Wayne County MI Archives Court.....Jones, Vs Disbrow 1837
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Deb Haines http://www.genrecords.net/emailregistry/vols/00003.html#0000719 August 9, 2008, 6:26 am

Source: Cases In Chancery
Written: 1837

Henry V. Disbrow v. DeGarmo Jones and others. 

DeGarmo Jones v. Henry V. Disbrow and others. (Cross Bill.)

Fraud in conveyance: Laches in applying for relief. A party seeking to set 
aside a conveyance on the ground of fraud, must be prompt in communicating it 
when discovered, and consistent in his notice to the opposite party of the use 
he intends to make of it. (a.)

Same: The principle applied. Where the complainant had rested for several 
months after he had knowledge of the fraud complained of, and until the 
condition of the property had changed, before he took any steps to rescind the 
contract, this court refused to interfere, and left the complainant to his 
remedy at law.

Foreclosure: Set-off by mortgagor of claim owing by mortgagee. Where land 
which was under lease for a term was sold, and a mortgage taken back for the 
purchase price, and it was agreed between the parties that during the 
leasehold term, the mortgagee should pay to the mortgagors the interest on the 
purchase price; held, that on a foreclosure of the mortgage the amount of this 
interest should be deducted from the amount due on the mortgage, and a sale be 
decreed for the balance only. (b.)

For a general statement of the facts in the first of these cases, see ante, p. 
48.

In that case Jones was proceeding to foreclose a mortgage by advertisement, 
under the statute, and Disbrow, claiming an undivided interest in the 
mortgaged premises as purchaser from one of the mortgagors, filed his bill and 
obtained an injunction, restraining the foreclosure. On the coming in of 
answers to this bill, the injunction was dissolved. Jones then discontinued 
the proceedings to foreclose by advertisement, and filed his bill, December 6, 
1837, for foreclosure in equity.

The bill is in the usual form, against the mortgagors, and states that 
Disbrow, some time after the sale of the mortgaged premises by Jones to the 
mortgagors, acquired by purchase of the mortgagors, or some one of them, an 
estate and interest in an undivided part of said premises, the same being 
conveyed to him in fee simple; that said Disbrow, by such purchase and 
conveyance, claimed to be the owner of the undivided three-fourth parts of 
said premises.

The bill alleged that at the time of such purchase and conveyance, Disbrow was 
fully informed of the bond and mortgage, and of Whiting's lease; that he was 
notified of the lease by Thompson, and also had notice thereof from other 
sources, and purchased and acquired the interest which he held in the 
premises, subject to Whiting's lease; that Whiting was, at the time of the 
purchase and conveyance to Disbrow, in the actual possession and occupation of 
said premises, under and by virtue of the lease, and that Disbrow knew of the 
indorsement on the lease extending Whiting's term to February 1, 1839.

July 23, 1838, the bill was taken pro confesso as to all the defendants except 
Disbrow, who answered. The answer admits the sale of the premises by Jones, 
the bond, mortgage, lease and agreement; also, the possession, by Whiting, of 
the premises, but denies that he, Disbrow, knew the terms of the lease, or had 
any knowledge of the special agreement reciting the extension of the term to 
Whiting, until his purchase, but states that after his (Disbrow's) purchase of 
Thompson, Thompson drew from his pocket and gave him that agreement.

D. Goodwin, for complainant.

Woodbridge & Backus, for defendant Disbrow.

The Chancellor.—The most important points in the first of the above cases were 
decided upon the motion to dissolve the injunction (see Disbrow v. Jones, ante 
48); and it is not necessary again to examine and decide the same points which 
were then discussed and decided.

Jones and Whiting, each, had an insurable interest in the premises; they paid 
the premium on the insurance; they have sustained loss to the full amount of 
the insurance, and they are clearly entitled to the benefit of the policy. The 
agreement respecting the insurance was between Jones and Whiting; Disbrow was 
not a party to it; Jones is liable to his vendees for the $2,800, and this 
amount must be deducted from the amount secured by the mortgage; but I cannot 
perceive how Jones can be made responsible to Disbrow for the $2,500 when the 
policy does not pass with the title to the premises.

There is another point in this case upon which I have entertained some doubt. 
It is the alternative prayer in the bill by Disbrow v. Jones and others, that 
the contract between Disbrow and Thompson may be rescinded, and the deeds and 
conveyances set aside on the ground of fraud. If this is done, it must be on 
the ground that the complainant has not a full and adequate remedy at law.

The only particular in which the remedy in this court would be more full than 
at law, is, if the contract between Disbrow and Thompson should be set aside, 
this court would have the power to order a re-conveyance. It is alleged in the 
bill that a part of the consideration paid by Disbrow to Thompson was paid in 
lands, and upon a proper showing it would unquestionably be competent for this 
court to order a re-conveyance; but it does not appear that the title to the 
lands conveyed by Disbrow to Thompson is still in Thompson, and a re-
conveyance is not specifically prayed for in the bill; a specific sum was 
agreed upon by the parties, which Disbrow was to pay Thompson for his 
interest, a part of which was paid in lands at a specified price. The 
incumbrance of Whiting's lease does not affect the title to the property 
conveyed by Thompson to Disbrow, but the present possession only; and it does 
not sufficiently appear that Disbrow has not an adequate remedy at law.

A party seeking to set aside a conveyance on the ground of fraud, must be 
prompt in communicating it when discovered, and consistent in his notice to 
the opposite party of the use he intends to make of it. (Boyce's Ex'rs v. 
Grundy, 3 Peters, 315.) Such was not the case here; the complainant had notice 
of the incumbrance of Whiting's lease at the time, or immediately after his 
purchase from Thompson, and he admits that Thompson handed him the agreement 
recognizing Whiting's right to occupy the premises, under his lease from 
Jones, until February 1, 1839, at the time or immediately after the 
consummation of the contract between Disbrow and Thompson. If Disbrow 
conceived this to be a fraud upon his rights, he should at once have given 
notice of his intention to recede from the contract. But this was not done. 
Disbrow rested for several months, and until the condition of the property was 
changed, before he took any steps to rescind the contract.

Under the facts here presented it would be going farther than any case I have 
been able to find, to rescind the contract between Disbrow and Thompson, and 
order the deeds to be canceled. 

The complainant must be left to his remedy at law, where, so far as I can 
perceive, that remedy is full and adequate.

The mortgagee having retained possession of the mortgaged premises by his 
tenant, would, perhaps, exclusive of any agreement on the subject, be liable 
to the mortgagors for the rents; but here was a specific agreement as to the 
rents, between the mortgagors and the mortgagee. Jones was to pay the 
mortgagors $1,400 per annum in lieu of rent. The amount secured by the 
mortgage is admitted to be unpaid, and a portion of it now due; this mortgage 
is expressly recognized in the deed from Thompson to Disbrow. The mortgagors 
have permitted the bill to be taken as confessed against them, and Jones is 
entitled to a decree for the amount now due upon the mortgage, deducting the 
amount due from Jones to his mortgagors by virtue of the agreement; and it 
must be referred to a master to ascertain the amount so due.

The bill in the case of Disbrow against Jones and others must be dismissed.

-----------------
(a.) See for the same principle, Street v. Dow, post, 427; McLean v. Barton, 
post, 279; DeArmand v. Phillips, Wal. Ch., 186; Campau v. Van Dyke, 15 Mich., 
371; Story Eq. Juris., § 1520-1522.

(b.) In Detroit and Milwaukee R. R. Co. v. Griggs, 12 Mich., 45, it was 
decided that one who had given a mortgage for the purchase price of lands 
which were conveyed to him with a covenant against incumbrances, is not 
confined to his remedy upon the covenant, but may set off the amount of a 
prior mortgage, which he has paid, against his own mortgage when suit is 
brought to foreclose it. See this case as to set-off generally in equity; also 
Lockwood v. Beckwith, 6 Mich., 168; Hale v. Holmes, 8 Mich., 37; McGraw v. 
Pettibone, 10 Mich., 530.

Additional Comments:
CASES DETERMINED IN THE COURT OF CHANCERY FOR THE STATE OF MICHIGAN
BY ELON FARNSWORTH, Chancellor 

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