Cask 77 — Action by A. E. Willson against W. Y. Davis, Jr., an» Others to Recover on a Note and Enforce a Mortgage Lien—

May 26.

#### Davis and Others v. Willson.

APPEAL FROM JEFFERSON CIRCUIT COURT, CHANCERY DIVISION.

Judgment for Plaintiff and Dee'endant, W. Y. Davis. Jr., and Plaintiff Appeal.

Affirmed.

Champerty — Adverse Possession — Contingent Remainder — Right to Mortgage — Purchaser Pendente IjIte — Settlement of a Suit — Rights of Mortgagee.

Held: 1. Defendant’s grantor obtained a decree whereby a pant of his life ’estate was conveyed to him in fee to- -offset certain amounts his gu-ardian had expended out! of his feie in improving fide life estate, but be did not make two of the remaindermen, who were then infants, panties to this suit. The property thus conveyed by tbe decree was thereafter conveyed to grantor, who took posisiesslon thereof, and, when the remaindermen bad attained their majority, sued them to quiet his title. One of the remaindermen employed plaintiff as her counsel in this suit, and gave him a mortgage on her interest in the estate to secura his fee. A deereie for defendant waa reversed on appeal, and the claims of his opponents upheld, unless he could make a certain, showing on a new trial. No retrial of -the suit was had, but instead a settlement was effected, and an agreed judgment entered, quieting defendant’s title to tbe premises. Held, that at the time of giving the -mortgage defendant’s possession waisl not adversa to that of the mortgagor, he holding possession as a life tenant of the particular estate supporting the mortgagor’s remainder, and therefore the mortgage w'as not ehampertous and void under 'Kentucky .Statutes, 1899, chapter 1.5, sections 209-216, making ehampertous contracts for the recovery of lands held-adversely for the whole or part of the lands thus possessed.

2. Under Kentucky -Statutes, 1899, section 2341, providing that any interest in real estate may he disposed of hy deed or will in writing, a contingent remainderman can mortgage her interest.

3. Defendant sued to quiet title to certain property against parties who claimed a contingent remainder -interest therein, and one of these claimants' engaged plaintiff as her counsel, giving him a mortgage on her interest as security for- his fees. A decree in *640favor -of defendant was reversed on the ground that he had only a life -estate as against his adverse claimants, unless he could ■make a certain showing on a retrial. The suit was not retried, hut defendant effected a .settlement with his adverse claimants, without notice to plaintiff, whereby they agreed to a judgment quieting hiis title to, the premises. Subsequent to- this settlement the contingency .on which the remainder estate depended happened. Held, that as the agreed judgment was not based on the grounds for relief relied on in the suit to quiet title, it was. in reality only a quitclaim deed, and therefore plaintiff was not bound by it as a pendente _ lite purchaser, but could assert his rights under the mortgage against defendant.

4. An attorney agreed to act for one of two defendants in a .suit to quiet title to an estate in which they claimed an interest, and took a mortgage on his client’s interest as security for his fees. The suit was never finally determined on its merits, but a settlement was effected by the parties, and an agreed judgment was entered in favor of plaintiff therein. Held-, that the attorney’s ■mortgage did not cover more than his client’s actual share in th-ei consideration for the settlement; though she was in fact pa-id the whole -sum.

SIM'RALI, & DOOLAN, for appellants.

POINTS AND AUTHORITIES.

1. The -mortgage sued on by appellee in this case is Cham-pertous and void, for the reason that at the time it w-as executed by Mrs. 'Caldwell, the mortgagor, W. Y. Daivis, the ancestor of the appellants, was in adverse possession of the property mortgaged, claiming it as his own adversely to- all the world. In fact, the appellee was employed to defend such adverse claim of fee simple title, and no rights could accrue to' him under the mortgage sued on in this case. . Ky. Stats., .secs. 210-216.

2. Even if the mortgage sued on by appellee were not eh-aanpertous, still, as a lis pendens mortgagee, appellee! would be hound by any judgment rendered in the case of DaYi-s v. Jacob, No- 4212S, which had been brought prior to the malting -of such mortgage-. This is certainly true in the absence of any showing of fraud or bad faith in the rendition of such judgment.

3. If the appellants are to he regarded as puircihaae-rsi -of 'the claim or interest of Mrs. Caldwell for the suim of $500, then it appears by- stipulation filed in this case that 'they became such purchasers in January, 1898, for value and without actual notice of appellee’s mortgage claim.

The mortgage to. appellee, being a mortgage of a .chose in action, was not a recordable instrument, and the irecoriding *641thereof did not give constructive notice of its contents or even, of its existence. Bank of United States v. Huth, 4 B. Mon., 448-9; Van Meter v. MeFadden, 8 B. Mon., 442.

4. The appellee has no claim of lien under the attorney's statute in a ease like this where he is employed merely -to de^ fend a suit to quiet title; besides he- has .not attempted to assert any claim of statutory lien in this case; Ky. .Stait., isiec. 107; ■Wilson v. House, 10 Bush, 406.

5. Whatever may be the' view of the count as to the questions raised on the original appeal, it is clear that the appellee upon his cross-appeal is not entitled to more than the> court below awarded ihim.

The only competent evidence in this ease .as to the value of Mrs. Caldwell's claim at the time it was extinguished hy a settlement between her and the Davis heirs is to be found -in the ■agreement or settlement made at .that time. All the proof offered hy appellee in support of Ms contention is incompetent and irrelevant, because it relates to a later period of time, namely, the years 1900 and 1901, after -the condition and status .of -the parties which existed in 1898 had been completely changed by the death of Charles D. Jacob, .Sr., and Charles D". Jacob, Jr.

STANLEY E. S’LOSS, por appellee.

POINTS AND AUTHORITIES.

1. Charles D. Jacob had no power to .sell more than a life estate; nor to improve the property for the benefit of the life estate, at the cost of the remainder; nor had the court power to compensate him for these expenditures out of that property in the old suit. Johnson v. Jacob, 11 Bush, 646; Caldwell v. Jacob, 16 Ky. Law Rep., 21; 19th St. Church v. Fithian, 16 Ky. Law Rep., 581; Johnson v. Stewart, 8 Ky. Law Rep., 857; Sparks v. Ball, 91 Ky., 502, and cases cited; Henry v. Brown, 9.9 Ky., 13; Springfield v. Bethel, 90 Ky., 593; Mayes v. Payne, 60 S. W., 710; 28 Ky. Law Rep., 1465; Gray y. Oyler, 2 Bush, 256.

■2. Remaindermen were necessary parties.. Johnson v. Jacob, •11 Bush, 646-55 to 61; Farr v. Gilreatb, 23 S. C., 502; Mosely v. Hankinson, 22 S. C., 331; Leroy v. Charleston, 20 ,S. C., 71; Long v. Long, 62 Md., 67.

3. The trustee sued was not their trustee.

4. The vendee of life tenant can not hold adversely1 to the remaindermen. Smith v. Shackelford, 9 Dana, 475; Gregory v. Ford, 5 B. Mon., 475; Phillips v. Johnson, 14 B. Mon., 176; *642Turman v. White, 14 B. Mon., 569; Simmon® v. McKay, 5 Bush, 31; De Coursey v. Diclcen, 1 Ky. Law Rep., 260; Mays v. Hannah, 4 Ky. Law Rep., 50; Mellvaine v. (Carter, 9 Ky. Law Rep., 599; Gudgell v. Tydings, 10 Ky. Law-Rep., 737; Berry v. Hall, 11 Ky. Law Rap., 30; May v. Scott, 12 Ky. Law Rep., 248; Tucker v. Price, 17 Ky. Law Rep., 11; Jeffries v. Butler, 22 Ky. Law Rep., 226; Davidson v. Kelly, 64 9. W., 623; 23 Ky. Law Rep., 1011.

5. No adverse possession under champerty statute. Castleman V. Combs, 7 Mon., 273, at 276-279; Griffith v. Dicken, 4 Dana, '561, at 563; Baley v. Deakins, 5 B. Mon., 16:1; Barrett v. Co-burn, 3 Met., 513; Jones v. Chiles, 2 Dana, 35; Ross v. Veeok, 58 ,S. W., 475; 22 Ky. Law Rep., 578; Moore v. Baker, 92 Ky., 518-; Baley y. Deakins, 5 B. Mon., 161; Jones v. Chiles, 2 Dana, 35; Berry v. Hall, 11 Ky. Law Rep., 30; 'Simmons v. McKay, 5 Buah.

6. There is no -lis pendens against Mr. Willson on account of the delay. Wallace v. Marquette, S8 Ky., 100; Ehrman v. Kendrick, 1 Met., 149.

7. The judgment was not rendered on any ground asserted in the record when Mr. WTillson took his mortgage, and the only cause of action which had then been asserted was heild bad by this court. There was, therefore, no lis pendens. 2 Van Fleet on Former Adjudication, secs. 539-549-586; Pearson v. Keady, 6 B. Mon., 128; Stone v. Connelly, 1 Met., 652-671; Watson v. Wilson, 2 Dana, 406; Clarkson v. Morgan, 6 B. Mon., 441-6-7-8-9, 450-1: Wassery v. Scarborough, 3 Atkins, 392; Ehrman v. Kendrick, 1 Met., 149; Stone v. Connelly, 1 Met., 552; Hawes' v. Orr, 10 Busk, 430-7; Bamberger v. Moayan, 91 Ky., 517-521.

8. As the remaindermen were not parties to the old suit to. .remove their property from the trust to compensate the life1 ten■ant, they are not bound ’by the judgment. Nor had the court power to grant such relief. Caldwell v. Jacob, 16 Ky. Law Rep., 21; Jacob v. Johnson, 11 Bush, 646.

9. The judgment rendered by consent in suit No. 42128 after reversal by this court (Caldwell v. Jacob, supra) was collusive, fraudulent .and void against Mr. Willson. It was a mere device to convey land. Judgment does not binid a stranigerr. Lovelle v. Clark, 18 Ky. Law Rep.; Shadburn v. Jennings, 1 Mar., 179; :CIary v. Marshall, 5 B. Mon., 266-273; Doyle v. Armstrong, 2 Dun., 534; Alexander v. S'tevens, 7 B. Mon., 351, at 356; Mc■Chord v. McClintock, 5 Litt., 305; Memphis, &c., v. Grey, 9 Bush, 137, at 148; Sutton v. Pollard, 96 Ky.,' 640; Feltman v. Butts, 8 Bush, 115, at 120; Blight v. Banks, 6 Mon., 192, at 224; Rothehild v. Kohn, 93 Ky., 107; Brown v. Moore, 80 Ky., 443-449; *643Adams v. Halbert, 13 Ky. Law Rep., 637; Ricketts v. Hamilton, 16 Ky. Law Rep., 351-762; Georgetown Water Co. v. Cen. Thompson Co., 16 Ky. Law Rep., 124.

10. -Mr. Willson, as we have shown, was not a lis pemdehs purehasier.i He was given no notice. Judgment was rendered in favor of Davis by consent, on the -same record this court had held .did not entitle him to thei relief granted, or to any relief.

11. The agreed judgment does not, fix the value of the land as to him.

12. He hais a mortgage lien to secure his fee; and whatever amo unit the mortgagor received for the land Imust be taken and treated ,as paid for the equity of redemption; i. e., as being in addition to an agreement to i>ay off the mortgage out of the land. Potter v. Ajax Mining Co., 61 Pac., 999; 1 Jones on Mortgages, seca 736, 740; Shuler v. Hardin, 25 Inid., 387; Delaware, &c., v. Bonnell, 4,6 Conn., 9; Russell v. Allen, 10 Paige, 249; Vanderkemp v. Shelton, 11 Paige, 28; Lovelace v. Webb, 62 Ala., 271; Lord v. Dudley, 3 Met. (Mass.), 147; Bowser v. Patrick, 23 Ky. Law Rep; Lufburrow v. Hicks, 66 Pac., 602; Potter v. Ajax Mining Oo., 61 Pac., 999, at 1002; Russel v. Dudley, 3 Met. (Mass.), 147.

13. The judgment is a -purchase subject to a ,lie¡n for .attorney’s fees secured by mortgage. Hubbel v. Dunlap, 19 Ky. Law Rep., 656; L. *&*N. v. Proctor, 21 Ky. Law Rep., Skaggs v. Hill, ,12 Ky. Law Rep., 382; McIntosh v. Booh, 62 S. W., 515; Potter v. Ajax Mining Co., 61 Pac., 999; Flint v. Hubbard, 66 Pac., 446; Lufburrow v. Hicks, 66 Pac., 602; Reid v. Punch, 2 Ky. Law Rep., 61.

14. The mortgaged interest was really worth the -amount 'of the mortgage -and more than the amount paid.

Opinion of ti-ik cotntr by

JUDGE BARKER

Affirming.

John I. Jacob, by Ms last will and testament, devised to his son, Charles D. Jacob, a large estate in fee simple, and also real estate in , the city of Louisville, Ky., worth the sum of $30,000, in trust to him for life, with remainder to his children living at the time of his death. At the time of the death of his father, Charles D. Jacob was an infant, and Ms guardian, in order to improve his trust estate, instituted an action in the Louisville chancery court, and therein obtained a decree authorizing the -sale of a portion of his ward’s fee-simple estate, and the right to invest the *644proceeds in improving the trust estate in order to increase its productiveness. Under this decree about $18,000 worth of the fee-simple estate was sold, and invested in improving a part of the trust property situated at the corner of Fourth and Main streets, in Louisville, Ky. After reaching his majority, Charles I). Jacob became dissatisfied with the investment made by his guardian, and instituted an action in the Louisville chancery court against all parties in interest except his two daughters, Mrs. I. P. Caldwell and Miss Lucy D. Jacob, -who were then infants. In this action a decree was rendered refunding to the fee-simple estate the sum that had theretofore been taken from it to improve the trust estate, and for this purpose a house and lot at the corner of Third and Main streets, belonging to the trust estate, and which was supposed to be about equal in value to the sum taken from the fee-simple estate to improve the trust property, was conveyed to Charles D. Jacob in fee simple by the commissioner of the court. This lot he afterwards improved by building a new business house thereon at an outlay of $27,000 from his fee-simple estate, and later conveyed the lot and improvements to W. Y. Davis for the sum of $36,000, with covenant of general warranty. Subsequently, W. Y. Davis, learning that the children of Charles D. Jacob were claiming to be owners of the reversion of the property sold to him, instituted an action in the Louisville chancery court against them for the purpose of quieting his title. Upon the institution of this action, Mrs. I. P. Caldwell and her husband employed the plaintiff, A. E. Willson, who is an attorney of the Louisville bar, to defend the action; the sum of $1,500 was agreed upon as a fee for his services to be thereafter rendered, for which they executed and delivered their promissory note, to secure which Mrs. Caldwell and her husband, I. P. Cald*645well, executed, acknowledged and delivered a mortgage upon her interest in the property involved in the litigation, which was recorded by the clerk of the Jefferson county court in his office. Upon the trial of the case in the court below the chancellor rendered a decree sustaining the prayer of the petition, and quieted the title of W. Y. Davis to the property. From this judgment an appeal was taken, and the case reversed in an opinion to be found in 15 R., 21, 22 S. W., 436, 27 S. W., 86. In this opinion it was decided by this court that the life tenant, Charles D. Jacob, had no right to have refunded to him out of the trust property the money which his guardian had taken out of his fee-simph estate to improve the trust estate, and that as his daughters, Lucy D. Jacob and Mrs. I. P. Caldwell, were not parties to the action instituted by him for the purpose of obtaining the decree by which this refunding was authorized, they were not bound by it. The court further said that, if it could be made to appear that the trust estate had not been injured by the whole transaction, and that there still remained to the contingent remaindermen the $30,000 worth o£ property devised to them in remainder by their grandfather, with its natural increase in value, then W. Y. Davis would be entitled to a decree quieting his title. After the case returned to the lower court, no further steps were taken for several years, W. Y. Davis making no effort to establish the fact that the trust estate had not been depreciated by the action of Charles D. Jacob in taking from it the house and lot at Third and Main streets. After the lapse of three or four years, without notice to appellee, W. Y. Davis made a settlement with the contingent remaindermen, by which he paid to them the sum of $1,000, in consideration of which sum they signed and delivered to him an agreed judgment quieting his title to the property *646in question in accordance with the prayer of his petition. Subsequently Charles D. Jacob died, and A. E. Willson instituted this action in the Jefferson circuit court, chancery division, for a judgment on this note, and an enforcement of his mortgage lien by which its payment was secured. In bar of the'action W. Y. Davis pleaded, first, that at the time of the execution of the mortgage he was in actual adverse possession of the property, claiming it as his own adversely to all the world, and therefore the mortgage was champertous and void; second, that appellee was a pendente lite purchaser, and consequently bound by the judgment rendered in the action to quiet the title to the property mortgaged; third, that appellant had no notice of appellee’s mortgage at the time he settled with the contingent remaindermen, "and that appellee’s mortgage, being a chose in action, was not a recordable instrument, and therefore did not give constructive notice of its contents or existence to appellant.

Under the deed from Charles D. Jacob, W. Y. Davis took such estate as the grantor had power to dispose of, which was a life estate. The life tenant’s holding is not adverse to the remaindermen, but, on the contrary, is amicable to them; the possession of the life tenant being the possession of the remaindermen. At common law a remainder could not be created without a particular estate to support it, the reason being that an estate of freehold of inheritance could not be created without livery of seisin or delivery of possession; and therefore it was necessary that there should be a tenant of the particular estate to whom livery of seisin could be made, the possession of the tenant of the particular estate being the possession of the remainderman. That the life tenant does not hold adversely to the remainder-man is so elementary as hardly to need citation of author*647ity. Smith v. Shackelford, 9 Dana, 475; Gregory v. Ford, 5 B. Mon,. 475; Phillips v. Johnson, 14 B. Mon., 472; Turman v. White, Id., 560; Simmins v. McKay, 5 Bush, 31; DeCoursy’s Adm’r v. Dicken, 1 Ky. Law Rep., 260; Mays v. Hannah, 4 Ky. Law Rep., 50; McIlvain v. Parter, 9 R., 899, 7 S. W., 309, 8 S. W., 705; Gudgell v. Tydings, 10 R., 737, 10 S. W., 466; Tucker v. Price, 17 R., 11, 29 S. W., 857; Berry v. Hall, 11 R., 30, 11 S. W., 474; May v. Scott, 14 S. W., 191; Davidson v. Kelly, 23 R., 1011, 64 S. W., 623. As appellant’s holding was amicable to the remaindermen, the contract by which Mrs. Caldwell conveyed her interest in the land, by mortgage, to appellee, was not champertous under the provisions of chapter 15, sections 209-216, of the Kentucky Statutes of 1899. She had the right to mortgage her contingent interest. Section 2341 of the Kentucky Statutes of 1899 provides: “Any interest in, or claim to, real estate, may be disposed of by deed, or will, in writing.” In construing this section, this court, in the case of the Bank of Louisville v. Baumeister, 87 Ky., 6, 9 R., 845, 7 S. W., 170, said: “And that the right to dispose of such interest or claim was intended to include the right to mortgage, as well as to sell absolutely, is unquestionable; for it is well settled that every kind of interest in real estate may be mortgaged, if it be subject to sale and assignment. Jones on Mortgages, section 136.” The court then held that an option upon real property was such an estate as was subject to sale and mortgage. In the case of Overton v. Means, 2 Ky. Law Rep., 211, this court said: “Whether an interest by devise in lands is vested or contingent, it is vendible, and subject to sale for the satisfaction of debts.” In the case of White’s Trustee v. White, 86 Ky., 603, 9 R., 757, 7 S. W., 26, it is said: “It is contended that by the common law the contingent remainder could not be sold by *648a decree of court for the reason that the decree could operate on the title only, and, as no title' passed to' the contingent remaindermen, until the happening of the contingency, there could be no sale in the interim by a decree of court. But section 6, art. 1, c. 63, Gen. St. (section 2341, Ky. St.), provides: ‘Any interest in, or claim to, real estate may be disposed of by deed, or will, in writing/ This provision clearly embraces a contingent remainder interest in the land.” To the same effect is McAllister v. Ohio Valley Banking & Trust Co.'s Assignee, 114 Ky., 540, 24 R., 1307, 71 S. W., 509.

As the interest of the remaindermen was subject to mortgage appellant had constructive notice of the existence of appellee’s lien from the time of the recording in the county clerk’s office. Undoubtedly, the general rule is that a pendente lite purchaser is bound by the judgment rendered in the case pending at the time of purchase; but this rule is subject to this modification: that the right of the purchaser is subservient only to the cause of action pending at the time of his purchase, and is not affected by a cause of action set up subsequent to his purchase. Van Fleet, in his. work on Former Adjudication, vol. 2, section 586, p. 1116, declares the rule as follows: “A lis pendens purchaser is not affected by a decree made on new matter incorporated into the bill by way of amendment after his purchase.” See, also, Freeman on Judgments, Sections 199 to 202, inclusive. In the case of Stone & Warren v. Connelly, 1 Metc. (Ky.), 652, 71 Am. Dec., 499, in discussing the precise question involved here, it was said, in the opinion: “It is argued on the part of the appellants that a lis pendens was created by the filing of the original petition and the service of the process thereon; and that, as the object of the action, from its commencement to its conclu*649sion, was to subject to sale tbe house and lot in tbe pleadings mentioned for tbe payment of tbe debt due to tbe plaintiffs, the alienation of tbe property during tbe pendency of tbe action was unauthorized, and that tbe purchaser is affected in tbe same manner as if be bad actual notice of tbe proceeding, and in every respect occupies tbe attitude of a pendente lite purchaser. Tbe general rule is that a person who purchases during the pendency of a suit is bound by tbe judgment that may be rendered- against tbe person from whom be derives title. Tbe rule," however, does not operate to annul the conveyance, but only to render it subservient to tbe rights of tbe parties to tbe action. The original petition was a proceeding in rem to subject real estate to tbe payment of the plaintiffs’ demand. Tbe jurisdiction of tbe court to furnisli the relief sought for was based and depended upon the allegation that tbe debt- or intended to make a fraudulent disposition of tbe attached property. As that allegation was not sustained by proof, the court bad no power on that ground to order a sale of the property, nor were the plaintiffs entitled to any relief on their original petition. Tbe purchase was made during tbe pendency of tbe litigation, under tbe original petition. Tbe purchaser held subject to tbe result of that litigation, and subservient to the rights of the plaintiffs arising out of it. As, however, tbe plaintiffs were not entitled to a judgment upon the matters then in litigation, are the rights of the purchaser to be affected by another distinct ground of equitable relief, which was subsequently asserted.by them in an amended petition? An entirely new lis pendens was created by this amendment. By it tbe plaintiffs’ right to come into a court of equity was placed upon a different and distinct ground. It did not operate as a continuation of the original equity which bad been re*650lied on, but asserted an additional and independent ground of equitable relief. It presented an entirely different state of case, and amounted, substantially, to a new cause of action. The lis pendens which it created can not be- permitted to relate back to the commencement of the action, so as to affect intervening rights.”

The judgment obtained in this action was not based upon the ground for equitable relief set up by appellant in his action' against the remaindermen; on the contrary, this court decided adversely to him on the issues raised by his pleadings. It is true that the court in the opinion said *that*if, when the case went back to the lower court, it could be shown that the trust estate of the remaindermen was in *statu quo*(that is, that it remained intact with its natural advancement in value), then, in that case, a judgment quieting the title might be rendered; but this state of facts was never set up by amended pleading, nor was it attempted to be shown by the evidence. Instead of doing-this, appellants purchased the interest of the remainder-men by the payment of money, and the agreed judgment entered in pursuance of this contract was, in effect, nothing more than the purchase of a quitclaim deed from them. This newly purchased title to the land of the remaindermen can not be allowed to relate back as so to defeat the claim of appellee acquired years before.

We think the chancellor adopted the correct basis in estimating the value of the interest of Mrs. Caldwell. Appellee could not acquire a greater interest than Ms mortgagor, and as the parties, by their own agreement, fixed the value of the interest of both the remaindermen at $1,000, Mrs. Caldwell’s interest was justly placed at $500. It does not alter the status of matters to show that Mrs. Caldwell actually got the whole sum of $1,000 paid for the *651outstanding interest. As a matter of law, she was only entitled to one-half this sum, and this must be considered as the real value of her interest, and the value of her interest mnst limit the right of appellee’s recovery under his mortgage.

Wherefore the judgment of the chancellor, both upon the original and cross appeals, is affirmed.