Shepherd v. Pepper

[Syllabus from pages 626-627 intentionally omitted]

''Wm. F. Mattingly, Enoch Totten, and Henry Wise Garnett'', for appellants.

Nathaniel Wilson and Walter D. Davidge, for appellee.

BLATCHFORD, J.

On the 1st of June, 1874, Alexander R. Shepherd and his wife made a deed of trust to Andrew C. Bradley and William H. Philip, conveying to them real estate situated in the city of Washington, in the District of Columbia, described in the deed as follows: 'Part of lot number d two, (2,) in square numbered one hundred and sixty-four, (164,) and bounded and described as follows, viz.: Beginning at a point on North K street, forty-three feet and nine inches (43 9-12 ft.) east of the south-western corner of said square; and running thence west on K street forty-three feet and nine inches, (43 9-12 ft.,) to said south-western corner of said square; thence north-westerly, along the line of Connecticut avenue, about eighty feet and ten inches, (80 10-12 ft.,) to the south line of original lot numbered three, (3,) in said square; thence north-easterly, and at right angles with said avenue, and along the line of said lot three, (3,) about eighty-five (85) feet, to intersect a line drawn due north from the point of beginning; and thence due south, to the point of beginning.' The deed recited that Shepherd was indebted to George S. Pepper in the sum of $35,000, evidenced by a promissory note executed to Pepper, dated June 1, 1874, and payable in 5 years after date, with interest, payable semi-annually, at the rate of 9 per cent. per annum, until paid, accompanied by 10 coupon notes, for $1,575 each, representing the interest; and it conveyed the land in trust to secure the payment of the notes. It gave power to the trustees to sell the premises at public auction, on a default in the payment of the notes or any installment of interest, and to convey the property in fee-simple to the purchaser. Shepherd covenanted in the deed to keep the buildings on the land insured during the continuance of the trust in the sum of $25,000, and to have the policies assigned to the trustees; and that, on his failure to do so, Pepper might do it, and the premium he should pay should be considered as secured by the trust-deed.

On the 22d of March, 1875, Shepherd and his wife executed to William F. Mattingly and the said Andrew C. Bradley another deed of trust, covering the same premises by the same description as in the first deed, to secure the payment o the said Pepper of a promissory note dated March 22, 1875, for $10,000, payable 5 years after date, with interest, payable semi-annually, at the rate of 9 per cent. per annum until paid, accompanied by 10 coupon notes of $450 each, representing the interest. The other provisions of this trust-deed were in terms like those of the first one, except that the insurance against fire was to be $10,000. On the 15th of May, 1876, Shepherd and his wife executed a deed of trust to James E. Fitch and Lewis J. Davis, covering premises described as follows: 'All that certain piece or parcel of ground situate and lying in the city of Washington, District of Columbia, and known and described upon the ground plat or plan of said city as lot number three, (3,) in A. R. Shepherd's subdivision of square number one hundred and sixty-four, (164;) said lot number three (3) fronting forty-three feet and nine inches (43 ft. 9 in.) on K street N. W., and one hundred and nine feet and one-half inch (109 ft. 1/2 in.) on Connecticut avenue.' The deed was made to secure the payment of a promissory note for $35,000, made by Shepherd, dated May 15, 1876, given to Mercy Maria Carter, payable 3 years after date, with interest at the rate of 9 per cent., per annum, payable quarterly. This deed covered the same premises embraced in the first two deeds of trust, and an additional piece of land in the rear of those premises, having a frontage on Connecticut avenue of 28 feet 2 1/2 inches, and running east. ward across the rear part of the premises covered by the first two deeds of trust. On the 15th of November, 1876, Shephred and his wife executed an assignment, for the benefit of the creditors of Shepherd, to George Taylor, Henry A. Willard, and Samuel Cross, which assignment covered 'lot 3, in square 164.' Willard refused to accept the trust, and Peter F. Bacon was duly appointed assignee in his place. On the 11th of April, 1878, Pepper filed a bill in equity, in the supreme court of the District of Columbia, making as defendants Shepherd and his wife, Bradley, Philip, Mattingly, Taylor, Cross, and Bacon. The bill set forth the making and contents of the two deeds of trust in favor of Pepper, and of the assignment by Shepherd; that Pepper was still the holder of the note for $35,000 and the note for $10,000, and the coupon notes belonging thereto; that there were large arrears of interest due thereon; that the property was largely incumbered with taxes, and had been sold for the taxes for the year ending June 30, 1877; that Shepherd had failed to keep the property insured, and Pepper had advanced the amount of the premiums of insurance; that Pepper had, in writing, requested the trustees, under the deeds of trust, to advertise the property for sale, but the defendant Bradley, a trustee under each of the deeds, had refused to do so, by a letter to Pepper, in which he also stated 'that the trust does not cover the entire area of the house, cutting off about twenty feet of the rear.' There was and is a dwelling-house on the land, which covers the entire width on K street, and at least a part of it extends the entire depth of the land embraced in the first two deeds of trust, and a part of the rear part of it is built upon the land covered by the deed of trust in favor of Mercy Maria Carter which is not embraced in the two deeds of trust in favor of Pepper. The bill averred that at the time the two loans were negotiated by Pepper he was informed and believed that the two deeds of trust covered the whole of the house and lots; that he had nothing to do with the preparation of those deeds, but they were prepared by Shepherd or his attorney; that Pepper never saw them until after the negotiations were concluded and the money paid; that Shepherd alone was responsible for any mistake or omission; that at the dates of the deeds of trust the house was completed and occupied by Shepherd as a dwelling; that sublot A, in square 164, being the premises not covered by the two deeds of trust in favor of Pepper, was at tha time owned by Shepherd; that it was understood that the two deeds of trust in favor of Pepper would and did cover the whole area occupied by the house and grounds; that the part of the house not included in those two deeds of trust was what is known as the 'picture gallery;' that the rear end of it could be detached without marring or lessening the value of the property; that the plaintiff was entitled to enforce the collection of the moneys due to him, irrespective of any injury which the sale might do to Shepherd or any one holding under him; and that, in any event, the plaintiff had the right to enforce the sale of so much of the property as was coverd by the two deeds of trust in his favor. The prayer of the bill was that a trustee might be appointed by the court in place of the trustees under the two deeds of trusts, with directions and authority forthwith to execute the trusts of the two deeds.

Answers to this bill were put in by Mattingly, Bradley, and Shepherd; the answer of Shepherd setting up that the loans to him by Pepper were usurious and void under the laws of the state of Pennsylvania, which governed the contracts. Issue was joined, proofs were taken, and the case Was heard at special term, which, on the 12th of May, 1879, entered a decree overruling the defense of usury, and further decreeing as follows: 'That James M. Johnston be and is hereby appointed trustee in the place and stead of Andrew C. Bradley in the deed of trust, and recorded in Liber _____, folio _____, of the land records for the District of Columbia, and referred to in the record in this cause. This decree is without prejudice to all other rights of defendant.' Shepherd, on the 14th of May, 1879, appealed from this decree to the general term; but, after the sale to Pepper hereinafter mentioned, he dismissed his appeal.

Johnston and Philip, claiming and purporting to act under the deed of trust of June 1, 1874, and regarding Johnston as having been appointed trustee in the place of Bradley, under that deed, by virtue of the decree of May 12, 1879, advertised for sale at public auction the premises described in that deed, by the description contained in it. The sale took place on the 23d of October, 1879, and the property was sold to Pepper, at such auction, for $50,000; and Philip and Johnston, as trustees, executed and delivered to Pepper a deed of the property. On the 14th of November, 1879, Shepherd filed a bill in equity in the supreme court of the District of Columbia against Philip, Johnston, and Pepper, setting forth the sale and the deed to Pepper, and alleging that Johnston and Philip acted without authority in selling the property, inasmuch as Johnston was not a trustee under the deed of trust, and the decree of May 12, 1879, did not confer upon him any power under that deed, nor substitute him in the place of Bradley under it, nor remove Bradley from his office of trustee under it; that it was announced at the sale by the auctioneer that the sale was made subject to taxes estimated at $2,700, and that the lot sold did not include the rear part of the building; that the property was knocked down to Pepper for $50,000 and the said taxes; that the price was grossly inadequate; that Shepherd, at the time of the sale, was the owner of a valuable equitable interest in the property; and that the sale was void. The prayer of the bill was that the sale be set aside and the deed to Pepper canceled; that the defendants be restrained from interfering with the property, or attempting to enforce at law any legal right claimed as a consequence of the sale or the deed; and for general relief. Philip and Johnston answered the bill, as also did Pepper. Pepper also filed a cross-bill against Shepherd, Philip, and Johnston, setting forth the contents of the original bill, and of the answers to it, and praying that the sale to Pepper be decreed to be legal and valid, and the deed to him effectual to convey to him an unincumbered fee-simple title to the e al estate; for a writ of assistance to put him in possession of the premises; for a receiver to collect the accruing rents; for an injunction to restrain Shepherd, and all persons claiming under him, from interfering with the plaintiff in respect of the premises; and for general relief. A replication was filed to the answers to the original bill, and Shepherd, and also Philip and Johnston, answered the cross-bill. Issue was joined on such answers, and proofs were taken. The case was heard at special term, and a decree was made, on the 30th of October, 1880, dismissing the bill, with costs, the decree being made by Mr. Justice JAMES. It stated that Shepherd appealed to the general term from the decree.

On the 24th of December, 1880, Mr. Justice JAMES filed an opinion in the suit, in which he stated that the decree of May 12, 1879, in the suit of Pepper against Shepherd, was inoperative and void, for uncertainty. He added: 'It purports to substitute a trustee in one of two deeds mentioned in the pleadings, without designating which of them. It is true that it can be inferred, from the comparative effects of the substitution in the one or the other case, that the court was not likely to intend to substitute Mr. Johnston for Mr. Bradley in the deed which conveyed only an equitable title, but I do not think that I am at liberty to explain and give considerations. It has been suggested that a decree may be explained by reference to the pleadings on which it is based, and this undoubtedly may be done in a proper case, but I do not find that the uncertainty of the decree in this case can be cleared up in that way. It follows that, if the decree is uncertain on its face, the alleged title of Pepper, through Mr. Johnston as substituted trustee, is not a cloud upon the title of the complainant, and consequently this court cannot take jurisdiction to grant the relief prayed. Therefore the decree must be that the bill be dismissed.' On the 14th of January, 1881, the defendants in the suit of Shepherd against Pepper entered an appeal from the decree of October 30, 1880. On the 11th of February, 1881, Shepherd dismissed his appeal from that decree. A motion by Shepherd to dismiss the appeal from that decree taken by the defendants therein, appears to have been granted by default; and they, on the 25th of February, 1881, filed petitions praying the court in general term to reinstate their appeal. The ground of these petitions was that the opinion of Mr. Justice JAMES found as a fact that the trustees, Philip and Johnston, had no power to make a sale, which finding did not appear in the decree of October 30, 1880. The court acted upon the petitions for reinstating, by making an order, on the 17th of June, 1881, striking from the files of the court the opinion of Mr. Justice JAMES. This left the decree of the special term, made October 30, 1880, to stand as a decree merely dismissing the bill of Shepherd. On the 20th of July, 1881, Pepper began the present suit by filing in the supreme court of the District of Columbia a bill in equity against Shepherd and his wife; Mercy Maria Carter, who had been married and become Mercy Maria Carter Gray; Fitch and Davis, the trustees in the deed of trust for the benefit of Mrs. Gray; Bradley, Mattingly, and Johnston, trustees, (Philip having died;) David R. Bartlett, Bacon, and Cross, assignees under the deed of assignment of November 15, 1876, (Bartlett having been appointed assignee in the place of Taylor;) and John Alexander and George M. Barker, two of the creditors secured by that assignment, as represen tatives of that class of creditors. The bill sets forth the two deeds of trust in favor of Pepper, and the deed of trust in favor of Mrs. Gray. It avers that Pepper owns and holds the promissory note for $35,000 and the one for $10,000; that they are both overdue; that a large amount of interest is due upon them; that Pepper has advanced moneys on account of taxes and insurance on the premises covered by the three deeds oft rust, which moneys are secured by the two deeds of trust in his favor; that Mrs. Gray still holds her promissory note for $35,000, which is overdue, with interest from May 15, 1877; and that the parties who claim to be secured by the assignment of November 15, 1876, a copy of which is annexed to the bill, are very numerous, and cannot, without inconvenience and delay, be brought before the court. It then sets forth the filing of the former bill by Pepper; the contents of the decree of May 12, 1879; the appeal by Shepherd from that decree; the sale of the property to Pepper by Philip and Johnston, trustees; the filing of the bill by Shepherd; the proceedings thereunder, and the entry of the decree of October 30, 1880; the filing of the opinion of Mr. Justice JAMES; and the order striking that opinion from the files.