Case ID: miss_21/html/0445-01.html
Source: Caselaw Access Project
Author: {"author": "Mr. Justice Smith", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Joshua Green vs. H. B. McDonald.
    When an appeal has been taken from a decree in chancery, dissolving an injunction, and the decree is affirmed and the case remanded, and an amended bill is afterwards filed, upon which a new injunction is granted, and upon the refusal of the chancellor to dissolve it, it is on appeal dissolved by the appellate court, upon which a supplemental bill is filed and a third injunction granted; this last injunction will be regarded as having been granted exclusively upon the allegations and statements of the last supplemental bill, and the former decisions will be regarded as conclusive on all the rights of the parties to the case, to the extent of the points adjudicated.
    F. and B., alleging themselves to be the owners of the equitable title to a tract of land, the legal title to which was in C. and D., gave G. a bond, with covenants of warranty, to make him a title to the land, and took from him his notes for the purchase-money, payable in instalments, G. having full knowledge of the nature of the title of F. and B. ; afterwards G. being being sued for the purchase-money by an assignee of F. and B., a judgment at law was obtained against him, and he filed his bill for an injunction, on the ground that, since the rendition of the judgment, the heirs at law of D. had obtained a judgment in ejectment against him for an undivided half of the land, which judgment was in full force and unreversed : Held, that there being no fraud on the part of F. and B., and it not affirmatively appearing that they could not enforce their alleged equitable right to the tract, or that it was any thing more than the naked legal title in the heirs of D. outstanding against them, no sufficient ground was laid for the injunction.
    It seems, however, as between the original parties it would have been otherwise if the judgment in ejectment had been in favor of one having the paramount legal title, or if it had been made to appear, by proof, that there was ■ a perfect title in the heirs of D., both legal and equitable, so that F. and B. could not coerce title from the heirs of D. and C. for G.
    Where the vendee of land, knowing that his vendors claimed but equitable titles to the land, took from them a bond to make title with covenants of warranty, and executed his notes for the purchase-money, payable at fixed times, to the vendors, one of which the vendors assigned away for value to a bond fide purchaser; and afterwards, when the assignee sued the vendee upon the note thus assigned, the latter set up in equity, as a defence, that the title to one half the land had wholly failed, his vendors not having even an equitable title to that half: Held, that while it is generally true, that the maker of a note may set up any defence against the payee, yet as the vendee in this case purchased, with knowledge of the defect of title, and protected himself by covenants of warranty, and actually had obtained title to one half the land, it would be inequitable and unjust to allow him to evade the payment of the note in the hands of the assignee without notice.
    It seems that where relief in equity is sought by the vendee of land against the payment of the purchase of money, on the ground of failure of title, he need not wait until actually evicted before he can apply for relief; it is ordinarily sufficient if a judgment in ejectment has been had against him, though it has not been executed.
    On appeal from the superior court of chancery; Hon. Stephen Cocke, chancellor.
    On the 23d of November, 1838, Joshua Green, Jr. filed his original bill and afterwards his amended bills, before any answer was filed, stating that in October, 1836, he purchased of George Finucane and Joseph W. Barnes a lot in Jackson, and gave therefor his two notes for $1000 each, due in April, 1837, and April, 1838; that Finucane and Barnes gave a bond, in the penalty of $4000, conditioned that on payment of both notes, they would make or cause to be made title to the lot; that in October, 1838, he tendered to Finucane the money, and interest, and Finucane said he could not make title; showed that James C. Dickson and Isaac Caldwell bought the lot from the state, and he supposes that the purchase-money has not been paid to the state; Dickson and Caldwell are dead, not having made to Finucane and Barnes title to the lot; that Finucane, at the time of Green’s purchase, erroneously represented that he and Barnes could make good title to the lot, and these representations induced Green to purchase; that H. B. McDonald had sued, as assignee of the note last due; that McDonald, before he sued, inquired of Green if said note would be paid, and Green informed him that it would not until he procured title to the lot, which Finucane and Barnes were then unable to make; also that Barnes owed him an account of $182.07, which he should insist upon as an offset to one of the tyro notes.
    On this bill an injunction was granted against the collection of the note by McDonald.
    Finucane’s answer admits that Caldwell and Dickson were the purchasers from the state; shows, by an exhibit, that the state has been paid; that respondent has been informed and believes that Dickson, in his lifetime, sold his interest to his co-tenant, Caldwell; that Caldwell sold the whole lot to himself and Barnes, and gave them bond for title on payment of the purchase-money, which has been fully paid; and that he has commenced the proceedings necessary to coerce title; the alleged tender by Green was in Union Bank bills not due, and Green required as a condition precedent to the payment that he (Finucane) should make him a perfect title. Finucane replied that at that time he was unable to make it, also that he had no authority to receive the amount due McDonald, who was holder of one of the notes. He denies that he represented to Green, when he sold, that he could make perfect title to the lot, or that any such representations induced Green to buy; he states that Green purchased, well knowing the situation of the title; he put Green into possession then, and he holds it yet.
    Barnes’s answer adopts Finucane’s as his own, and, in addition, states that he sold the said note to McDonald, about January,. 1837, for full and adequate consideration; that this sale was made without any notice given by him of any equity or pretence thereof in Green.
    McDonald’s answer states, that in November or December, 1836, he purchased the said note of Barnes; that, during the negotiation for the purchase, and before the completion of it, he had a conversation with Green relative to it, and requested Green, then, to pay it at a discount, (it not being due.) Green replied, that he could not raise the money.then, but it would be a mighty good note when due, but made known no difficulty about the title as charged; that if Green had informed him of any such difficulty about the note, he would not have taken it from Barnes. |
    About the 14th of February, 1838, Green, for the first time, made objection to the consideration, alleging, that some lady had dower in it, and that he would not pay until he got title; states that Green knew of his purchase from December, 1836; that Finucane is solvent, but that Barnes, and all the other parties to the note, except Green, are insolvent, and if Green succeed, it is a dead loss to McDonald.
    Upon this state of pleading, at November term, 1839, the injunction was dissolved as to McDonald; Green appealed. At January term, 1841, of the high court-of errors and appeals, the chancellor’s order was affirmed. ¡The case is reported in 5 How. R. 542.
    In December, 1841,- Green filed a supplemental and amended bill, showing that Finucane had filed a bill in chancery, against the heirs of Caldwell and Dickson, to procure title; by that bill, it appears that the title to a moiety of the lot is in the heirs of' Dickson; if ever there was a sale by Dickson to Caldwell, it was verbal and void; that Finucane is now insolvent; that by his said bill, Finucane does not pretend to have purchased of Dickson, but that Caldwell bought of Dickson, he (Finucane) of Caldwell; that Caldwell’s executors answer, that they find among the papers of Caldwell no written evidence of the sale by Dickson to Caldwell.
    “ That about the time McDonald purchased said note of Barnes, perhaps before the purchase, he called on the complainant to know if it was a good note; he replied in substance, that it was a good note, and would be paid when Finueane and Barnes made a title to the property, for which it was given; ” also, that he “ had an account against Barnes. McDonald said that he would deduct the account, if Green would pay the balance. Green replied, that he would not pay the note until Finueane and Barnes had made title, as there was some difficulty about it, and so he charges that McDonald took the note knowing Green’s defence.” On this bill the injunction was reinstated.
    McDonald’s answer to supplemental and amended bill, states, that he knows nothing about the alleged suit by Finueane against Caldwell’s heirs, nor about the title to the lot in question. On these subjects he requires proof; as to the alleged conversation with Green, he answers, “ True it is, that about the time this respondent was negotiating with Barnes for the purchase of said note, he held a conversation with Green relative to said note. This conversation is correctly and at length set out in respondent’s answer, heretofore filed. He can give no more correct or detailed statement of that conversation, than in his former answer he has given. The time, manner, and matter of said conversation, were as in said answer set forth, and not as set forth in the supplemental bill. Respondent refers to that answer as part of this, and makes the whole of that answer a part of this.” Green is still in possession of the lot.
    Thomas Green proves, that on the 14th of February, 1838, there was a conversation between McDonald and Green, in which Green informed McDonald of the defect of title, and refused to pay the note on that account; also gave him notice that he would attempt to set off Barnes’s account; also proved tender of the Union money to Finueane.
    George Finueane proves, in February, 1837, he delivered the note sued on by McDonald to Barnes; that, at the time he sold to Green, he believed he had a good title, and he endeavored to persuade Green that it was good.
    Upon these pleadings and proof McDonald moved to dissolve the injunction. The motion was overruled. McDonald appealed, and the judgment was reversed, and the injunction dissolved. The case is reported in 9 S. & M. 138.
    Green then filed a supplemental bill,- stating, in effect, that that since the filing of the original find amended bills, the heirs of Dickson had sued him in ejectment, and in the circuit court obtained judgment for a moiety of the lot, which case is now pending in the high court of errors and appeals. On this supplemental bill the injunction was reinstated, and subsequently on McDonald’s motion the injunction was dissolved, and Green appealed.
    
      George Work, for appellant, j
    Filed an elaborate argument, insisting that the record showed, that Green never could get title to one half the lot in controversy, and so the consideration of the note had failed; and, upon the principles laid down in 9 S. & M. 138, he was entitled to relief. On this point he reviewed the facts, and cited Litt. Sel. Ca. 412: 1 J. J. Marsh. 4S2; 2 lb. 239; 3 lb. 585; 5 lb. 701; 4 Monr. 701.
    He insisted further, that Green had not, under the facts, precluded himself from setting up this equity; and cited 4 How. 161; 5 lb. 698; 3 S. & M. 647, 683; 10 lb. 560; 1 Pet. 465; 4 Litt. 155. 1
    
      D. Shelton, for appellee,
    Contended that all the principles now involved, had been twice decided in this cause by the supreme court. First, as reported in 5 How. R. 542; and second, as reported in 9 S. & M. 138. The fact stated in the last supplemental bill does not take the case out of any one of those principles. They are also decided in the case of Coleman v. Rowe, 5 How. R. 460. These principles are,
    1. If the purchaser is aware of the condition of the title, at the time of the contract, equity will not relieve him against it. 5 How. R. 546 ; sustained by 3 Marsh. 288 ; 5 S. & R. 204; 13 lb. 386 ; 1 Fonbl. Eq. 272, n.; Walk. R. 244..
    2. Green’s contract to pay the money was independent of the covenant of Finncane to make him title. 5 How. R. 544. In such a case, chancery will not enjoin the collection of the purchase-money. 5 How. 544,545; also lb. 465-468; supported by a number of authorities, especially 2 J. C. R. 524.
    3. Green was put into possession, and still holds it; possession having passed, being continued without eviction and without fraud, chancery will not enjoin the collection of the purchase-money. 5 How. 469, 470; sustained by 1 Fonbl. Eq. 372, n.; 1 J. C. R. 218; 2 Sch. & Lef. 519, 546.
    To the first of these principles there is not an exception; to the two last fraud and imposition, charged and proved, constitute the only exception. 2 J. G. R. 522.
    There is no fraud charged or proved in this case.
    Mr. Shelton reviewed the facts of the case, and insisted that if, as between Green and McDonald, the equities were equal, McDonald’s judgment at law gives him a legal advantage, and equities being equal, he who has the legal advantage must prevail. 1 Fonbl. Eq. 321, 351; 2 Gond. R. Sup. Ct. U. S. 399; 2 Wash. O. G. R. 411; 7 Peters, R. 608 ; 10 lb. 177.
    But McDonald has a still stronger defence to this bill, which is available on this motion-
    While McDonald was negotiating for the note on which he obtained his judgment, he applied to Green to know if the note would be paid; Green assured him that it would, and upon this assurance McDonald purchased the note. Now, if the maker of a promissory note give to a third person such representations as induce him to purchase it, the maker is bound by his representations, and shall make them good; he will bound to do so whether he knew them to be false or made them ignorantly. 1 Story, Eq. 202; 4 How. R. 160.
   Mr. Justice Smith

delivered the opinion of the court.

The appellant filed this bill to enjoin the collection of a note, given to secure the payment of part of the price of a certain lot in the city of Jackson, purchased by appellant of Finucane and Barnes. On this note, McDonald had brought suit and recovered judgment in the circuit court of Hinds. This case, varying but little in aspect, was, before its present advent, twice in this court. First, on an appeal taken by the appellant, from an order of the chancellor dissolving the injunction. The decision of the chancellor on that appeal was affirmed, and the case is reported in 5 How. 542. Second, on an appeal taken by the appellee, from a decree of the chancellor overruling a motion to dissolve a second injunction, which had been obtained on an amended bill, filed after the dissolution of the first. This decree of the chancellor was reversed, and the case is reported in 9 S. & M. 13S. The decisions pronounced on these occasions, are final and conclusive on all the matters adjudicated, so far as the respective rights of the parties to this controversy are involved. The principles there settled constitute the law of the case, as far, at least, as the facts were there developed and reviewed by this court. But afterwards, in 1847, the appellant filed a second supplemental and amended bill, upon which he obtained a third injunction. This injunction was likewise dissolved, and he has appealed. The decree of the chancellor dissolving the third injunction, must be regarded as made exclusively on the statements and allegations of the last amended and supplemental bill. The sufficiency or insufficiency of these allegations must determine the propriéty of the decree.

In this bill, the only new or additional grounds taken, may be comprehended in the single allegation, that after the amended and supplemental bill was filed, the heirs at law of James C. Dickson, in an action of ejectment, which was pending at the filing of said bill, recovered judgment against appellant for one undivided half of the lot sold to him by Finucane and Barnes, and for which, in part payment, the' note enjoined in the hands of McDonald was given; that the judgment so recovered was not vacated or reversed, and that unless said judgment in ejectment shall be reversed, he will be turned out of the possession of one undivided moiety of said lot. No evidence of any character was introduced by either party, since the decision of this court reversing the order of the chancellor overruling the motion to dissolve the second injunction. With the exception of the additional matter above stated, the equities of the appellant exist now as they did when that decision was made. The second supplemental bill was not answered; that additional matter is then to be taken as truly alleged. Our first inquiry, and perhaps the only one which it may be deemed necessary to make, is, therefore, whether the allegation of this new matter has placed the case without the operation of the principles previously settled. The facts adjudicated, and the principles of law held to apply, were, 1. That the possession of the lot was passed under the contract oí sale, and that the vendor remained, in the quiet and undisturbed occupancy of the same. 2. That the covenants in the case were independent; that appellant had bound himself to pay the money at all events, and was compelled to rely upon his remedy at law on the covenants in the title-bond. 3. That the bond from Caldwell to Finucane and Barnes showed an equitable title in them, which could be enforced ; that appellant was acquainted with the state of the title, and the contingencies of procuring a conveyance from the. representatives of Caldwell and Dickson, and having purchased, with a full knowledge of the title of Finucane & Barnes, he is not entitled to relief. 5 How. 545, 546. 4. That there is no proof in the record, that McDonald took the note with a know-ledge of the equities alleged to exist on the part of Green, and that no defect of title was shown by the chancery proceeding instituted by Finucane against the heirs at law of Caldwell and Dickson, as the allegations to that effect, of the amended and supplemental bill, was not admitted by the answer, and no proof was offered to sustain it. 9 S. & M. 143.

Green, at the purchase, knew the character and condition of the vendors’ title; he knew that they held only the title-bond of Caldwell, conditioned to convey upon the payment of the price of the lot by them; and that probably Caldwell’s title was but an equitable one. Finucane and Barnes believed this title to be a good one of its kind, and that a perfect legal title could be obtained, either by the voluntary act of Caldwell or by legal steps taken for that purpose. There is no pretence for charging them with false representations or fraudulent concealment in reference to the condition of their title. ' The defect of the legal title, or rather the fact that Barnes and Finucane had none, or that they now cannot make one, in nowise constitutes a ground on which the collection of the money should be enjoined. Green purchased with a full knowledge of the title, and no fraud has been proven. If he had taken no precaution to secure himself by covenants, he could not, as between himself and the vendors, be shielded against the payment of the money, even on the ground of a total failure of consideration arising out of a de’fect of title in them. 5 How. R. 460, 542, and cases cited. But the bond of Finucane and Barnes shows, that he designed to protect himself against a possible failure of their equitable title. Under this state of case, the question in advance of any other open in the cause, is, Whether it has been satisfactorily shown that Finucane cannot obtain a conveyance of the legal title to the lot from the heirs at law of Caldwell and Dickson? As above remarked, the record before the filing of the last supplemental bill furnishes no evidence of a defect in the equitable title of Finucane. But the fact relied on to prove the incapacity of Finucane ever to convey, As the alleged recovery of the judgment in ejectment, predicated on the paramount legal title of the heirs of Dickson, for one half of the lot.

This bill does not aver that Green was disturbed in his possession ; that there had been an eviction in fact. This was perhaps unnecessary, as it seems the objection to granting relief, before eviction, in cases of the failure of consideration arising from defects in the title, is placed chiefly on the ground of the incompetency of a court of chancery, as not'possessing any direct jurisdiction over legal titles. It is conceded that it may try title to land when the question rises incidentally, but it is understood not to be within its province, when the case depends on a simple legal title, and is presented directly by the bill. If this be the true reason why a previous eviction is necessary to authorize the interposition of the court, a judgment at law, establishing a failure of title, would be held sufficient for that purpose, without an eviction. Abbott v. Allen, 2 Johns. Ch. R. 519.

And upon the authority of this case, we might be disposed to regard the recovery in ejectment as equivalent to an actual eviction, if it were decisive of the question .under examination. But the recovery averred in the bill was had upon the legal title in the parties, against whom the equitable title of Finucane is asserted. A state of case wholly different would be presented, if the judgment at law against Green had been obtained on a legal title paramount to that of Dickson’s heirs. Their title may be perfectly good at law; non constat, that Finucane’s is not good in equity. If the title in the heirs of Dickson were good at law, they were compelled to recover against Green in the action of ejectment, who held under the subordinate equitable title derived from Finucane. The judgment recovered against Green, therefore, does not prove that Finucane’s title is more defective than Green understood it to be at the purchase, nor that Finucane will be unable to coerce a conveyance from the heirs of Dickson and Caldwell. Green’s defence has, therefore, not been materially strengthened by the supplemental matter of his last bill. The case, as between Finucane and himself, stands as it did when this court, on a former occasion, held, that if he could have any relief in equity, it could not be granted on any thing short of a showing that he never can get a title.” 9 S. & M. 143. McDonald’s claim remains covered by Finucane’s defence.

But, were it conceded that.the judgment in ejectment and the admitted insolvency of the vendors, had changed the relations between Green and Finucane, would that affect the claim of McDonald %

No exception whatever is taken to the title to one half of the lot, claimed through Caldwell; and although Green might claim a rescission of the contract, on the ground of a failure of title to the half claimed by the heirs at law of Dickson, as between himself and Finucane and Barnes, yet that fact must have an important effect on the decision of the controversy in reference to McDonald, who is shown to be a bona, fide purchaser, for a valuable consideration, and without notice of Green’s equity, of the note, given for one half of the price of the lot. For although it be generally true, that the maker of a promissory note may avail himself of any defence in an action by the assignee, which he could have urged in a suit by the payee, as Green purchased with a knowledge of the defect in the title, and secured himself by covenants against its ultimate failure, he should not be permitted to contest the payment for the amount covered by his indemnity. The ground of defence is a total failure of consideration ; but this fails unless Green is permitted to reject the title to one half of the lot, about which there is no dispute. To compel him to pay McDonald’s note, would not even be a hardship, as he is indemnified to that extent. To allow him to claim a rescission of the contract, and evade the payment of the note, would be the grossest injustice to McDonald.

Let the decree be affirmed.