Laughlin v. North Wisconsin Lumber, Co.

1. Vendor and Purchaser (§ 214*) — Assignment of Contract — Rights of Assignee. The assignee of a contract for the purchase of laud, who was in default in making payments, had no legal ground of complaint because the original vendee, who had not been released from the contract, to protect his obligation, paid the remaining installments of purchase money and took an assignment from the vendor and a deed to the land, subject to the assignee’s rights under the contract, since he could as fully ■ protect and enforce such rights by making the payment to the grantor. [Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 442-418; Dec. Dig. § 214.*] 2. Vendor and Purchases (§ 193*) — Contract of Sale — Rights of Purchaser. Under the law of Wisconsin, a purchaser of land by contract is the equitable owner in fee, entitled to possession, and with the right to sell timber therefrom, unless restrained to prevent impairment of the rights of the vendor, who holds the legal title only as security for the purchase price. [Ed. Note. — For other cases* see Vendor and Purchaser, Cent. Dig. §§ 399-401; Dec. Dig. § 193.*]

Appeal from the Circuit Court of the United States for the Western District of Wisconsin. Suit in equity by Henry D. Laughlin against the North Wisconsin Lumber Company and John H. Savage. From the decree (176 Fed. 772), complainant appeals. On February 1, 1908, appellant brought his bill in the Circuit Court of the United States for the Western District of Wisconsin to restrain a forfeiture of his rights in and to certain real estate in Wisconsin held under and by virtue of a certain agreement in writing, and for other relief. The appellee corporation, being then the owner of the land in suit, entered int.o an agreement with the appellee Savage on January 15, 1904, for the purchase by Savage of 1,023.41 acres of land in Bayfield county, Wis., for $9,-210.69. Of this sum, $2,046.82 was paid down, and the balance made payable in five annual installments of $1,430 each, on January 15th of each year from 1905 to 1909, with interest at 6 per cent., payable annually. On this sale, Savage and one W. L. McCormick -were allowed a commission aggregating $1,534.11, of which $511.70 was credited on the cash payment, and the balance, with interest, was to be paid when the contract price was paid. The contract made certain reservations as to flowage and oil, mineral, and gas. On May 12, 1904, Savage assigned said contract to O. H. and H. P. Norton, who in turn, on April 7, 1905, reassigned the same to appellant herein. Both assignments were consented to by the North Wisconsin- Lumber Company without releasing Savage from his liabilities thereunder. Laughlin thereupon paid the installments due January 15, 1905, and January 15, 1906. He failed to pay the installment maturing January 15, 1907, and the taxes for the years 1906 and 1907. These latter the lumber company had to pay to protect itself. In December, 1907, the lumber company, appellee herein, executed an assignment to Savage of its rights as vendor in said contract, and at the same time delivered to said - Savage a warranty deed of said premises as in said contract provided; he having paid the remaining installments and the taxes of 1907 and 1908. Said assignment and deed each contained a clause that Savage should protect the rights of all assignees of said contract, and hold the original vendor harmless. Savage thereupon, by notice dated January 4, 1908, and mailed January 7, 1908, proceeded to notify Laughlin that if he failed to pay the delinquent installments and taxes within 30 days after the receipt of notice “his rights under the contract would be forfeited and terminated.” The contract called for a 30-day notice before forfeiture could be declared. While Savage signed this notice, “John H. Savage, Grantee North Wisconsin Lumber Company” and gave his address, he did not otherwise advise Laughlin of the assignment of the contract and the delivery of the warranty deed to him. On January 14, 1908, and after the assignment and conveyance to Savage, Laughlin mailed a cheek to the lumber company for the installment due January 15, 1908, and offered to pay the 1907 installment and the back taxes. This check the lumber company returned to Laughlin, advising him that the payment should be made to Savage. The installments due January 15, 1907, January 15, 1908, and January 15, 1909, together with the taxes of 1906 and 1907, have never been repaid to Savage by Laughlin, or by any one for him. It appears that Savage obi tained the bulk of the moneys paid' by him to the lumber company for the assignment and deed of said lands from one Glover, representing the Willow River Lumber Company, with whom Laughlin had been negotiating for the sale of the lumber on said land. It is Laughlin’s claim that he would! have effected a sale of the lumber to Glover, or to Yogt & Co., with whom lie was also negotiating, liad Savage not interfered. ITe chose rather to treat Savage’s act in purchasing the contract and taking the deed as a con-: fiscation of his interests under the contract, and ceased negotiations. In October, 1008, the timber was damaged by fire to an amount stipulated at So,200. On February 5, 1908, Savage filed Ms bill against Laughlin and all parties interested in said land in the circuit court of Bayfield county, Wis., to quiet title to said lands. This suit Laughlin removed to tile Circuit Court of the United States for the Western District of Wisconsin, on June 25, 1908, and thereupon filed an answer and a cross-bill thereto; the former denying Savage's title and setting np his own, and the latter charging that Sat age obtained said assignment and deed through ■ fraud, and setting up the filing of his (Laughlin’s) bill herein, the issuance of the restraining order, charging a violation of the restraining order, and other acts done in furtherance of a scheme and design to cheat and defraud Laughlin, and praying the court to decree that moneys paid by Savage for said assignment and deed were not an equity which constituted a condition precedent to Laughlin’s right to take the title from Savage. To this cross-bill Savage filed an answer, and his original bill, together with Laughliu’s cross-bill, were heard in conjunction with the original bill of Laughlin, upon which this appeal Is predicated. This last-named bill sets up the contract to Savage, its assignment to the Nortons, and by them to Laughlin, as aforesaid; that Laughlin entered into possession of said lands; that lie made payment of tlie installments falling due January 15, 1905, and January 15, 1900, together with accrued interest; that he has not paid the January 15, 1907, nor the January 15, 1908, installments; that he did, on January 15, 1908, tender the latter to the lumber company, and offered to pay the January 15, 1907, installment, and ail taxes and accrued interest, which tender and offer were refused by the lumber company; that he failed to make the 1907 payment through inadvertence; that the right to assert a forfeiture is personal to said lumber company; that Laughlin first learned of conveyances to Savage through Ms attempt to give notice of forfeiture; that the records of Bayfield county, Wis., disclose no record of Savage’s deed or assignment; that the lumber company had no legal right to convey to Savage; that Savage's payment of accrued installment and taxes was voluntary, and made with a purpose io defraud Laughlin; that the latter is ready and willing to pay all that remains due upon an accounting. Complainant thereupon prays for an accounting; that the said land ho decreed to be conveyed to him by a deed from the lumber company; that the deed to Savage be decreed null and void, and that Savage be restrained and enjoined from placing the same on record (which was granted), and from attempting to enforce a forfeiture; that on final hearing the injunction be made perpetual; and that such further relief be granted as the nature of the case requires. The answer of Savage denies possession of said premises by any one, and sets up that he took said title to protect his own liability to make said payments and perform said contract, growing out of Laughlin’s default. The answer admits the giving of notice of forfeiture, and charges that it was made in accordance with the terms of the contract. The answer further asserts that before this suit was begun he gave Laughlin notice of conveyance to him by the lumber company; that he mailed the deed to the recorder for Bayfield county before this suit was begun, and without notice of the suit. The answer also sets np the danger of injury to timber by fire when no one is in possession, asserts Ms right to take said title, and denies all unlawful confederacy. The North Wisconsin Lumber Company also makes answer to said bill, setting up substantially the same facts. Complainant also filed a supplemental bill setting up the destruction of timber by fire as above set out. As to this supplemental bill he asks no relief. On the hearing the Circuit Court found that the deed from the lumber company to Ravage, dated December 5, 1907, was a good, and valid conveyanee of the legal title to saia land, subject, however, to the equitable title of Laughlin, and subject to the easement of flowage and highway servitude reserved in the original contract, and to the oil, gas, and mineral rights also reserved in said contract; that the conduct of Savage in his attempt to enforce said contract against Laughlin was inequitable, whereby he was without right to demand a forfeiture against Laughlin; that Laughlin was entitled to acquire the legal title to said lands by warranty deed from Savage, but that Savage was entitled to a strict foreclosure of Laughlin’s rights in said lands, unless the latter should pay the balance of the purchase price and taxes, amounting to $4,894.50, with interest at 6 per cent, from date of decree, said payment to be made within four months from the date of entry of the decree, or, in case of appeal, within four months from the filing of the mandate, whereupon Savage should convey said lands to Laughlin by warranty deed. On failure of Laughlin so to do, his rights should cease, and Savage be invested with a fee-simple title thereto, subject to the reservations of the contract aforesaid. The court further ordered that judgment for costs, amounting to $039.50, go against Savage. Said bill was dismissed as to said lumber company at complainant’s costs. From the finding of the Circuit Court complainant took this appeal, assigning as errors, that the Circuit Court decreed that the lumber company-had the right to deed said lands to Savage without Laughlin’s consent; that the court held' the deed to Savage to be a good and valid conveyance; that the court held Savage entitled to recover from Laughlin the balance due on said contract, with interest at 6 per cent.; that the court held Savage entitled to a strict foreclosure of Laughlin’s interest in said lands, unless he pay the balance of the purchase price; that the court failed to decree the setting aside of the deed of the lumber company to Savage and the execution of a warranty deed by the lumber company to Laughlin; that the court ordered the bill dismissed as to the lumber company, and the issue of execution against Laughlin for $25 costs; that the court restrained conveyance by Laughlin, and the cutting of timber from said premises for four months; and that the court decreed that Savage had any right to the balance of installments, taxes, and interest due on said contract.