Drury v. Hayden - 111 U.S. 223 (1884)
U.S. Supreme Court
Drury v. Hayden, 111 U.S. 223 (1884)
Drury v. Hayden
Submitted March 25, 1884
Decided April 7, 1884
111 U.S. 223
Where, in a recorded deed of land subject to a mortgage, an agreement of the
"grantee to assume and pay it is inserted by mistake of the scrivener and against the intention of the parties, and on the discovery of the mistake the grantor releases the grantee from all liability under the agreement, a court of equity will not enforce the agreement at the suit of one who, in ignorance of the agreement, and before the execution of the release, purchases the notes secured by the mortgage, although the grantee, after the deed of conveyance to him, paid interest accruing on the notes."
This was an appeal from a decree in equity, in favor of the holder of promissory notes secured by a mortgage of land in Chicago, for the payment by the appellant personally of the sum due on those notes. The material facts appearing by the pleadings and proofs were as follows:
On July 28, 1875, Solomon Snow, owning the land, made
two mortgages thereof in the form of trust deeds, with power of sale in case of default in payment of the principal or interest of certain promissory notes of the same date, made by him to Joseph E. Loockwood, the first mortgage to Edwin C. Larned, as trustee, to secure the payment of a note for $28,000, payable in five years, and the second mortgage to Roswell B. Bacon, as trustee, to secure the payment of two notes for $6,000 each, payable in two and three years, respectively, and on December 14, 1875, conveyed the land by warranty deed to William C. Snow, subject to the two mortgages, which the latter assumed and agreed to pay and save him harmless from. On January 28, 1876, William C. Snow conveyed the land by warranty deed to Isaac M. Daggett, subject to the two mortgages but without any stipulation that Daggett should assume and pay them. On April 12, 1876, Daggett conveyed the land by warranty deed to William Drury, subject to the two mortgages, "both of which said encumbrances the party of the second part herein assumes and agrees to pay." Each of the mortgages and deeds was duly recorded within a few days after its date. Drury, after receiving the conveyance to him, paid interest accruing on the notes secured by each mortgage. The testimony of Daggett, of Drury, and of the broker who negotiated the sale between them conclusively shows that the clause in this last deed, by which Daggett agreed to assume and pay the encumbrances, was inserted by mistake of the scrivener, without the knowledge and contrary to the intention and agreement of the parties. On July 12, 1877, as soon as the mistake was discovered, Daggett executed a deed of release to Drury reciting the mistake and therefore releasing him from all liability, demand, or right of action arising from or out of that agreement. This release was recorded on July 18, 1877. About November 1, 1876, Annie E. Hayden, the appellee, purchased from Lockwood for a valuable consideration the two notes held by him and secured by the second mortgage. But she did not allege, or offer any evidence tending to prove, that at the time of purchasing the notes, she knew of or relied upon the clause in the deed of April 12, 1876. Her original bill in this case was filed on January 26, 1878,
against the mortgagor, the trustees named in each mortgage, and the successive purchasers of the equity of redemption for a foreclosure of the second mortgage and a sale of the land by reason of default in the payment of interest on her notes, and for a personal decree against Drury for the amount of any deficiency in the proceeds of the sale to pay her debt. After answer and replication, the case was referred to a master, who, on February 6, 1880, reported that the sum due to her was $15,194.21. It was alleged in a supplemental bill filed on February 13, 1880, and was admitted in the answer thereto, that pending this suit, the holder of the first mortgage had filed a bill and obtained a decree of foreclosure, under which the land had been sold and conveyed to the purchaser, and that the mortgagor was insolvent. The circuit court entered a final decree, in accordance with the prayer of Hayden's supplemental bill, for the payment by Drury of the sum reported by the master. See Hayden v. Snow, 9 Bissell 511. From that decree this appeal is taken.