Trustees of Schools v. Wright, 12 Ill. 436 (1851)

June 1851 · Illinois Supreme Court

12 Ill. 436

The Trustees of Schools, Pltffs in Error, v. John S. Wright et al., Defts in Error.

ERROR TO LA SALLE.

In equity, a defendant cannot avail himself of the statute of frauds, or limitations, unless he relies thereon in some pr per pleading; and a defence of a kindred character, arising from length of time, will be subject to the same rule.

If a commissioner has sold school land, the law requiring him to take a mortgage as security for the purchase money, which he omits to do, the lien upon the land is not .lost, and may be enforced against subsequent purchasers, wi.h notice, if proceedings lor that purpose are instituted within a reasonable time.

This case was decided at Ottawa, at June term, 1850, and was reported in the 11th Illinois, p. 603 ; at the succeeding June term of the Court, in 1851, a petition for a rehearing; the case having been decided on the last day of the preceding term, was presented, and the prayer was allowed. At that term, the case was again argued, and the following opinion was pronounced.

A. Hoes & H. G-. Cotton, for Pltffs in Error.

The lien of the vendor for the unpaid purchase money will be enforced against the vendee, and subsequent purchasers with notice, unless waived, or an intention appear on the part of the vendor not to rely upon the lien.

The respondents John S. Wright, Amasa Wright, Frederick Deming, and'Hosea Webster, had, at the time they respectively purchased, notice that the consideration money was unpaid.

The lien in this case was not waived, nor does it appear that there was any intention, on the part of the vendor, not to rely upon the lien. The law required a mortgage in addition to the personal security, and the taking of the personal security cannot raise a presumption of any intent to waive the lien. The school commissioner was not authorized to waive it.

The acts under which the sale was made were public acts, and all the parties are chargeable with notice of the provisions of the same.

This was a bill filed to enforce a vendor’s lien for the purchase money upon school lands, sold by David Letts, school commissioner of La Salle county, to John T. Temple, on the first day of May, A. D. 1835, upon a credit of 1, 2, and 3 years. Notes, with personal security were taken, but no mortgage was executed.

The bill was taken 11 pro con/esso” against all of the defendants, except John S. Wright, Amasa Wright, Frederick Deming, and Hosea Webster, who filed their answers; to which the complainants filed a general replication.

The case came on to a hearing on bill, answer, replication, and exhibits.

The Circuit Court dismissed the bill, as to all that portion of the land (described in the bill) conveyed by Temple to John S. Wright, and by him to Amasa Wright, Deming, and Webster.

The writ of error is prosecuted to reverse this part of the decree.

In support of the first point made by the plaintiffs in error, it is considered unnecessary to offer any remarks.

The existence of the vendor’s lien, under the limitations and restrictions stated, is supported by the authority of numerous decisions in the Courts of the United States and England, and is recognized by this Court, in Conoven v. Warren, 1 Gil., 498; see also Dyer v. Martin, 4 Scam., p. 146, 151; see in addition, to cases cited by Treat, J., in Conoven v. Warren, Bradley v. Bozley, 1 Barbour C. R., 125, 152; Palmer et al., 1 Douglass’ Michigan, 425, 427; 9 Smedes & M., 122; 10 do., 143; 6 B. Monroe, 67, 74; 5 Conn. R., 468, 472; Story, J., 1 Mason, 191; 15 Vesey, Jr., 328; 9 Cowen, 316; Winter v. Lord Anson; 3 Russel, 488; 3 Eng. Chan., R.; Hughes v. Kearney, 1 Schoales and Lefroy, 132; 3 Sugden on Vendors, 151; 4 Wheaton, 255; 17 Ohio R., 530.

The doctrine has been repeatedly questioned in England and this country, on the ground of inconvenience and impolicy, but is so clearly sustained by the authority, not only of the cases cited, but of many others to which the attention of the Court might have been, directed, if it had been deemed necessary, that we submit that objections on the grounds stated, would be more properly addressed to the legislative department.

Notice is clearly made out notwithstanding the apparent denial in the answers.

- The patents were not issued until the 21st of May, A. D. 1838.

J. S. Wright, purchased of John T. Temple, and paid the consideration money in May, A. D. 1836.

Webster, Deming, and A.-Wright, purchased of John S. Wright, October 31st, 1837; consideration paid “ at or before that time" At the time that John S. Wright purchased of Temple, his only evidence of title was the certificate issued to him by the school commissioner, which states on its face, that obligations were taken for the purchase money in pursuance of the advertisement. The same state of facts existed when John S. Wright conveyed to Webster, Deming, and Wright.

If-these subsequent purchasers had exercised the ordinary precaution of enquiring of Temple for the evidence of his title, they would have ascertained that ho purchased upon a credit sale. The law had fixed the time of credit at 1, 2, and 3 years. It required the commissioner to report to the Auditor and county commissioners court, and the report to be recorded. That report had been made, and showed a sale upon a credit of 1, 2, and 3 years.

The school commissioner was a public officer of the county, and if further information was required, they had the means of obtaining it.

These inquiries it was their duty to make. Dyer v. Martin, 4 Scam., 146; Graham v. Day, 4 Gil., 389, 394; Hower v. Blackwell, 6 B. Monroe, 67; Thornton v. Knox, 6 B. Monroe, 74. They are in any event chargeable with notice of every fact appearing upon the face of the title papers of Temple, under whom they claim. A court of equity will not permit them to close their eyes when the road to the truth lies open and plain before them, and then insist upon immunity from liability as bona fide- purchasers without notice. Especially when, as in this case, the parties to be injured by their neglect, are beneficiaries of a trust fund, and are to suffer by the misconduct of a public officer, over whose appointment and official acts, after the initiative of a petition for a sale, they had no direct authority or control.

If the subsequent purchasers from Temple, are to be the losers by the enforcement of this lien, the result will be attributable, to say the least, to their own culpable carelessness.

Was this lien waived? When,, and under what circumstances the lien of the vendor will be considered as waived, does not appear to bo very clearly defined by the adjudged cases.

It has been frequently held that the taking of distinct and independent security for the whole purchase money, in the absence of other circumstances showing an intention to retain the lien, will be held a waiver. Beyond this we apprehend the rule to be, that each case must stand upon the intention of the parties, as evidenced by the facts of the case.

The facts of this case present a question, so far as the authority of adjudged cases is concerned, unless 10 S. & M. be an exception somewhat anomalous.

The sale was made under the authority of a public statute, of the provisions of which, all parties are deemed to have been cognizant.

The authority to sell, is no more plainly expressed, than the duty imposed, to take mortgage security upon the land. To hold that the taking of personal security, was in this case a waiver of the lien, is to hold that the commissioner and Temple intended to violate the law, to substitute a security, which by law, he was required to take as a cumulative security, as the sole security for the payment of the purchase money. We think such inference unreasonable, but on the contrary, that the fair and reasonable conclusion from the facts of this case is, that the commissioner intended to sell, and Temple intended to purchase, subject to the lien for the prarchase money, imposed by the statute, although no mortgage was executed. 10 S. & M., supra.

But if the intention of the commissioner was otherwise, if he intended to waive the lien, we deny his right to do so, and the right of Temple, or his grantees with notice, to acquire a title to these lands, under this sale, divested of the lien for the purchase money. Kidder v. Trustees, 5 Gilman, 191.

The statute did not vest a discretion in the commissioner to dispense with the mortgage.

An arrangement between Temple and tire commissioner to take prersonal security solely, would have been a fraud upon the inhabitants of the township, and neither Temple nor his grantees with notice, would be allowed to set up such fraudulent arrangement in bar of our equitable claim.

The patents have been issued and delivered, and the legal title is vested in the defendants. People v. Auditor, 2 Scam., 567.

They insist in their answer upon their title under the patents. And inasmuch as they purchased with notice of our equity, the plainest principles of justice and equity, require that they should take the lands subject to our lien, for the unpaid balance of the purchase money.

It is objected, that if we were entitled to the relief sought, we are barred of our remedy, by limitation. In reply to this, we insist that the question of limitation or laches not having been insisted upon by demurrer, plea, or answer, the same, even if apparent upon the record, comes too late.

That there is nothing in the record to authorize this Court to adjudge that the right and remedy of the complainants are barred either by laches or limitation, If there is any distinction between them.

That the rules of limitation in equity, are not discretionary, but depend either upon analogy to the rules of limitation at law, or in cases where courts of equity have exclusive jurisdiction, and the subject matter is not cognizable at law, upon known and settled rules.

That the ordinary bar of a purely equitable right, when there is no circumstance in the case to avoid the limitation, is twenty years.

That the subject matter of this suit, is the unpaid purchase money, evidenced by the notes of Temple, with Goodrich and Stewart as securities.

That said notes are cognizable at law, and the rule of limitation at law is sixteen years. .

That when the subject matter of the demand is such that it can be sued for, either at law or in equity, courts of equity invariably follow and adopt the rule of limitation at law; and if there are two or more remedies at law, and different rules of limitation, courts of equity adopt and enforce only the one which gives to the complainant the longest time.

That tested by the above principles, the rule of limitation applicable to this case cannot, in any point of view in which it can be considered, be less than sixteen years. 19 Vermont, 467.

If this Court has the power arbitrarily, and in their discretion, to bar us of our right, this is not a case which calls for the exercise of such discretion.

The time which has elapsed, since the last note became due, and the commencement of the present suit, is only seven years and a few months, not sufficient to bar an ordinary book account.

Intermediate that time, a previous suit had been brought and dismissed without prejudice. (See the answers of the defendants.) This is fairly inferrable from the language of the answers, and neglect to plead the former suit in bar. The language of the answers, in this respect is that of complaint rather than of defence.

Payment was demanded of John S. Wright, as the grantee of Temple, in the winter of 1838 & 9, and his grantees were immediately advised by him that such payment had been demanded. See answers.

Beinar so notified that we intended to look to the land as secuO rity, they have no reason to complain of delay. Ii they desired to have the incumbrance removed, they could have removed it by paying the balance of the purchase money.

The title papers although constructively delivered, have always been, and are now actually in our possession.

The circumstances and situation of the immediate parties remain substantially without change. The title is now where it was placed by John S. Wright, in 1837. No actual possession has been taken, or improvement made upon the land. There is no loss of evidence. The case stands upon the bill thus, sworn answers and replication.

John S. Wright claims to be a Iona fide purchaser, and to avoid our proof of actual notice, he says he purchased and paid for the land in 1836. His deed from Temple bears date in 1840. What price did he pay Temple for the land, and what was the evidence of his title prior to the deed in 1840? He fails to disclose either, and by so doing, has left his conduct, to say the least, open to suspicion.

The insolvency of the sureties is no answer; because if they had paid the money they would clearly have been entitled to the benefit of our lien, as against Temple and his grantees.

The insolvency of Temple is no answer. We had a right to rely upon our lien, and it was their duty, before they purchased, to investigate the title, and take sufficient security to indemnify them against the lien for the purchase money. The first step in such investigation would have shown them that the purchase money was unpaid.

In support of the above positions, the following legal propositions and authorities are submitted:—Statute of limitations is a good bar to a suit in equity, as it is at law in matters oí concurrent jurisdiction. Story’s Equity Pleadings, p. 757, 751; Humbert v. The Rector &c. of Trinity Church, 7 Paige, 195; White v. Turner, administrator, 2 Gratten, 502; Sheppard v. Turpin, 3 Gratten, 374; Hughson v. Manderville, 4 Desau, 87.

A defendant who has answered, cannot have the benefit of the statute of limitations, at the hearing, unless he has insisted on it in his answer, or demurred or pleaded. Harrison v. Bonvell, 16 English Ch. R., 382; Story’s Equity Pleadings, §484, 760; Pratt v. Vatu, 9 Peters, 415; Dey v. Dunham, 2 Johns. C. R., 182.

If an equitable title is not sued upon until after the time within which a legal title of the same nature ought to be sued upon to prevent a bar by the statute of limitations, courts of equity, acting by analogy to the statute will not entertain it. Story’s Equity Pleadings, p. 763, §757; 2 Story’s Commentary on Equity, 735.

A vendor’s lien can only be barred by lapse of twenty years. Morton v. Harrison, 1 Bland, 491; Elmondorf v. Taylor, 10 Wheaton, 152; 6 Conn. R., 47; Lingan v. Henderson, 1 Bland, 236, 282; Smith v. Ramsay, 1 Gilman, 372.

Every equitable title must be pursued within twenty years after it accrues. Hovenden v. Lord Annersley, 2 Schoales & Lefroy, 607; Heyer v. Pruyn, 7 Paige, 465.

Chancery will not set up lapse of time against a claim, when an ación of debt for its recovery would not be barred by the statute of limitations. Forbes v. Taylor, 10 Ohio, 104; Grafton Bank v. Doe and others, 19 Vermont, 463.

As the Court has not legislative power, it cannot limit the time. Smith v. Clay, 2 Ambler, 647.

Courts of equity, though not within the words of the statute of limitations, (which apply to particular legal remedies,) are within the spirit and meaning of them. Courts of equity, act not by analogy, but in obedience to the statute of limitations. Hovenden v. Lord Annersley, 2 Schoales & Lefroy, 629.

Jas. H. Collins, for Deft in Error.

The record of this case shows that David Letts, as school commissioner for La Salle county, on the first of May, 1835, sold, under the act of 1829, the school section in the above township, at public sale, pursuant to law. That John T. Temple became the purchaser of certain lots, among which were lots 1, 2, 3, 6, 7 & 8, in the subdivision of said section. That on the purchase of said lots, three sealed notes were executed by said Temple, to said commissioner, to secure the purchase money of these and other lots purchased by said Temple at the same sale, in the same section, with Grant Goodrich and Eoyal Stewart as sureties. Said notes were received by the commissioner and deposited with the treasurer, and divers payments were subsequently made, but no mortgage was executed by Temple as collateral to the notes. The commissioner at the same time executed a certificate of purchase to Temple for these and other lots. The patent subsequently issued to Temple, and is in the hands of the treasurer of the township. Temple failed to pay the notes; and he and bis sureties became bankrupt; and the bill prays that the plaintiffs in error, may have a lien upon these lots for their proportion of the balance of the purchase money, secured by said notes, and that, the ids may be sold to satisfy the same. John S. Wright in his answer alleges, in substance, that lie purchased these lots (I, 2, 3, 6, 7 & 8) of Temple, and paid the consideration for the same in May, 1838, prior to his knowledge, that notes instead of ca>h liad been given on the sale to Temple. That on the 28lb of September, 1840, Temple and wife executed a deed to him for said lots. He denies all knowledge or notice that the purchase money was due or unpaid, and avers that the allegations of the bill in that behalf are false, and insists that he is a bona fide purchaser, without any notice of any equities of the plaintiffs in error, or that they had, or pretended to have any lien on the premises, and that he had paid the whole consideration rnonev, before he had any notice of their claim. That on the 81st day of October, 1837, he conveyed to his co-defendants Amasa Wright, Hosea Webster, and Frederick Detning, of New York city, by separate deeds, to each an undivided one-third of said six lots, for the consideration of four hundred and fifty dollars, paid by each, at and before the date of their respective deeds, and that neither of them had notice that the original purchase money had not been paid.

A. Wright, Webster, and Doming, in their answer,

allege the purchase from John S'. Wright, each, of an undivided one-third of the lots, and that each paid four hundred and fifty dollars as the consideration, at and before the purchase, and expressly deny all notice of the non-payment of the original purchase money by Temple, before, or at the time of the payment of the consideration money to John S. Wright.

The purchase money having,been secured by Temple, by his giving his sealed notes or covenant, with Goodrich and Stewart as sureties, the lien was waived or discharged.

The rule is well settled that it the vendor take a note or bond of the vendee, secured by a third person, it is an extinguishment of the implied lien for the purchase money, 1 Mason’s R., p. 214, 215, Brown v. Gilman, 1 Paige R., p. 29; Fish v. Howland, where all the cases are reviewed, Harding, 48; 3 Bibb, 183; 4 Pet. Cond. R., p. 457, Brown v. Gillman.

The defendant John S. Wright, as well as his grantees Amasa Wright, Denting, and Webster, being bona fide purchasers, without notice, took the lots divested of any lien, even if such lien had ever existed. 2 Edwards Ch. R., 507; 1 Paige, p. 29; 6 Binny, 119; 1 Teat’s, 393; 5 Pet. Cond. R., p. 231.

It is alleged in the bill, that the consideration of the conveyance from John S. Wright, to Wright. Deming, and Webster, was a precedent debt due by John S. Wright to the latter. This is expressly denied, but if the allegations are true, the case last cited, (5 Pet. Cond. R.) establishes the principle that a bona fide conveyance to a creditor would defeat the lien.

Treat, C. J.

On a former hearing of this case, the decree of the Circuit Court was affirmed. For the facts of the case, and the reasons for that conclusion, reference is made to the report of the case, in 11 Illinois, 603. A rehearing has since been allowed, and the case is again submitted for our consideration. The opinion was expressed in the former decision, that an implied lien on land, for the payment of the purchase money, must, as against third persons, be enforced by the vendor, within a reasonable time after his right to do so attaches ; and it was by the application of that doctrine to the case, that the decree dismissing the bill was sustained. Upon further reflection, we are still strongly inclined to adhere to the principle then laid down ; but we are likewise well satisfied, that the principle ought not to be applied to this case, in the condition in which it is presented by the parties. The defendants do not, by their pleadings,- assume the position, that the complainants are not entitled to the' relief sought, because of the lapse of time between the maturity of the notes and the filing of the bill. They claim no advantage by reason of any delay or laches on the part of the complainants.In this respect, the answers are wholly silent. The only questions presented by the answers are, whether the complainants ever had a lien on the lands, and, if so, whether the defendants were purchasers with notice thereof. It is a familiar principle of equity, that a defendant cannot avail himself of the benefit of the statute of frauds, or of limitations, unless he specially relies thereon by answer, plea,- or demurrer. If he fails thus to' claim the protection of the statute, he is to be understood as waiving it. He must give the complainant an opportunity to show by averments and proof, that the case is tiot within the operation of the statute. In the present case, the objection arising from length of time, although not within the statute of limitations, is a defence of a kindred character, and subject to the same rule. The defendants did not raise the Objection in their answers, and they must be held to have waived it. If they intended to insist, on the hearing, that the complainants were barred by the lapse of time, from asserting a lien on the lands, they should have interposed the defence in their answers, or in some other appropriate mode. The complainants might then have amended their' bill, by inserting allegations accounting for the delay, and thereby laying a foundation for the introduction of proof to1 sustain the' case against the objection. As it is, they were not notified that such a defence would be attempted, and consequently they were not called upon to repel or avoid it. It may be, that they could have accounted satisfactorily for the long delay, and have shown that they were still in a situation to enforce the lien. At all events, they ought not to be concluded, until such an opportunity has been afforded them.

We are also well satisfied, that the complainants, once had a lien on the lands for the payment of the purchase money, and that the defendants were chargeable with notice of its existence when they purchased. The statute, under which these lands were sold, required the school commissioner to take notes with personal security, and a mortgage on the premises, to secure the payment of the purchase money. The lands were sold on a credit of one, two, and three years, and the notes of the purchaser, with sureties, taken for the payment of the several instalments, but the commissioner omitted altogether the taking of a mortgage. Under these circumstances, we think the lien was not waived. The-purchaser did not acquire the land divested of a lien, which the law expressly provided should be reserved. See Powell v. Kettelle, 1 Gilman, 491. In such a case, there can be no doubt of the right of trustees of schools to assert a lien as against a purchaser; and we think it equally clear, that the same remedy may be pursued against those claiming under him with notice, if proceedings for the purpose are instituted within a reasonable time after the right to do so accrues. The defendants all purchased before the patents issued, and before the last of the notes became due. The certificate of purchase showed on its face, that the original purchaser had given notes for.he consideration, and the same fact appeared in the report of the sale to the county court. If the defendants had examined the sources of their title, they would at once have discovered that the lands were sold on a credit which had not then expired, and by inquiring at the proper office, they would have ascertained that the notes were still unpaid. They are chargeable with knowledge of every thing appearing on the face of the title papers, and of the records relating to the sale.

The decree of the Circuit Court dismissing the bill, so far as it seeks to enforce a lien against the lots conveyed by the original purchaser to John S. Wright, is reversed; and the cause is remanded, with leave to the parties to amend their pleadings.

Decree reversed.