Reynolds v. First National Bank of Crawfordsville Indiana

This was a bill in equity to quiet title and restrain waste, filed by the appellee, First National Bank of Crawfordsville, Indiana, against the appellant, Harris Reynolds. The bill alleged in substance that on August 18, 1875, Reynolds was indebted to the bank in the sum of $7,000, which was evidenced by his note of that date and amount, with Isaac M. Vance and James H. Watson as sureties; and that on the day just mentioned, in order to indemnify the sureties, Reynolds executed a mortgage on certain real estate; that on September 17, 1877, Reynolds executed to the bank another mortgage on the same lands to secure an additional sum of $3,000 which he at that date owed the bank; that on August 30, 1878, Reynolds was adjudged a bankrupt, and John W. Baird was appointed assignee of his estate; that on April 18, 1879, the assignee reported to the bankruptcy court that no assets of the bankrupt had come to his hands and no debts been proven against his estate, whereupon the estate was settled, and both the assignee and the bankrupt discharged; that before the discharge of the assignee, to-wit, on April 11, 1879, Reynolds stated to the bank that no claims had been proven against his estate, and that the register in bankruptcy had given him a writing showing that fact, and also showing that the title to the real estate covered by the mortgage to the bank had revested in him; that relying upon this statement the bank agreed with Reynolds, Vance, and Watson that it would release the two latter from their liability on the note for $7,000, in consideration of which Vance and Watson agreed to pay the bank a certain sum of money and assign to it the mortgage executed to them by Reynolds for their indemnity, and Reynolds agreed to convey the mortgaged property to the bank, but was to be allowed to retain possession thereof until March 1, 1880, and that these agreements were executed; that afterwards the bank purchased a certificate of purchase at sheriff's sale of a certain part of the mortgaged premises which had been sold upon a judgment senior to the mortgage to the bank, and at the expiration of the time for redemption took a sheriff's deed for the land described therein; that the bank was compelled to pay $1,286.60 in discharge of a schoolfund mortgage upon the real estate mortgaged to it; that the bank purchased from Ann Smith a decree against said land, and took an assignment thereof to itself; that 'said purchases and assignments were made upon the faith of the agreement and deed of Reynolds, and for the purpose of saving expense of foreclosing said liens, and that the amount of liens so held * * * was fully equal to the value of said real estate at the time of said agreement;' that Reynolds, for the purpose of annoying complainant and casting a cloud upon its title and delaying it in getting possession, claimed that after the execution of the deed to the bank, Baird, the assignee, executed to him a quitclaim deed for the same real estate, under which he claimed to be the owner; that this deed was wholly inoperative, null, and void, because the interest which it purported to convey never had passed from Reynolds, and because it was made without any authority from the bankruptcy court, and because it was executed by a party out of possession, and as to whom there was an adverse possession. It was averred, in an amendment to the bill, that the deed from Baird, the assignee, to Reynolds was executed after the latter had made his deed to the bank; that Reynolds had caused the deed of the assignee to himself to be recorded; and that under it he was asserting a title paramount to that of the bank, and was threatening to commit waste, and was insolvent. The prayer of the bill was for a decree quieting the title of the bank and enjoining waste by Reynolds.

The answer of Reynolds was filed September 20, 1880. It admitted that he was indebted to the bank, as charged in the bill, in the sum of $7,000, for which Vance and Watson were his sureties, and that he had executed to them the indemnifying mortgage mentioned in the bill. It admitted the averments in respect to his bankruptcy, but denied that he had made to the bank the representations that the assignee in bankruptcy had given him a statement in writing showing that no debts had been proven against his estate in bankruptcy, and that the title to his real estate had been revested in him. The answer averred that prior to the execution of the deed by Reynolds to the bank, the latter proposed to him that it would pay off all his debts which were liens upon his real estate, and permit him to retain possession thereof until March 1, 1880, on condition that Reynolds would convey to the bank, by quitclaim deed, the mortgaged premises, and upon the further condition that Vance and Watson would convey to the bank, by deed of warranty, 200 acres of land owned by them, and that this proposition was accepted; that the consideration for the said contract between Reynolds, Watson, Vance, and the bank, pursuant to which he executed the quitclaim deed to the bank, was this undertaking and agreement of the bank; that Vance and Watson complied on their part with the agreement, and conveyed, with covenants of warranty, to the bank 200 acres of land owned by them; that it was upon the faith of this agreement, and none other, that the quitclaim deed was executed by Reynolds; that when this agreement was entered into, the estate in bankruptcy of Reynolds was unsettled, as the bank knew, and that the purchase of the sheriff's certificates, and other purchases made and assignments taken by the bank, were in violation of the agreement under which Reynolds made the deed to the bank.

The answer admitted the execution and delivery of the deed from Baird, the assignee, to Reynolds, and that Reynolds was claiming whatever title the deed conferred on him, and denied that he had threatened to commit waste on the premises.

On May 3, 1881, the cause was set down for hearing on May 11th, on bill and answer by counsel for the bank, and of this the defendant had immediate notice. On the day fixed for the hearing the counsel for Reynolds moved the court to dismiss the bill for failure of the complainant to except to the answer or to file replication thereto.

The motion to dismiss the bill was overruled. The cause was then heard upon bill and answer, and the court found that the equity of the case was with the complainant; that the material averments of the bill, as amended, were true, except the averment as to waste and threatened waste; that the various instruments set forth in the bill had been executed as charged; that Baird, the assignee in bankruptcy, had executed the deed to Reynolds as charged; that this deed was 'wholly inoperative, null, and void,' and that the assertion of title thereunder cast a cloud upon complainant's title; and that the complainant was the owner of and entitled to the possession of the real estate in controversy. A decree was entered on these findings quieting complainant's title, and declaring the deed from Baird to Reynolds void. From this decree Reynolds appealed.

D. W. Voorhees, for appellant.

J. E. McDonald and J. M. Butler, for appellee.

WOODS, J.