grown that year on a large plantation which they were cultivating, and to enjoin him from disposing of it, and had a bill prepared, and had procured the fiat of a judge upon it, and directing the issuance of attachment apd injunction for that purpose. Learning this, Bone went to Layne, and represented to him that Dodson & Harper were very much incensed at him for having sold them the house and lot without telling them of the existence of his mortgage, and represented to him that they were going to file a bill against him, and attach all his property of every kind, and that it would ruin him, and applied to him, in order to prevent this, to relinquish his mortgage upon this house and lot, and take another mortgage upon certain other personal property for the security of his debt. The property he proposed to mortgage by this arrangement being a part of the property which Dodson & Harper were about to attach. Layne consented to do so, but said, it was not convenient then for him to go to town, but sent word by Bone to Dodson & Harper to hold up their attachment bill, and that he would come to. town on the nest Monday and release his mortgage on the house and lot. Bone conveyed this message to Dodson & 'Harper, but they refused to delay their attachment proceedings until Monday, but agreed to hold them up until the next day. Bone went back to Layne, and gave him this information, and thereupon on the next morning he went with Bone to Lebanon, and relinquished his mortgage upon said house and lot, and surrendered it up to Bone, and took in lieu of it another mortgage upon said personal property, said last mortgage and relinquishment of the first being registered; whereupon Dodson & Harper desisted from filing their said bill against Bone, or taking any other steps to secure themselves, considering their title to said house and lot then complete by the removal of the incumbrance of said mortgage.

On August 21, 1877, Layne filed this bill seeking to set aside this relinquishment of said first mortgage upon the . alleged grounds that said relinquishment had been procured by the fraudulent representations of Bone as to the conditions or extent of his indebtedness, and alleging that he had repudiated said second mortgage as soon as he had discovered the fraud of said Bone, and seeking to have said mortgage upon said house and lot set up and re-established, and to have the same foreclosed for the satisfaction of his said debt originally secured by it. There is no allegation that either Dodson or Harper participated in or knew of any fraudulent represen-_ tations, or fraud of any kind made to or practiced upon the complainant by Bone in order to procure him to' relinquish the mortgage. And they resist the relief sought upon the ground that they had nothing to do with procuring the relinquishment and surrender of said mortgage. That they were proceeding by their attachment and injunction bill to secure themselves out of the property of Bone, and could and would have done so, but for the relinquishment by Layne, and surrender by him of said mortgage upon the house and lot which they had purchased of Bone. That said relinquishment and surrender of the same was made expressly for their benefit, and to prevent them from proceeding to file said bill and attach the property conveyed of Bone, and that the property conveyed by Bone to Layne in the second mortgage was a portion of th'e identical property they were about to attach, and that Layne had actually received • and appropriated some portion of the same to the satisfaction of his debt, notably a bay mare and a watch of the value of $215, and that in consequence of said relinquishment and surrender, they had desisted from filing their said attachment bill, and the value of said property and the opportunity of securing their debt and indemnifying themselves out of the property which they were about to attach had been lost to them, and they could not be placed in the same condition they were at the date of said relinquishment.

It is shown by the proof that complainant did obtain said bay mare, and sold her for $135, which was specifically mentioned in said attachment bill, and a gold watch worth $90, which they might probably have obtained under the same. -Whether they could have realized any thing out of the other property they were about to attach does not certainly appear.

The chancellor dismissed the bill, and the Referees have reported that his decree should be affirmed. The report of the Referees finds that Layne was induced to release said mortgage by the fraud of Bone,- and there is no exception to this part of the report, and hence it is taken to be true. But admitting this, does it entitle complainant to relief as against Dodson & Harper, who did not participate in or have any connection with it or knowledge of it? The very object of the release was to satisfy Dodson & Harper by perfecting their title to the house and lot, and thus prevent them from attaching Bone’s property and instituting legal proceedings against him, which he represented to Layne would be very injurious to him, and this was accomplished by the relinquishment, and was a sufficient consideration to make it obligatory upon Layne as a contract. With the reasons that induced him to execute the release, Dodson & Harper had nothing to do, and were in no manner responsible. A right accrued to them by the relinquishment, which was the removal of an in-cumbrance from their title, in consideration of which they desisted from their legal proceedings, and allowed the opportunity to Layne to take the property they were about to attach and make the most he could out of it, which he did, and is estopped from interfering with the title which was thus closed by his voluntary act without any fault on the part of Dodson & Harper.

The authorities relied upon by complainants’ counsel have been examined, but they are inapplicable to the facts of this case. The exceptions to the report of the Referees will be overruled, the report confirmed, and the decree of the chancellor affirmed with costs.