
    VENDOR’S LIEN SUPPORTED BY EQUITABLE INTEREST IN THE LAND CONVEYED.
    Common Pleas Court of Pike County.
    Ray Brown v. John Carr and Julia Carr.
    Decided June 10, 1921.
    
      Vendor’s Men Not Waived as to ¿Purchaser—By Acceptance of Mortgage Containing False Covenants—Purchaser May Rely on Express Covenants—Notwithstanding Opportunity to Ascertain the Truth as to the Title.
    
    1. A owns a tract of land; B arranges for its purchase. B also makes a deal with C whereby C is to take the property owned by A. B pays the consideration to A and A makes the deed direct to C. C does not pay all the purchase money to B.
    Held:—That B had an equitable title in the land sufficient to support a vendor’s lien in his favor for the unpaid purchase money owing him by C.
    2. A vendor’s lien is not waived as to the purchaser, when the vendor accepts from the purchaser a mortgage containing false covenants without knowledge of the falsity.
    3. When a grantee or mortgagee protects himself by express covenants, he is not required to go further, even though the means by which he could have fully informed himself as to the title are at hand.
    
      Blair cfe Blair and Levi B. Moore, for plaintiff.
    
      Theodore K. Funk and Luther A. Thompson, for defendants.
   Stephenson, J.

Plaintiff for a cause of action against the defendants John Carr and Julia Carr claims that on or about September' 5, ]919, he bargained and sold to defendants a tract of land, to-wit;

“Situated in township of Union, in the county of Pike and state of Ohio—Being the southwest quarter of the southeast quarter of section thirty-six (36), township four (4) of range twenty-one (21), containing forty (40) acres,” for the sum of $1,200, which defendants agreed to pay or secure to be paid to plaintiff.

That at the time of said sale, plaintiff was the equitable owner of said land, having purchased and paid Arthur Gross therefor, but the title still remained in said Arthur Gross, who agreed and was ready and willing to make title to said lands to plaintiff or to whomsoever plaintiff might direct: that defendants with full knowledge of the facts and with the purpose and intention of unlawfully and fraudulently getting the title and possession of said lands themselves, agreed to pay plaintiff therefor the sum of $1,200, $800 of which was to be paid and was paid plaintiff by way of part payment on real estate deeded by the defendants to plaintiff and $400 of which was to be paid in two equal installments of $200 each in one and two years and to be properly and fully secured.

Plaintiff further says that defendants with the purpose and intention of defrauding plaintiff and to induce him to procure the title and possession of said land to be made and given to them by said Arthur Gross, and to induce plaintiff to accept and receive a mortgage bn the real estate hereinafter described as security for said sum of $400, did falsely and fraudulently represent to plaintiff that they were at the time the owners in fee of the following described- real estate:

‘ ‘ Situate in the county of Scioto and state of Ohio and in the township of Jefferson and bounded and described as follows: being the west one half of the northwest quarter of section 22, township 3, on range 21, containing 80 acres more or less and that the same was free and unincumbered.”

Plaintiff says that at the time of said transaction he was lead to believe and did -believe that the title to the last described real estate was in defendants and was free and unincumbered and was further lead to and did direct said Arthur Gross to make the title and deliver possession of the lands first herein described to defendants and did accept and receive a mortgage from defendants on the lands last described to secure said sum of $400, payable in one and two years.

He says that defendants were not at said time and are not now the owners of said second tract herein described, owning only the undivided one-eighth interest therein; that at the time they so falsely and fraudulently made said representations, they well knew said representations to be false and fraudulent.

Plaintiff further says that the interest of defendants in said premises is wholly insufficient to secure his said claim, all of which was well known at the time to defendants; that defendants have no other property upon which execution may be legally levied.

He further says he has requested defendants to secure said sum of $400 as they agreed to do, which defendants have refused to do. He therefore 'brings into court the mortgáge given by defendants to plaintiff and tenders the same to defendants. He says that defendants are threatening to, and will unless restrained by an order of this court, encumber and sell said first tract herein described in order to prevent plaintiff from collecting said $400. He prays that defendants be restrained and enjoined from encumbering or selling said first tract herein mentioned; that a lien be decreed him on said first tract herein described to secure said sum of $400 and for all proper relief.

Plaintiff by amendment to his petition claims that the $800 paid plaintiff was paid as follows: defendants executed and delivered to plaintiff their deed of general warranty for the following described real estate: Lot No. 25 of the North Moreland Addition to the village of New Boston, Scioto county, Ohio, for the real consideration of $2,650 to be paid as follows: $800 to be applied upon the premises conveyed to defendants; $1,-400 to be paid by plaintiff on a mortgage held by -the Royal Savings & Loan Co., given by defendants on said premises, and $450 to be paid to the Leet Lumber Co. upon a lien held by said company on said premises.

That the deed of defendants conveying said lot in New Boston contained the following covenants:

"And the said Julia Carr and John Carr do hereby covenant and warrant that the title so conveyed, is clear, free and unincumbered and that they will defend the same against the lawful claims of all persons whomsoever.”

That at the time of making and delivering said deed, said premises were subject to a mortgage executed and delivered to tbe Royal Savings & Loan Co., on or about October 18, 1917, bj the then owners, Charles Pitch and Stella Fitch, predecessors in title to the defendants to secure the sum of $1,800 and interest, and which mortgage was recorded in Vol. 91, page 369 of the records of mortgages of Seio'to county, Ohio; that certain payments had been made on said mortgage, so that on September 5, 1919, there was a balance due and owing thereon of the sum of $1,412.67.

Plaintiff says that there was likewise a mortgage on said premises executed and delivered by the aforesaid Charles Fitch and Stella Fitch on January 7, 1918, to secure the payment of $500 and interest; that certain payments had been made thereon so that .at the date of transfer to plaintiff there was due thereon the sum of $467.25.

' Plaintiff further says that at the time of the making and delivering of said deed by defendants to plaintiff, said premises were subject to state and county taxes for the year 1918 in the sum of $19.80. and there had been levied and placed on the duplicate for collection state and county -taxes for the year 1919, $19.32, none of which had been paid and which plaintiff has since paid and he further says that on Sept. 5, 1919, one of said notes became due, no part of which has been paid, and he prays an accounting between the parties to the transaction, that the amount due plaintiff from defendants be ascertained and declared to be a lien on the premises deeded by plaintiff to defendants.

Defendants John Carr and Julia Carr admit that on or about September 5, 1919, they entered into an agreement by the terms of which they were to receive a deed of general warranty with release of dower for the property first described in plaintiff’s petition, but they say that the consideration therefor to be paid by them was to be whatever sum of money plaintiff would be required to pay-Arthur Gross therefor, and they deny each and every other allegation of plaintiff’s petition.

Defendants by way of cross petition say that a short time prior to Sept. 5, 1919, they and John Conkel who is father-in-law of plaintiff and who is the real plaintiff herein, entered into an agreement the terms of which were (finally) agreed to on or about Sept. 5, 1919, and by said terms they were to pay John Conkel whatever sum of money he would have to pay Arthur Gross for the premises first described in plaintiff’s petition; that John Conkel acting for plaintiff and for himself agreed to accept from defendants a deed for a certain piece of property located in New Boston, Scioto county, Ohio, at’the agreed price of $800 and the balance of the purchase price was to be secured by mortgage on real estate owned by the defendants and their sons in Scioto county, Ohio.

They say that acting in good faith they relied on the promises, statements and representations of plaintiff and John Conkei, who was acting both for himself and plaintiff, w^hen said John Conkel and plaintiff represented that they paid the sum of $1,200 for the property first described in plaintiff’s petition; that defendants executed a deed in accordance with their agreement for the premises located in New Boston, Scioto county, Ohio, at the agreed price of $800, and that there would have been due to said Conkel and plaintiff, if they had made no misrepresentations, the sum of $400.

That thereupon they submitted to plaintiff and Conkel a deed for the 80 acres of land in Jefferson township, Scioto county, which deed showed who owned said tract of land, and plaintiff through his agent prepared a mortgage on said real estate and defendants signed the same in accordance with their agreement, as instructed and directed by said John Conkel and his agent who prepared the papers for defendant’s signature.

They say they are unacquainted with legal terms and phrases and the proper manner of executing a mortgage; that they delivered, as aforesaid, to plaintiff, the original deed held by them for the property upon which they were to execute the mortgage; that they instructed plaintiff to prepare the papers necessary to carry out their contract; that plaintiff did so and that if any of said papers were in any degree incorrectly executed, that it was and is the fault of plaintiff and' said John Conkel acting for himself and plaintiff.

Defendants further claim that Conkel acting for himself and plaintiff stated and represented to defendants that he positively would not make a profit off of them on the property first described in plaintiff’s petition; that he would turn the same over to them for exactly what he or plaintiff had to pay for the property, and that both Conbel and- plaintiff represented that they were compelled to pay $1,200 for the Arthur Gross real estate; that Conkel and plaintiff willfully and knowingly misrepresented to defendants the amount they had to pay therefor and by such willfull, false and malicious misrepresentations secured from defendants a mortgage for $800 more than they should have (executed); they say that plaintiff and Conbel, acting for himself and plaintiff, paid to Arthur Gross for the aforesaid real estate the sum of $900 and no more, and that in truth and in fact, to carry out the contract defendants made with plaintiff and said Conkel, there would be owing to plaintiff or to said John Conkel after they had executed the deed for the property in New Boston, the sum of $100; that said sum of $100 is in fact the only and entire amount defendants (yet) owe to plaintiff or said John Conkel, and defendants ask that the court reform said mortgage of $400 and correct the same in conformity with the agreement between defendants and plaintiff and said Conkel and the. same be decreed to be $100 instead of $400; that plaintiff’s petition be dismissed and for such other and further relief as is just and equitable.

An agreed statement establishes the mortgages set out in the petition and the balances due on each, also the taxes that were a lien on the property at the time of sale.

At the time of the trial, counsel was advised by the court that the issues were not made up as- there was no answer to the cross petition and no reply to the answer, and it was agreed that the case be tried on the theory that a reply had been filed denying the allegations of the answer and cross petition and leave was granted to file same, and while the reply has not been filed, it has been placed with the papers and may now be filed.

The reply admits John Conkel is father-in-law of plaintiff; that the consideration for the New Boston property was $2,-650; that defendants were to pay plaintiff $1,200 for the property conveyed in Pike county to defendants, and defendants executed a deed to plaintiff for the premises located in New Boston at the agreed price of $2,650, and denies each arid every other allegation contained in said answer and cross petition contained, other than the admission of facts therein stated in plaintiff’s petition and prays as in the petition.

Two issues are brought into this cause under the prayer for an accounting that are not stated in the pleadings-. Evidence pro and con was offered bearing upon such issues. In fact there is no dispute along that particular line. These issues grow out of the assumption by plaintiff of the mortgage on the New Boston property to the Royal Savings & Loan Co. to the extent of $1,400, and the lien of the Leet Lumber Co. to the extent of $450. As a matter of fact the Royal Savings & Loan Co.’s mortgage amounted to $1,412.67, and the line of the Leet Lumber Co. amounted to $467.25, there being an excess of $12.67 in the first instance and $17.25 in the second. Under all the evidence the court is of opinion that the defendants John Carr and Julia Carr should account to plaintiff for each and both said amounts and so finds.

Defendants should also account to plaintiff for the taxes that were a lien on the New Boston property at the time of sale.

Coming now to the two notes for $200 each executed and delivered to plaintiff as part consideration for the tract of land first described in plaintiff’s petition and which the court refers to as the Gross property. These notes were for a balance due on the purchase price of said Gross property, and a court of equity will declare a vendor’s lien on said lands for the amount of said notes and interest, if the plaintiff was in fact the vendor and if he has not waived his lien.

Was he the vendor in fact? The admissions in defendant’s answer and 'cross petition and the evidence render a discussion of this proposition unnecessary. Just one reference to the evidence. disposes of this proposition. Arthur Gross was defendants ’ witness and he was asked:

" Q. When you sold your farm to Mr. Ray Brown, how much did you ask him for it?”
A. I sold it to Mrs. C'arr. The check in payment was made out by Ray Brown to John Conkel and endorsed by him.
Q. How much did Mr. Brown pay you for the farm?
A. Nine hundred dollars.
Q. Was this the same property that Ray Brown sold to John Carr and Julia Carr on or about September 5, 1919 ?
A. I do not know.”

This testimony taken together with all the other testimony in the case establishes the fact beyond all cavil that defendants recognized plaintiff herein as the vendor of the 40 acre tract of land situate in Pike county, Ohio, the legal title to which was in Arthur Gross. There is no question but that plaintiff had the equitable title. He paid the consideration and must have had the power to direct to whom Gross should make the deed, as we find that Gross did make the deed to the defendant, Julia Carr, and this was in consonance with the agreement between plaintiff and defendants entered into on Sept. 5, 1919.

The fact that Gross made the deed direct to Julia. Carr does not affect plaintiff’s equitable title, as equity looks to the substance of things and not the form.

The case of Neil v. Kinney, 11 O. S., 58, is dispositive of this proposition, and such is the law in. all the states where the question has been squarely passed upon.

Defendants further claim that if plaintiff ever had a vendor’s lien he waived it when he accepted the mortgage from defendants on the 80 acre tract of land in Scioto county to secure the sum of $400, the balance of the purchase money due on the Gross land.

No question but that a vendor waives his lien when he accepts other security, if the party to be benefited thereby has done nothing to induce such vendor to accept an insufficient security.

Plaintiff did accept a mortgage security which purports to convey 80 acres of land in Scioto county, worth $800, but it envelopes that the mortgagors, who are the defendants in this case, had title to the undivided one-eighth part of said land, worth as a matter of calculation $100.

Can it be said that plaintiff waived his vendor’s lien under such circumstances? The court thinks not.

It is insisted that there is no evidence tending to show that the mortgage security is insufficient. Stenographic notes were not taken, but the court’s notes taken at the time show that-Ray Brown testified that said land was of the value of $800, and it is a matter of simple division that the real security received by plaintiff for his $400 was an undivided interest in real estate worth $100.

Defendant contends that plaintiff took the mortgage under such circumstances that the doctrine of caveat emptor applies. That defendant’s deed for the land upon which said mortgage was given was in the scrivener’s office when the mortgage was prepared. That plaintiff’s father and Gonkel were agents o£ and acting for plaintiff and saw the deed and plaintiff had the opportunity to examine it and if he failed to do so, his mouth is closed to complain.

It is further insisted that the taking of an invalid mortgage waives the vendor’s lien. That is good law, if the party to be benefitted thereby is guilty of no fraud.

But where a grantee or mortgagee protects himself by. express covenants, he is not required to go further, even though the means by which he could have fully informed himself as to the title- are at hand.

The defendants .in this case are in no position to claim any advantage from a mortgage that furnished but one-eighth óf the security they covenanted for.

The court holds that under all the circumstances in this case, plaintiff by accepting the mortgage from defendants with its false granting clause did not waive his vendor’s lien.

It is further claimed by defendants that plaintiff should have tendered back to defendants, the notes as well as the mortgage which he did tender.

This court is of opinion that plaintiff was not even required to tender the mortgage.

He was under no obligation to put defendants in statu quo, as this is not a case of rescission or cancellation. Plaintiff does not seek to have the invalid mortgage set aside and defendants did not accept it back, so that if the court finds that plaintilf is entitled to, or rather has not waived his vendor’s lien, then he has both the mortgage and the vendor’s lien as security for his debt, but in equity the mortgage security must first be exhausted then the vendor’s lien foreclosed for the balance.

Coming to the claim made by defendants on their cross petition.

They claim through their arrangement with plaintiff, and with Conkel who was acting for plaintiff and himself, they were to pay only so much for the Gross land as plaintiff and Conkel paid Gross for same; that plaintiff and Conkel only paid Gross $900 for his land, and that in accordance with their agreement they should only be required to pay them $900, and as they have already paid $800 they are only indebted to plaintiff in the sum of $100 and they ask the court to reform the mortgage accordingly.

Defendants have given their two notes for $200 to plaintiffs as consideration for the Gross land and now seek, in effect, to impeach the contract to this extent for fraud. .

To do this they must furnish more than a preponderance of the evidence. Their evidence must be clear and convincing, and clear and convincing evidence must be such evidence as frees- the mind from doubt, suspense or uncertainty. Before defendants can maintain their position they must prove by clear and convincing evidence that plaintiff made the agreement as they claim it to be, or that Conkel made it for plaintiff as his agent, or that Conkel made it and plaintiff affirmed it.

Defendant’s 'testimony falls short on each and -all these theories and defendants’ cross petition will be dismissed.

Plaintiff is decreed a vendor’s lien on the -Gross land for such part of the $400 purchase money as the mortgage fails to satisfy.

Judgment is awarded plaintiff against defendants in the sum of $200 with interest at 6 per cent, from Sept. 5, 1919, on the note that became due Sept. 5, 1920, and it is decreed that said mortgage he foreclosed upon the interest of Julia Carr and John Oarr in the lands in said mortgage described, and for any balance due upon said note and which the proceeds of sale under foreclosure will not liquidate, it is decreed that the vendor’s lien on the Gross land be foreclosed, said lands sold and the proceeds applied to such balance, and as to the note for $200, due Sept. 5, 1921, this cause is continued.

It is further adjudged that plaintiff recover of defendants the sum of $69.04 with interest at 6 per cent, from the 5th day of Sept., 1919.

This amount is made up as follows: excess of the Royal Savings & Loan C'o.’s mortgage above amount agreed upon, $12.67; excess of the Leet Lumber Co.’s lien, $17.25; state and county taxes for year 1918, $19.80; state and county taxes for year 1919, $19.32.

It is further decreed that defendants pay the costs of this proceeding.

Exceptions of plaintiff and defendant are noted to each and all decrees, judgments and findings of the court herein. Appeal bond fixed in the sum of $200.  