Court Opinion

ID: 6959780
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:43:32.766927+00
Date Added: 2024-06-11T16:08:23.825557
License: Public Domain

Mr. Justice Sheldon delivered the opinion of the Court : The question here presented for determination is principally one between T. B. Ellis, Sumner & Co., and Cable, as to the priority of their respective equities. The Sisson mortgage was first in point óf time. T. B. Ellis took his deed of May 5, 1858, subject to the payment of that mortgage, and that mortgage which Sumner. & Co. now hold by assignment is entitled to priority as respects' the mill and mill lot which it is upon, unless its precedence has been displaced by the contract of September 30, 1858, entered into between T. B. Ellis of the one part, and Sisson and Bathbun of the other part. That contract, though in some of its parts obscure and almost unmeaning, is in other portions clear and unambiguous. It distinctly purports to be an agreement by T. B. Ellis “ to sell and convey to the said parties of the second part all his paid-in interest in the Bichland Grove steam mill, store, and lands attached to the same, amounting to ten thousand dollars more or less, as shall appear from authenticated bills rendered at the final closing up of this contract, which shall take place within three weeks from this date,” and to yield up to them nil the said premises at the signing of the contract; and Sisson and Rathbun agree “ that they will make over the balance, after deducting the amount held by Benjamin T. Sisson, $9,280, and the said ten-thousand dollars more or less paid in by the said party of the first part, and sold to John B. Rathbun (he agreeing to pay the same) by mortgage on the premises” as they might agree with John M. Waugh ; and it was further agreed “that all the parties named in this article shall deliver up all bonds, mortgages, deeds, and receipts and papers of whatever kind relating to this contract so soon as the same are lawfully canceled.” This court, in the case of Sumner et al. v. Waugh et al., when that was before us, put an interpretation upon this contract, so far as it-respects the Sisson mortgage, and it was held that the Sisson mortgage was a part of the purchase price of the premises; that, as possession had been taken of the premises upon the making of the contract, as provided by its terms, and such possession had not been surrendered, it was not in the power of Sisson to rescind the contract, and he was bound, under the terms of the contract, to deliver up the mortgage to be canceled. And it was further held that the pendency,, at the time Sumner & Co. took the assignment of the Sisson mortgage, of the suit commenced by T. B. Ellis, March 26, 1861, to enforce the contract of September 30, 1858 — in the bill wherein the contract was set out — was notice to Sumner & Co. of the equities of T. B. Ellis, and that they took the assignment of the mortgage subject thereto ; and" that neither Sisson nor Sumner & Co., his assignees of the mortgage with notice, could set up the Sisson mortgage as prior to the lien of T. B. Ellis. We find no reason for changing the conclusion which we then reached, and it establishes the priority of the equity of T. B. Ellis over the Sisson mortgage, unless, since the remanding of the case of Sumner et al. v. Waugh et al., and a further hearing had in the court below, the introduction pf additional testimony has changed the phase of the case. When the case of Sumner et al. v. Waugh et al. was before us, the point was made, that T, B. Ellis had rescinded the contract of September 30, 1858, by the act of bringing- a suit in December, 1858, in the llock Island circuit court, against Sisson & Bathbun, to recover the amount of his “ paid-in” iuterest, and the remark was made in the opinion that if that were so, that if the suit had been brought by Ellis to recover his advances which made up his “paid-in” interest, it would have been an election, and would have amounted to a rescission of the contract, on the .authority of the case of Herrington v. Hubbard, 1 Scam. 569 ; but it was said that the record furnished no evidence of the nature or purpose of that action, and we could not say that it was of such a nature as to operate as a rescission. On the rehearing of the case of Sumner et al. v. Waugh et al., in the court below, there was introduced the record of the Bock Island suit. All that it shows is that a suit was commenced November 10, 1858, by T. B. Ellis against Sisson & Bathbun, that a declaration in asmmpsit containing only the common counts for goods sold and delivered, etc., was filed, without any bill of particulars ; that a plea of the general issue was filed, and, without anything more, the suit was dismissed by the plaintiff at the May term, 1859. There was the testimony of the attorney who brought the suit, that he thought it was brought for money T. B. Ellis claimed to have paid in for machinery in a mill; and of T. B. Ellis, that he sued for the amount of his bills as damages. It was doubtless the above-mentioned remark made by this court in regard to that suit as operating to rescind the contract of September 30, 1858, which led the court below to depart from the former judgment of this court that T. B. Ellis had the prior equity, and to decree that Sumner & Co. had the prior 'equity. As the former record, when here, furnished no evidence of the nature or purpose of the suit in the Bock Island court, the remark as to what might have been the effect had the suit been brought for the purpose there supposed, was unnecessary, and evidently but slightly considered. It was there supposed that the case of Herrington v. Hubbard, 1 Scam. 569, would control. But that was the case of a purchaser, under an unexecuted contract for the purchase of real estate, bringing suit to recover back the purchase money which he had paid under the contract. That was evidently an act in distinct renunciation of the contract of purchase. But the case here was different. It was the case of the vendor suing the vendees to recover in respect to property sold to them. The action, it is true, was misconceived as one brought upon the contract of September 30th, as that was under seal, the time of payment had not arrived, it being seven years ; and the express agreement to pay was on the part of Rathbun alone. Still it was a suit by the vendor against the vendees, or at least a vendee, to recover for the property sold, and for an indebtedness, not to recover back any of the specific property. It was clearly not such a distinctive act of repudiation of the contract as that in the case of Herrington v. Hubbard. But, however this may be, we are of opinion that Sisson, by the taking of immediate possession of the property under the contract of sale of September 30, 1858, and ever since having retained it and enjoyed the benefit of the property, is precluded from insisting that there was a rescission of the contract by T. B. Ellis in his bringing such suit in the Rock Island circuit court, as well as from settingup the non-compliance claimed on the part of T. B. Ellis with the terms of the contract. • Immediately upon the execution of the contract of September 30, 1858, T. B. Ellis departed for St. Louis to procure the authenticated bills of the machinery and goods he had furnished, in order to ascertain the precise amount of the purchase money which Rathbun was to pay; which bills by the contract were to be rendered within three weeks. He also took with him a certified copy, furnished by Waugh, of the mortgage from T. B. Ellis to Waugh and H. B. Ellis, to have H. B. Ellis execute a release of the same. Within the three weeks he returned, bringing the release executed by H. B. Ellis, and the original bills receipted. Rathbun took exception to the bills as being of a larger amount than he had expected, and was willing to allow. Reference was made to Waugh, who examined them, and threw out three of them as objectionable. Several days were spent in trying to effect a settlement. T. B. Ellis offered to settle, leaving out the bills thrown out by Waugh for future adjustment. Objection was made, further, that the bills were not authenticated, and, seemingly for the latter reason, the parties being together on the last day of the three weeks, failed in making a settlement as to the hills, and separated. There is evidence that Rathbun said then he would have nothing further to do with the contract. November 10th thereafter, T. B. Ellis brought the suit in the Rock Island circuit court. In March, 1861, previous to T. B. Ellis filing his bill herein to enforce the contract of September 30th, Mr. Thompson, for T. B. Ellis, made a tender to Sisson & Rathbun of a deed from Ellis and his wife of the property described in that contract, and also presented to them bills of the machinery and goods furnished by T. B. Ellis, verified under oath. This seems to be all which the evidence discloses as having taken place between the parties subsequently to their separation as aforenamed, and up to the time of the filing of said bill by T. B. Ellis. By the terms of the contract of September 30th, possession of the property, thereby agreed to be sold, was to be yielded up to Sisson & Rathbun at the signing of the contract. The possession was so yielded up, and has never been surrendered, or offered to be surrendered, back; but, on the contrary, has been ever since, retained, and the whole benefit of the property enjoyed by Sisson, Rathbun, and Waugh, among them. The amount of the goods, according to the invoice made October 5, 1858, was $3,640.77. Among the property sold was some shafting, at the time in possession of Langley & Co., at Rock Island, for which T. B. Ellis gave to Sisson & Rathbun an order dated October 18, 1858. This order they did not return or offer to return, but refused to do so, and some time after the final failure, as before named, to complete the contract, Sisson & Bathbun replevied the shafting from Langley & Co., and put it into the mill. The vendees here have enjoyed all the benefits of the contract of purchase in as full manner as if the vendor T. B. Ellis had performed the contract to its very letter. He did perform, substantially, within the limited time of three weeks. He procured and presented the original bills of machinery and goods he had pui-chased and put in the mill and store, which formed his paid-in interest. The bills are shown to be just and correct. It seems he regarded them as authenticated bills. If they were not authenticated bills witliin the meauiug of the contract, that was but a circumstantial non-compliance, which in no way interfered with the enjoyment of the full benefit of the contract by the vendees. Ellis was ready to execute the deed. It seems to be no just objection that he could not make a good conveyance by reason of his mortgage to Waugh and H. B. Ellis, which was resting upon the property. It was, doubtless, the true understanding that that mortgage, as respected T. B. Ellis, was to be released. H. B. Ellis had executed a release of it. Bichard Ellis testifies that on that objection being named by Sisson & Bathbun, that T. B. Ellis “could not give them a good title no how,” the latter turned to Waugh and inquired if he could not; to which Waugh responded : “Yes, if I release;” and, being asked if he was not going to release, he replied that he would, if T. B. Ellis and Sis-son & Bathbun would settle about the bills. The goods and personal property, constituting a large part of the whole property, were received and fully appropriated and disposed of by the purchasers. Usually, before a party can rescind a contrae':, he must restore, or offer to restore, what he has received on the contract, and place the opposite party in the same situation as he was at the time the agreement was entered into between the parties. A party has no right to claim all the benefits of the contract, and at the same time insist that it is rescinded. Gehr v. Hagerman, 26 Ill. 441; Sanford v. Emory’s Administrator, 34 id. 468. By this contract of September 30, 1858, as this court has before construed it, this Sisson mortgage constituted a part of the purchase price of the property, and while he held the property he was bound to deliver up the mortgage to be canceled. After all this enjoyment and use of the property, and no offer to restore it, it would be manifestly inequitable to permit Sisson to enforce his mortgage as against T. B. Ellis; and Sumner & Co., his assignees of the mortgage with notice, occupy no better position. To evade the force of such possession and enjoyment of the property, the claim is set up, as respects the goods, that they were purchased by Waugh, and not by Sisson & Rathbun ; and, as respects the mill property, that Sisson was holding possession of it under his mortgage. Waugh, Sisson, and Rathbun do testify that the goods were sold to Waugh, not to Sisson & Rathbun; and Griffith, who was a clerk in the store for T. B. Ellis before the contract of September 30th, and for Sisson & Rathbun, employed by them, for some three months afterward, testifies that he understood that Waugh took the goods back from Ellis about the last of September, 1858 ; that Waugh, about October 1, 1858, sold the goods to Sisson & Rathbun. It appears there was a purchase of the store by Sisson & Rathbun from Waugh, but the note in evidence given for the purchase bears date October 25, 1858. On one of the mortgage, notes of T. B. Ellis to Waugh and H. B. Ellis there was an indorsement made by Waugh, October 11, 1859, alter the dispute arose, and by the advice of counsel, of $3,502.52, as being for store and chattels returned to him October 1, 1858. Waugh, in his first deposition in the .case, testified that after the execution of the contract of September 30, 1858, in the evening, T. B. Ellis started for St. Lonis the next morning, leaving him in the store to take an inventory of the goods; that he had the key to the store and considered himself in possession ; that Sisson succeeded T. B. Ellis in the mill, and Rathbun & Sisson in the store; that Rathbun & Sisson received possession of the store and goods then, in the first place, from him. That he gave them possession by authority given to him by T. B. Ellis. That he was to deliver the store and goods to Sisson & Rathbun, and they were to have seven years to pay for them, and were to pay to him and he was to indorse it on one of the notes of T. B. Ellis to Waugh and H. B. Ellis. That two or three days after making the contract Sisson & Rathbun sent to' Boston for goods for the store. The invoice made of the goods by Waugh, and Griffith, the clerk, is dated October 5, 1858, and on its face shows J. M. Waugh to be debtor to Sisson & Rathbun for the entire amount. T. B. Ellis denies that he made the sale of the goods to Waugh alone, but testifies that he sold the whole property together to Sisson & Rathbun, or, rather, that the sale was really made to all three of them, and Waugh’s name kept out of the written contract by arrangement between the parties. This store was kept in one end of the mill, and seems to have been kept in connection with it. The probability is, from the circumstances, that all the property was sold together. But what should settle the question, as being the best evidence upon the subject, the written contract of September 30th expressly names that the store, as well as the mill and lands, was embraced in the sale to Sisson & Rathbun. As respects possession of the mill, the mortgage of Waugh and H. B. Ellis to Sisson, which T. B. Ellis on his purchase of the property assumed the payment of, did not become due until July 20, 1862. Sisson, when he received possession of the mill property from T. B. Ellis, upon the making of the contract of September 30, 1858, received such possession under the contract, and not under the mortgage ; and the claim that, upon the failure to complete the contract within three weeks after-wards, thenceforth, and ever since, Sisson has been holding the possession, not under that contract, but under his mortgage, which would not mature until July, 1862, seems to be but a mere pretension, and entitled to no serious consideration. To be sure, Sisson says he held possession under his mortgage, but he never communicated any such idea to T. B. Ellis, the holder of the equity of redemption, and who had assumed payment of the mortgage. Good faith required at least this, if not the surrender to Ellis of the possession he had received from him under the contract of September 30th, before undertaking to hold the possession under the mortgage. We find, then, that there is nothing in the claim that the sale of the goods was to Waugh alone, or that the holding of the possession was under the Sisson mortgage, which should detract from the just force and effect of the possession and enjoyment of the property in their operation to preclude Sisson from insisting that the suit brought by T. B. Ellis in the Bock Island circuit court amounted to a rescission of the contract of September 30th, or that Ellis had not complied with the contract. And hence we remain of the same opinion now as before, that the contract of September 30, 1858, postponed the Sisson mortgage to the Waugh and Ellis mortgage. It was doubtless the intention of the contract of September 30th that this latter mortgage also, as well as the former, should be canceled, so as to give to T. B. Ellis a superior lien upon the property for the security of the payment of his paid-in interest, and for the carrying out of such intention, and being impressed with the justice of the claim of T. B. Ellis that he should have such security, we have anxiously sought for some satisfactory ground upon which we might rest the support of such a claim, but we have not been able to discover any. It will not do to say that the intention from the beginning was only to give T. B. Ellis a security upon the property for the payment of the advances which he had made, and assign only that character to the transactions had between the parties. The form of the transaction of May 5, 1858, between T. B. Ellis and Waugh and H. B. Ellis was a purchase and sale, and not a security, and we find no sufficient warrant for pronouncing it to be different from what the parties by their writings and acts have expressed it to be. The written contract of September 30, 1858, was not signed by Waugh, and we can not hold him as bound by that contract to discharge and release his mortgage, allhough we may strongly suspect there was a secret understanding to that effect. It is set up by T. B. Ellis that Waugh accepted Sisson and Bathbuu in lieu of T. B. Ellis, as his debtors for the sum due to him on the Waugh and Ellis mortgage, and that the same has been paid to Waugh by Sisson and Bathbuu. We find no sufficient proof in support of such a claim. It does appear that Waugh and Sisson had largo dealings with each other, and that Sisson assumed the payment of, and did pay, some $7,000 of claims against Waugh, but the proof fails to show that this had anjr connection with the Waugh and Ellis mortgage, or with the contract of September 80th, or should be taken to lessen to any extent the amount due on said mortgage. Sisson and Bathbuu do by the contract of September 30th assume the payment of several enumerated bills of goods owing by T. B. Ellis, but the contract is entirely silent in regard to any assumption of payment of this Waugh and Ellis mortgage. It appears that at the time of the filing of the original bill of T. B. Ellis, Sisson then had in his hands these notes and mortgage of T. B. Ellis to Waugh and Ellis held as collateral security for two certain claims against Waugh that Sisson had assumed the payment of, which notes and mortgages were afterwards delivered back by Sisson to Waugh ; and it is supposed that the notes and mortgage having been thus in the hands of Sisson at the time of the filing of the bill, they became affected with the equity of T. B. Ellis, at least to the amount for which they were held as collateral and which Sisson paid, to have them postponed to his claim of a lieu for his paid-in interest. We are unable to see that this circumstance should have subjected the notes and mortgage to the consequence supposed. We find, then,‘that this Waugh and Ellis mortgage is entitled to be first paid.. But when it comes to the paying over to Waugh of the amount of this mortgage, a rival clajm to the money arises on the part of Sumner & Co., growing out of a transaction in connection with the assignment to them of the Sisson mortgage, which has not as yet been adverted to. When this assignment of the Sisson mortgage was made to Sumner & Co., there was a creditor’s bill pending against Sisson & Rathbun, which had been brought by Sumner & Co. upon two judgments, one against Sisson, the other against Sisson & Rathbun. The judgment against Sisson was against him as indorser of Waugh. On application by Waugh to Sumner & Co. to take security for their claim and,dismiss their creditor’s bill, they accepted an assignment of the Sisson mortgage and dismissed the creditor’s bill, Waugh at the same time, with the assignment, executing to Sumner & Co. the following instrument in writing: “ Whereas, Benjamin T. Sisson has this day assigned a certain indenture of mortgage executed by John M. Waugh, Mary Ann Waugh, and Henry B. Ellis and Ottilina S. Ellis, to said Benjamin T. Sisson, dated February 15, A. D. 1858, to secure the payment of $9,280.58, and recorded in the recorder’s office of Mercer county, in the State of Illinois, in volume ‘ E ’ of Real Estate Mortgages, page 58, to Austin Sumner, John R. Kimball and Edwin O. Tuffts, of Boston, Mass., to .secure the payment of three thousand and forty-six and eighty-eight hundredths dollars, according to Ms four certain promissory notes described in said assignment. “Now, therefore, I, John M. Waugh, in consideration of the premises, do hereby consent that the said Benjamin T. Sisson may assign the said mortgage, on which there will be due and payable on the 20th day of July, A. D. 1862, the sum of nine thousand two hundred and eighty and fifty-eight hundredths dollars, with interest as stated in said mortgage, to the said Austin Sumner & Co., to secure the debt above described, without prejudice, and that he or they may delay the collection of said mortgage if so chosen. “ Dated this 8th day of February, A. D. 1862. “ John M. Waugh.” We think that as against Waugh himself, this instrument in writing should be held to have the effect of a revival of the Sisson mortgage to the extent of Sumner & Co.’s claim. By Ms representation contained in that writing, he induced Sumner & Co. to take an assignment of that mortgage and dismiss their pending creditor’s bill. It was a virtual representation that the Sisson ■ mortgage was then a valid and subsisting mortgage, and that the whole amount thereof was due and owing. Waugh should make good Ms representation, and, as between himself and Sumner & Co., it is, equitable that the latter should be preferred in payment. Cable having taken his assignment from Waugh of this Waugh & Ellis mortgage at a late stage of all this litigation, took subject to all equities against Waugh, and stands in no better situation than Waugh himself. The conclusion, then, is that Sumner & Co. should first be paid the amount of their claim. Cable should next be paid the residue of the amount of the Waugh & Ellis mortgage after the deduction therefrom of the amount of Sumner & Co.’s claim. Then T. B. Ellis should be paid the amount of his paid-in interest. Any surplus remaining should be paid over to Sisson, as the owner of the equity of redemption. Of course, all that has been said in regard to the priority of Sumner & Co. is to be confined to the amount of the proceeds of the mill and mill-lot, the property embraced in the Sisson mortgage—their claim being limited in its extent to the property described in that mortgage. A question is made as to the effect of the release which H. B. Ellis executed of the Waugh & Ellis mortgage on October 9, 1858 ; whether it was to release the one-half interest in the mortgage. Although the mortgage and the notes it secured were given to Waugh and H. B. Ellis jointly, as between Waugh and H. B. Ellis the whole equitable interest in the notes would appear to have been in Waugh. They had ever remained in- his possession, and it would seem from the proofs that H. B. Ellis never put anything in the mill, or in the concern of Waugh & Ellis. We think it sufficiently appears that Waugh was the real owner of the entire interest in the notes and mortgage, and that no significance is to be given to the release in the respect named. As respects Rathbun, it appeal's that at the time of the disagreement as to the settlement of the bills, he distinctly announced to Ellis that he would not have anything more to do with the contract; that afterward, he had to do with the store only, selling the goods in partnership with Sisson, until in'January, 1859, when he sold out his interest in the goods to Sisson, and he seems since to have had no further connection with any of the property. We think that, as against him, under the contract of September 30, 1858, T. B. Ellis is entitled to a personal decree for any deficiency, should there be such, for the satisfaction of his claim out of the proceeds of the above-named mortgaged property to the extent of the amount of said goods received by Sis-son & Rathbun, with ten per cent per annum interest thereon. Objection is made that as Rathbun was not made a party to the bills filed by Sumner & Co. and Cable, and as Cable does • not complain of the refusal by the court to decree against Rathbun, and it .only concerns T. B. Ellis, and’ he has not appealed, but Cable only, it is not allowable to Ellis to assign this cross-error for not decreeing against Rathbun, that he can only assign cross-errors in respect to some decree as between himself and Cable to his injury. After the consolidation of the two cases of Sumner & Co. and Cable with that of T. B. Ellis, the latter filed an amended and supplemental bill, reciting specifically and in detail all the proceedings in the said three suits, reiterating his prayer for relief as made in his original bill filed against Waugh, Sisson and Rathbun upon the contract of September 30th, and making all the parties in interest, Rathbun among them, defendants.' We think it was competent' on this appeal by Cable for T. B. Ell-is to assign for cross-error any decree or refusal of decree by the court below to his prejudice. As respects Henry B. Ellis, there should have been no personal decree against him under the Sisson mortgage, as we hold it should be canceled under the contract of September 30,. 1858, and it was beyond the power of Waugh afterward to revive it against any one but himself. The decree will be reversed and the cause remanded for further proceedings in conformity with this opinion. Decree reversed.