Wayne County MI Archives Court.....Disbrow, Vs Jones 1837 ************************************************ Copyright. All rights reserved. http://www.usgwarchives.net/copyright.htm http://www.usgwarchives.net/mi/mifiles.htm ************************************************ File contributed for use in USGenWeb Archives by: Deb Haines http://www.genrecords.net/emailregistry/vols/00003.html#0000719 August 9, 2008, 6:26 am Source: Cases In Chancery Written: 1837 CASES IN CHANCERY. Henry V. Disbrow v. DeGarmo Jones and others. Possession of lands constructive notice of equities. The possession of a tenant is notice to a purchaser of the actual interest the tenant may have in the premises. (a.) Cotemporaneous contracts. Where several papers are executed between the same parties cotemporaneously, and relate to the same subject matter, they are regarded as together constituting one and the same transaction. (b.) Insurance is a personal contract, and does not pass to a purchaser by a conveyance of the property insured. (c.) Foreclosure for one installment. Equity will not interfere to prevent the mortgagee selling, under the power of sale, the whole of the mortgaged premises for a single installment, when it appears that they cannot be sold in parcels without injury to the whole. Purchaser subject to mortgage cannot contest it. One who buys land and receives a conveyance subject to a mortgage thereon, cannot afterwards contest the validity of the mortgage on the ground of defect in the formalities of execution. Motion to dissolve an injunction. The facts, as they appeared by the bill and answers, may be shortly stated as follows: February 1, 1832, the defendant (Jones), being the owner of a lot in the city of Detroit with a warehouse thereon, leased the same to John L. Whiting and John J. Deming for a term of five years, at the yearly rent of $600. The lessees agreed to keep the warehouse insured for not less than $2,500 for the benefit of Jones, and Jones covenanted that in the event the warehouse should be destroyed from hazards contemplated by the policy, he would rebuild within six months thereafter. September 10, 1834, Jones indorsed upon the lease an agreement to extend it for two years longer, for an additional sum of not exceeding $200 a year. April 27, 1836, Jones sold the premises to Augustus Garrett, Daniel B. Brown, Nathaniel J. Brown, William R. Thompson, and George W. Hoffman, for $20,000, and conveyed the same by deed, with covenants of seisin and against incumbrances, taking back a mortgage on the premises for $16,000 of the purchase price. At the same time Jones entered into an agreement with his vendees, reciting the extension of the term to Whiting (who had bought out Deming, and was then in possession of the premises, and so continued to be until the bill was filed) and stipulating that until possession should be given up by Whiting, Jones should pay his vendees interest on the $20,000 in lieu of the rents for that time; and the rent was to be received by the vendees up to February 1, 1837. Whiting, it appeared, was at this time applied to by the parties to see if he would give up possession at the end of the five years, and declined to do so, expressing his intention to hold for the full term, as extended. Soon after the purchase Garrett and the Browns sold and conveyed their interest to Thompson, and afterwards, on October 21, 1836, Thompson sold and conveyed all his interest to Disbrow. December 7, 1837, Whiting caused the warehouse to be insured in his own name, but for the benefit of Jones, against loss by fire, in the sum of $2,500, in fulfillment of his covenant in the lease. The next April the warehouse was destroyed by fire. No payment had then been made on the mortgage to Jones. The insurer was ready to pay the amount of his policy to Whiting, but Disbrow claimed three-fourths thereof, and alleged in the bill an offer to pay three-fourths of the amount of the mortgage to Jones if Jones would stipulate to give him possession, and to rebuild the warehouse within a reasonable time, and give him three-fourths of the insurance money. This offer was denied by the answer of Jones. April 29, 1837, one installment of the mortgage to Jones being due and unpaid, he proceeded to foreclose under the power of sale. Disbrow then filed his bill, alleging that the whole of the premises had been advertised for sale by Jones for the first installment, and insisting that it was not competent to advertise and sell more than was necessary to pay the amount then due. He also alleged the mortgage to be defectively executed, there being but one subscribing witness to the execution by the Browns; and he prayed for an injunction to restrain the insurance company from paying over the money, and to inhibit and enjoin Jones from proceeding to foreclose under his notice, and that Thompson be decreed to vest in complainant a more perfect title to the premises, or that the sale from Thompson to complainant might be set aside, and he be decreed to repay the purchase money, etc. The answers showed that the mortgaged property was so situated that it could not be sold in parcels without injury to the whole. A preliminary injunction having been granted, motion was now made to dissolve the same. D. Goodwin and T. Romeyn for the motion. Woodbridge & Backus contra. The Chancellor.—In the argument of this motion it has been urged on the part of the complainant that Jones, having put it in the power of his vendees to commit a fraud upon the complainants, is responsible for the consequences. I am unable to see anything in this case to authorize this position in the argument. There is no showing that goes to charge Jones with fraud. At the time of the execution and delivery of the conveyance by Jones to Thompson and others, Whiting was in possession and occupied the premises under the lease from Jones, and the vendees all knew that fact. Whiting was applied to at the same time to learn whether he wished or intended to occupy the premises the full term to which the lease had been extended (to February 1, 1839), and he replied that he did, and this fact was also communicated to the vendees of Jones. There is, therefore, not only the absence of fraud on the part of Jones in this respect, but Whiting's right to occupy formed the subject of a positive agreement between Jones and his vendees. The deed by Jones, the bond and mortgage on the premises by his vendees, and an instrument or agreement reciting and recognizing Whiting's unexpired term, and his right to occupy under the lease, signed by all the vendees, were all executed and delivered at the same time; each of these instruments, therefore, must be regarded as a part of, and as constituting one and the same transaction. The vendues of Jones have nothing to complain of, for Whiting was in possession when they purchased, and their right to possession was subject, by agreement, to his unexpired term. Disbrow, the complainant, was not an original purchaser from Jones, but derived his title through the vendees of Jones, and clearly they could convey no greater interest than that which they themselves had in the premises. Whiting was also in possession, and occupied the premises at the time of Disbrow's purchase from Thompson, and Disbrow knew that fact, as he admits in his bill; and there is no principle better settled than that the possession of a tenant is notice to a purchaser of the actual interest the tenant may have in the premises. (Chesterman v. Gardner, 5 Johns. Ch., 29; Daniels v. Davison, 16 Ves., 249; Taylor v. Stibbert, 2 Ves., 437.) In the case in 4 Hen. & Munf., 120, which has been cited by the complainant, it does not appear that the purchaser had notice that Bibb was in possession before he received the first deed (of February 11, 1790), and this fact, on a careful examination of the case, will be found to form the basis of that decision. In the case of Grimstone v. Carter, 3 Paige, 439, I have been able to find nothing conflicting with the rule above stated, but on the contrary Chancellor Walworth says in that case, that it is the settled law of the land that the possession of premises by a third person is sufficient to put purchasers on inquiry, and to deprive them of the defense of bona fide purchasers without notice of his rights. From the answers of Jones and Whiting in this case, it is clearly to be inferred that Disbrow had, at the time of his purchase, not only notice of the existence and substance, but also of the details of Whiting's lease. It is, therefore, clear to my mind that when Disbrow purchased the premises of Thompson, he took them not only subject to the mortgage, but also to Whiting's term under the lease. It is also insisted by the complainant, that the mortgage is defective, there being but one witness to the execution of it by Garrett and N. J. Brown. To this allegation the defendants answer, that the officer who took the acknowledgment must be considered a subscribing witness. It is not necessary now to decide how far the execution of the mortgage may be considered in compliance with the statute, for if the mortgage were defectively executed in this respect, it could form no ground in the present case for the interference of this court. The complainant has recognized this mortgage in his purchase, and there is no pretense that the money is not due. The tender alleged in the bill is not supported by any other evidence, and is positively denied in the answer. That the whole of the premises are advertised to be sold for the first installment due on the mortgage, furnishes no ground for the interference of this court, as it is shown by the answer that the premises are valuable principally for a wharf and storehouse, and the whole premises have heretofore been used and occupied for that purpose, and cannot be sold separately without injury to the whole. After a careful examination of the whole matter, I have been irresistibly led to the conclusion that the case does not justify an interference with the policy of insurance. The insurance is a personal contract, and does not pass with the title of the property insured. This doctrine is clearly laid down in Ellis on Insurance, page 72. The language of Lord Chancellor King is there quoted, and he says, in reference to policies of insurance: " these policies are not insurances of the specific things mentioned to be insured, nor do such insurances attach on the realty, or in any manner go with the same as incident thereto, by any conveyance or assignment; but they are only special agreements with the persons insuring against such loss or damage as they may sustain." This doctrine is fully recognized, and stated to be the true one in the Saddlers' Company v. Badcock, 2 Atk., 554, and in 1 Phillips on Insurance, 27. All the decisions I have been able to find conflicting with this principle arise under the builders' act, statute of 14 George III, which empowers the governors or directors of the insurance offices within certain districts, upon the request of any persons interested in or entitled to any houses or buildings which may be burned down, etc., or upon any grounds of suspicion that the person insured has been guilty of fraud or willfully setting the houses or buildings on fire, to cause the insurance money to be laid out, as far as the same will go, towards rebuilding or repairing the property damaged, etc., Although, therefore, a policy as a personal contract does not pass with the property insured, yet a covenant to insure to a certain amount, entered into by a lessee or other person having an estate in land, is so far beneficial to the property, that in cases to which this, statute applies, it will run with the land, and an assignee entitled to the benefits of covenants real may maintain an action on the covenant to insure, if it be not observed. (Hughes on Insurance, 392.) The case of Vernon v. Smith, 5 Barn. & Ald., 1, was a case arising under the statute of 14 Geo. III, and the views expressed by Best, J., in that case have not the authority of a decision, and the reasons upon which those views were based do not exist here. If Jones had no remaining interest or liabilities, the case would present a different aspect. But if the views heretofore taken are correct, that the execution and delivery of the deed, bond and mortgage, and agreement, were all at the same time, and formed parts of one and the same transaction, and that Disbrow had legal notice of the existence of the lease, it follows that both Whiting and Jones had an insurable interest. Jones is bound to pay $1,400 per year for the two years, and is bound by his contract with Whiting to rebuild in six months, and Whiting is to pay rent for the two years. Whether the doctrine of Best, J., in 5 Barn. & Ald., be correct or not, it would be going further than any case I have been able to find to interfere by injunction in cases like the present. The legal rights of the parties should be carefully guarded, and seldom interfered with by injunction. As to whether Jones may not be compelled to apply the insurance money, at or before the expiration of Whiting's term, need not now be decided. The dissolution of this injunction does not prevent Disbrow's recovery of Jones, if he is liable to him for any portion of the insurance money; and there is no allegation in the bill that Jones is insolvent or unable to pay any amount which may be recovered against him. Upon the whole, then, Jones seems to have acted fairly, so far, at least, as regards the sale to his vendees. All of the facts in relation to the premises were at that time disclosed by Jones, and Whiting's right to occupy under the lease was made the subject matter of a positive agreement between Jones and his vendees. Whiting continued to occupy and was in possession when Disbrow purchased from Thompson, and Disbrow knew that fact, and this the law regards as notice to him of Whiting's rights in the premises. If a fraud has been practiced upon the complainant at all, it is by his immediate vendees, and as against them he has an adequate remedy. Jones is, therefore, clearly entitled to his remedy to collect his money which is due; he has not been in fault, and it would be unjust to restrain him from doing so. Jones and Whiting had an insurable interest to more than the amount insured, and they have earned the benefits to be derived from the policy, for they have paid the premium on the insurance. Some other points have been made in the argument, and they have all been carefully considered, and I have been irresistibly led to the conclusion above stated. This case may be, like the case of Grimstone v. Carter, 8 Paige's Reports, 439, a hard one; but this court is bound by the rules of law, and whenever courts shall undertake to judge according to the convenience of parties in each case, there is an end to all fixed and settled rules, and the rights of parties will be left to the caprice of whomsoever may occupy the seats of justice at the time. The injunction in this case must be dissolved. Injunction dissolved. ----------------- (a.)—When a party purchases lands which are in the possession of a third person, he takes them subject to all equities existing in favor of the occupant as against his vendor. Rood v. Chapin, Wal. Ch., 79; Godfroy v. Disbrow, Wal. Ch., 260; McKee v. Wilcox, 11 Mich., 358; Norris v. Showerman, 2 Doug. Mich., 16. But the continuous possession of a grantor after giving a deed is no notice to a purchaser that he claims equities in opposition to his conveyance. Bloomer v. Henderson, 8 Mich., 395. (b.)—Compare Bronson v. Green, Wal. Ch., 56; Norris v. Hill, 1 Mich., 202; Dudgeon v. Haggart, 17 Mich., 275. (c.)—Nor can a trespasser in whose hands the property is accidentally destroyed, avail himself of a recovery of the insurance moneys by the owner, to reduce the recovery of damages against him for his trespass. Perrott v. Shearer, 17 Mich., 48. Additional Comments: CASES DETERMINED IN THE COURT OF CHANCERY FOR THE STATE OF MICHIGAN BY ELON FARNSWORTH, Chancellor File at: http://files.usgwarchives.net/mi/wayne/court/disbrow20gwl.txt This file has been created by a form at http://www.genrecords.org/mifiles/ File size: 16.4 Kb