*Davison v. Waite.
Thursday, December 19th, 1811.
1. Equitable Relief — Judgment in Ejectment — Decree.— If a purchaser of land, subject to encumbrance by mortgage, apply to equity for relief against a. judgment in ejectment, the decree ought not to be "that the injunction be dissolved, unless the complainant pay the sum due to the mortgagee;”' but "that the mortgaged premises be sold, unless,”1 &c. and that, out of the proceeds of the sale, the-sum due be paid to the mortgagee, and the surplus, if any, to the complainant.
2. Same — Same.—In such case, if the dower interest of the mortgagor’s wife has been relinquished to-the complainant, but not to the mortgagee; the court, in directing the sale, ought to guard the complainant’s right to such dower interest.
3. Sale of Encumbered Land — Liability of Purchaser with Notice. — Land encumbered by mortgage is liable (in possession of a purchaser with notice) for the sum intended to be secured by the mortgage, but not for other claims of the mortgagee against the mortgagor; especially, if the purchaser has had no notice of such claims. It is, therefore, not liable for a deficiency of quantity, in another tract of land, for the title of which the mortgage is a collateral security; there having been no stipulation, known to the purchaser, that the mortgaged premises should be liable for such deficiency.
George Kiger, of the town of Winchester, having sold to Obed Waite seventy acres of land, part of a larger tract which he had purchased of Joseph Tidball, administrator with the will annexed of William Grayson, deceased, who had not made him a title, (the power of the said administrator to make such title being disputed by the heirs of William Grayson, and a suit pending on their behalf,) a mortgage was executed by Kiger (bearing date July 30th, and recorded December 3d, 1802,) conveying to Waite part of lot No. 15 in the said town, as a collateral security for making a good and sufficient title to the said seventy acres of land. The wife of Kiger, though named as a party in the mortgage, failed to sign *553it, and did not relinquish her right of dower. Waite, afterwards, bought, by parcels, at several times, the residue of the said tract, and thereupon, as a further security for the title, took a deed of trust, dated September 28th, 1803, and recorded December 7th, by which the said Kiger conveyed other real and personal property, therein mentioned, to Hugh Holmes, as trustee, with power to sell such property for the purpose of repaying to Waite (in case the suit should be determined in fa-vour of Grayson’s heirs) the several sums of money he had paid, with lawful interest from the respective times of payment.
The following clause was also inserted: “Provided that such sale shall not be made, until the time and place of making thereof shall be previously advertised, &c. and not more of said property shall be sold than sufficient for the objects above mentioned; and if said property shall be insufficient, such deficiency shall be made *up by a sale of the house and lot, mortgaged by the said George Kiger to the said Obed Waite, (on the 30th day of July, 1802,) by proceeding to foreclosure of the equity of redemption, and making sale thereof.’’
The whole tract was described in the said deed as containing, or as “supposed to contain,” two hundred and thirty acres, and nothing was suggested about a deficiency of quantity.
After this, viz. on the 6th of November, 1804, George Kiger and Amelia his wife, for and in consideration of the sum of six hundred dollars, conveyed the part aforesaid of lot No. IS, to William Davison and his heirs forever; the deed to whom was recorded, together with a privy examination and acknowledgment of the said Amelia, May Sth, 1805. Before this deed was executed, Davison had full notice of the contents of the mortgage and deed of trust. Waite, (also before that event,) under a supposition that the part of the lot in Winchester, conveyed in the mortgage, would be sufficient for his indemnification, had permitted some of the personal property conveyed in the deed of trust to be sold, to satisfy other creditors of Kiger; and himself had bought, and afterwards emancipated, a negro man, named Nat, who was one of the negroes mentioned in the said deed. But after the purchase of the same part of lot No. IS, by Davison, (Kiger having failed to pay to Tidball, administrator of Grayson, part of the money he owed him for the land, though Tidball’s power to make him a title was established; a deficiency being discovered in the quantity of the land, which proved to be only 203, instead of 230 acres; and Kiger having become insolvent,) Waite proceeded to collect the remaining slaves, and other personal property, conveyed by the deed of trust, and caused them to be sold by the trustee. The net proceeds of the sale (amounting to 343 dollars and 20 cents) being not sufficient to satisfy his claim, he instituted an action of ejectment, upon the mortgage, against Davison, and obtained ^judgment; whereupon the latter filed a bill in the superior court of chancery for the Staunton district, and obtained an injunction to stay proceedings until the matters in controversy should be heard and determined in equity.
The substance of the bill, answer and testimony is, for the most part, expressed in the following opinion, delivered by Chancellor Brown, the 16th of April, 1808.
“It cannot be denied that the mortgage- and deed of trust, executed by Kiger, gave to Waite the lien which he now contends, for. It is equally clear, from those words in the deeds of trust, “and if said property shall be insufficient, such deficiency shall be made up by a sale of the house and lot mortgaged,” &c. — and from the preceding words, “not more of said property shall be sold than sufficient for the objects above mentioned,” &c. that it was the intention of the parties that the trust property should be applied to relieve the mortgaged property, though not absolutely to discharge it. But does it follow, as a necessary consequence, that Kiger, with the consent of Waite, might not dispose of any part of the property, included in the trust deed, for his own benefit; and that if he did, the mortgage-lien would be discharged, contrary to the express agreement and understanding of the parties?
“The true state of the case appears to be this. When Waite took the mortgage, his purchases were inconsiderable; and the mortgage was considered a sufficient security. After he had purchased the whole property, additional security was thought necessary', as part of the purchase-money had not been paid to Tidball, and the title to the whole land was still in controversy. But, after the dispute about the title was decided, and Tidball’s right to sell and convey established, Waite (considering himself sufficiently protected by the mortgage against any claim for the purchase-money which Kiger ’“'might owe) was willing to permit Kiger to appropriate such parts of the trust property as he chose, to his own use. Indeed, he might have considered it iniquitous, as it respected Kiger’s other creditors, to insist upon his trust-lien, when his mortgage-lien was fully sufficient to indemnify him; or to have compelled those creditors to resort to a court of equity to set aside the trust. It is manifest, that, acting under those impressions, some of the property of Kiger, included in the deed of trust, was sold to satisfy creditors. Negro Nat was purchased by Waite Himself, with the consent of Kiger, and the money applied to the payment of Kiger’s debts. Nor can it be material that no execution was actually levied on Nat. If one had been levied, it could not have been safely enforced without Waite’s consent, or the aid of a court of equity. The purchase of this property, by Waite from Kiger, was an absolute discharge of Waite’s trust-lie'n upon that property, and an implied consent, on the part of Kiger, that the mortgage-lien, if necessary, should stand charged with Nat’s value.
“I have been considering the case as it would stand between Waite and Kiger himself. Net us now inquire how far Davison ought to be placed in a different situation from what Kiger would have stood in?— *554Davison’s purchase was made the 24th of October, 1804. Nat was purchased by Waite in June preceding. Davison charges, in his bill, that he was deceived by Waite’s concealment of facts, when consulted, at, or before, the time of the purchase from Kiger; and that Waite, after his (Davison’s) purchase, has misapplied the trust-property, which, with proper management, would have released the mortgaged property. If either of those charges were admitted, or proved, they would certainly entitle hinq to relief against Waite. But both are denied; and there is no proof to establish the charges. On the contrary, the answer is established, so far as relates to the management and application of the trust property after the plaintiff’s ^purchase, and after his interest in the application of it accrued. But it is said that the resords of the mortgage and deed of trust proved that the trust property was to be first applied; and it may be contended that the records were evidence that no different arrangement had taken place between the parties; or that any subsequent or private arrangement would have been fraudulent. But this argument is not sound. And I think it has been already shown that the arrangement, between Kiger and Waite, respecting certain parts of the trust property, was both fair and honest. Besides, Davison himself cannot be supposed to have been governed solely by the information afforded by the records; for we find him bargaining with Kiger, not simply for the mortgaged premises, under a persuasion that all the trust property must be applied to its discharge, but also for part of the trust property; viz. Smither’s lot. The truth appears to be this. The parties were deceived as to the amount of the encumbrance. Waite swears that he was ignorant of it, and that he referred the plaintiff to Tidball. Tidball says the plaintiff applied: and, from his deposition, it appears that he was not then capable of giving a correct statement of the amount due. The plaintiff knew of the encumbrances: it was his duty to see how far the property was or might be bound by them. The defendant swears he never, directly or indirectly, deceived him; that he always asserted his claim, though he was ignorant of its extent; that he informed the plaintiff, when the extent could be known; that he has released no part of the trust property since the defendant’s interest occurred; but has been zealous in securing and disposing of it in the best possible manner for the plaintiff’s advantage; (and this part of the answer appears to be supported by the evidence.) Though a hard case on the plaintiff, this court can only relieve, and perpetuate the injunction, on his paying the plaintiff 418 dollars and 49 cents, with interest, and the costs *of this court and the ejectment at law. The mortgage ought not to be continued to guard against claims which are not even suggested to exist; nor for the value of the girl Beck, which is a barely possible, but scarcely probable, claim. The defendant may have redress for her, when injury appears.”
For those reasons, it was adjudged, ordered, and decreed, “that the plaintiff’s injunction be dissolved, unless the plaintiff, on or before the 10th day of July next, pay to the defendant the sum of 418 dollars and 49 cents, the amount of the lien appearing to be due upon the mortgaged premises, and also such costs as the defendant has sustained in prosecuting his writ of ejectment at law; and the court, not yet being advised as to the amount of interest to which the defendant is entitled on the 418 dollars and 49 cents aforesaid, or whether to any, doth refer the cause to Master Commissioner Bent, to state and report an account of said interest, provided the parties cannot agree upon the same.”
And afterwards, (viz. on the 1st of August, 1808,) the plaintiff having been served with a copy of the decree, and failing to show cause to the contrary, the bill • was dismissed with costs; whereupon an appeal was taken to the court of appeals.
Thursday, December 19th, 1811, the following was pronounced as the opinion of this court.
“The court is of opinion that the chancellor erred in dissolving the injunction, on the failure of the appellant to pay the sum stated in the decree;
“1st. In not directing a sale of the mortgaged premises; whereby the appellant would have received the *residue of the value thereof, beyond that sum, if it would have sold for more; and,
“2dly. Because the appellant had procured the dower right of Kiger’s wife, which had not been relinquished to the appellee, and who ought not to have been placed in a better situation than he stood under his mortgage; and the court, in letting the appellee into possession, or in directing a sale, ought to have guarded the appellant’s right to the dower interest, which has now accrued, provided Mrs. Kiger has survived her husband.
“But the court also erred, as to the amount which was properly chargeable on the mortgage, as it respects the appellant, who claims as a purchaser under the mortgagor; that is to say, in allowing to the appellee the sum of two hundred and ninety-seven dollars on account of deficiency in the quantity of land.
“The purchaser from the mortgagor will be bound for the amount intended to be secured by the mortgage, but not for other claims, of the mortgagee, on the mortgagor; especially, if he has received no notice of such claims.
“In this case, neither the mortgage, nor the deed of trust, gives notice of this claim, on account of a deficiency of the quantity of land; but as well the mortgage and deed of trust, as the communications between the parties, had reference, first, to the inability of Tidball to convey, and, secondly, to the sum to be paid to him to procure the title, if he could convey. But as to a claim on Kiger for a deficiency in the *555quantity of land, the purchaser had no notice thereof. That sum of two hundred and ninety-seven dollars must therefore be taken from the sum of four hundred and eighteen dollars and forty-nine cents, decreed to be paid; which will leave one hundred and twenty-one dollars and forty-nine cents, to which, with the interest thereon, the mortgaged premises are to be subjected in the hands of the appellant.
‘Decree reversed with costs; and suit remanded to be proceeded in to a final decree according to the principles of this decree.”