Case ID: tenn_21/html/0248-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Reesb, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Campbell vs. Baldwin, et al.
    
    X. A vendor is presumed to intend to retain his lien upon conveyed real estate for the purchase-money, and the circumstances which manifest the non-existence of such intention must be shown by the vendee.
    2. A note given for the purchase-money with the endorsement of a third person^ is evidence that the vendor intended to waive and abandon his lien on the estate ji sold, for the payment of the purchase money. This evidence, however, may be re-/ pelled by the vendor.
    3. Where a bill was filed to subject real estate to the lien of the vendor, and the deed by which such real estate was conveyed, recited that the vendor had taken notes endorsed by third persons, as a security for the payment of the purchase money: Held, that said bill was not had on demurrer, as the complainant had alledged therein, that it was no this intention in the taking of such endorsed notes,¡to relinquish his lien.
    Joseph L. Campbell filed this bill in the chancery court at Franklin, on the 22d of February, 1840, against Henry Baldwin, jr.f and against James'Plunket. The bill charges, that complainant on the 2nd day of August, 1838, sold and conveyed to H. Baldwin, jr., the one-fourth part of a lot of ground in the town of Franklin, and the house and machinery thereon, known as “the Franklin cotton factory,” and the one-fourth part of a certain other lot of ground in said town, with a two story brick store-house and other buildings thereupon; that for the said interest in said real estate, the said Baldwin agreed to give complainant the sum of $6000, with interest from the 1st day of January, 1838, payable in one, two and three years; that Baldwin executed to complainant three several bills single, endorsed by Benjamin.S. Tappan, in consideration of said land so sold and purchased, the first, with interest added for one year, for $2120, the second, with interest added for the sum of $2,240, and the third with interest added for three years, for the sum of $2,364; that the complainant executed a deed of conveyance of said property to said Baldwin; that said deed set forth and specified a description of each of the bills single by whom drawn and endorsed, and when payable; that these facts were inserted in the face of the deed for the purpose of giving notice to any person who should purchase the same that the purchase money was unpaid, as well as to charge the creditors of said Baldwin with notice of such fact, and to retain his lien upon the land for the payment of the purchase-money, and that such deed of conveyance had been duly registered in the county of Williamson.
    The bill further charges, that Baldwin had paid him about three-fourths of the first of the bills single above set forth; that complainant had obtained judgment against him for about the sum of five hundred dollars, thereupon remaining; that execution had been issued and was then in the hands of the sheriff of Williamson county; that the second bill single, fell due on the 1st day of January then last past for the sum of $3,249, and being unpaid the complainant commenced suit upon it in' the circuit court of Williamson county against said Baldwin and Tappan; that said writ was returnable to the then next ensuing March term; that the third of said bills single would become due on the 1st day of January, 1841. The bill further charges* that Baldwin was much involved in debt; that many judgments had been obtained against him, and that executions having been issued thereupon, they were levied upon the largest portion of the property of said Baldwin, and that he entertained fears, that before he could obtain judgment upon the bill single for $2,240 then in suit, and obtain satisfaction of the same by execution, the whole of the estate of said Baldwin would be exhausted by sale for the benefit of judgment creditors, and that he should lose the two last instalments of the purchase money; that Tappan was then a resident of the State of Mississippi, and that it was his opinion that he intended to sell all his property in the State and withdraw the proceeds beyond the jurisdiction of the court, before any judgment could be obtained against him.
    The bill further charges, that said Baldwin had sold one-fourth part of the said real estate to one James Plunket, and that Plunket had full notice that the purchase-money had not been discharge d, but that he did not know the exact nature of the contract, and prayed a discovery in regard thereto.
    The bill further charges, that complainant was informed and believed that said Baldwin was about to sell or mortgage said real estate to pay or secure certain debts against him and that he was advised that if said Baldwin should sell or mortgage said property there might be some difficulty in enforcing his lien thereon against such vendee or mortgagee, unless he could show that the vendee or mortgagee had express notice of such lien, and that the filing of this bill would furnish such express notice.
    The bill further charges, that complainant would not have taken the said bills single of said Baldwin with the said Tappan as endorser thereupon for the purchase-money of said property, if he had not been advised and believed, as he now insists, that he had a lien upon said property for said purchase money, and that the face of the deed would give notice to all the world of his lien upon the property for the unpaid purchase money.
    The bill prays, that Baldwin and Plunket be made defendants to the bill, and that the real estate be declared subject to the payment of the purchase money, and that so much be sold as would discharge the judgment already obtained on the first bill single and the second due 1st Janury, 1840, and that it may be declared subject to the satisfaction of the third instalment due 1st January, 1841, in the hands of Baldwin and all others .deriving claim thereto from him. The bill also prayed an injunction against Baldwin to restrain him from selling or mortgaging the property. This bill was verified by the affidavit of complainant, and Chancellor Williams ordered an injunction in pursuance of the prayer of the bill.
    On the 16th of April, 1840, complainant filed a supplemental bill, charging that since the filing of the original bill he had procured' the execution on the judgment obtained on the first bill single, to be levied upon the real estate sold by him to Baldwin, and that M. Baldwin, the wife of Henry Baldwin, had filed her bill, and obtained an injunction against the sale of the property to satisfy complainant’s debt, upon the ground that by a certain marriage contract between herself and the said Henry Baldwin, she held a separate estate, and that the property levied on was purchased with the proceeds of her separate estate. This supplemental bill charged, that about $4,500 of the purchase money was unpaid, and prayed that Mary Baldwin be made a party, &c.
    On the 14th day of May, 1840, H. Baldwin, James Plunket and Mary Baldwin filed their demurrer to the bill, and for cause of demurrer set forth, that he, complainant, had admitted and acknowledged by his bill, certain facts, to wit, that for the purchase money of the property sold by him to defendant Baldwin, and which was the subject of this suit, he, the said complainant, received the bills single of said Baldwin, endorsed by Benjamin S. Tappan, which facts, by the known rules of law, avoided his right to an answer. The plaintiff joined in demurrer. It was set down for argument at the May term, 1840, and was argued by counsel before Chancellor Bramlett, who sustained the demurrer and dismissed the bill. The complainant appealed to the supreme court.
    
      
      J. Campbell.
    
    Did the complainant retain a lien on the proper^ ty sold for the whole of the purchase money? or did he by taking the note with Tappan as endorser part with his lien, when he specified on the face of his deed, that he sold the property for $6000, to be paid in one, two and three years from and after the 1st day of January, 1838, and for which he had executed his notes with Tappan as endorser?
    What is the effect of this recital in the deed? that the consideration was unpaid, or in other words, that the notes with an endorser were not accepted as a payment of the consideration money. The general principle is laid down in 4th Kent, 145. Taking the responsibility of a third person, “is evidence,” says Chancellor Kent, “that the seller did not repose upon the lien, but upon the independent security.” If taking the security be evidence that the lien is waived, the recitation in the face of the deed that the consideration is unpaid, is surely much stronger evidence to show that the vendor has not parted with his lien, or relied upon the note alone for payment.
    The lien is raised or waived by the supposed intention of the parties. Eskridge vs. McClure, 2nd Yer. Rep. 85. Whether the taking a security is a waiver of the lien depends upon the circumstances of each case. Sug. Yen. 387, 8, 9, 90, 1, 2. Mackreth vs. Symmons, 15th Yes. 329. A lien may exist notwithstanding a mortgage. It exists unless there is a manifest intention to abandon it. It must be shown that the vendor did not mean to trust to the estate sold. 1st J. C. R. 309, Garson vs. Green.' Can it be said here that C. did not mean to trust to the estate sold as a security? In other words, that he had given up the land and taken the note as a payment.
    The lien rests upon this single principle, that the land is bound till it is paid for, or security is given, that the vendor considers equivalent to a payment. How can it be said here that the land is paid for, or its equivalent received, when it is expressly stated in the face of the deed that it is not paid for?
    Taking a distinct security is prima facie evidence that the lien is waived. It may be repelled by circumstances showing it is not waived. Hatcher vs. Ilatcher, 1st Ran. 53. In a deed where property is conveyed to one, but paid for by another, a trust arises in •favor of that other. So if a conveyance is made, without consideration, to a trustee, a trust results in favor of the bargainor. It is upon this principle that the doctrine of an equitable lien arises. Here the conveyance has been made, but the deed shows that the consideration is unpaid; a trust then arises in favor of the bargainor till the consideration be paid. 2d Story’s Eq. 470,476.
    2. Complainant obtained judgment upon the first note which gave him a lien if he had none before. He had the right to file his bill to enforce that lien. In any event therefore the chancellor’s decree must be reversed.
    
      Meigs, for defendants.
    The bill in this case is filed to set up the vendor’s lien for purchase-money, and it makes out a case of a conveyance to the purchaser, whose promissory notes or negotiable paper the vendor took for the purchase money, endorsed by a third pérson. And the question is, whether the vendor’s Men for the purchase-money is, or is not extinguished by such independent security? In the affirmative, see Eskridgevs. McClure,2 Yer. 84: Gilman vs* Brown, 1 Mason, 191, same case, 4 Wheaton, 255, and 4 Peters’Cond. R. 445; and 2 Story’s Eq. sec. 1226, and note at the end of the section.
    The vendor’s lien for purchase-money- of things sold and delivered seems to be founded upon this principle of the civil law, stated in Justinian’s Institutes,¡Lib. 2, Tit. 1, sec. 41, “Things, although sold and delivered, are not acquired by the buyer until he hath either paid or otherwise satisfied the seller for them, as by a bondsman or pledge.” Hence it is laid down by Pothier in his treatise on the contract of sale that, “it is peculiar to the delivery, which is made in execution of the contract of sale, that it does not transfer the property to the buyer, except when the seller has been paid or satisfied the price.” And this, though it be held in that law, as well as in our own, that when the contract of sale is ©f a specific thing, and is absolute, it is considered to be perfect as soon as the parties are agreed upon the price for which the thing is sold. Pothier No. 309: Meigs’ Rep. 26, 27. It is manifest enough,that the seller,who sells for ready money, is considered not to have an intention to transfer the property, except upon that condition and therefore that a delivery in such case does not transfer the property. Pothier, No. 323. But the principle just cited from Justinian is much broader; for it embraces not only sales for ready money, but also sales on time, as to which latter, it is said that things although sold and delivered,, are not- acquired' by the buyer.' until he has satisfied the seller for them, as by a bondsman or pledge, that is, some collateral and independent security. According to this, the buyer would not acquire the thing, though sold and delivered, by giving the seller his own bond; he must give a bondsman or pledge, either of which is looked upon as a satisfaction of the price. It is not the sale and delivery, but the.satisfaction of the price, either by payment or security, which extinguishes the seller’s title. It is because the contract of sale is a commutation-contract, in which the intention of each of the parties is to receive as much as he gives, (Both. No. 2,) that the property in the thing sold and delivered never wholly passes out of the seller, and is acquired by the buyer, until the equivalent, the price, is either paid or secured by some assfirance besides, or in addition to, the buyer’s promise or bond. As to the application of the principles of the contract, the civil law admits of no distinction, as the common law does, founded on the nature of .the property. These principles apply by the former system, alike both to movables and immovables. But at common law the whole property in movables sold on' time, passes, with-outfraud, to the buyer so soon as the parties are agreed upon the price. Not so as to immovables, for as to them both systems agree that the proprty is not wholly.acquired by the buyer, even by ¿ sale and delivery of possession, but only by the price, or the security of it by dbondsman or pledge. Without these or one of them, the proprty itself is tacitly pledged for the price; while with them, or one^f them, the property wholly passes to,oris acquired by the buyt. The existence of this tacit pledge or lien for purchase-moi|y unpaid, or not otherwise secured, is exactly consistent with the )?ineiples of the contract, and makes the law symmetrical and harnmious.
    
      BGctmpbell, for complainant.
    The decision of the chancellor upofihe demurrer is conceived to have been founded in a total misajrehension of the case. It would seem that he inferred, from a has^ reading of the bill at the bar, that.the question presented by it \r decision was, whether the acceptance by the vendor of the notespf the vendee for the purchase money, with the endorsement f a third person on them, constituted a waiver of the implied Ip, which the law "would ordinarily have given him upon the estatuid for such purchase money. ’ But it will be apparent up-©na ffeful perusal of the bill that such is not the case which is made by it. The bill alledges, that the mode in which the purchase money for the property was secured to be paid, was inserted in the conveyance given for it, in order to retain the lien of the vendor thereupon, and to give notice of the retention thereof to subsequent purchasers from the vendee; and that the vendor looked to the property as his ultimate security for the payment of his purchase-money, and would not have conveyed it to the vendee alone upon the security of his notes with the endorsement of a third person on them. These allegations obviously present for decision a ease wholly and entirely different from the one, in which it appears the vendor has taken the notes of the vendee for the purchase-money with the endorsement of a thhd person on them, without any thing more. This latter state of facts would raise the isolated question, whether such notes with the endorsement of a third person on them, would, in the absence of any thing more, furnish conclusive evidence that the vendor had waived his lien upon the estate conveyed; but the former state of facts presents the question, whether it be not competent for the vendor to take collateral security of this description for his purchase money from the vendee and still retain his lien upon the estate conveyed, by the insertioi, in the conveyance, of the mode in which such purchase money i secured to be paid, (if such be the intention of the parties,)and whether, when the bill is demurred to, and the intention ol the vendor to retain his lien, as therein alledged, thus admitted b}the vendee, such lien roust not be held to exist. To hold that suh is not the correct rule of equity jurisprudence applicable to this ¡ate of facts, is to contradict the whole current of authorities, Enjish and American, as well the adjudged cases as the text writersup-on this subject. It Avould, indeed, be absurd to hold the liemvas waived, when the vendor alledged in his bill his intention to itain it, and the vendee admitted the fact of the existence of such itention to retain it.
    There is no case to be found, either in England or Americithat gives the slightest countenance to such an absurdity, nor anytext writer who yields it the least support. To see that this ass'tion is well founded, it is only necessary to advert to the terms in whn the rule upon the subject of the lien of the vendor is laid down in t'best text writers, and to observe how that rule has been applied home of the adjudged cases. Story, in his Equity Jurisprudence, 2rvol., page 470, states the rule thus: “Generally speaking, the lien.’ the vendor exists, and the burthen of proof is on the purchaser to establish that in the particular case, it has been intentionally displaced or waived by the consent of the parties, if, under all the circumstances, it remains in doubt, then the lien attaches.” In another part of the same work, he says: “The taking of a security for the payment of the purchase-money is not of itself, as it was in the Roman law, a positive waiver or extinguishment of the lien.”' Again the same author says: “But the taking of a security has been deemed, at most, as no more than a presumption under some circumstances of an intentional waiver of the lien, and not as conclusive of the waiver. And if a security is taken for the money, the burthen of the proof has been adjudged to lie on the vendee to show that the vendor agreed to rest on that security and to discharge the land.” Chancellor Kent, in the 4th vol. of his Commentaries, page 157, lays down the rule in, the same way, and in terms almost as strong. “Prima facie” says he',“thelien exists without special agreement for that purpose, and it remains with the purchaser to- show that from the circumstances of the case it results that the lien was not intended to be reserved, as by the taking of other real- or personal security, or where the object of the sale was not money, but some collateral benefit.” The same rule isi^ stated by Lord Eldon, in terms still stronger, in the case of Macreth vs. Symmons, 15 Yes. 348. “The principle,” he there says, “has been carried to this extent, that the lien exists, unless an intention, and- a manifest intention, that it shall not exist, appears.” These citations may surely suffice to show the nature, extent and limits of the rule in equity, as to the effect of the vendor’s taking another security for his purchase money as understood by these distinguished writers. From the whole of them the obvious result is, that whether the lien exists in any particular case, is- a question of fact, which is-open for discussion upon all the-circumstances of the case, and that the acceptance by the vendor of a collateral security for the purchase money is merely evidence of a waiver of lien, which is subject to be repelled by any other evidence that may exist in the case. A review of the cases will show, that the rule as laid down bjr these distinguished writers, is the correct result of these cases. Thus it was decided in the case of Macreth vs. Symmons, which has been before cited, (15 Yes. 328,) that the lien exists unless clearly relinquished, and the having taken and relied upon another security, would be evidence of the waiver, according to- the circumstances of the case. There the bill alledged that in the year 1783, Macreth was indebted to John Manners invarious sums of money, which amounted altogether to the sum of £13,500, with J. Mar-tindale as his security. Martindale agreed, in 1785, with Macreth to discharge the debt, and they settled their accounts with such agreement. Martindale had, indeed, before that time taken credit for £3,000 of it in a prior settlement between him and Macreth, There were afterwards other settlements between them, and on the last of these settlements, which was made in February, 1793, there was a balance of £54,000 found due Martindale. There was included, however, in that sum, the amount of £10,393 17s. the value of certain annuities granted by Macreth, against which Mar-tindale agreed to indemnify him, in consideration of his agreement to pay it to him. For this purpose a bond for £20,000 was given, and Macreth executed a mortgage in fee simple for the balance of the £54,000 on the 31st of October, 1793. Macreth agreed to sell the reversion in the mortgaged estates to Martindale for the sum of £60,000, composed of the principal and interest due upon the mortgage and conveyed the same to Henry Martindale and his heirs to the use of Macreth for life, and remainder to John Martin-dale in fee. It further appeared that Martindale failed to pay the bonds for £13,500 to Manners and the value of the annuities, which constituted part of the consideration for the purchase of the reversion of the mortgaged estate. Martindale, in 1797, became bankrupt, and the representatives of Manners proved the debt due on the bonds under the commission issued against him and received dividends, and Macreth was compelled to pay the balance due upon those bonds, which amounted to the sum of £14,128 3s.' and also various sums on account of the annuities. Before his bankruptcy, Martindale had contracted to mortgage the reversion of the estate comprised in the indentures of 1793, to Symmons, who filed a bill against his assignees and obtained a decree for a mortgage. But Macreth was not a party to that suit, and the decree was made with an express reservation of his rights. Macreth claimed a lien upon the estate for the payments he had been compelled to make by the failure of Martindale to perform his engagements, and gave the assignee notice of his claims. The Lord Chancellor Eldon decided that as to the annuities, Macreth had no lien upon the estates, but that as to the amount he was compelled to pay on account of the bonds to Manners, which Martindale had failed to discharge according to his contract, he had a lien upon the estates for the payment of the same.
    The precise point involved in the present case would seem to have been settled in the case of Brahane vs. Haskins, 3 Price, 31. There a “bill was brought founded upon an equitable lien for the purchase-money of an estate, and the hill stated that a bond was taken as a further and additional security; a demurrer to the bill upon the ground that the taking the bond was a waiver of the lien, was overruled, for the allegation of the bill was that it was taken as an additional security, and if it was not, the. objection should be in another, form.” Story’s Equity Pld. That was a much stronger case for the implication of a waiver of the lien than the present. The facts there, were, that Brabane had entered into an agreement with one Joseph Dickens, for the absolute conveyance of an estate, (which was carried into execution by a conveyance of it,) and it was agreed that Dickens should be allowed time for the pay-, ment of four thousand pounds, part of the purchase money, and should, “for the further securing the payment of it,” procure Richard Meek to join him in a joint and several bond in the final sum of eight thousand pounds. Upon these authorities this case might be safely rested. They establish beyond controversy, that the ex-"' jstence of the lien in any case is purely a question of fact, and that the having taken a collateral security for the purchase money is merely evidence of the waiver of the lien, and is open to contradiction like all other evidence.
    A review of all the adjudged cases in England and America, will show that the result of them sustains this position. 2 Story’s Eq. Jur. 475: Fawell vs. Heelis, Ambler, 724: Bond vs. Kent, 2 Vern. 281: Noursevs. Brown, 6 Yes. 759: Hughes vs. Kearny, 1 Sc. & Left-., 135-6: Saunders vs. Leslie, 2 B. & Beat. 514-15: 3 Russ. 488: S. C. 1 Sim. & Stew. 434: Grant vs. Mills, 2 Yes. & Beam. 366: Coffer vs. Spottiswood, Tomlyn’s Rep. 21: Gilman vs. Brown, 1 Mason Rep. 212: Garson vs. Green, 1 John. Chan. Rep. 308: Blackburn vs. Grig son,’’Jl Brown Ch. Rep. 420: Coppinv s. Cop-pin, 2' P. Wms. 291: Cole vs. Scott, 2 Wash. Rep. 141: Fish vs. Rowland, 1 Paige, 20: 9 Cowen 316: 3 Bibb, 183: Hatcher vs. Hatcher, 1 Rand. 53: 8 American Com. Law cases, 297: Meigs vs. D., 6 Conn. 456: Little Sf Tilford vs. Brown, Leigh, 353: Gann vs. Chester, 6 Yer. 265,
   Reesb, J.

delivered the opinion of the court.

The result of all the decided cases, and of all the elementary disquisitions, which the counsel of the complainant has, with much labor and learning, laid before us, is,so far as they have any bearing upon the question raised by the demurrer, that in the first place a vendor is presumed to intend to retain his lien upon the conveyed premises for the payment of the purchase-money, and the circumstances to manifest the non-existence of such intention, must be shown by the vendee; and, truly, that a note given for the purchase-money, with the endorsement of a third person, is evidence that the lien of the vendor is waived and abandoned.

But we regard it as evidence only, which may be repelled on the part of the vendor.} We do not think, however, that the recital in the deed, to which the draughtsman of the bill seems to have attached'so much importance, will have that effect; for if it proclaims to all who may read the deed, that the consideration-money has not been paid, it informs them, also, that a security has been taken therefor. But as the plaintiff in, his bill avers, that, notwithstanding such security, it was his purpose and intention to retain his lien, (which purpose and intention, if he have competent proof thereof, we think he may show upon the trial,) we are of opinion that the defendants should answer. We regret to be constrained so to rule in the case, because we think it very probable, and almost certain, that the chancellor, upon the trial of the cause, will arrive at the same result to which he came on the argument of the demurrer.