Court Opinion

ID: 3494785
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:02:42.880026+00
Date Added: 2024-06-11T13:43:43.026369
License: Public Domain

The record consists largely of concessions made by the counsel for the respective parties and statements made by them as to what certain witnesses, if present, would testify to. A proper understanding of the issues presented seems to necessitate a more extended statement of the undisputed facts. *Page 514 
The plaintiff held title to a part or all of the lands described in the bill of complaint as security for money loaned by him to his brother Albert. Negotiations were had looking to the exchange of these lands by Albert with defendant Bailey for his equity in an apartment house in Minneapolis. Some preliminary contracts were entered into. The difference in values was $18,000. Bailey agreed to pay $10,000 of this in cash, and to turn over to Albert certain cattle notes for the balance. He sought to make a loan of $10,000 from the defendant bank. He was at that time indebted to it in about $19,000. It declined to make the loan. He then sought to obtain it from the defendant Wiger, the cashier of the bank. The negotiations resulted in the visit of Wiger and Mr. White, the president of the bank, to Sault Ste. Marie, where the details were finally agreed upon in the office of plaintiff's attorney. Albert A. Stegeman was then present. Wiger there agreed to make the loan on condition that $15,000 of Bailey's indebtedness to the bank should also be secured, and to this Bailey assented. Discussion was had as to the way in which it should be arranged, and it was finally decided to have Stegeman deed directly to Wiger. It was understood, however, that later Wiger should deed to Bailey, who would then give a mortgage to secure the $25,000. On the return of Wiger and White to River Falls, Wisconsin, where they lived, Wiger sent a draft for $10,000 to a bank at Sault Ste. Marie, to be turned over
"upon receipt of a deed running to Mr. Wiger, on the lands and premises described in the bill of complaint filed in this cause, and an abstract showing good title, and a letter from Mr. Larmonth so stating."
Stegeman thereupon secured a deed from the plaintiff. The $10,000 was turned over by the bank and the deeds and abstracts sent to Wiger. Bailey gave Albert A. Stegeman his note for $8,000. In satisfying *Page 515 
his indebtedness to the plaintiff, Albert indorsed to him this $8,000 note. Plaintiff brought action thereon, and obtained a judgment, on which execution was issued and levy made on the lands, to enforce collection of which this bill was filed.
The record largely consists of the statements of counsel, agreed upon as a statement of facts. Among them is the following:
"Albert A. Stegeman, the owner of the property, who made the conveyance, had knowledge of the conditions existing between the parties, and of the indebtedness of the defendant Bailey to the Farmers  Merchants Bank. The details between these parties were fully gone over between Albert A. Stegeman and the defendants Bailey and Wiger."
Mr. White, whose deposition was taken, testified:
"I had a conversation at the hotel with Mr. Albert Stegeman the afternoon before we left the Soo and he was telling me about this piece of land and how well located it was and that it was good security for anything that Mr. Wiger and the bank had coming from Mr. Bailey."
In view of this evidence, I do not think that the statement of Mr. Justice BIRD that "Plaintiff had no notice of this arrangement between Wiger, White, and Bailey. Neither had the brother, Albert A.," is warranted. Albert certainly was familiar with all the details of the deal.
That a vendor's lien may exist and be enforced in courts of equity in this State admits of no doubt. The right thus conferred is a creature of equity, founded upon the doctrine that a vendee should not be permitted to retain that which he has purchased from another without paying for it. It is implied as an incident of the purchase and sale. The right thereto may, however, be waived, and enforcement of it may be refused when any other equity is presented stronger than the vendor's right thereto. This exception to *Page 516 
the right of enforcement runs through nearly all of the cases in which such a lien was considered. In Palmer v. Sterling,41 Mich. 218, 220, a lien was said to exist "where nothing is done to waive or lose it;" in Hiscock v. Norton, 42 Mich. 320, 325, "unless circumstances are found which repel the presumption," and among such circumstances are said to be "the formation of arrangements between the parties, which suffice to make out that reliance was not placed on any unwritten claim against the land;" in Dunton v. Outhouse, 64 Mich. 419, 425, "unless there be an express or implied waiver and discharge of it."
In Lyon v. Clark, 132 Mich. 521, 524, after stating its right of priority, it was said:
"The only limitation on this rule is that, if the circumstances would indicate a purpose on the part of the vendor to waive his lien, it will not thereafter be enforced."
In Fisher v. Shropshire, 147 U.S. 133, 143 (13 Sup. Ct. 201), the court said:
"Undoubtedly, a lien of the character we are considering may be defeated if the grantor or vendor do any act manifesting an intention not to rely on the land for security; but this must be an act substantially inconsistent with the continued existence of the lien, and cannot be inferred from the mere fact that the parties may not have contemplated the assertion of the lien in the first instance."
In Re Oswegatchie Chemical Products Corp., 279 Fed. 547, 549 (22 A.L.R. 1334), the court said:
"From the authorities cited, and many others, there may be drawn the doctrine that the implied equitable right of the vendor to look for security in respect of his purchase price to the very land he conveyed is purely a creature of equity, being the equitable right or capacity to assert a lien, which is only useful when it has been judicially ascertained and declared. It follows that, whenever any other equity arises stronger than the vendor's equity, the latter must yield. When *Page 517 
it comes to ascertaining the lien as here, the question always is (broadly stated) whether one set of equities outweighs the other."
In 39 Cyc. pp. 1826, 1827, it is said:
"The right of a vendor to a lien for purchase-money may be waived by him, without consideration, and without writing. A waiver of such lien may result not only from the provisions of the agreement of the parties as to the transaction, but from their acts, conduct, or declarations inconsistent with its retention and from which an intention to waive the lien may be implied."
And in 27 R. C. L. p. 586:
"Courts will not enforce it (a vendor's lien) to the extent of doing inequity to others, nor in cases where the conduct of the vendor has been such as to lead others to adopt a position upon the assumed absence of any such right so that they will suffer if it is asserted and sustained."
The reasoning of the foregoing leads me to conclude that, if Albert A. Stegeman were here claiming a lien, his right thereto would be denied. He well knew that Wiger hesitated before making the loan of $10,000, the proceeds of which he (Stegeman) received, and that such hesitation was because Bailey had not promptly paid the loans made to him by the bank of which Wiger was cashier, and the lands were in a State other than that in which he lived. Mr. White, the president of the bank, was assured by Stegeman that the land was "good security" for any loan that Wiger or the bank might make to Bailey. Had it been intimated by him that such loan would be subject to a lien he might claim for the $8,000, it is clear that it would not have been made. He was present at the conference, and it was at his suggestion that the deed, instead of a mortgage, was executed. In my opinion, the equities are all on the side of the defendants *Page 518 
and a waiver on the part of Albert A. Stegeman is established.
If Albert A. Stegeman had no right to a lien at the time the note was given, I do not think that a right thereto passed to plaintiff on its indorsement and delivery to him. A copy of the note does not appear in the record. His counsel, in stating the conceded facts, said that the note provided "that it should be paid for in cattle notes before a certain date." Such notes were not delivered. The extent to which this provision destroyed its negotiability (see 2 Comp. Laws 1915, § 6042) was not discussed by counsel, and I do not rest decision upon it. It does appear that plaintiff accepted this note in part payment of the indebtedness of his brother to him. While his counsel stated as a fact that he had no knowledge of the nature of his brother's deal with the defendants, I am impressed that this could not have been a fact. He is here represented by the same attorney in whose office the deal was consummated, and it is significant that the first proceeding taken was an action against Bailey on the note on which judgment was recovered.
The suit here brought is clearly one in the nature of a judgment creditor's bill. While in one of the paragraphs it is said "that the debt upon which this judgment was secured was for a portion of the purchase price of said land," there is no allegation that he thereby secured a lien thereon. The prayer for relief reads:
"1. That the said H.E. Bailey, C.N. Wiger and Albert A. Stegeman who are made party defendants to this bill may be required to make full and direct answer to the same.
"2. That the said lands may be determined to be and belong to H.E. Bailey and pretended claim title of C.N. Wiger may be set aside and held for naught.
"3. That the sheriff of the county of Chippewa be authorized to sell said lands under the execution heretofore issued in the case in which John W. Stegeman *Page 519 
is plaintiff and H.E. Bailey defendant and give a deed for the same free and clear of any and all claims of H.E. Bailey, C.N. Wiger or Albert A. Stegeman."
It is clear that no such claim was made upon the hearing. The trial court in his opinion said:
"In his brief, plaintiff says: 'The only real issue in the case is, Can the Farmers  Merchants State bank of River Falls, by virtue of a parol agreement between the bank, Wiger and Bailey, have a lien upon this land against the rights of an attaching creditor who had no notice whatever of the agreement.' "
Later, in the opinion the court said:
"In connection with the argument, plaintiff urges that his claim is for part of the purchase price of the premises, that he had no notice of the bank lien and that the bank gave no consideration for the creation of a lien in its favor. He does not point out in what manner these facts affect the legal phases and it is evident that they do not."
In his opening statement to the trial court, his counsel said:
"Plaintiff claims the right to sell this land, either subject to the Wiger mortgage of $10,000 with interest and other expenses added; or that the land be sold and he be considered as having an equal lien upon it by virtue of the fact that this was for the part of the purchase price of the land paid by Bailey, and, if there is any loss, that the loss be shared jointly by himself and Wiger."
In preparing the record for appeal to this court, his counsel has included therein "assignments of error." There is no provision therefor in either the statutes or rules. It is significant, however, that the words "vendor's lien" are not mentioned therein, nor do they contain any suggestion that the court erred in denying plaintiff the right to such a lien.
The trial court held that on foreclosure of the deed to Wiger, when treated as a mortgage, his $10,000 *Page 520 
claim should be first paid; that the claim of the bank should be next paid, and that plaintiff should have a lien upon the balance. It is insisted that plaintiff's claim should take precedence over that of the bank. With this I cannot agree. Plaintiff held title to a part of these lands to secure an indebtedness owing to him by his brother Albert. He deeded the land to Albert in order to perfect his title and permit him to consummate his deal with Bailey. On the record as it then appeared, plaintiff had no lien on any of the lands included in the deed from Albert to Wiger. Albert indorsed to him the note he had received from Bailey in closing the deal. It mattered not to plaintiff whether Albert A. Stegeman deeded to Bailey and Bailey mortgaged to Wiger and the bank, or whether the plan pursued at Albert's suggestion (the giving of a deed from him to Wiger) was followed. Wiger would not have advanced the $10,000 which Bailey needed to complete the deal had not the bank's claim been secured as well as his own. In view of these facts, I cannot see any equitable reason for giving the plaintiff's claim priority over that of the bank. Plaintiff could have insisted on security from Albert when he released that which he held. He executed his deed without doing so. He thus permitted Albert to dispose of the land free and clear therefrom. The deed from Albert to Wiger passed all his title to the land. It is only as to Bailey and his creditors that it is treated as a mortgage. The acceptance of this security by the bank doubtless influenced it in not making any effort to enforce its claim. Plaintiff did not accept Bailey's note in reliance on the fact that he owned the property free and clear of incumbrance. An examination of the title would have disclosed that Bailey had no record title. Investigation would have revealed the fact that Wiger's title was in the nature of a mortgage to secure his claim and *Page 521 
that of the bank, and that any interest Bailey then had was subject thereto. That the deed was not recorded as a mortgage in no way affected plaintiff's rights. Even if plaintiff was without knowledge of the particulars of the deal, he certainly knew that one was being consummated. Else why did he release the security he had and accept Bailey's note from his brother in lieu of such security? He certainly knew that his brother was disposing of his real estate, and that he had accepted a note from Bailey in part payment thereof.
The decree is affirmed, with costs to appellees.
FELLOWS, CLARK, and McDONALD, JJ., concurred with SHARPE, J.